1. Company Analysis: Strategy

2. Collis & Montgomery n Resource Based View (RBV) of strategy n Resources: Physical (e.g., best faculty); Intangible (e.g., reputation in marketing) n A firm is a collection of resources (or capabilities) - some good and some bad(IBM) n Different firms have different sets of resources (IBM vs. Dell) n The firm with the “best” set most likely to be successful n RBV bridges the gap between External view (Porter) and Internal view (Prahalad)

3. Collis & Montgomery, cont. n Resources need to pass the market test of value: –Is resource hard to copy? –How quickly does resource depreciate? –Who captures the value that resource creates? –Can a unique resource be trumped by a different one? –Whose resource is really better? n Implications:Need to invest in resources; upgrade resources; to leverage resources n Managers over-estimate transferability of specific skills and assets n Managers over-estimate ability to compete in highly profitable industries n Managers assume competitive advantage in one industry transfers to others regardless of competitive dynamics

4. Porter’s POV n Defining and communicating the company’s unique positioning n Variety-based (Product line choice - e.g., narrow) - Marketing at Vanderbilt n Needs-based (Customer segment choice) - Store brands n Access-based (Specific to how customers are reached) - Amazon.com n Making tradeoffs n Performing activities consistent with chosen position n Not performing activities not consistent with chosen position n Continental vs. Continental Lite

5. Porter’s POV, cont. n Forging a fit among firm’s activities n Simple consistency between each activity & with strategy n Activities reinforce each other n Optimization of effort n Locks out imitators and provides competitive advantage n Create activity system maps n P&G and Value pricing; Republic Industries n Mercedes with full line strategy will make an interesting study

6. P&G Marketing Manufacturing R&D Global Ops. Organization Product PlacePrice Promotion Best Product MR CPR Value Pricing High Quality Low Cost No T.P. Low C.P. Advert- ising Brand Equity Low Cost Smooth Production Cycles Value Category Management Simplified Product Line Strategic Alliances Localized Product Globalization Market Access Efficiency CustomersCompetitors

7. Components of Strategy n Scope n Breadth of strategic domain: number and types of industries, product lines, market segments. Reflects company mission and strategic intent (vs. Strategic fit) n MCI... Core business (long distance), Contiguous business (fastest growing sector - communications related products: wireless paging, Internet, local service), Content (invested $2 billion in News Corp): Vision of Bert Roberts, Chairman n Goals and Objectives n Desired level of accomplishment on one or more performance dimensions and the growth vector n Resource deployments n Allocation of human, financial and other resources across businesses, markets, etc. n Identification of a sustainable competitive advantage n What are the distinctive competencies or strengths relative to competitors? n Synergy n Improving overall efficiency and effectiveness by exploiting synergies across businesses and product markets

8. Strategy Over Time: The PLC n Introduction n Growth n Shakeout n Maturity n Decline

9. Adopter Categorization for New Products n 2.5% Innovators n 13.5% Early Adopters n 34% Early Majority n 34% Late Majority n 16% Laggards

10. PLC: Implications Selected products/ Selected markets Problem solving emphasis Technical uncertainty Product / market expansion Competitive activity Customers better informed Product / market proliferation Market volatility Aggressive customers Market contraction Consolidation Regeneration Introduction Growth Maturity Decline

11. Characteristics of PLC Stages

12. Marketing Objectives by PLC Stage

13. Strategies for PLC Stages

14. Characteristics of PLC Stages n Sales level n Cost per customer n Profits n Nature of customers (early adopter, etc.) n Competitors

15. Market Life Cycle High Price Low Cost-to-serve High *Selected products / selected markets *Problem solving emphasis *Customer needs knowledge *Product/Market expansion *Competitive activity *Knowledgeable customers *Product/market proliferation *Market volatility *Aggressive customer

16. Implications High Price Low Cost-to-serve High C B D A Value axis Power axis

17. Strategies High Price Low Cost-to-serve High C B D A Value axis Power axis 1 2 4 3

18. Technology Adoption Life Cycle - Discontinuous Innovations n Innovators = Technology enthusiasts n Technology eventually helps improve lives; No money; Have influence; Gatekeepers to the life cycle; If they hate it implies trouble n Early adopters = Visionaries n Believe in competitive advantage via discontinuous innovation; Bring $$ to table & demand modifications; Techies explore-visionaries exploit n Early majority = Pragmatists n Do not love technology for its own sake; Believe in evolution not revolution; Want to improve organizational effectiveness; Difficult to convince them to shift paradigms; Prefer to buy from market leaders n Late majority = Conservatives n Technology skeptics; Price sensitive; Demanding consumers; Largely untapped opportunity for high tech n Laggards = Skeptics n Gadflies of high tech; Challenge the hype; Need to sell around them

19. Seed enthusiasts with new products Help them educate visionaries Seed enthusiasts with new products Help them educate visionaries Capture interest of visionaries Make them satisfied customers Serve as good references for pragmatists Capture interest of visionaries Make them satisfied customers Serve as good references for pragmatists Gain bulk of revenue by serving pragmatists ideally by becoming market leader and setting de facto standards Gain bulk of revenue by serving pragmatists ideally by becoming market leader and setting de facto standards Generate volumes and experience so products become reliable and cheap to meet demands of conservatives Generate volumes and experience so products become reliable and cheap to meet demands of conservatives Leave skeptics to their own devices The Adoption “Stairway”

20. Visionaries Technology Enthusiasts Pragmatists Conservatives Skeptics The Early Market The Early Market The Mainstream Market The Mainstream Market The Chasm The Chasm The Chasm

21. The Early Market The Early Market The Chasm The Chasm The Tornado Main Street The Bowling Alley The Bowling Alley End of Life End of Life Landscape of Technology Adoption Life Cycle

22. Early Market: Time of great excitement; techies and visionaries looking to get on board the new paradigm The Chasm: Time of great despair; early market interest wanes, but mainstream not comfortable with the product The Bowling Alley: Period of niche-based adoption in advance of the general marketplace; whole products for niche applications The Tornado: Period of mass market adoption; marketplace switches over to new paradigm Main Street: Period of aftermarket development; goal is now to reach and flesh out the market potential End of Life: Entry of new paradigms Landscape of Technology Adoption Life Cycle

23. Strategy Implications of TALC n Bowling alley argues for customer- centric niche strategies n Tornado forces push in opposite direction towards mass market n Main street forces push back towards customer-centric focus n Given the dramatic reversals in strategy, firm should be acutely aware of its life cycle stage n Moving fluidly from strategy to strategy is the ultimate challenge to organization; Demands extremely flexible responses from management team

24. Implications for Segmentation n In the early market, do not segment - go where visionaries lead you n To cross the chasm and negotiate the bowling alley, need to segment n Once inside the tornado, must not segment n On mains street, must segment - basis of +1 strategy Complications Firms carry different products; each could be at a different TALC stage (1-2-3, ccMail, Notes) Different segments in the same market can be at different stages (Internet is on main street for Unix technical community, in the tornado for college students, in bowling alley for marketing researchers, early market for commercial transactions…) Mini-tornadoes (segment-specific) can occur in the bowling alley Markets at different life cycle stages interact with one another (main street financial applications being ported to tornado client-server platforms using bowling alley development tools!)

25. Product Leadership Only Product Leadership Only Product Leadership + Operational Excellence Product Leadership + Operational Excellence + Customer Intimacy Operational Excellence + Customer Intimacy Product Leadership + Customer Intimacy Product Leadership + Customer Intimacy Value Disciplines & the Life Cycle