MAPPING

PERSPECTIVE

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EFFICIENCY
COST PROCESS LEARNING DESIGN

INOVATION
VALUE QUALITY BRAND RANGE
COMPANY E SELF COMPETITOR - I COMPETITOR - II

SERVICE
SCORE S I

DELIVERY DISTRIBUTION RELATIONSHIP CORE PERFORMANCE

SYNDICATE WORK : PROFILE YOUR COMPANY AND TWO KEY COMPETITORS ON FIVE POINTS SCALE AS OF NOW . FOLLOW PERCENTILE CONCEPT

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SEGMENTATION BASES FOR BUSINESS MARKETS

Segmentation Basis 1. Customer Location Possible Market Segments

Region
Locations 2. Customer Type Industry

Southeast Asia, Central America, Upper Midwest, Atlantic Seaboard ingle buying site, multiple buying sites Selected industry codes Sales volume, number of employees Centralized or decision decentralized, group or individual

Size
Organization structure Purchase criteria 3. Transaction Conditions

Quality, price, durability, lead time

Buying situation
Usage rate Purchasing procedure Order size

Straight rebuy, modified rebuy, new buy

Nonuser, light user, heavy user

Competitive bidding, lease, service contracts Small, medium, large Light, moderate, heavy

Service requirements

Contd

SEGMENTATION BASES FOR BUSINESS MARKETS

Segmentation Basis 1. Customer Location Possible Market Segments

Region
Locations 2. Customer Type Industry

Southeast Asia, Central America, Upper Midwest, Atlantic Seaboard ingle buying site, multiple buying sites Selected industry codes Sales volume, number of employees Centralized or decision decentralized, group or individual

Size
Organization structure Purchase criteria 3. Transaction Conditions

Quality, price, durability, lead time

Buying situation
Usage rate Purchasing procedure Order size

Straight rebuy, modified rebuy, new buy

Nonuser, light user, heavy user

Competitive bidding, lease, service contracts Small, medium, large Light, moderate, heavy

Service requirements

Contd

FINDING THE RELEVANT SEGMENTING DIMENSION

Segmenting dimensions become more specific to reasons why the target segment chooses to buy a particular brand of the product

All potential dimensions

Qualifying dimensions

Determining dimensions (Product type)

Determining dimensions (Brand Specific)

Dimensions generally relevant to purchasing behaviour

Dimensions relevant to including a customer type in the productmarket

Dimensions that affect the customers purchase of a specific type of product

Dimensions that affect the customers choice of a specific brand

IDENTIFYING DETERMINANT ATTRIBUTES

Endorsements

Features

Benefits

Comparison

Pro-environment

Usage
Product class

Parentage
Price / Quality

Manufacturing process
Country or Geographic area

Ingredients

DEFINING MARKET SEGMENTS CUSTOMER CHARACTERISTICS

Geographic Demographic
Age Gender Income Occupation Religion / Race Industry Company size Location

PRODUCT - RELATED APPROACHES User

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Status / Readiness Type Usage Application Attitude

Contd.. Next page

DEFINING MARKET SEGMENTS Contd.. Previous page PRODUCT - RELATED APPROACHES Benefits Needed Price sensitivity Buying process Criteria Relationship Policies organisation Brand Loyalty

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STEPS IN THE POSITIONING PROCESS 1. Identity relevant set of competitive products serving a target market 2.Identity the set of determinant attributes that define the product space in which positions of current offerings are located 3. Collect information from a sample of customers and potential customers about perceptions of each product on the determinant attributes

4. Determine products current location (positioning) in the product Space and intensity thereof
5. Determine customers most preferred combination of determinant attributes 6. Examine the fit between preferences of market segments and current position of product (market positioning) 7. Write positioning statement or value proposition to guide Development and implementation of marketing strategy
Identity position Where additional new products might be placed

COMPARISON OF FHYSICAL AND PERECEPTUAL POSITIONING ANALYSIS

Physical Positioning Technical Orientation

Perceptual Positioning Consumer orientation Perceptual attributes Perceptual measures Need for marketing research Perceptual brand positions and positioning intensities Limited number of dimensions Represents impact of product specs and communication R & D implications need to be interpreted

Physical Characteristics
Objective measures Data readily available

Physical brand properties

Large number of dimensions Represents impact of product specs and price Direct R & D implications

FACTORS UNDERLYING MARKET ATTRACTIVENESS AND COMPETITIVE POSITION Market attractiveness factors Customer needs and behavior As there unmet or underserved needs we can satisfy ? Competitive position factors Opportunity for competitive advantage Can we differentiate Can we perform against critical success factors?

