Strategy

1
Strategy

• David Forlani
• Marketing Strategy (MKTG 6010)

2
Overview

• Understanding Industries
• Strategy Defined
• Levels of Strategy
• Components of Strategies
• SBU Strategies
• Growth Strategies
• Market Entry Strategies

3
An Industry

• Is a group of organizations (providers) that
  compete for the opportunity to satisfy users
  needs/wants.

4
An Industrys Attractiveness

• Is influenced by its level of competitiveness...

Threat of new entrants
Bargaining power of suppliers
Bargaining power of buyers
Rivalry among existing industry firms
Threat of substitute products
(Porters 5 Forces Model)
5
An Industrys Attractiveness

• And by 5 Macro-level factors.
• Changes in its L-T growth rate.
• Changes in its key buyer segments.
• Diffusion rate of proprietary knowledge.
• Changes in costs and efficiencies.
• Changes in government regulations.
• Together these Competitive and Macro influences
  determine an industrys attractiveness to firms
  considering entry.

6
Attractive in What Way?

• Firms successfully competing in an industry
  thrive on the status quo.
• Firms looking to enter an industry thrive on
  change.

7
Defining Strategy

• A Plan for Deploying Resources to Achieve
  Organizational Goals.
• A Plan for Deploying Resources to Create Superior
  Customer Value.
• Where the level of the strategy establishes the
  issues and elements of the decision process.

8
Strategies Exist At Multiple Levels

• Corporate Determines collection of Business
  Units (CEO)
• Business Unit or SBU Determines P-Ms to compete
  in (Divisional President)
• Product-Market How to compete in chosen P-Ms
  (Director of Marketing).
• Marketing Mix Elements Product, Price, Channel,
  Promotion Strategies for competing in a Targeted
  Market Segments (Brand Manager).

9
Strategies Have 5 Components

• Scope Operational DomainAllowable
  Markets/Offerings.
• Goals Objectives Outcome strategy is intended
  to produceMarket-based Linked to Financial.
• Competitive Advantage What a firm does better
  than its competitors. Why the goals will be met.
• Resources Human, financial, technical and
  market-based that generate SCA.
• Synergy Scope efficiencies associated with a
  given strategyenhancing asset utilization.

10
Generic BU Strategies

• Michael Porters Competitive Dimensions
• Differentiation
• Cost Leadership
• Focus

11
Generic BU Strategies

• Miles and Snow Typology
• Prospectors
• Defenders
• Analyzers
• Reactors

12
SoHow Do BUs Compete?

• With their competitive advantage, which should be
  reflected in their BU strategies.
• Porter By creating fit among a unique set of
  company activities, where the goodness of fit is
  a function of the tradeoffs made.
• Day By building long-term market-based
  relationships grounded in market-driven
  capabilities.

13
Integrating Porter with Miles Snow
Emphasis on new product-market growth
Heavy emphasis
No emphasis
Prospector
Analyzer
Defender
Reactor
Units with strong core bus. actively seeking to
expand into rel. prod-mkts with differentiated
offerings
Units primarily concerned with maintaining a
differentiated position in mature markets
Differentiation
Units primarily concerned with attaining growth
through aggressive pursuit of new product-market
opportunities
Units with no clearly defined product-market
development or competitive strategy
Units with strong core bus. actively seeking to
expand into rel. prod-mkts with low-cost
offerings
Units primarily concerned with maintaining a
low-cost position in mature markets
Cost leadership
14
SBU Strategy by Dimension

• Dimensions
• Scope
• Goals and obj. Adaptability (new product success)
  Effectiveness (inc. mrkt share)
  Efficiency (ROI)
• Resource deployment
• Synergy

Prospector Broad/dynamic domains tech. and cust.
segments not well-established Extensive Large L
ow Need cash for product dev. (?) Danger in
sharing operating fac. and programs - better to
share tech./mktg skills
Analyzer Mixture of defender and prospector
strategies Mix. of defender prospector
strats. Mix. of defender prospector
strats. Mix. of def. prosp. strats Need cash
for prod. dev. but in sharing operating fac. and programs - better
to share tech./mktg. skills
15
SBU Strategy by Dimension

• Dimensions
• Scope
• Goals and obj. Adaptability (new product success)
  Effectiveness (inc. mrkt share)
  Efficiency (ROI)
• Resource deployment
• Synergy

Low-cost defender Mature/stable/well-defined
domain mature tech.and cust. segments Very
little Little High Generate excess cash (cash
cows) Need to seek operating synergies to achieve
efficiencies
Differentiated defender Mature/stable/well-defined
domain mature tech.and cust.
segment Modest Little High Generate excess
cash (cash cows) Need to seek operating synergies
to achieve efficiencies
16
Growth Strategies (Ansoff)
17
Successful Market Entry Strategies

• Being a Successful Pioneer, Fast Follower, or
  Late Entrant involves doing at least one of the
  following well
• Large entry scale (Dominos Pizza)
• Broad product line (Apex A/V electronics)
• Focus on emerging/peripheral markets (Sony Viao
  computers)
• High product quality (Acura)
• Heavy promotional expenditures (Frontier)

18
Successful Market Entry Strategies(Continued)

• Leapfrogging earlier entrants with superior
• Quality Infiniti Vehicles
• Technology Samsung appliances
• Customer Service Lexus vehicles
• Channel Relationships Kodak digital cameras
• Positioning Verizon cell phone service).
• Morphing
• Paramorphicsame Products that appear diff.
  (e.g., Platform Strategy, Subaru WRX, Saab 9-2).
• Isomorphicdifferent Products that appear the
  same (e.g., Hyundai Santa Fe, MB ML350 50
  Rolex).