Generic Corporate Strategies Flashcards
How does a Market-Oriented approach pay off?
Marketing is more influential in firms that have strong “customer-connecting” capabilities. Market-Oriented firms operated according to the marketing concept. MO firms should be able to enhance, accelerate, and reduce the volatility and vulnerability of their cash flows.
Being Market-Oriented is a firm capability (much like any other capability i.e. R&D, knowledge, organizational processes, talent, skill, etc.)
The marketing concept is the use of marketing data to focus on the needs and wants of customers in order to develop marketing strategies that not only satisfy the needs of the customers but also the accomplish the goals of the organization.
What does a Non-Market Oriented Firm look like?
Non-MO Firms are often…
- Product-oriented or production oriented. They focus most of their attention and resources on functions like product and process engineering, production, and finance in order to acquire and manage the resources necessary to keep pace with growing demand.
- Sales-Oriented response to increasing the competition focuses on selling what the firm wants rather than what the customer needs
Strategy Vs. Plan
Strategy: a fundamental pattern of present and planned objectives, resource deployments and interactions of an organization with markets, competitors, and other environmental factors. It’s a field theory about how to gain competitive advantage. Should specify what, where, and how.
Plan: blue print for action, a written document. A formal plan helps to ensure that the objectives, strategy, and marketing actions are based in analysis, logic, and sound reasoning.
Coca Cola Case
First started out in Ideal Business Scenario because they funded the war via government support, so Coca-Cola didn’t need and DID NOT have a business strategy.
They started developing a strategy when Pepsi came out with a larger bottle of pop for the same price.
Note: Many companies can have a plan even though they don’t have a strategy.
Generic Corporate Level Strategy: Cost Leadership
Corporate level strategy for companies that want to gain competitive advantage by having the LOWEST PRICE and they prioritize having the lowest operating costs (to achieve low prices).
Generic Corporate Level Strategy: Value Leadership
What you give to your clients and the value you get back is their payment. If clients get more value from you, they’ll pay your price, continue being your consumer, and recommend you to others. This strategy focuses on being the best at ADDING value. This is usually found in the service-based industry.
focuses on providing value, rather than any particular product to their customer base. Value that you give to clients (service-based industries), also value you get back from those you are serving (payment- the value you get back). Focuses on the ways you’re adding value when working with your clients
Generic Corporate Level Strategy: Differentiation
Built on the belief that you need to have clear and unique positioning. You need to highlight your unique features and convince customers that because you’re doing it differently, they NEED to pay a premium. (e.g. organic cereal)
you need to have clear and unique positioning. Perks that add value to customers, while higher prices are the markup for higher costs. Highlight unique features, and convince customers to pay a premium.
Generic Corporate Level Strategies: Focus
There’s a misperception that being attractive to most consumers is the best way to go. Focus strategies are effective because they only care about their particular niche market. They require competing based on price to a target niche market. You can apply this to any of the listed leaderships (i.e. Focus Cost Leadership is based on offering the lowest price for a niche and Focus Value Leadership focuses on giving the most value to a smaller, niche market). This is best for smaller companies that can’t have a wider read due to capacity. (Ex. Small corner stores only target those that are within walking distance looking for convenience, as opposed to big chain supermarkets)
Generic Corporate Level Strategies: Blue Ocean
To avoid head to head competition, they focus on innovation. They look for blue oceans where there isn’t a lot of space occupied, because red oceans have a ton of competition and are too occupied. (ex. Uber innovated and found a new way to bring in more drivers to the public without having to purchase all the infrastructure)
companies search for new market space to reinvent their industries, avoid competition, and focus on innovation. Red oceans, blood in the water, highly competitive, head to blue oceans.
Strategic Business Unit Level Strategies:
Defensive Strategy–> Fortress/Position Strategy
A fortress/position strategy is when you remind consumers of what you offer and emphasize that you do it better than your competition. It’s holding down your fortress and reminding your consumers of your positioning on the matrix in meeting their need.
make the firm’s position stronger (ads, marketing) for awareness of improved products and services. Keep doing what we’re doing, we’re staying here, targeting the same people
Example: The city of Edmonton. You just remind your customers of your positioning on the matrix and what you do and WHY you do it better than the competition. All about maintaining a fortress around your brand and protecting your brand image. This is what a lot of government marketing and communications departments do.
Strategic Business Unit Level Strategy
Defensive strategy: Flanker Strategy (Reactive)
Trying to maintain your brand while getting a new flank of the market share. An example would be Toyota. In order to protect Toyota’s main brands from competitors’ direct competition with their affordability + durability + basic image, Toyota decided to expand their market share and product offerings through the following companies: Lexus and Scion. Lexus is Toyota’s company that offers luxury vehicles, which the Toyota name is not known for. This allowed them to tap into the luxury vehicle industry without tarnishing or confusing consumers on the position of Toyota’s name. As well, to tap into the low-price segment of the motor vehicle industry, Toyota made the Scion brand.
Strategic Business Unit Level Strategy….
Defensive Strategy: Confrontation Strategy (Reactive)
Standing up against a confrontational attack from an existing competitor (pricing war, etc.). If a competitor for example sets up a restaurant near you with a similar menu but lower prices, you counter confrontationally by also lowering your prices. (Reacting, not innovating or starting the fight)
Strategic Business Unit Level Strategy
Defensive Strategy: Contraction/Withdrawal
Appropriate only for small companies. Relies on really good information to give you insight on what to do and REQUIRES FAST RESPONSE to information. (it’s a hit & run strategy, move in and out)
Strategic Business Strategy…
Offensive Strategy for FLANKER (proactive)
No reference point. You’re picking a flank of the target market to position yourself towards. You’re gonna be proactive to target that on purpose by choosing an undefended and unmet market share (so you don’t have to compete!!!). You will be finding a new target market to make money.
Strategic Business Strategy
Confrontation Strategy (offensive)
Try to attack where that competitive leader is weak. (ex. Pepsi to coca cola). A head-on attack against the market leader. Try to attack where the leader is weak. You’re instigating the fight.
