fieo welcome ppt

8/10/2019 FIEO welcome ppt

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Dr. Kartik Dave


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Dr. Kartik Dave2

AGENDA

Introduction to Marketing

Customer Analysis

Segmentation of Customers

Competitor Analysis

Market Analysis Marketing Environment Analysis

#


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Dr. Kartik Dave3

AGENDA

Company Analysis

Selection of Market Segment andCompetitive Strategy

Developing Value Proposition,Positioning, and Business Design


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Dr. Kartik Dave4

WHAT IS MARKETING?

If a business firm is willing and ableto satisfy the need of these group of

people/firms, they can be called thebusiness firmspotential customers.What is marketingthen?Marketing is acquisition, retention,

and enhancement of business fromthese customers at a profit to thebusiness.


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WHAT IS BUSINESS?

What is business?

A business is a collection of activities to

provide some products/services to itspotential customers.

Some of these activities can be termed

primary activities and few other supporting

activities.

Dr. Kartik Dave5


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Dr. Kartik Dave6

THE INTEGRATED BUSINESS VIEW

Inbound

Logistics

Operations Outbound

Logistics

Marketin

g

& Sales

Service

Firm Infrastructure

Human Resource Management

Technology Development

Procurement

Support

Activities

Primary Activities


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Dr. Kartik Dave7

HIERARCHY OF HUMAN NEEDS

Self-Actualization

Needs

(self-development

and realization)

Esteem Needs(self-esteem, recognition, status)

Social Needs

(sense of belonging, love)

Safety Needs(security, protection)

Physiological Needs

(hunger, thirst)


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Dr. Kartik Dave8

How a company can consistentlydeliver

superior value to customers and at the

same time make money for the

shareholders?

This is possible only when the company

has developed certain capabilities to

integrate the different business activitiesinto processesthat provide such value to

the customers at a cost which is less

than the cost of these activities.

MARKETING AND BUSINESS


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What are these processes?

The first is the innovation process, which

analyses potential market opportunities,researches for solutions, and develop

acceptable value propositions for the target

group of customers.

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Second, the business needs an efficient

operations process - it has to produce and

deliver products that meets the world-class

standards of cost and performance.

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Finally, it must have an effective process forcustomer creation, customer support, andcustomer retention.

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MARKETING MYOPIA Production orientation to Product

orientation to Sales orientation. What is the problem with these

orientations?It resulted in business firms definingtheir business in terms ofproducts/services they produce andsell.

It led to marketing myopia whichprevented business firms to understandwhat customers really need andwhether this need can be met by any

othersubstitute products.Dr. Kartik Dave13


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MARKETING MYOPIA

American railroads, defined their

business too narrowly (railroad

business instead of transportationbusiness).

As a result their business declined

inevitably as they could not foresee

that the transportation needs of thecustomers could be met by other means

of transport as technology advanced.

Dr. Kartik Dave14


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MARKETING MYOPIA

Petroleum industry still thinks itself as

producer of petroleum and petroleum

products instead of thinking itself as

being in the energy business.

It must come out of the narrow grip of its

tight product orientation and instead

think itself as taking care of customersenergy needs. Otherwise the oil firms

will be companies without an industry.

Dr. Kartik Dave15


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ESCAPING MARKETING

MYOPIA

How do a business get out of this kind of

marketingmyopia?

Business firm must think of itself not asproducing products but as providing

customer value.

This is possible when a business firm is truly

customeroriented.

Dr. Kartik Dave16


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PRODUCTS AS

SOLUTIONS/BENEFITS

George Eastman, founder of Kodak:

Kodaksells memories


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Dr. Kartik Dave18

PRODUCTS AS

SOLUTIONS/BENEFITS

Charles Revson of Revlon:

In the factory we make cosmetics;

in the store we sell hope.


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Customer (Market) Orientation

For marketing to become the central

purpose of business, everybody in everyfunction must put the customer at thecentre of the business; that is marketingmust be the guiding philosophy of theorganization.