Market or market segment size and growth rate

Stage of competing products in product life cycle : is the timing right Firm and competitor capabilities and resources Management strength and depth Financial and functional resources : marketing, distribution, manufacturing, R & D , etc. Brand image Relative market share

Market potential in units, dollars, number of prospective customers Growth rate in units, dollars, number of prospective customer Might the target segment constitute a platform for later expansion into related segments in the market as a whole

FACTORS UNDERLYING MARKET ATTRACTIVENESS AND COMPETITIVE POSITION ..(Contd) Macro trends : Are they favourable, on balance Demographic Sociocultural Attractiveness of industry in which we would compete Threat of new entrants

Threat of substitutes
Buyer power Supplier Power Competitive rivalry Industry capacity Driving forces : are favourable, on balance ? they

Economic
Political / legal Technological Physical

STEPS IN CONSTRUCTING A MARKET ATTRACTIVENESS / COMPETITIVE POSITION MATRIX FOR EVALUATING POTENTIAL TARGET MARKETS
1. Choose criteria to measure market attractiveness and competitive position

2. Weigh market attractiveness and competitive

position factors to reflect their relative importance

3. Assess the current position of each potential target market on each factor

4. Project the future position of each market based one

environmental, customer, and competitive trends

5. Evaluate the implications of possible future changes for business strategies and resources requirements

IMPLICATIONS OF ALTERNATIVE POSITIONS WITHIN THE MARKET ATTRACTIVENESS / COMPETITIVE POSITION MATRIX FOR TARGET MARKET SELECTION, STRATEGIC OBJECTIVES, AND RESOURCE ALLOCATION

Competitive Position Weak

Build selectively Specialize around limited strengths Seek ways to overcome weakness Withdraw if indications of sustainable growth are lacking

Medium
DESIRABLE POTENTIAL TARGET Invest to build Challenge for leadership Build selectively on strength Reinforce vulnerable areas Protect existing strengths Invest to improve position only in areas where risk is low

Strong
DESIRABLE POTENTIAL TARGET Protect Position : Invest to grow at maximum digestible rate Concentrate on maintaining strength DESIRABLE POTENTIAL TARGET Build selectively Emphasize profitability by increasing productivity Build up ability to counter competition Protect and refocus : Defend strengths Seek ways to increase current earnings without speeding markets decline

High
Market Attractiveness

M
e d i u m

Limited expansion or harvest Manage for earnings

Looking for ways to expand without high risk; otherwise, minimize investment and focus operations
Divest Sell when possible to maximize cash value

Manage for earnings : Protect position Minimize investment

Low

Meantime, cut fixed costs and avoid further investment

THE COMPETITIVE ADVANTAGE OF FIRMS IN GLOBAL INDUSTRIES

FIRM INFRASTRUCTURE (e.g., Finance, Planning)

Support Activities

HUMAN RESOURCE MANAGEMENT TECHNOLOGY DEVELOPMENT PROCUREMENT

M A
AFTER SALE SERVICE

R G I N

INBOUND LOGISTICS

OPERATIONS (Manufacturing)

OUTBOUND LOGISTICS

MARKETING AND SALES

PRIMARY ACTIVITIES

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STRATEGY AN OPERATION DIMENSIONS

What Ineffective Effective
May have worked in past in short run, Doubtful to work in Future, with Increasing competition

Have failed in past, will fail in future also Contributed to Success in past with less competition unlikely to succeed In future

Legend : Formulating clear strategies, followed by proper Deployment usually leads to effective operations all around. AL 2004/2C 0 COPY

Operating Decisions

Always

contributes
to success be It Past or Future

Clear

Unclear

Strategic Decisions

STRATEGIC VISION VS. OPPERATUNISM

STRATEGIC
APPROACH FUTURE SRATEGIC VISION RISK SRATEGIC STUBBORNNESS

STRATEGIC VISION 1. A clear Future strategy Core Idea, defined competition, functional strategies & competitive advantages. 2. Deployment with buy-in across the organisation 3. Assets, competencies & Resources to implement 4. Patience STRATEGIC OPPORTUNISM 1. Very Dynamic & uncertain environment makes focus on future infeasible 2. Better taping ability for emerging businesses 3. Strategic flexibility of quick response

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FOCUS ON

PRESENT

SRATEGIC OPPORTUNISEM

SRATEGIC DRIFT

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STRATEGIC VISION VS. OPPERATUNISM

