Positioning

1. Positioning SIX

2. Porter proposes firms can use knowledge to support alternative positions of: • Cost leadership • Focused cost leadership • Differentiation • Focused differentiation • Cost orientation is low scale advantage because can be easily pre-empted by another low cost supplier • Differentiation is high scale because on accumulated knowledge to product superior offering SIX

3. Basic model ignores actual ability to be low cost producer of superior products • Small firms use specialist knowledge to occupy niche and thereby avoid large firm competition • Early entrants into e-commerce were mainly flexible, fast responding small firms • Large firms now exploiting customers’ prior knowledge of brand name to dominate cyberspace trading SIX

4. Smaller firms need to upgrade provision of in-depth specialist knowledge via their web sites • Similar situation of earlier terrestrial battle between large and small stores • Small terrestrial stores used upmarket using superior knowledge provision to retain customers • However, large firms through segmentation and move towards 1:1 marketing are blurring the divide between large and small firms SIX

5. Large firm moves into customisation made possible to access to real time data (e.g. loyalty cards; web site visitors) • Jeff Bezos claims Amazon.com now able to behave like small-town specialist book store • Market winners will be firms who base positioning on exploiting real time knowledge • Firms stimulated to acquire knowledge by adopting customer relationship management (CRM) tools SIX

6. Glazer feels winning firms exhibit the attribute of “being smart” • Achieved by exploiting every new advance in IT • Firms like Dell using CRM to acquire knowledge and then offer customised products or services • Firms now need to carefully assess their knowledge management practices SIX

7. Winning firms regularly audit management of: • Customer knowledge • Process knowledge • Technology knowledge • Knowledge systems • Market relationships • Customer relationships • Strategic knowledge SIX

8. Networks • Miles and Snow proposed firms would integrate their operations to access additional knowledge • Johnson & Johnson proposed a similar idea in their concept of “value added partnerships” • Studies of industrial districts in Italy showed small firms formed networks to share knowledge and improve market performance SIX

9. Danish technology institute promoted idea of assisting firms form business networks • Sharing knowledge can increase sales, attract new customers and permit entry into new markets • Sharing knowledge also permits improved or new product offerings • Combining two variables generates a knowledge collaboration matrix SIX

10. Market Existing Market(s) New Market(s) Product Existing Customers New Customers New Customers 1 Sharing of market management knowledge and resources to increase existing customer sales 2 Sharing knowledge and resources to achieve scale effect to gain access to new customers 3 Sharing market management knowledge and resources to execute new market entry strategy Existing Product 4 Increased sales to existing customers by sharing knowledge to offer an enhanced product proposition 5 Access to new customers through sharing knowledge to offer an enhanced product proposition 6 Gaining access to new markets through sharing knowledge to offer an enhanced product proposition Merged Product Line to Enhance Product Position 7 New sales to existing customers through sharing knowledge to develop a new product 8 Gaining access to new customers by sharing knowledge to develop a new product 9 Gaining access to new markets through sharing knowledge to develop a new product New Product FIGURE 6:2 ALTERNATIVE STRATEGIES FOR KNOWLEDGE-BASED BUSINESS NETWORKING SIX