The organizational culture and climatemust effectively encourage the followingbehaviours:

Dr. Kartik Dave19

EVOLUTION OF BUSINESS FIRMS

ORIENTATION TO CUSTOMERS


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Dr. Kartik Dave20

MARKET ORIENTATION

Customer Orientation

Competitor

Orientation

Inter-functional

Coordination

Target Market

Long-termprofit

focus


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Dr. Kartik Dave22

Market-driving companies generate

significantly new products, services,

business formats and raise our sights

and our civilization.

These companies are much more than

customer-led. They lead customers

where they want to go, but dontknowyet.

Sonysinnovation culture.

MARKETING AND INNOVATION


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Social Marketing

The organizations task is to determine

the needs, wants, and interests of target

markets and to deliver the desired

satisfactions in a way that preservesor

enhances the consumers and thesocietyswell-being.

Dr. Kartik Dave23

EVOLUTION OF BUSINESS FIRMS

ORIENTATION TO CUSTOMERS


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Copyright 2009 Dorling Kindersley(India) Pvt. Ltd.

Holistic Marketing Dimensions


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8/14/2012Dr. Kartik Dave25

CUSTOMER

ANALYSIS


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Consumer Behavior

The behavior that consumers display in searching

for, purchasing, using, evaluating, and disposing of

products and services that they expect will satisfy

their needs.

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Consumer behavior provides the behavioral fit

to marketing mix which need to be changed from

time to time by marketers.


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Consumer Behavior Is Interdisciplinary


Psychology

Sociology

Socialpsychology

Anthropology

Economics


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BUYERS CHARACTERISTICS

CulturalSocial Personal

Psychological

Buyer

Culture

Subculture

Social class

Reference

groups

Family

Roles andstructures

Age and

life-cyclestage

OccupationEconomicCircum-

stances

Lifestyle

Personality/self-concept

Motivation

Perception

Beliefs andattitudes

Learning


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Verbal model of culture and value dimensions of

Indian Consumers



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The new Emerging Lifestyles of UrbanConsumers

Labelled, Urban, Chilled, Kicked-with-life Indians or the

LUCKIES Marked by multiple credit cards, off centre job options,

recycling initiatives, a generation much aware aboutalternatives and sporting a choicy selection. (These arereferred to as Global Nomads by Radhika Chopra-

DSE) Confident communicators and can flourish in a global,

competitive market.

Living in style is the in-thing.

Believes in looking good. Ravaged by labels.

Working hard by day and clubbing all night.

T.V has played a major role.


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a new breed of consumer in India

young, increasingly wealthy and

willing to spend on everything from

mobile phones to I-Pods to French

fries.

Time magazine



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Median age of 26.2

0

10

20

30

40

50

2005 2010 2025

India US

Source: US Bureau of the Census, International Data Base, 2002

age


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Consumerism on rise


% spends

Source: KSA TechnopakShare of Wallet

0

1

2

3

4

5

6

7

8

9

Ea

ting

Out

Boo

ks

&

Mus

ic

Mov

ies

&

Thea

tre

Compu

ters,

Lap

tops,

Mo

bile

Phone

20-25 yrs

26-50 yrs

Persona

l

Care

Items

Sav

ings

&

Inves

tments

En

terta

inment


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A Hedonistic Society



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Information Babies



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A rural consumer is looking forfunctional value, not frills.High involvement in the purchase ofany product.The decision making is a collectiveprocess governed by social values.

They are more brand loyalthan theirurban counterparts.Word-of-mouthrecommendations byusers influences purchase decisions.

UNDERSTANDING THE RURALMINDSET


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The family is the most importantconsumer-buying organization in thesociety.

Family members

constitute the

most influentialprimary reference

group.

Social Characteristics..

