How to fail without trying Fred Wiersema and Mike Treacy

1
How to fail without tryingFred Wiersema and Mike
Treacy

• Why does Casio sell a calculator cheaper than a
  box of cornflakes ?
• Why does it take a few minutes to rent a car at
  Hertz but twice the time to get a room at the
  Hilton?
• Why does Lands End remember your last order and
  family members sizes, while America Express
  urges you to join after you have been a member
  for ten years?

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BUSINESS STRATEGY

• Steps in Setting Strategy
• What is a companys mission?
• Set goals and objectives - quantify, set time
• Design the business portfolio
• Operational details - 4Ps

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Strategy - basics

• Mission
• Business Objectives
• Marketing Objectives
• Marketing Strategy

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Mission

• Who is the customer?
• What is the value to the customer ?
• What will our business be?
• What should our business be?

5
Factors that affect mission

• History
• Current preferences of owners and management
• Market environment
• Resources
• Distinctive competencies - Core competencies -
  Hamel and Prahalad

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Mission

• Should define
• Industry scope
• Products and services
• Competencies
• Segments
• Vertical scope
• Geographical scope

7
Portfolio Models

• Boston Consulting Group Matrix
• (BCG Matrix)
• General Electric Grid
• GE Grid

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Portfolio Analysis

• Boston Consulting Group - BCG Matrix
• Market ?
• Growth 10 Star Question Mark
• Rate
• Cash Cow Dog
• 1.0
• Relative Market Share

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General Electric Grid

• Business Strengths
• Relative Market Share
• Product Quality
• Sales/Promotion Effectiveness
• Geography
• Market Attractiveness
• Market Size
• Growth Rate
• Profits
• Competition
• Intensity

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• Business
  Strengths
• Market Strong Avg. Weak
• Attractiveness
• High A A
  C
• Med A C
  B
• Low C B
  B
• A-Build
• B-No Growth-Divest/Harvest
• C-Wait See

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Ansoffs Product Market Grid

• Products
• Markets Current New
• Current Market Product
  Penetration Development
• New Market Diversification
• Development

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Marketing Myopia Ted Levitt

• Focus on needs not products
• Revlon
• Xerox
• Standard oil
• Columbia Pictures
• Encyclopedia Brittanica
• Railroads

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Strategic Choices

• Competitive Advantage The Discipline of Market
  Leaders
• Michael Porter Treacy and Wiersema
• Overall Cost Leadership Operational Excellence
• Differentiation Product Leadership
• Focus Customer Intimacy

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Strategy and tactics

• The science or art of military command as
  applied to the overall planning and conduct of
  large-scale combat operations
• Tactics are a plan of action resulting from the
  practice of this science

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Art of War - Sun Tsu

• 350 B.C.
• Sun Pin - strategist of Tien Chi
• Horse Races

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Laws of Physics

• Stronger force will overcome the lesser, all else
  being equal
• Boxing and weight classes

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Lessons

• Strategy is about getting a competitive advantage
• Know the laws that govern the competition
• Know the competition and the terrain
• Creating strategies can be learned

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Marketing Warfare

• Al Ries and Jack Trout
• 4 types of players Kotler
• Leaders Leaders
• Followers Challengers
• Flankers Followers
• Guerillas Nichers

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Principles

• Principle of force
• Superiority of defense
• Mind is the battleground

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Defensive warfare

• Only the market leader should play defense
• The best defensive strategy is the courage to
  attack yourself
• Strong competitive moves should be blocked

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Gillette

• Blue Blade
• Super Blue Blade
• Trac II - double blade
• Atra - Adjustable
• Good News - Disposable
• Pivot - Adjustable disposable
• Sensor

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Offensive warfare

• Consider the strength of the leaders position
• Find a weakness in the leaders strength and
  attack at that point (Achilles heel)
• Launch the attack on as narrow a front as possible

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Flanking warfare

• Move into an uncontested area
• Tactical surprise is very important
• The pursuit is as critical as the attack itself
• Dont move resources to other targets.

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Flanking

• With low price - tell the loophole
• With high price - popcorn, perfume
• With distribution - Timex, Leggs
• With size - VW Beetle
• With product form - Close-Up gel

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Guerilla warfare

• Find a niche small enough to defend
• No matter how successful, never act as the leader
• Be prepared to bug out at a moments notice
• Rolls Royce, Roos, United Jersey Bank,
• Peoples Express, Jeep

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Segmentation

• Identify segmentation variables
• Segment the market
• Develop profiles of segments

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Bases for segmentation

• Geographic
• Region
• Metro
• Climate
• Density

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Segmentation

• Demographic
• Age
• Gender
• Income
• Education
• Race
• Family Size

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Segmentation

• Psychographic
• Social Class
• Lifestyles
• Activities, Interests, Opinion
• Personality

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Behavioral

• Occasions
• Benefits
• User Status
• Usage rate
• Loyalty
• Attitude towards product

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Industrial segmentation

• Demographic
• Industry
• Size
• Location
• Operations
• Technology
• User/ nonuser

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Industry Segmentation

• Purchasing Approach
• Centralized or decentralized
• Engineering dominated or financial dominated
• Existing Relationships
• Purchase policies - leasing, service etc.
• Purchase criteria

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• Situation
• Urgency
• Specific Applications
• Size of Order

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Requirements for Effective Segmentation

• Measurable
• Profitable
• Accessible
• Differentiable
• Actionable

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Evaluation of segments

• Size and growth
• Structural Attractiveness
• Segment rivalry
• New Entrants
• Substitutes
• Buyer clout
• Supplier Clout
• Company objectives and resources

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American Express

• Based on Income and age - 9 segments
• Up and Comers - 40k
• Affluent established - 50, 40k
• Affluent Retired - retired, 40k
• Successful Beginners -
• Mainstream Family 36-50 15-40k
• Conservative Core 50
• Young Survivors
• Older Survivors
• Retired Survivors

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Food Products(based on attitudes towards food)

• Hedonists (20)
• want good life, taste, convenience, not
  expensive, not health conscious, young, no kids
• Dont Wants (20)
• Avoid sugar, fat Are over 50 years, better
  educated
• Weight Conscious (33)
• Moderates (25)

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Levi Strauss Mens Clothing

• Utilitarian Jeans Customer (26)
• Loyalist, work and play, does not care for style
• Trendy/Casual (19)
• High fashion, likes to be noticed, younger
• Price shopper (12)
• Older, department store sales and discount stores
• Mainstream Traditionalist (22)
• Older, conservative tastes, shops with wife,
  department stores
• Classic Independent (21)
• late 20s/30s, real spender on clothes, shops
  alone, specialty stores, traditional styles