How Different Business Strategies Influence Marketing Decisions Marcellous Curtis
How Do Businesses Compete?
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Business strategies are primarily concerned with allocating resources across functional activities and product-markets to give the unit a sustainable advantage over its competitors. The unit’s core competencies and resources, together with the customer and competitive characteristics of its industry, determine the viability of any particular competitive strategy.
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How Do Businesses Compete? Generic business-level competitive strategies
Overall cost leadership Di erentiation Focus
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Strategies to gain and maintain competitive advantages (Michael Porter):
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How Do Businesses Compete?
Prospectors focus on growth through the development of new products and markets. Defenders concentrate on maintaining their positions in established product-markets while paying less attention to new product development. Analyzers try to maintain a strong position in core product-market(s) but seek expansion into new product-markets. Reactors have no clearly defined strategy.
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Strategies based on intended rate of product-market development (Robert Miles and Charles Snow):
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Combined Typology of Business-Level Competitive Strategies
How Do Businesses Compete?
The unit’s desired rate of product-market development (expansion). The unit’s intended method of competing in its established productmarkets.
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The combined typology describes six business strategies, and each of the strategic categories could be further subdivided. It classi es business strategies on two primary dimensions:
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How Do Businesses Compete? Do the same competitive strategies work for single-business rms and start-ups?
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The same set of generic strategies are just as appropriate for small rms as for business units within larger ones. In reality most entrepreneurial rms begin life as prospectors.
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How Do Businesses Compete? Do the same competitive strategies work for service businesses?
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Basically, services can be thought of as intangibles and goods as tangibles. The former can rarely be experienced in advance of the sale, while the latter can be. The framework used to classify business-level competitive strategies is equally valid for service businesses.
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How Do Businesses Compete? Do the same competitive strategies work for global competitors?
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Businesses that compete in multiple global markets almost always pursue one of the two types of analyzer strategy. A single SBU may need to engage in di erent functional activities across the various countries in which it competes.
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How Do Businesses Compete? Will the Internet change everything?
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It will be harder for rms to di erentiate themselves on any basis other than low price. Strategies focused on di erentiation will become less viable, while rms pursuing low-cost strategies will be more successful.
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How Do Businesses Compete?
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While it facilitates the dissemination of information, the goods and services themselves will continue to o er di erent features and bene ts.
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The Internet will make it easier for rms to customize their o erings and personalize their relationships with their customers.
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The Internet is primarily a communications channel.
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How Do Competitive Strategies Differ from One Another? Di erences in scope
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The breadth and stability of a business’s domain are likely to vary with strategies. This can a ect the variables the corporation uses to de ne its various businesses. Defender businesses tend to operate in relatively well-de ned, narrow, and stable domains where both the product technology and the customer segments are mature.
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How Do Competitive Strategies Differ from One Another?
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Prospector businesses usually operate in broad and rapidly changing domains where neither the technology nor customer segments are well established. Analyzer businesses usually have a well-established core business to defend, and often their domain is primarily focused on that business.
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How Do Competitive Strategies Differ from One Another? Di erences in goals and objectives – Important performance dimensions:
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E ectiveness—the success of a business’s products and programs relative to those of its competitors in the market. E ciency—the outcomes of a business’s programs relative to the resources used in implementing them. Adaptability—the business’s success in responding over time to changing conditions and opportunities in the environment.
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How Do Competitive Strategies Differ from One Another? It is very di cult for any SBU, regardless of its competitive strategy, to simultaneously achieve outstanding performance on even this limited number of dimensions.
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How Do Competitive Strategies Differ from One Another? Di erences in resource deployments
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Prospector—and to a lesser degree, analyzer—businesses devote a relatively large proportion of resources to the development of new product-markets. Defenders focus the bulk of their resources on preserving existing positions in established product-markets. Resource allocations among functional departments and activities within the SBU also vary across businesses pursuing di erent strategies.
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How Do Competitive Strategies Differ from One Another? Di erences in sources of synergy
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The sharing of operating facilities and programs may be an inappropriate approach to gaining synergy for businesses following a prospector strategy. Low-cost defenders should seek operating synergies that will make them more e cient.
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Deciding When A Strategy is Appropriate Prospector strategy
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R&D, product engineering, design, and other functional areas that identify new technology and convert it into innovative products Marketing research, marketing and sales.
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Suited to unstable, rapidly changing environments resulting from new technology, shifting customer needs, or both. Most successful prospectors are usually strong in two broad areas of competence:
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Deciding When A Strategy is Appropriate Analyzer strategy
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Appropriate for well-developed industries that are still experiencing some growth and change. Analyzers are often not as innovative in new product development as prospectors.
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Deciding When A Strategy is Appropriate Defender strategy
The basic technology is not very complex. It is well developed and unlikely to change dramatically over the short term.
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Appropriate for units with a pro table share of one or more major segments in a relatively mature, stable industry. It works best in industries where:
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Deciding When A Strategy is Appropriate
Requires the business to be more e cient than its competitors. E ciency and low price are the primary focus.
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Low-cost defenders
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A business must be strong in those functional areas critical for maintaining its particular competitive advantages over time. Marketing is also important
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Di erentiated defenders
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How Different Business Strategies In luence Marketing Decisions
Product policies
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These concern the breadth or diversity of product lines, their level of technical sophistication, and the target level of product quality relative to competitors. For prospector businesses, policies encouraging broader and more technically advanced product lines than those of competitors should be positively related to performance.
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How Different Business Strategies In luence Marketing Decisions
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Product policies (cont.)
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Di erentiated defenders compete by o ering more or better choices to customers than do their competitors. Broad and sophisticated product lines are less consistent with the e ciency requirements of the low-cost defender strategy. Businesses can distinguish themselves on the quality of service they o er.
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How Different Business Strategies In luence Marketing Decisions
Pricing policies
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Success in o ering low prices relative to those of competitors should be positively related to the performance of low-cost defender businesses. Di erentiated defenders and prospectors seldom adhere to a policy of low competitive prices.
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How Different Business Strategies In luence Marketing Decisions
Distribution policies
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A relatively high degree of forward vertical integration is found among defender businesses, particularly di erentiated defenders. Prospectors rely more heavily on independent channel members to distribute their products.
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