Exam 2 Flashcards
5 factors impacting an innovation’s rate of adoption:
- Relative advantage
- Compatibility
- Complexity
- Trialability
- Communicability/Observability
Define Relative Advantage:
How readily do adopters see the innovation’s value over existing products/technologies?
Define Compatibility:
How easily can the innovation be adopted within existing infrastructure/lifestyles?
Define Complexity:
How easy is it to understand the innovation, how to use it, and recognize its value?
Define Trialability
How easy is it to test-use the innovation on a limited scale?
Define Communicability/Observability:
How easily can the innovation be communicated to/observed by others?
What does it mean to bridge the chasm?
Making the leap from early adopters to mainstream consumers by fixing the problems innovators/early adopters will put up with but mainstream consumers won’t.
Porter’s 5 Forces:
- Threat of new entrants
- Rivalry among existing competitors
- Threat of substitutes
- Bargaining power of suppliers
- Bargaining power of buyers
Porter’s 3 Generic Strategies:
- Cost Leadership
- Differentiation
- Focus
Cost Leadership
Having the lowest prices by having the lowest production cost.
Differentiation
This focuses on delivering a unique benefit or feature not available from competitors. “Class leader”
Focus
Achieve competitive advantage by concentrating on serving a narrow segment of a larger market.
Middle of the Road:
Firms that do not pursue one of the 3 generic strategies are stuck in the middle with no focus. They become vulnerable to changes in the market.
Tjan’s 4 Value Propositions that Work:
- Best Quality
- Best Bang for the Buck
- Luxury & Aspiration
- Must-have
Barney’s 5 criteria for a sustainable competitive advantage:
- Is the competitive advantage valued by customers?
- Is the competitive advantage rare?
- Can the competitive advantage be imitated or copied?
- Are there strategically equivalent substitutes or alternatives?
- Is the competitive advantage complex? (interrelationship between various skills and assets)
BCG - Product Life Cycle
Intro = Question Marks
Growth = Stars
Maturity = Cash Cows
Decline = Dogs
What to do with Question Marks?
Build up market share to become a star… or get out if the market position cannot change
What to do with Stars?
Typically needs cash investments to maintain growth to pursue learning curve/economies of scale
What to do with Cash Cows?
Excess cash generation should be “milked” and invested into stars or question marks
What to do with Dogs?
Need to divest (exit market) or harvest (maximize remaining profits by targeting laggards)
10 characteristics of “cool” brands:
1) Rebellious, 2) Extraordinary/Useful, 3) Aesthetically appealing, 4) Original, 5) Popular, 6) Iconic, 7) High Status, 8) Energetic, 9) Authentic, 10) Subcultural
2 Paths to Affordable Luxury
- High-end
- Low-end
High-end Affordable Luxury:
Offering products that are almost as good as major competitors, but at a reduced price.
Ex: Coach handbags & Lexus
* Do this in High Priced Categories
Low-end Affordable Luxuries:
Offering products that are better quality than major competitors, but a higher (but affordable) price.
Ex: Starbucks
* Do this in low-priced categories