THE FAMILY AND ITS ROLE INPURCHASING DECISIONS
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THE TRANSITION OF NUF

THEN NOW

Father

Mother

Children

Spousal Role

Parental Role

Strict, Unemotional,Authoritarian

Caring, Concerned,Sensitive

Emotional, Caring,

Nurturing

Informed, Independent,

Enterprising

Self-indulgent,Irresponsible,

Rebellious

Responsible,Disciplined,

Career-Minded

Strictly Hierarchical,Rigid

Egalitarian, Flexible

Controlling, DistantDemocratic,

Companionable


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Personal Characteristics.

A FAMILY LIFE CYCLE MODEL

Bachelor

Newlymarried

Nochildren

Full NestISmall

Children

Full NestII

Grown updependent

children

Empty NestI

Children notliving

at home

Empty Nest

IIRetired

Children notliving

at home

Typical age range

0 - 25 25 -50 50 +

Single: Always Single; Divorced: Widowed


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PSYCHOLOGICAL FACTORS

A persons buying choices are influenced by

four major psychological factors:

Motivation Perception

Learning

Beliefs and attitudes


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PERCEPTION, LEARNING,

BELIEFS AND ATTITUDES How a motivated person actually acts is

influenced by his or her perceptionof the

situation, learning, beliefsand attitudes.

Perception is the process by which an

individual selects, organizes, and

interprets information inputs.

Learning involve changes in anindividuals behaviour arising from

experience.

Classical Conditioning


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Classical Conditioning

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PERCEPTION, LEARNING,

BELIEFS AND ATTITUDESA belief is a descriptive thoughtthat a person holds about

something.An attitude is a persons enduringfavourable or unfavourable

evaluations, emotional feelings,and action tendencies towardsome object or idea.


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MODERN MARKETING MODEL

Product

Money

Equity

(trust)

Experience(relationship)

Energy(convenience)

Rational Emotional

Value


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THE BUYER EXPERIENCE CYCLE

Supplements Maintenance Disposal

Do you needother productsand services to

make thisproduct work?

If so how costlyare they?

Does the productrequire externalmaintenance?

How easy is it to

maintain andupgrade theproduct?

Does use of theproduct createwaste items?

How easy is it

to dispose ofthe product?


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Marketing not only requires a focus on

satisfying customer needs it also has a

competitive dimension.The firm must seek a value proposition

that satisfies the needs of target

customers more effectively thancompetitors.

WHY COMPETITOR ANALYSIS?


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From the perspective of the customer:

Focus on customer choice. A buyer of a particular brandcould be asked what brand would have been purchased

if that brand was out of stock or what are the otherbrands he had considered for purchase.

IDENTIFYING COMPETITORS


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Association of products with specific use contexts orapplications. A number of respondents could be asked tolist out the different use situations for a particularproduct under study. Then these respondents could be

asked to name all the products that are appropriate foreach of these use contexts.



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A strategic group is a group of firms that: Over time pursue similar competitive strategies

(e.g., product differentiation, use of samedistribution channel).

Have similar characteristics (e.g., size,aggressiveness).

Have similar assets and skills(e.g., strong brand,excellent service quality image).


STRATEGIC GROUPS


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COMPETITIVE STRENGTH GRID


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COMPETITIVE STRENGTH GRID

Assets and Skills

Key for Success

New product capacityProduct quality

Cost structure

Product differentiation

Dealer satisfaction

Market share

Second ary Imp or tance

Flexible production

Financial capacity

Quality of managementSales force/distribution

Brand name recognition

Advertising/promotion

Quality of service

Growth of target segment

Company A Company B Company C


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DIMENSIONS OF A MARKET

ANALYSIS

The nature and content of an analysis of amarket will often include the followingdimensions: Actual and potential market size Market growth

Market profitability

Cost structure

Distribution systems Trends and developments

Key success factors


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MARKET SIZE AND GROWTH

What are important and potentially

important sub-markets?

What are their size and growthcharacteristics?

What are the driving forces behind

sales trends?


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MARKET SIZE AND GROWTH

The potential market includes the usage

gap, which can be penetrated by creating

increased frequency of use, new users,

and new uses. To forecast growth patterns, it can be

helpful to consider the forces driving

sales, leading indicators, corresponding

industries, pressure on prices, and theexistence of substitute products.


