1. Chapter 3 Business Strategies and Their Marketing Implications

2. Strategic Business Units (SBUs)
Components of a firm engaged in multiple industries or businesses
Independently decide objectives, markets, and
competitive strategies to be pursued
Should be consistent with the firm’s:
Mission
Objectives
The allocation of resources

3. Characteristics of SBUs
Homogeneous set of markets with limited number of related technologies
Unique set of product-markets
Control over factors necessary for successful
performance
Responsibility for their own profitability

4. Dimensions That Define Individual SBUs
Technical compatibility
Similarity in the customer needs
Similarity in the personal characteristics of customers in the target markets

5. Business-Unit Objectives
Derived from the corporate objective and
vary according to:
Attractiveness of the industries
Strength of the competitive positions within those industries
Resource allocation decisions by corporate management

6. Allocating Resources within the Business Unit
Firms use:
Similar economic value
Value-based planning
Portfolio analysis tools

7. Generic Business-Level Competitive Strategies
Michael Porter distinguishes three strategies
Overall cost leadership
Differentiation
Focus
Robert Miles and Charles Snow classify business
units into four strategic types
Prospectors
Defenders
Analyzers
Reactors
3-7

8. Exhibit 3.1 - Definitions of Miles and Snow’s Four
Business Strategies

9. Exhibit 3.1 - Definitions of Miles and Snow’s Four
Business Strategies

10. Exhibit 3.2 - Combined Typology of Business-Unit
Competitive Strategies

11. Single-Business Firms and Start-ups
Distinction between business-level competitive strategy
and marketing strategy tends to blur
Two strategies blend into one
Entrepreneurial start-ups
Do not have an established market position to defend

12. Service: Any activity or benefit that is essentially intangible
Service Businesses
Service: Any activity or benefit that is essentially intangible
and that does not result in the ownership of anything
Its production may or may not be tied to a physical product
Almost all businesses are engaged in service to some extent

13. The Impact of the Internet
Changed the way firms compete
Is primarily a communications channel
Makes it easier for firms to:
Customize their offerings and personalize their relationships with their customers

14. Exhibit 3.4 - How Business Strategies Differ in Scope, Objectives, Resource Deployments, and Synergy

15. Exhibit 3.4 - How Business Strategies Differ in Scope, Objectives, Resource Deployments, and Synergy

16. Exhibit 3.5 - Environmental Factors Favorable to Different Business Strategies
External Factors
Industry and Market
Prospector
Industry in early growth stage
Potential customer segments unidentified
Analyzer
Industry in late growth
Some potential segments may be undeveloped
Differentiated
Defender
Industry in decline stage
Sales primarily due to repeat purchases
Low-Cost Defender
Sales primary due to repeat purchase

17. Exhibit 3.5 - Environmental Factors Favorable to Different Business Strategies
External Factors
Technology
Prospector
Newly emerging technology
Applications undeveloped
Analyzer
Basic technology well developed but still evolving
Product modifications and improvements
Differentiated
Defender
Basic technology fully developed and stable
Major modifications
Low-Cost Defender

18. Exhibit 3.5 - Environmental Factors Favorable to Different Business Strategies
External Factors
Competition
Prospector
Few established competitors
Industry structure still emerging
Single competitor
holds commanding
share
Analyzer
Large number of competitors
Industry structure still evolving
One or more competitors hold large
shares in major
segments
Differentiated
Defender
Small to moderate number of well-established competitors
Industry structure
stable
Maturity of markets
Low-Cost Defender
Industry structure stable

19. Exhibit 3.5 - Environmental Factors Favorable to Different Business Strategies
External Factors
Business’s relative
strengths
Prospector
SBU has strong R&D, product engineering and marketing research and marketing capabilities
Analyzer
SBU has good R&D,
product engineering, and marketing research capabilities
Low-cost position or strong sales, marketing, distribution
Differentiated
Defender
SBU has no outstanding strengths in R&D or product engineering
Costs are higher
SBU’s outstanding strengths are in process engineering and quality control
Low-Cost Defender
SBU has superior sources of supply and/or process engineering and production capabilities

20. Exhibit Differences in Marketing Policies and Program Components across Businesses Pursuing Different Strategies

21. Exhibit Differences in Marketing Policies and Program Components across Businesses Pursuing Different Strategies

22. Changing Business Strategies for a Changing Market
Effective implementation of different business
strategies requires different:
Functional competencies and resources
Organizational structures
Decision-making and coordination processes
Reward systems Personnel