Chapter 6 Competitive Strategy and the Industry Environment
Life Cycle Unit Sales Profits
Life Cycle Emerging Embryonic Introduction Growth MatureDecline
Industry Life Cycle
Challenges of Emerging Industries Uncertain market conditions and characteristics Competing proprietary technologies and varied marketing/service/distribution tactics Lack of complementary products Limited/poor quality and high costs Education of users Innovators vs. Initial adopters vs. Mass-market.
Alternatives in Emerging Industry Move fast/early with superior product or technology Track the Dominant Design Build alliances with key suppliers or those that provide complementary products to out position rivals Seek new customer groups, new applications for your product Make it cheap/easy for early adopters to try/buy your product.
Challenges of Turbulent Environments Rapid technological changes Short product life-cycles Many new entrants and strategies Changing customer demands/preferences.
Alternatives in Turbulence Invest heavily in R&D, staying on the technological frontier Develop the capability to be flexible Maintain strategic partnerships Build up lead-time advantages.
Challenges of Mature Industries Slow growth fight for market share Sophisticated buyers Costs, prices and service critical Excess capacity Innovation and new uses more difficult International competition Falling profitability Consolidation Segmentation.
Alternatives in Mature Industries Prune product line Process innovation & cost reductions Sell more to current buyers Purchase rivals at low prices Go international.
Alternatives in Fragmented Industries Fragmented industries experience low entry barriers, lack of economies of scale, and high segmentation Formula facilities - Low cost operations - Become the specialized vendor of choice - Focus on a customer type - Focus on a geographic segment -
Problems for Runner-ups Lower economies of scale Lack of recognition Limited exposure in mass media Capital limitations.
Alternatives for Runner-ups in Scale Sensitive Industries Use lower price points Merge/acquire rivals to increase market share Invest in cost-saving techniques Pursue radical innovation to change the rules of the game.
Other Runner-up Strategies Vacant Niche Strategy - Specialists Strategy - Superior Products Strategy - Distinctive Image Strategy - Content Follower –
Strategies to Deter Entry Product Proliferation Pricing Games Maintaining Capacity
Strategies to Manage Rivalry Price Signaling & Price Leadership Non-Price Competition
Non-price Competition Market Penetration Market Development Product Development Product Proliferation Existing New Marketing Segments Products