Transcript Document 7256299

Chapter 8
Tailoring Strategies to Fit Specific Industry
and Company Situations
Life Cycle
Unit Sales
Profits
Life Cycle
Emerging
Embryonic
Introduction
Growth
Mature
Decline
Industry Life Cycle
Introduction Growth
Mature
Decline
Growth
Low
Large
Lower
Negative
Segments
Few
Some
Many
Few
Competition
Low
Increasing
Intense
???
Emphasis
V High
Prod
R&D
High Prod
V High
Process
Production
Stability
Market
Awareness
Create
Demand
Functional
Objectives
Sales &
Marketing
Defend
Share and
Extend
Admin.,
mgt. &
finance
Consolidate
Maintain,
harvest, or
exit
Industry Life Cycle
Introduction Growth
Mature
Decline
Growth
Low
Large
Lower
Negative
Segments
Few
Some
Many
Few
Competition
Low
Increasing
Intense
???
Emphasis
V High
Prod
R&D
High Prod
V High
Process
Production
Stability
Market
Awareness
Create
Demand
Functional
Objectives
Sales &
Marketing
Defend
Share and
Extend
Admin.,
mgt. &
finance
Consolidate
Maintain,
harvest, or
exit
Industry Life Cycle
Introduction Growth
Mature
Decline
Growth
Low
Large
Lower
Negative
Segments
Few
Some
Many
Few
Competition
Low
Increasing
Intense
???
Emphasis
V High
Prod
R&D
High Prod
V High
Process
Production
Stability
Market
Awareness
Create
Demand
Functional
Objectives
Sales &
Marketing
Defend
Share and
Extend
Admin.,
mgt. &
finance
Consolidate
Maintain,
harvest, or
exit
Industry Life Cycle
Introduction Growth
Mature
Decline
Growth
Low
Large
Lower
Negative
Segments
Few
Some
Many
Few
Competition
Low
Increasing
Intense
???
Emphasis
V High
Prod
R&D
High Prod
V High
Process
Production
Stability
Market
Awareness
Create
Demand
Functional
Objectives
Sales &
Marketing
Defend
Share and
Extend
Admin.,
mgt. &
finance
Consolidate
Maintain,
harvest, or
exit
Industry Life Cycle
Introduction Growth
Mature
Decline
Growth
Low
Large
Lower
Negative
Segments
Few
Some
Many
Few
Competition
Low
Increasing
Intense
???
Emphasis
V High
Prod
R&D
High Prod
V High
Process
Production
Stability
Market
Awareness
Create
Demand
Functional
Objectives
Sales &
Marketing
Defend
Share and
Extend
Admin.,
mgt. &
finance
Consolidate
Maintain,
harvest, or
exit
Industry Life Cycle
Introduction Growth
Mature
Decline
Growth
Low
Large
Lower
Negative
Segments
Few
Some
Many
Few
Competition
Low
Increasing
Intense
???
Emphasis
V High
Prod
R&D
High Prod
V High
Process
Production
Stability
Market
Awareness
Create
Demand
Functional
Objectives
Sales &
Marketing
Defend
Share and
Extend
Admin.,
mgt. &
finance
Consolidate
Maintain,
harvest, or
exit
Challenges of Emerging
Industries
•
•
•
•
•
•
•
Uncertain market conditions and characteristics
Competing/unknown proprietary technologies
and varied marketing/service/distribution tactics
Lack of complementary products
Limited/poor quality and high costs, which deter
acceptance
Low entry barriers
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/merge 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.
High Technology Industries

Battle over technical standard, format, and
dominant design

Set by decree, cooperation, public domain,
but mostly through consumer choices
Benefits for Standards




Compatibility
Reduce consumer uncertainty
Reduce production costs
Increase in complementary products –
Network effects – which greatly enhances
sustainability

Lock outs and switching costs
TV Industry – Paradigm Shifts
Black & White TV
Color TV
Black & White TV
Color TV
Black & White TV
Big Screen TV
Color TV
Black & White TV
Big Screen TV
Color TV
Black & White TV
HDTV
Big Screen TV
Color TV
Black & White TV
Incremental evolution
included remote
controls,cable ready
tuners, stereo sound
systems, screen-in-ascreen, etc
Color TV
Black & White TV
HDTV
Big Screen TV
Challenges of Mature Industries
• Slow growth fight for market share
• Sophisticated buyers
• Costs, prices and service critical
• Excess capacity and oversupply
• Innovation and new uses more difficult
• International competition
• Falling profitability
• Consolidation
• Segmentation.
Alternatives in Mature Industries
• Prune product line
• Process innovation & cost reductions in
value chain
• Sell more to current buyers
• Purchase rivals at low prices
• Go international.
Fragmented Industries





Low entry barriers
Lack of economies of scale
High segmentation
Local Advantages
Diverse preferences
Alternatives in Fragmented Industries
•
•
•
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•
Formula facilities – YUM Brands, Home Depot
Low cost operations - tires, pool suppliers
Become the specialized vendor of choice - oil
change, lawn/garden, bar stools
Focus on a customer type - Hooters, Panera
Focus on a geographic segment - Winn-Dixie,
Chic-fil-a, Sonic.
Other Runner-up Strategies
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Vacant Niche Strategy - commuter airline,
health foods, religious book stores
Specialists Strategy - Arm & Hammer
Superior Products Strategy - Sub-Zero
Distinctive Image Strategy - Rainforest
Cafe
Content Follower – Cadbury-Schweppes