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MARKET PROFITABILITY

Is this a business area where an average

firm will make a profit?

How intense is the competition among

existing firms?

Evaluate the threats from potential

entrants and substitute products.

What is the bargaining power of suppliersand customers?

How attractive/profitable are the market

and the sub-markets?


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MARKET PROFITABILITY

Michael Porter, Harvard economist and

business strategist, has brilliantly

exposed the market profitability dynamicsthrough his five forces model.

According to Professor Michael Porter of

Harvard Business School, the state of

competition in an industry is a composite

of five competitive forces.


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These forces are:

The rivalryamong competing firmsin the industry.

The attempts of firms in other

industries to win customers over

to their own substitute products.

FORCES DRIVING MARKET


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The potential entry of new

competitors.

The bargaining power andleverage exercisable by suppliers

of inputs.

The bargaining power and

leverage exercisable by buyersof

the product.

FORCES DRIVING MARKET

FIVE FORCES DRIVING COMPETITION


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FIVE FORCES DRIVING COMPETITION

Potential

Entrants

Industry

Competitors

Rivalry Among

Existing Firms

Suppliers Buyers

Substitutes

Threat of

Substitute

Product

or Services

Bargaining Power

of Suppliers

Bargaining Power

of Buyers

Threat of

New Entrants

Entry Barriers Economics of Scale

Product Differentiation

Capital Requirement Switching Costs

Access to Distribution Channels

Cost Disadvantages

Government Policy

Rivalry Determinants: No of Competitors

Industry Growth

Fixed Cost Switching Cost

Exit Barriers

Determinants of Supplier

Power: Supplier Concentration

Substitute Inputs

Differentiation of Inputs

Switching Costs Of Suppliers Importance of the Input

Threat of Forward

Integration

Determinants of Buyer Power: Buyer Concentration

Buyer Volume

Buyer Switching Cost

Substitute Products Buyer Information

Ability to Backward Integration

Determinants Of Substitution Threat

Relative price performance of

substitutes

Switching costs

Buyer propensity to substitute


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OTHER COMPONENTS OF A

MARKET ANALYSISCost Structure

What are the major costs for the various

types of competitors?

Distribution SystemsWhat are the alternative channels of

distribution?

Key Success Factors

What are the key success factors, assets,

and skills needed to compete

successfully?


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Distribution Systems

Access to effective and efficient distribution channel

is often a KSF.

Emergence of e-commerce

Convenience stores at petrol pumps and gas

stations Catalogue retailing


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Market Trends

What is change and what is important?

Missing or misinterpreting a trend can be disastrous.

Trends drives growth and rewards those who develop

differentiated strategies, fads are short term investment

attracters.

Identify trend or fad:

What is driving it

How accessible is it

Is it broadly based


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Strategic Implications for Marketing


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Country Population(millions)

GDPper

capita

Carsper 1000

TVsper 1000

PCsper 1000

Canada 33.4 35,700 581 655 460

China 1,321.9 7,800 8 306 19India 1,129.8 3,800 8 58 6

Kenya 36.9 1,200 13 22 6

Mexico 108 10,700 151 241 69

Strategic Implications for Marketing

THE COMPANYS MARKETING


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ENVIRONMENT

COMPANY

Suppliers

The Economy

Technology

Dr. Kartik Dave


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8/14/2012 70

COMPETITIVENESS OF INDIA

Country GCIRank

2004-05

GCIRank

2005-06

GCIRank

2006-07

GCIRank

2007-08

GCIRank

2010-11

India 55 50 42 48 51

China 46 49 35 34 27

Brazil 57 65 66 72 58

Japan 9 12 5 8 6

USA 2 2 1 1 4

Source: Global Competitiveness Report 2010-11

Dr. Kartik Dave


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8/14/201271

Cocooning

Fantasy adventure

Pleasure Revenge

Small Indulgences Down Aging

Being Alive

99 lives

SOCIO-CULTURAL MEGA

TRENDS

Dr. Kartik Dave

WHY TECHNOLOGICAL


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ENVIRONMENT IS

IMPORTANT?

