Tailoring Strategies to Fit Specific Industry and Company Situations Chapter 8 Tailoring Strategies to Fit Specific Industry and Company Situations

Life Cycle Unit Sales Profits

Life Cycle Emerging Embryonic Introduction Growth Mature Decline

Industry Life Cycle

Challenges of Emerging Industries Uncertain market conditions and characteristics Competing/unknown proprietary technologies and varied marketing/service/distribution tactics Lack of complementary products Limited/poor quality and high costs, which deter acceptance Low entry barriers Education of users Innovators vs. Initial adopters vs. Mass-market.

Alternatives in Emerging Industry Move fast/early with superior product or technology Track the Dominant Design Build alliances/merge with key suppliers or those that provide complementary products to out position rivals Seek new customer groups, new applications for your product Make it cheap/easy for early adopters to try/buy your product.

High Technology Industries Rapidly changing scientific knowledge underlying attribute for competition R&D/Sales Battle over technical standard, format, and dominant design Set by decree, cooperation, public domain, but mostly through consumer choices

Benefits for Standards Compatibility Reduce consumer uncertainty Reduce production costs Increase in complementary products – Network effects – which greatly enhances sustainability Lock outs and switching costs

Winning Format Wars Ensure complementary products Killer applications Razor and blade strategy Cell phones, printers, satellite TV/radio, video games Cooperative competition Licensing

Challenges of Growth Environments Rapid technological changes Short product life-cycles Many new entrants and strategies Changing customer demands/preferences.

Alternatives in Growth Environments Drive down costs through scale Invest heavily in product R&D to differentiate, staying on the technological frontier Expand distribution and geographic coverage Expand product line to appeal to new customers

Challenges of Mature Industries Slow growth fight for market share Sophisticated buyers Costs, prices and service critical Excess capacity and oversupply Innovation and new uses more difficult International competition Falling profitability Consolidation Segmentation.

Alternatives in Mature Industries Prune product line Process innovation & cost reductions in value chain Sell more to current buyers Purchase rivals at low prices Go international.

Fragmented Industries Low entry barriers Lack of economies of scale High segmentation Local Advantages Diverse preferences

Alternatives in Fragmented Industries Formula facilities - Low cost operations - Become the specialized vendor of choice - Focus on a customer type - Focus on a geographic segment -

Problems for Runner-ups Lower economies of scale Lack of recognition Limited exposure in mass media Capital limitations.

Alternatives for Runner-ups in Scale Sensitive Industries Use lower price points Merge/acquire rivals to increase market share Invest in cost-saving techniques Pursue radical innovation to change the rules of the game.

Other Runner-up Strategies Vacant Niche Strategy - Specialists Strategy - Superior Products Strategy - Distinctive Image Strategy - Content Follower –