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How to fail without trying Fred Wiersema and Mike Treacy

How to fail without trying Fred Wiersema and Mike Treacy. Why does Casio sell a calculator cheaper than a box of cornflakes ? Why does it take a few minutes to rent a car at Hertz but twice the time to get a room at the Hilton?

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How to fail without trying Fred Wiersema and Mike Treacy

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  1. How to fail without tryingFred Wiersema andMike Treacy • Why does Casio sell a calculator cheaper than a box of cornflakes ? • Why does it take a few minutes to rent a car at Hertz but twice the time to get a room at the Hilton? • Why does Land’s End remember your last order and family member’s sizes, while America Express urges you to join after you have been a member for ten years?

  2. BUSINESS STRATEGY Steps in Setting Strategy • What is a company’s mission? • Set goals and objectives - quantify, set time • Design the business portfolio • Operational details - 4P’s

  3. Strategy - basics • Mission • Business Objectives • Marketing Objectives • Marketing Strategy

  4. Mission • Who is the customer? • What is the value to the customer ? • What will our business be? • What should our business be?

  5. Factors that affect mission • History • Current preferences of owners and management • Market environment • Resources • Distinctive competencies - Core competencies - Hamel and Prahalad

  6. Mission • Should define • Industry scope • Products and services • Competencies • Segments • Vertical scope • Geographical scope

  7. Portfolio Models • Boston Consulting Group Matrix • (BCG Matrix) • General Electric Grid • GE Grid

  8. Portfolio Analysis Boston Consulting Group - BCG Matrix Market ? Growth 10% Star Question Mark Rate Cash Cow Dog 1.0 Relative Market Share

  9. General Electric Grid Business Strengths Relative Market Share Product Quality Sales/Promotion Effectiveness Geography Market Attractiveness Market Size Growth Rate Profits Competition Intensity

  10. Business Strengths Market Strong Avg. Weak Attractiveness High A A C Med A C B Low C B B A-Build B-No Growth-Divest/Harvest C-Wait & See

  11. Ansoff’s Product Market Grid Products Markets Current New Current Market Product Penetration Development New Market Diversification Development

  12. Marketing Myopia Ted Levitt Focus on needs not products Revlon Xerox Standard oil Columbia Pictures Encyclopedia Brittanica Railroads

  13. Strategic Choices Competitive Advantage The Discipline of Market Leaders Michael Porter Treacy and Wiersema • Overall Cost Leadership Operational Excellence • Differentiation Product Leadership • Focus Customer Intimacy

  14. Strategy and tactics The science or art of military command as applied to the overall planning and conduct of large-scale combat operations Tactics are a plan of action resulting from the practice of this science

  15. Art of War - Sun Tsu 350 B.C. Sun Pin - strategist of Tien Chi Horse Races

  16. Laws of Physics Stronger force will overcome the lesser, all else being equal Boxing and weight classes

  17. Lessons • Strategy is about getting a competitive advantage • Know the laws that govern the competition • Know the competition and the terrain • Creating strategies can be learned

  18. Marketing Warfare Al Ries and Jack Trout 4 types of players Kotler • Leaders Leaders • Followers Challengers • Flankers Followers • Guerillas Nichers

  19. Principles • Principle of force • Superiority of defense • Mind is the battleground

  20. Defensive warfare • Only the market leader should play defense • The best defensive strategy is the courage to attack yourself • Strong competitive moves should be blocked

  21. Gillette • Blue Blade • Super Blue Blade • Trac II - double blade • Atra - Adjustable • Good News - Disposable • Pivot - Adjustable disposable • Sensor

  22. Offensive warfare • Consider the strength of the leader’s position • Find a weakness in the leader’s strength and attack at that point (Achilles heel) • Launch the attack on as narrow a front as possible

  23. Flanking warfare • Move into an uncontested area • Tactical surprise is very important • The pursuit is as critical as the attack itself Don’t move resources to other targets.

  24. Flanking • With low price - tell the loophole • With high price - popcorn, perfume • With distribution - Timex, L’eggs • With size - VW Beetle • With product form - Close-Up gel

  25. Guerilla warfare • Find a niche small enough to defend • No matter how successful, never act as the leader • Be prepared to bug out at a moment’s notice Rolls Royce, Roos, United Jersey Bank, People’s Express, Jeep

  26. Segmentation • Identify segmentation variables • Segment the market • Develop profiles of segments

  27. Bases for segmentation • Geographic • Region • Metro • Climate • Density

  28. Segmentation • Demographic • Age • Gender • Income • Education • Race • Family Size

  29. Segmentation • Psychographic • Social Class • Lifestyles • Activities, Interests, Opinion • Personality

  30. Behavioral • Occasions • Benefits • User Status • Usage rate • Loyalty • Attitude towards product

  31. Industrial segmentation • Demographic • Industry • Size • Location • Operations • Technology • User/ nonuser

  32. Industry Segmentation • Purchasing Approach • Centralized or decentralized • Engineering dominated or financial dominated • Existing Relationships • Purchase policies - leasing, service etc. • Purchase criteria

  33. Situation • Urgency • Specific Applications • Size of Order

  34. Requirements for Effective Segmentation • Measurable • Profitable • Accessible • Differentiable • Actionable

  35. Evaluation of segments • Size and growth • Structural Attractiveness • Segment rivalry • New Entrants • Substitutes • Buyer clout • Supplier Clout • Company objectives and resources

  36. American Express Based on Income and age - 9 segments • Up and Comers - <50, >$40k • Affluent established - > 50, > $40k • Affluent Retired - retired, > $40k • Successful Beginners - <35 $15-40k • Mainstream Family 36-50 $15-40k • Conservative Core >50 • Young Survivors • Older Survivors • Retired Survivors

  37. Food Products(based on attitudes towards food) • Hedonists (20%) • want good life, taste, convenience, not expensive, not health conscious, young, no kids • Don’t Wants (20%) • Avoid sugar, fat; Are over 50 years, better educated • Weight Conscious (33%) • Moderates (25%)

  38. Levi Strauss Men’s Clothing • Utilitarian Jeans Customer (26%) • Loyalist, work and play, does not care for style • Trendy/Casual (19%) • High fashion, likes to be noticed, younger • Price shopper (12%) • Older, department store sales and discount stores • Mainstream Traditionalist (22%) • Older, conservative tastes, shops with wife, department stores • Classic Independent (21%) • late 20s/30s, real spender on clothes, shops alone, specialty stores, traditional styles

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