Topics

31

Business Administration / Risks of focus

« on: April 15, 2017, 09:08:21 AM »

risks of focus

1. The focus strategy is imitated:
2. The target segment becomes structurally unattractive because
• Structure erodes.
• Demand disappears.
3. Broadly targeted competitors overwhelm the segment:
• The segment's differences from other segments narrow.
• The advantages of a broad line increase.
4. New focusers sub-segment the industry.

32

Business Administration / Risks of differentiation strategy

« on: April 15, 2017, 09:07:51 AM »

Risks of differentiation strategy

1. Differentiation is not sustained, because
• Competitors imitate.
• Bases for differentiation become less important to buyers.
2. Cost proximity is lost.
3. Differentiation focusers achieve even greater differentiation in segments.

33

Business Administration / Risks of cost leadership

« on: April 15, 2017, 09:07:16 AM »

Risks of cost leadership
Cost leadership is vulnerable to the same risks. Some of these risks are..
1. Cost leadership is not sustained because,
•   Competitive imitate: your strategy may be imitate by your competitors.
•   Technology changes: technological change that nullifies past investments or learning
•   Other bases for cost leadership erode
2. Proximity in differentiation is lost.
3. Cost focuser achieve even lower cost in segment.

34

Business Administration / Differentiation focus:

« on: April 15, 2017, 09:06:43 AM »

Differentiation focus: Differentiation focus, like cost focus, concentrates on a particular buyer group, product-line segment, or geographic market. In using differentiation focus, the company or business unit seeks differentiation in its target segment. This strategy is valued because of a belief that a company or a unit that focuses its efforts can serve its narrow strategic target more effectively than can its competition

35

Business Administration / Cost Focus:

« on: April 15, 2017, 09:06:17 AM »

Cost Focus: Cost focus is a low-cost competitive strategy that focuses on a particular buyer group or geographic market and attempts to serve only this niche, to the exclusion of others. In using cost focus, the company or business unit seeks a cost advantage in its target segment.  This strategy is based on the belief that a company or business unit that focuses its efforts can serve its narrow strategic target more efficiently than can its competition.

36

Business Administration / Cost leadership:

« on: April 15, 2017, 09:05:48 AM »

Cost leadership: Though cost leadership, a firm sets out to become the low cost producer in its industry. The sources of cost advantage are varied and depend on the structure of the industry. Cost leadership requires
   Efficient scale facilities.
   Cost reduction from experience.
   Tight cost and overhead control.
   Avoidance of marginal customer accounts.
   Cost minimization in R&D, service, sales force, Advertising etc.

 In this regard, a great deal of managerial attention is required because, low cost relative to   competitors becomes the theme (idea) running through the entire strategy, though quality, service and other areas cannot be ignored.

37

Business Administration / Economic of scale effect

« on: April 15, 2017, 09:04:43 AM »

Economic scale effect: Economics of scale at the plant level refer to unit cost reductions achieved through mass production techniques. The economic scale effect relates to the input and output relationship. The classic example of such economies is Ford’s Model T automobile. The world’s first mass-produced car, the Model T-Ford, was introduced in 1923. Until then it had cost Ford approximately $ 3000 (in 1958 dollars) to build and assemble an automobile. By introducing mass production techniques, the company achieved greater division of labor (i.e. splitting assembly into small, repeatable tasks) and specialization, and reduced the cost of manufacturing cars to less than $900 per unit (in 1958 dollars) at large output volumes.  These may three types;
   Increasing
   Decreasing
   Constant

38

Business Administration / Bargaining power of supplier

« on: April 15, 2017, 09:03:51 AM »

Bargaining power of supplier: The bargaining power of suppliers refers to the ability of suppliers to raise input prices, or to raise the costs of the industry in other ways—for example, by providing poor quality inputs or poor service. Powerful suppliers squeeze profits out of an industry by raising the costs of companies in the industry.

39

Business Administration / Bargaining power of buyer

« on: April 15, 2017, 09:03:25 AM »

Bargaining power of buyer: The bargaining power of buyer refers to the ability of buyers to bargain down prices charged by companies in the industry or to raise the costs of companies in the industry by demanding better product quality and service.

40

Business Administration / Components of positioning Statement

« on: April 15, 2017, 09:02:45 AM »

Positioning statement

A statement that summarizes company or brand positioning. It has the following components…………..

a.   Target segment
b.   Need
c.   Brand name
d.   Point of difference.

41

Business Administration / Positioning Map

« on: April 15, 2017, 09:01:49 AM »

Positioning Map

 A perceptual map that shows consumers perceptions of their brands versus competing products on important buying dimensions. The position of each circle in the map indicates the brand’s perceived position on two important dimensions – price and quality.