STRATEGIC
APPROACH FUTURE SRATEGIC VISION RISK SRATEGIC STUBBORNNESS

STRATEGIC VISION 1. A clear Future strategy Core Idea, defined competition, functional strategies & competitive advantages. 2. Deployment with buy-in across the organisation 3. Assets, competencies & Resources to implement 4. Patience STRATEGIC OPPORTUNISM 1. Very Dynamic & uncertain environment makes focus on future infeasible 2. Better taping ability for emerging businesses 3. Strategic flexibility of quick response

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PRESENT

SRATEGIC OPPORTUNISEM

SRATEGIC DRIFT

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DEFINATIONS OF MILES AND SNOWS FOUR BUSINESS STRATEGIES Prospector Operates within a broad product market periodic redefination, domain that undergoes

Values being a first mover in new product and market areas, even if not all of these efforts prove to be highly profitable. Responds rapidly to early signals concerning areas of opportunity, and these responses often lean to new rounds of competitive actions. Competes primarily by stimulating and meeting new market opportunities, but may not maintain strength over time in all markets it enters. Attempts to locate and maintain a secure position in relatively stable product or service areas. Offers relatively limited range of products or services compared with competitors.

Defender

Tries to protect its domain by offering lower prices, higher quality, or better service than competitors .
Usually not at the forefront of technological /new product development in its industry; tends to ignore industry changes not directly related to its area of operation. Contd..

DEFINATIONS OF MILES AND SNOWS FOUR BUSINESS STRATEGIES Prospector Operates within a broad product market periodic redefination, domain that undergoes

Values being a first mover in new product and market areas, even if not all of these efforts prove to be highly profitable. Responds rapidly to early signals concerning areas of opportunity, and these responses often lean to new rounds of competitive actions. Competes primarily by stimulating and meeting new market opportunities, but may not maintain strength over time in all markets it enters. Attempts to locate and maintain a secure position in relatively stable product or service areas. Offers relatively limited range of products or services compared with competitors.

Defender

Tries to protect its domain by offering lower prices, higher quality, or better service than competitors .
Usually not at the forefront of technological /new product development in its industry; tends to ignore industry changes not directly related to its area of operation. Contd..

COMBINED TYPOLOGY OF BUSINESS LEVEL COMPETITIVE STRATEGIES

Emphasis on new product-market growth

Heavy emphasis No emphasis

Prospector
Differentiation

Analyzer
Units with strong core business actively seeking to expand into related product markets with
differentiated

Defender Units primarily concerned with maintaining

differentiated

Reactor

Competitive strategy

Cost leadership

Units primarily Concerned with attaining growth through aggressive pursuit of new product market opportunities

offerings Units with strong core business actively seeking to expand into related product markets with low cost offerings

position in mature markets

Units primarily concerned with maintaining a low cost position in mature markets

Units with no clearly defined product market development or competitive strategy

IMPLICATIONS OF ALTERNATIVE POSITIONS WITHIN THE MARKET ATTRACTIVENESS / COMPETITIVE POSITION MATRIX FOR TARGET MARKET SELECTION, STRATEGIC OBJECTIVES, AND RESOURCE ALLOCATION

Competitive Position Weak

Build selectively Specialize around limited strengths Seek ways to overcome weakness Withdraw if indications of sustainable growth are lacking

Medium
DESIRABLE POTENTIAL TARGET Invest to build Challenge for leadership Build selectively on strength Reinforce vulnerable areas Protect existing strengths Invest to improve position only in areas where risk is low

Strong
DESIRABLE POTENTIAL TARGET Protect Position : Invest to grow at maximum digestible rate Concentrate on maintaining strength DESIRABLE POTENTIAL TARGET Build selectively Emphasize profitability by increasing productivity Build up ability to counter competition Protect and refocus : Defend strengths Seek ways to increase current earnings without speeding markets decline

High
Market Attractiveness

M
e d i u m

Limited expansion or harvest Manage for earnings

Looking for ways to expand without high risk; otherwise, minimize investment and focus operations
Divest Sell when possible to maximize cash value

Manage for earnings : Protect position Minimize investment

Low

Meantime, cut fixed costs and avoid further investment

GROWTH STRATEGIES
PRESENT PRODUCTS
I GROWTH IN EXISTING PRODUCT MARKETS INCREASE MARKET SHARE INCREASE PRODUCT USAGE INCREASE THE FREQUENCY USED INCREASE THE QUANTITY USED FIND NEW APPLICATION FOR CURRENT USERS

