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“Making Sure That Marketing Decisions Match the Business Strategy” 1. Comment of this statement: “Strategies most often fail because they aren’t executed well. Things that are supposed to happen don’t happen. ” A successful business strategy can help companies effectively execute and stay ahead of the competition. Maintaining strategic direction and relentlessly executing – rather than reacting to competitive conditions – is the most consistent route to success. Along with a successful strategy, a company needs to focus its culture and align it with employees.
Aligning the right people in the right roles with the right strategy for your business will lead to organizational success. 2. Distinguish among the four fundamental business strategies described in this case: Pioneer, Fast Follower, Cost Leader, and Customer Centric. There are four business strategies that companies can implement to become more aligned with their target market. Pioneers identify and exploit new product and market opportunities by offering innovative products or by viewing the market from a different perspective.
To be successful, pioneers must be both customer and innovation-oriented, patient, and have a decentralized marketing organization with a high proportion of marketing specialists. Pioneers must market aggressively because they are targeting innovators and early adopters. This strategy also requires educating customers and stimulating demand through advertising. Pioneers can charge a premium price for their product. Fast Followers develop strategies with the knowledge gained from Pioneer’s.
They identify opportunities by monitoring customer reactions and competitor’s activities, successes, and failures to identify unattended segments or product improvement opportunities. Successful Fast Followers also monitor competitors to understand their successes and failures. Cost Leaders are typically late entrants that aggressively protect their market from competitors. They focus on efficiency in many areas enabling them to offer low prices. Cost Leaders have a focused product line and pursue their market with adequate quality, low prices, and an intensive distribution strategy.
They defend their market from competition by benchmarking their value chain costs against the competition. Customer Centrics offer high-quality products with exceptional customer service at lower prices than Pioneers but higher prices than either Fast Followers or Cost Leaders. Customer Centrics target narrow segments in order to develop close relationships with customers while providing high-quality products. They place a high emphasis on understanding their customers. 3. What makes a successful Pioneer? A successful Cost Leader?
A successful Pioneer is both customer and innovation-oriented, patient and have a decentralized marketing organization with a high proportion of marketing specialists. Pioneers target innovations and early adopters and are therefore very proactive in their product development efforts. That requires a successful Pioneer to devote a significant effort to marketing research. The successful pioneer will also devote resources to educating customers and stimulating demand for the product through advertising. The Cost Leader has the opposite strategy of the Pioneer.
Cost Leaders places lower emphasis on product innovation and have a decentralized marketing organization. Instead, they are internal-cost oriented. To be successful, Cost Leaders must focus on process innovation that improves production efficiency over product innovation. In addition, they must defend their market from competitors by benchmarking their value chain costs against those of competitors. 4. What are the biggest risks that Fast Followers face? What should they do to minimize these risks? The biggest risk that Fast Followers face is the timeliness of their product entry into the market place.
Life is easy for the fast followers because all they need to do is to follow in the footsteps of the pioneering entrepreneurs who have led the way and established a dominant design or product platform, and whose earlier activities have resolved all the major uncertainties. Fast followers can leapfrog the pioneers with a proactive market strategy. In order to minimize their risks, Fast Followers must take advantage of the learning and education of the market that has already taken place and focus on improving the product. Speed to Market is the core of the fast follower business model.
They must shorten the time it takes to get from concept to factory floor to the market place. 5. Do you agree that Starbucks is the “ultimate Customer Centric? ” Why or why not? I agree that Starbucks demonstrates the ultimate customer centric business strategy. Customer-centric strategies strive to increase customer satisfaction, loyalty, retention and ultimately, the bottom line. Differentiated customer experience is an essential strategy for attracting and retaining customers, and people are willing to pay more for it.
The Starbucks atmosphere provides quick service, comfortable seating, music, wireless internet and other customer experience differentiators has led to sales growth. Starbucks believes in paying front-line employees well because they are the first line of experience. The company also empowers its employees to make customer relation decisions without obtaining approval from higher level managers. All these actions are in an effort to exceed the expectations of their customers making Starbucks the ultimate Customer Centric. 6.
How would you compete against Starbucks? Starbucks has designed their company to sell an ordinary commodity in a way that is unique. To compete against Starbucks would require conducting market research. A competitor would have to study the customer needs and in particular those needs that aren’t currently being met by Starbucks. Once the segment of the target market is identified through market research, the competition must find a way to appeal to those customers. A Starbucks competitor should focus on the fundamentals or the things that customers will remember.
Clean facilities, friendly employees and delivering the same first-rate business transaction each time will foster customer loyalty. 7. Should a company have a different fundamental business strategy for each of its strategic business units (SBUs)? Explain your answer. Yes, a company should have a different fundamental business strategy for each of its strategic business units (SBUs). Management should select strategies consistent with its mission and capitalize on the organization’s distinctive competencies that will result in a competitive advantage.
A methodology to allocate resources among the various SBUs of a business must be established. Various portfolio models including the Boston Consulting Group Portfolio Model and the General Electric Portfolio Model can be utilized to classify the SBUs of an organization. This analysis allows a company to determine the future cash contributions that can be expected from each SBU as well as the future resources that each will require. As a result, an organization can develop an appropriate business strategy for each SBU.