Business Strategies and Their Marketing Implications

1-1

McGraw-Hill/Irwin©2008 The McGraw-Hill

Companies, All Rights Reserved

CHAPTER

THREE

Business Business Strategies Strategies

and Theirand Their

Marketing Marketing ImplicationsImplications

3

1-2 3-2

3m

SBUs Industrial & Transportation (adhesives &

filters)

Health Care

Consumer & Office Sector

Electro & communications sector

Display & Graphics sector

New Product Devlopment 30% of annuals from new products

1-4 3-4

Scotch-Brite Never Rust

Invest in new plants

Big Ad budget

Maintain profitability in other lines Post-it notes

Magic Transparent Tape

1-5 3-5

Discussion Question

2. On what basis do businesses compete?

1-6 3-6

Porter’s Generic Strategies

Overall Low Cost Leadership

Differentiation

Focus

1-7 3-7

Robert Miles & Charles SnowProspector

1-8 3-8

Defender

1-9 3-9

Analyzer

1-103-10

Reactor

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Exhibit 3.2

Combined Typology of Business-Unit Competitive Strategies

Co

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Emphasis on new product-market growthHeavy emphasis No emphasis

Prospector Analyzer Defender Reactor

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

offeringsUnits 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

1-123-12

Single Business Firms

Belvedere Vodka

Startups

Start Life as Prospectors

Services

Emirates Airline

Differentiated analyzer

Global Competitors

One of the analyzer strategies

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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 defenderMature/stable/well-defined domain; mature tech.and cust. segments

Very little

Low

HighGenerate excess cash (cash cows)

Need to seekoperating synergies to achieve efficiencies

Differentiated defenderMature/stable/well-defined domain; mature tech.and cust. segment

Little

Low

HighGenerate excess cash (cash cows)

Need to seek operating synergies to achieve efficiencies

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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

ProspectorBroad/dynamic domains; tech. and cust. segments not well-established

Extensive

HighLowNeed cash for product dev. (? or *)

Danger in sharing operating fac. and programs - better to share tech./mktg skills

AnalyzerMixture of defender and prospector strategies

Mix. of defender & prospector strats.

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

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Let’s combine the two perspectives and examine the book retailing industry

Co

mp

etit

ive

stra

teg

y

Dif

fere

nti

atio

nC

ost

lea

der

ship

Emphasis on new product-market growthHeavy emphasis No emphasis

Prospector Analyzer Defender Reactor

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

offeringsUnits 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

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Discussion Questions

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

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

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Prospector Industry & Market

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Prospector Technology

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Prospector Competition

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Prospector Business’s relative Strengths

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Analyzer I&M

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Analyzer Technology

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Analyzer Competition

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Analyzer BR strengths

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D Defender I&M

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D Defender Technology

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D Defender Competition

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D Defender BR Strengths

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LC Defender I & M

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LC Defender Technology

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LC Defender

1-333-33

LC Defender

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

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Fit versus Future

Microwave Popcorn

1970s Pillsbury rejected idea of microwavable food.

ActII

Business Strategies and Their Marketing Implications

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