42

Business Administration / Factors affecting chossing target market

« on: April 15, 2017, 09:01:20 AM »

Choosing a target marketing strategy:
Companies need to consider many factors when choosing a target-marketing strategy.
1. Company resources: The choice of strategy depends on company resources. When the firm’s resources are limited, concentrated marketing makes the most sense.
2. Product variability: The best strategy also depends on the degree of product variability. Undifferentiated marketing is more suited for uniform products such as grapefruit or steel. Products that can vary in design, such as cameras and automobiles, are more suited to differentiation or concentration.
3. Stage of product life cycle: The product-life-cycle stages also must be considered. When a firm introduces a new product, it may be practical to launch only one version and undifferentiated marketing or concentrated marketing may be most sense. In the mature stage of the product life cycle, however, differentiated marketing begins to make more sense.
4. Market variability: Another factor is market variability. If most buyers have the same tastes, buy the same amounts, and reach the same way to marketing efforts, undifferentiated marketing is appropriate.
5. Competitor’s strategies: Finally, competitor’s marketing strategies are important. When competitors use undifferentiated marketing, a firm can gain an advantage by using differentiated or concentrated marketing. 

43

Business Administration / Target Market Coverage Strartegies

« on: April 15, 2017, 09:00:36 AM »

Targeting strategies:

There are several target marketing strategies. These are……………

1. Undifferentiated marketing: Undifferentiated (mass marketing) is a market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer. This mass marketing strategy focuses on what is common in the needs of consumers rather than on what is different. The company designs a product and a marketing program that will appeal to the largest number of buyers.

2. Differentiated Marketing: Differentiated marketing (segment marketing) is a market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each. General motors’ try to produce a car for every “purse, purpose, and personality.”

3. Concentrated Marketing: Concentrated marketing is a market-coverage strategy in which a firm goes after a large share of one or a few segments or niches. It is especially appealing when company resources are limited. Instead of going after a small share of a large market, the firm goes after a large share of one or a few smaller segments or niches. Example of Hazi Biriani.

4. Micro marketing: Micro marketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations. Rather than seeing a customer in every individual, micro marketers see the individual in every customer. Micro marketing includes local marketing and individual marketing.
i. Local marketing: Local marketing involves tailoring brands and promotions to the needs and wants of local customer groups—cities, neighborhoods, and even specific stores.

ii. Individual marketing: Individual marketing—tailoring products and marketing programs to the needs and preferences of individual customers. Individual marketing has also been labeled one-to-one marketing, mass customization, and markets-of-one marketing.

44

Business Administration / Target Market and Evaluating Criteria for Target Market

« on: April 15, 2017, 08:59:55 AM »

Target market
Target market is that segment of the market that is suitable for a company to serve. Without clear definition of target market the marketing plan cannot be implemented properly. Target marketing is the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter.
The best approach for selecting a target market is need based segmentation.
Target marketing involves three steps:
a.   Evaluating market segments
b.   Selecting target market segments
c.   Choosing a targeting strategy.
A. Evaluation criteria for segment:
In evaluating different segments a company must look at three criteria. These are as follows………………
1. Segment size and growth: First the company needs to collect and analyze data regarding segment sales, growth, and expected profitability for various segments. That means the company need to identify the number of customers in each segment, their consumption pattern, growth rate of the market during previous years. 
Total consumption = number of people × per head consumption

If total consumption increases in last 10 years hen, the growth rate is increasing.  Growth rate below 10% is not very good.

2. Segments structural attractiveness: To evaluate this company needs to analyze the five wings of industry structure. For example:

a.   A segment is less attractive if the cost of entry is very high.
b.   Some segments become less attractive by the high bargaining power of buyers in that segment. Because buyers with strong bargaining power try to force down the prices and demand more services.
c.   Again segments become less attractive if It contains powerful suppliers who can control prices or reduce quality.
d.   The existence of many substitutes’ products may limit the prices.
e.   A segment is less attractive if contains many strong and aggressive competitors.

3. Company objective and resources: A segment may have a right size and growth and it may structurally attractive but the company cannot choose it before considering its own objectives and resources.  Some segment can be dismissed quickly as they don’t match with the company objectives or the company may lack the skills and resources to succeed in that attractive segment. The company should enter into that segment in which it can offer superior value and gain competitive advantage.

45

Business Administration / Criteria for Strategic Business Unit

« on: April 15, 2017, 08:58:59 AM »

Criteria for Strategic Business Unit
A business unit is an operating unit in an organization that sells a distinct set of products of services to an identifiable group of customers in competition with a well-defined set of competitors. Generally, the following criteria should be considered in classifying an organizational unit as an SBU:
1. An SBU should serve an external, rather than an internal, market: That is, it should have a set of external customers and not merely serve as an internal supplier.
2. Have definable groups of competitors: It should have a clear set of external competitors, which it is trying to equal or surpass.
3. It should have control over its own destiny:  This means that it must be able to decide for itself what products to offer, how and when to go to market, and where to obtain its supplies, components, or even products. This does not mean that it cannot use pooled resources, such as a common manufacturing plant, or a combined sales force, or even corporate R&D. The key is choice. It must be able to choose and not merely be the victim of someone else`s decisions. It must have options from which it may select the alternative(s) that best achieves the corporate and the business objectives.
4. Its performance must be measurable in terms of profit and loss: that is, it should be a true profit center. SBUs operate within the objectives and strategy set by top management. Within that framework, each SBU performs its own strategic management process. The SBU`s operations are either strengthened or weakened depending on the resources allocated to it at the corporate level.