Technology is a dynamic force which

shapes peoples and industries' lives and

even wipe out entire industries.

We live in an age in which the pace of

technological change is pulsating ever

faster, causing waves that spread outwardtoward all people, and all industries.

Dr. Kartik Dave


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8/14/201273

Videotapes + VCR + TelevisionVCD or DVD + PC or Television.

OREntertainment Cable + PC or Television

Analog Camera Digital Camera

Stand Alone Digital Camera DC, PC

Stand Alone Digital Camera Mobile Phone+ Digital Camera

WHY TECHNOLOGICAL

ENVIRONMENT IS IMPORTANT?

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What are the implications of this shift todigital camera?

First, traditional camera industry nolonger exists in many of the developedcountries. It has become a peripheral tothe PC, or one of the input/output devicesto a PC.

Second, because of the shift to the digitalcameras, the entire value chain for theanalog camera industry is in trouble.

WHY TECHNOLOGICAL


Dr. Kartik Dave


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8/14/201275

WHY POLITICAL-LEGAL


This environment is composed oflaws, government agencies, and

pressure groups that influence andlimit various organizations andindividuals.

Sometimes these laws create newopportunities for business.

Dr. Kartik Dave


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INDIAN LEGAL ENVIRONMENT

Competition Law replacing

Monopolies And Restricted Trade

Practices Act

Food and Drugs Act

The Food Safety and Standards Act,

2006

Consumer Protection ActIntellectual Property Rights Act

Environment Protection Act

Dr. Kartik Dave


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MAJOR FORCES DRIVING

BUSINESS

The competitive wellbeing of business

is determined by six major forces.

The power, vigour, and competence of acompanys existing competitors,

suppliers, customers, potential

competitors, complementors, and the

possibility of substitution.

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What such a transition does to a businessis profound, and how the businessmanages this transition determines its

future. We are, in fact, witnessing a major

transitionin the way business is done as aresult of some major business trends.

These are: E-Business

Consolidation

Globalization.

MAJOR FORCES DRIVING

BUSINESS

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GLOBALIZATION

There have been three great eras ofglobalization.

Globalization 1.0 This lasted from 1492 when Columbus set sail,

opening the trade between the old world and thenewuntil around 1800.

The force driving the process of globalintegration was the physical prowess of a few

countriesof West Europe .

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8/14/201282

Globalization 2.0 Lasted roughly from 1800 to 2000.

The force driving the process of global

integration was multinational companiesfrom theWest.

In the first half of this era, global integration waspowered by falling transportation costs, and in thesecond half by falling telecommunication cost.

GLOBALIZATION

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Globalization 3.0 Started around the year 2000.

The dynamic force is the newfound power for

individuals to collaborate and compete globally.Individuals from every corner of the world is beingempowered.

Companies, large and small have also been newlyempowered.

GLOBALIZATION

Dr. Kartik Dave

FORMAT FOR COMPANY ANALYSIS


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1.Performance IndicatorsMarket Share

Sales GrowthNet Profit Margin

ROI

Others

2.Internal StrengthsInternal Weaknesses

External Opportunities

External Threats

3.Competitive Strength Assessment

Key Success Factor

4.Competitive Position

5.Major Strategic Issues

Year 1 Year 2 Year 3 Year 4 Year 5

Firm A Firm B Firm C Firm D Firm E

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F l l f Mi k i


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Four levels of Micromarketing

Segments

Local areas Individuals

Niches


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Copyright 2009 Dorling Kindersley (India) Pvt. Ltd. 8-88

What is Customerization?

Customerizationcombines operationallydriven mass customization with customized

marketing in a way that empowers

consumers to design the product and service

offering of their choice.
http://localhost/var/www/apps/conversion/tmp/scratch_2/08_Marriott.mov


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Market segmentation is the process of

dividing a varied and differing groups of

customers or potential customers into smallergroups,who want the same value (benefits or

solutions to problems) from the product or

service.

