1-1 McGraw-Hill/Irwin ©2008 The McGraw-Hill Companies, All Rights Reserved C H A P T E R THREE Business Strategies and Their Marketing Implications 3.

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1-1 McGraw-Hill/Irwin ©2008 The McGraw-Hill Companies, All Rights Reserved C H A P T E R THREE Business Strategies and Their Marketing Implications 3

m  SBUs  Industrial & Transportation (adhesives & filters)  Health Care  Consumer & Office Sector ConsumerOfficeSector  Electro & communications sector Electro  Display & Graphics sector  New Product Devlopment  30% of annuals from new products

Discussion Question 1.Ultimately the goal for any firm or business unit is to gain sustainable competitive advantage. What key decisions are necessary to get there?

Scotch-Brite Never RustBrite  Invest in new plants  Big Ad budget  Maintain profitability in other lines  Post-it notes  Magic Transparent TapeTape

Discussion Question 2. On what basis do businesses compete?

Porter’s Generic Strategies  Overall Low Cost Leadership  Differentiation  Focus

Robert Miles & Charles Snow Prospector

Defender

Analyzer

Reactor

Exhibit 3.2 Combined Typology of Business-Unit Competitive Strategies Competitive strategy Differentiation Cost leadership Emphasis on new product-market growth Heavy emphasisNo emphasis ProspectorAnalyzerDefenderReactor Units primarily concerned with attaining growth through aggressive pursuit of new product-market opportunities Units with strong core bus.; actively seeking to expand into rel. prod-mkts with differentiated offerings Units with strong core bus.; actively seeking to expand into rel. prod-mkts with low-cost offerings Units primarily concerned with maintaining a differentiated position in mature markets Units primarily concerned with maintaining a low-cost position in mature markets Units with no clearly defined product-market development or competitive strategy

 Single Business Firms  Belvedere VodkaVodka  Startups  Start Life as Prospectors  Services  Emirates Airline EmiratesAirline  Differentiated analyzer  Global Competitors  One of the analyzer strategies

How Business Strategies Differ in Scope, Objectives, Resource Deployments, and Synergy Exhibit 3.4. Dimensions Scope Goals and obj. Adaptability (new product success) Effectiveness (inc. mrkt share) Efficiency (ROI) Resource deployment Synergy Low-cost defender Mature/stable/well- defined domain; mature tech.and cust. segments Very little Low High Generate excess cash (cash cows) Need to seek operating synergies to achieve efficiencies Differentiated defender Mature/stable/well- defined domain; mature tech.and cust. segment Little Low High Generate excess cash (cash cows) Need to seek operating synergies to achieve efficiencies

How Business Strategies Differ in Scope, Objectives, Resource Deployments, and Synergy Exhibit 3.4. Dimensions Scope Goals and obj. Adaptability (new product success) Effectiveness (inc. mrkt share) Efficiency (ROI) Resource deployment Synergy Prospector Broad/dynamic domains; tech. and cust. segments not well-established Extensive High Low Need cash for product dev. (? or *) Danger in sharing operating fac. and programs - better to share tech./mktg skills Analyzer Mixture of defender and prospector strategies Mix. of defender & prospector strats. Mix. of def. & prosp. strats Need cash for prod. dev. but < prospectors Danger in sharing operating fac. and programs - better to share tech./mktg. skills

Let’s combine the two perspectives and examine the book retailing industry Competitive strategy Differentiation Cost leadership Emphasis on new product-market growth Heavy emphasisNo emphasis ProspectorAnalyzerDefenderReactor Units primarily concerned with attaining growth through aggressive pursuit of new product-market opportunities Units with strong core bus.; actively seeking to expand into rel. prod-mkts with differentiated offerings Units with strong core bus.; actively seeking to expand into rel. prod-mkts with low-cost offerings Units primarily concerned with maintaining a differentiated position in mature markets Units primarily concerned with maintaining a low-cost position in mature markets Units with no clearly defined product-market development or competitive strategy

Discussion Questions 3. How might the Internet change how firms compete? Are these strategy typologies obsolete?

Discussion Questions 4. What sorts of market, technological, and competitive conditions call for which of these strategies? What strengths are required for success with each?

Prospector Industry & Market

Prospector Technology

Prospector Competition

Prospector Business’s relative Strengths

Analyzer I&M

Analyzer Technology

Analyzer Competition

Analyzer BR strengths

D Defender I&M

D Defender Technology

D Defender Competition

D Defender BR Strengths

LC Defender I & M

LC Defender Technology

LC Defender

LC Defender

Discussion Questions 5. What sort of marketing mix (4 P’s) is typically appropriate for each of these strategies? Can we generalize?

Fit versus Future  Microwave Popcorn  1970s Pillsbury rejected idea of microwavable food.  ActII