NEW PRODUCTS
II PRODUCT DEVELOPMENT ADD PRODUCT FEATURES, PRODUCT REFINEMENT DEVELOP A NEW GENERATION PRODUCT DEVELOP NEW PRODUCTS FOR THE SAME MARKET IV DIVERSIFICATION I NVOLVING NEW PRODUCTS AND NEW MARKETS RELATED UNRELATED

PRESENT MARKETS

III

NEW MARKETS

MARKET DEVELOPMENT EXPAND GEOGRAPHICALLY TARGET NEW SEGMENTS CURRENT USERS IV

VERTICAL INTEGRATION

VERTICAL INTEGRATION STRATEGIES FORWARD INTEGRATION BACKWARD INTEGRATION

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THE SUSTAINABLE COMPETITIVE ADVANTAGE

STRUCTURING STRATEGIC DECISIONS
THE WAY YOU COMPETE PRODUCT STRATEGY POSITIONING STRATEGY MANUFACTURING STRATEGY DISTRIBUTION STRATEGY, ETC

BASIS OF COMPETITION
ASSETS AND COMPETENCIES WHOM YOU COMPETE AGAINST

WHERE YOU COMPETE

PRODUCT-MARKET SELECTION

COMPETITOR SELECTION

SCA
LEVERAGED SUSTAINABLE

SUBSTANTIAL

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Differentiation Ingredient or component Superior product offering Added service Broad product line Quality Brand name

Low Cost No frills product Product Design Production / operations Scale economies Experience curve

STRATEGIC TRUST
Focus Product focus segment focus Geographic focus
The Preemptive move Product Production system Gain customer loyalty / commitment Distribution / Service Synergy Enhance customer value Reduce operation cost Reduce required investment

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MULTIPLE MARKET SEGMENTS TARGET SEGMENTS

COST

PRODUCT / SERVICE DIFFERENTIATION

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UNDERSTANDING COMPETITORS
STRUCTURING COMPETITOR ANALYSIS WHO ARE THE COMPETITORS?
AGAINST WHOM DO WE USUALLY COMPETE?
WHO ARE OUR MOST INTENSE COMPETITORS? LESS INTENSE BUT STILL SERIOUS COMPETITORS? MAKERS OF SUBSTITUTE PRODUCTS? CAN THESE COMPETITORS BE GROUPED INTO STRATEGIC GROUPS ON THE BASIS OF THEIR ASSETS, COMPETENCIES AND / OR STRATEGIES?

WHO ARE POTENTIAL COMPETITIVE ENTRANTS?

WHAT ARE THEIR BARRIERS TO ENTRY? IS THERE ANYTHING THAT CAN BE DONE TO DISCOURAGE THEM? AL 2003
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UNDERSTANDING COMPETITORS
STRUCTURING COMPETITOR ANALYSIS
EVALUATING THE COMPETITORS WHAT ARE THEIR OBJECTIVES AND STRATEGIES? THEIR LEVEL OF COMMITMENT? THEIR EXIT BARRIERS? WHAT IS THEIR COST STRUCTURE? DO THEY HAVE A COST ADVANTAGE OR DISADVANTAGE? WHAT IS THEIR IMAGE AND POSITIONING STRATEGY? WHICH ARE THE MOST SUCCESSFUL/ UNSUCCESSFUL COMPETITORS OVER TIME? WHY ? WHAT ARE THE STRENGTHS AND WEAKNESSES OF EACH COMPETITOR OR STRATEGIC GROUP ? WHAT LEVERAGE POINTS (OUR STRATEGIC WEAKNESSES OR CUSTOMER PROBLEMS OR UNMET NEEDS.) COULD COMPETITORS EXPLOIT TO ENTER THE MARKET OR BECOME MORE SERIOUS COMPETITORS? EVALUATE THE COMPETITORS WITH RESPECT TO THEIR ASSETS AND COMPETENCIES. GENERATE A COMPETITOR STRENGTH GRID.

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UNDERSTANDING COMPETITORS IDENTIFYING RELEVANT ASSETS AND COMPETENCIES

1. What Businesses have been successful overtime? What assets or competencies have contributed to their success? And vice Versa? 2. 3. What are the key customer motivations? What is really important to the customer? What are the large value added parts of the product or service? What are the large cost components? 4. 5. What are the Industry Mobility barriers? Which components of the value chain can create competitive advantage?
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UNDERSTANDING COMPETITORS

SIZE, GROWTH AND PROFITABILITY STRENGTHS AND WEAKNESS

IMAGE & POSITION

OBJECTIVE AND COMMITMENT CURRENT AND PAST STRATEGIES ORGANIZATION AND CULTURE

COMPETITOR ACTION

EXIT BARRIERS

COST STRUCTURE

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