Dr. Kartik Dave89

WHAT IS MARKET

SEGMENTATION?


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CLASSIFICATION OF


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Dr. Kartik Dave91

CLASSIFICATION OF

SEGMENTATION BASES

General Product-specific

Observable

Un-observable

Geographic,

demographic and

socio-economic

variables

User status, usage

frequency, loyalty

and patronage,

situations

Psychographics(life-style),

values, personality

Benefits, perceptions,preferences,

intentions

SOCIO-ECONOMIC


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CLASSIFICATIONS IN INDIAEducation

Occupation

Unskilled

Skilled Workers

Petty Traders

Shop Owners

Businessmanwith employees

None

1-9

10+

IlliteRate

School4 yrs

School5-9 yrs

SSC/HSC

CollegeEdu

Grad/Post

(Gen)

Grad/Post

(Prof)

1 2 3 4 5 6 7

01

02

03

04

05

06

07

E2 E2 E1 D D D D

E1 D C C B2 B2

E2 D

D

D

D C

C CD B2 B2

B2

B2

B2 B2

C

C

B1

B1

B1 B1

A2 A2

A2 A2

A2

A2 A2

B1

A1

A1

A1 A1 A1

A1

E2

SOCIO-ECONOMIC


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Education

Occupation

IlliteRate

School4 yrs

School5-9 yrs

SSC/HSC

CollegeEdu

Grad/Post

(Gen)

Grad/Post

(Prof)

Self-employedProfessionals

Clerical/

Salesman

Supervisory

Executives

Junior

Middle/Senior

1 2 3 4 5 6 7

08

09

10

11

12

D D D

DD D

D D

C

CC

C C C

B2

B2

B2

B2

B1 B1 B1 B1

B1

B1

B1

B1

B1

A2

A2

A2

A2

A2

A1 A1

A1

CLASSIFICATIONS IN INDIA

PSYCHOGRAPHIC


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In psychographic segmentation, buyers are

divided into different groups on the basis of

lifestyleor personality or values.

People within the same demographic group

can exhibit very different psychographic

profiles.

Dr. Kartik Dave94

PSYCHOGRAPHIC

SEGMENTATION

Th VALS S t ti S t


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The VALS Segmentation System

Sric-bi.com

BENEFIT/VALUE BASED


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BENEFIT/VALUE BASED

SEGMENTATION

On its own this approach to segmentation,

while able to provide you with an

invaluable insight into how to win a

customer's business, still requires you toknow how to reach them.

The input to this part of the equation,

provided by a detailed understanding ofwho the customersare and where they are

to be found, is clearly very important.

ALTERNATIVE CLASSIFICATION


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Dr. Kartik Dave97

It is, therefore, worthwhile to look at

an alternative way to classify the

segmentation variables so that wecan find out

What benefits/value the customers

want? Who are theyand where are they?


OF SEGMENTATION BASES



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OF SEGMENTATION BASESIdentifier Variables(Who they are)

Consumer Markets

Geographic Location

Demographics Socio-economic Factors

Psychographics

Business Markets

Company Size Industry

Geographic Location

Response Variables(What they want)

Benefits Desired

Price, reliability, service

Applications/Usage Situation User Status, usage frequency,

application of the product

Sensitivity to Marketing Mix

Product features, price,

promotion

Purchasing Behaviour

Buying volume

Switching among brands

Purchasing approach

Channels used

SEGMENTATION OF BUSINESSCUSTOMERS


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Dr. Kartik Dave99

Organizational demographics:

Industry / Company s ize/ Loc at ion

Operating variables:

Techno logy /User status /Customer

capabil i t ies (f inancial)

Purchasing approaches

Organizat ion of DMU/Purchasin gpol ic ies/Purch asing cr i ter ia

Situational factors

Urgency /Appl icat ions /Order size

Personal characteristics:Motiv ation/Buyer-sel ler dyad/

Risk percept ions

General, observable

(Macro)

