MGT-519 STRATEGIC MARKETING AAMER SIDDIQI

LECTURE 4

RECAP Implementation of Competitive Advantage Porters "Value Chain” Sustaining Competitive Advantage Core Competencies and Capabilities Resource-Based View of the Firm (RBV)

E VOLUTIONARY CHANGE AND H YPER COMPETITION E VOLUTIONARY CHANGE Competing on the Edge, Eisenhardt & Brown (1998) Draw analogies between biological evolution and business In the real world analysis and planning is often a rarity Strategies based on flexibility, experimentation, continuous change and learning even more important than rigorous analysis and planning Right balance between order and chaos - firms can then successfully evolve and adapt to their unpredictable environment At the "edge of chaos," firm creates an organization that can change and produce a continuous flow of competitive advantages Firms not hindered by too much planning or centralised control Organized to happen! By organising in this way they promote an entrepreneurial philosophy.

E VOLUTIONARY CHANGE ( CONT ’ D ) React to the evolutionary pressure of customers’ needs, mistakes but relentlessly reinvent the business by discovering new growth opportunities Strategy is unpredictable, uncontrolled and inefficient Important…firms should not just react well to change, but must anticipate In successful businesses, change is time-paced Triggered by the passage of time rather than events Unplanned, evolutionary change can be an important component to success. Strategy and planning should foster and complement such change, not suffocate it.

Certain core beliefs are fundamental to organizations, and should be preserved at all costs. Not everything about an organization is for change in considering alternative strategies E VOLUTIONARY CHANGE ( CONT ’ D )

H YPER COMPETITION Today’s business environment has become dynamic Traditional sources of competitive advantage erode rapidly sustaining advantages can be a distraction from developing new ones With fragmentation of markets niche seeking competition has intensified Traditional sources of advantage more vulnerable; price & quality, timing and know-how Entry barriers have fallen, deep pockets, resource dominance no longer sufficient means by which to control and dominate E VOLUTIONARY CHANGE AND H YPER COMPETITION

H YPER COMPETITION (C ONT ’ D ) Hypercompetition suggests that strategy should also involve the creative destruction of opponent’s advantage A strong emphasis on SWOT analysis Primary goal of this new approach is disruption of the status quo To seize the initiative through creating a series of temporary advantages speed and intensity of movement that characterizes hypercompetition From economic theory there is no equilibrium as in perfect competition Only temporary profits are possible in hypercompetition markets

Resulted in rise of new marketing trends –Guerrilla –Ambush –Astroturfing –Viral –Stealth Designed to create temporary advantages in markets Evolved Game Theory:Tool for analysing customers’ and competitors’ responses to a firm’s competitive moves The theory attempts to mathematically capture behaviours in strategic situations H YPER COMPETITION (C ONT ’ D )

GAME THEORY Helps predict scenarios of market macroenvironment Key pivotal points for disruption to be identified 3 elements for successful strategy in hypercompetitive markets 1. Vision for how to disrupt a market Setting goals, building core competencies necessary to create specific disruptions 2. Key capabilities enabling speed and surprise in a wide range of actions 3. Disruptive tactics illuminated by game theory Shifting the rules of the game, signalling, simultaneous and strategic thrusts H YPER COMPETITION (C ONT ’ D )

T HE M ARKETING C ONCEPT Four eras in the development of business 1.The Production Era Minimal dialogue between customers and suppliers Mass production Homogenous products Distribution is the focus of marketing 2. The Institutional Period and Selling Orientation Rapid growth More focus on cost, inventory asset management Selling focus (company builds it and sales person sells it) Minimal customer voice Increasing need for marketing communications The development of the 4Ps

3. The Marketing Concept Companies should only make what they can market instead of trying to market what they have made Increasing customer focus 4. Relationship Marketing/ Supply Chain Era Customers now have a dialogue, not just a voice Close, long-term relationships based on mutual trust More emphasis on win-win outcomes 5. Value Chain Era Start with customer requirement and build infrastructure to deliver maximum value Integration of supply and demand chains Proactive, knowledge-based relationships T HE M ARKETING C ONCEPT (C ONT ’ D )

Consumer choice and attitude of this period, “any colour as long as it’s Black” - Henry Ford Marketing concept, the shift from a seller’s market to a buyer’s market 3 alternatives to marketing orientation Sales orientation Selling the product which they have is the main problem Use of selling, pricing, promotion and distribution skills Little attention to customer needs and wants Don’t try particularly hard to create suitable products or services T HE M ARKETING C ONCEPT (C ONT ’ D )

Production orientation Concerned with making as many units as possible. Exploiting economies of scale Needs of customers are secondary compared to need to increase output. Effective when a business operates in very high growth markets or where the potential for economies of scale is significant Product orientation Subtly different from a production orientation. Business is “arrogantly obsessed” with its own products Their products may start out as fully up-to-date and technical leaders T HE M ARKETING C ONCEPT (C ONT ’ D )

S UMMARY Implementation of Competitive Advantage Sustaining Competitive Advantage Core competencies and capabilities Resource-Based View of the Firm (RBV) Evolutionary change and Hyper competition The Marketing Concept

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