Market Definition (Product Management Framework Element)

Question 1

Market-Driven Strategy.

Answer 1

Let the Mkt drive your strategy: Build your business around an understanding of your customers and your competitors.

A sound business strategy can ward off threats, adapt to changing conditions and maintain its advantage over competitors.

“Without effective implementation, the clearest strategic thinking will be for naught — mired in functional conflicts, ill-conceived programs, budget overruns, missed schedules and poor follow-through”

Question 2

Competitive advantage

Answer 2

(1) Leading firms that continually seek new sources of advantage to enhance their value to customers
or reduce their relative costs are difficult to attack.

(2) Businesses achieve competitive advantage by having superior resources, skills or controls.Superior resources include distribution networks, sales and service people, computer systems and financial capacity.
(3) “Controls” refers to controlling costs, tracking quality and monitoring customer satisfaction. Products and services must also provide superior value to customers.
(4) Companies also achieve a competitive advantage by defining how they choose to compete.

Question 3

Definition:

1. Strategy
2. Market
3. Competitive strategy
4. Differentiation
5. Cost leadership
6. Playing the spread
7. Adaptability

Answer 3

1. A strategy offers integrated actions in the pursuit of competitive advantage. A sound business strategy is an articulation of vision
2. A Mkt is an arena where customers with similar needs or problems meet with sellers of reasonably substitutable Pds or services who are competing to satisfy these needs.
3. Competitive strategy is about seeking new edges in a market while slowing the erosion of present advantages
4. Differentiation means highlighting the differences between yourself and your competitors.
5. Cost leadership means delivering the Pd or service at the lowest possible cost.
6. Playing the spread means doing both at the same time.
7. Adaptability requires keeping a balance b/n
   the continuity of effort needed to resolve a big issue versus the need to be open and flexible in sensing when new issues are demanding attention

Question 4

Develop a sound business strategy

Answer 4

Leaders can develop a sound business strategy by asking themselves the following questions:

• Can my company ward off known threats, exploit opportunities, enhance current advantages or provide new sources of advantage?
• Can my company adapt to a broad range of foreseeable environments? Is it robust or will it only work in certain circumstances of inflation, demand and currency relationships?
• How difficult will it be for competitors to match, offset or leapfrog my firm’s expected advantages?

Note: Most businesses define themselves by their technology and materials, by the activities in their value-added chain and by their customers’ needs and demographics.

Question 5

Implementing Business Strategy

Answer 5

Your company can implement its business strategy successfully if you ensure that it is feasible and consistent, and if key staff people support it. A competitive strategy should satisfy the following tests:

• Will the strategy create and maintain a competitive advantage?
• Are the assumptions valid?
• Can the strategy avoid or contain unacceptable environmental and internal uncertainties?
• What are the prospects for successful implementation? Consider feasibility, consistency and supportablility.

Question 6

Defining the market

Answer 6

(A) Once a Mkt is defined, look into sub-markets or specialty segments within markets.

(B) Then, target sub-Mkts by identifying and selecting possible segment groups, and testing for relevance.

(C) Then, Identify discrete groups of buyers and products within their overall market.

(D) Next, evaluate each group’s buying criteria, geographic location and purchase behavior.

(E) Finally, your Mgers should ask how your company stacks up against your competitors and whether or not each projected market is and will be substantial and durable.

Question 7

Sustenance of company in Competitive world

Answer 7

Good competitors stress Q, design and services that reduce customer price sensitivity and
reduce price cutting. These benefits will be lost
if the emphasis is on gaining market share at all costs.

Companies using the competitor-focused approach need to gauge flexibility and responsiveness, the competitor’s ability to exploit opportunities, and future strategies.

Question 8

Introduction to Competitive Strategy

Answer 8

Leaders must carefully think out their competitive strategies. General strategies that most businesses adopt include (i) Differentiation, (ii) Cost leadership and (iii) Playing the spread.

Question 9

Formulate Competitive Strategy - Part I

Answer 9

(A) When you choose the scope of your competitive strategy, you have three major options:

1. Broad Mkt coverage:
   Developing a common strategy for all segments.
2. Broad coverage with tailored strategies:
   The degree of tailoring depends on the size of the differences among segments.
3. Focus coverage of a single segment:
   This works best when broad-scope competitors
   are unable to serve these buyers at the same time as they are serving others, or the costs to serve the segment are very different.

Question 10

Formulate Competitive Strategy - Part II

Answer 10

(B) The next decision is to select a positioning theme that distinguishes your company from other companies. This involves four steps:

1. Identify alternative positioning themes.
2. Screen each alternative according to whether it is meaningful to customers, feasible given the firm’s competencies, customer perceptions of the firm’s capacities and the competitive situation, and whether it meets long-term performance objectives.
3. Choose the position that best satisfies these criteria and generates the most enthusiasm and commitment within the orgzn.
4. Design the programs needed to implement the position. Compare the costs of these programs with likely benefits, such as price premiums and customer loyalty.

Question 11

Theme for Success, in Competitive world

Answer 11

As you pursue your Mkt-driven strategy, accelerate your responsiveness to customers.

Set ambitious objectives for improvements.

Challenge the causes of delays by eliminating
or compressing them, not by simply doing things faster.

Be cost conscious as you rethink organizational designs and processes.

Successful businesses can’t afford to stop and celebrate their current advantages. They have to be paranoid about competitors and move aggressively to defend their position

Fact: No competitive force is immune from the restless effect of technology

Question 12

Deciding Where to Compete

Answer 12

Choose where to compete regardless of whether your company opts for broad coverage or specialization. Ask yourself..

(i) Mkt Segmentation
(ii) Mkt Attractiveness (Competitive structures)
(iii) Segment coverage, best fit to competencies
(iv) Vulnerability of attack

Question 13

Sustaining and Defending the Advantage

Answer 13

Securing a competitive advantage is not enough; one must sustain and defend it.

Firms can stay competitive by taking advantage of their assets — namely their people — and by being a pioneer in the market. Pioneers have an extra advantage because they preempt the competition
and are the first to acquire a reputation for leadership, customer loyalty and a sustainable
technological lead. Other invisible assets include
brand name, reputation as a reliable supplier and sound channel relationships.

Question 14

Market-Driven Organizations

Answer 14

Mkt-driven organizations are committed to a set of processes, beliefs and values that
permeate all aspects of their activities.

They act according to their deep, shared understanding of their customers’ needs and behavior, and their competitors’ capabilities and intentions.

They define superior performance as being the best at satisfying their customers.