Specific, subtle

(Micro)

(Intermediate)

CUSTOMERS


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FACTORS FOR SELECTING


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Key Success Factors (KSF)Product Quality

Brand ReputationTechnology RequirementCost StructureDistribution System

Quality of ServiceFinancial Capacity


MARKET SEGMENTS



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Company ObjectivesCompatibility with company goalsRelationships with other segments

ProfitabilityResources and Capabilities of theCompany and Competitors

Ability to conceive and design

R & D CapabilityExisting Patents and CopyrightsAccess to new technologies throughthird parties


MARKET SEGMENTS



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Resources and Capabilities of theCompany and Competitors

Ability to Produce (Quality & Quantity)

Production TechnologyProduction CapacityFlexibility in ProductionCost Competitiveness

Ability to MarketBrand ReputationDistribution StrengthService Strength


MARKET SEGMENTS



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Resources and Capabilities of theCompany and Competitors

Ability to Finance

Access to Capital from OperationsAbility to Use Debt & Equity FinanceParentsWillingness to Finance

Ability to Manage/Execute

Quality of ManagementQuality of Decision MakingInnovativenessOrganization Culture


MARKET SEGMENTS

SELECTING MARKET SEGMENTS


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Selection of market segment to servehas to be on the basis of the fit between:

the attractiveness of the segment,

the key success factors for operating inthe segment, andthe companys relative ability tocompete in the segment.

The company also needs to consider thecompetitive reactions it might face if itdecides to compete for a segment.

SELECTING MARKET SEGMENTS

TO SERVE

THREE GENERIC


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COMPETITIVE STRATEGIES

1 Cost

Leadership

2 Differentiation

3A Cost

Focus

3B Differentiation

Focus

Lower Cost Differentiation

Broad

Target

Narrow

Target

Competitive

Scope

Competitive Advantage

WHAT IS COST LEADERSHIP


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STRATEGY?

In a cost leadership strategy, a firm

sets out to become a low-cost

producer in its industry.

The sources of cost advantage may

include the pursuit of economies of

scale, proprietary technology,

preferential access to raw materials,locational advantage and other

factors.



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A cost leader must achieve parity or

proximity in the bases of

differentiation relative to itscompetitors to be an above-average

performer, even though it relies on

cost leadership for its competitiveadvantage.


STRATEGY?



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Proximity in differentiation means

that the price discount necessary to

achieve an acceptable market sharedoes not offset a cost leader cost

advantage and hence a cost leader

earns above average returns.


STRATEGY?

WHAT IS DIFFERENTIATION


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WHAT IS DIFFERENTIATION

STRATEGY?

In a differentiation strategy, a firm seeks to

be unique in its industry along some

dimensions/attributes that are widely

valued by buyers. It is rewarded for itsuniqueness with a premium price.

A firm pursuing differentiation strategy

must always seek ways of differentiating

that lead to price premium greater than the

cost of differentiating.


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WHAT IS FOCUS STRATEGY?

The focuser selects a segment or a group

of segments in the industry and tailor its

strategy to serving them in a better way

than its competitors though it does notpossess an overall competitive advantage.

In a cost focus a firm seeks a cost

advantage in the target segment.

In a differentiation focus, a firm seeks

differentiation in its target segment.


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AL RIES ON FOCUS

Thesun is a powerful source of energy. ..

Yet with a hat and some sunscreen you

can bathe in the light of the sun for hours

at a time with a few ill effects.A laser is a weak source of energy. .. But

with a laser you can drill a hole in a

diamond or wipe out a cancer.

When you focus a company, you create

the same effect. You create a powerful,

laser like ability to dominate a market.


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All businesses is a niche business. The

question is what kind of niche do you

want to own?

Sacrifice is the essence of corporatestrategy. Without sacrifice there is no

strategy. Without sacrifice a company

becomes weak.When you sacrifice yourenot giving up

anything at all; what you are doing is

defining your position.

AL RIES ON FOCUS


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