Offensive Strategies

1
Offensive Strategies

• Mktg 485
• May 26, 2004

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Schedule

• Wednesday (5-26)
• Chapter 12 (Offensive Strategies)
• Systemsoft Case
• Wednesday (6-2)
• Chapter 13 (Defensive Strategies)
• Intel Case
• Course review
• Monday (6-7)
• Final Exam (830)

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Portfolio Analysis
VeryAttractive



Market Attractiveness
VeryUnattractive
Very Weak
Very Strong
Competitive Advantage
4
Portfolio Analysis
Build Selectively(Flanker) Invest to Build(Challenger) Protect(Leader)
Limited Expansion or Harvest(low risk expansion) Selectivity Manage for Earnings(seek protect profitable segments) Build Selectively(Protect against competition seek profitability)
Divest Manage for Earnings(harvest?) Protect Refocus(Manage for current earnings)
VeryAttractive
Market Attractiveness
VeryUnattractive
Very Weak
Very Strong
Competitive Advantage
5
Strategies
Protect Invest to hold a competitive position
Grow Invest to grow a competitive advantage
Focus Selectively narrow market focus to profitable segments
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Strategies
Harvest Adjust prices and marketing expenses to gradually exit a market
Entry Invest to enter an attractive market
Divest Quick divestment from a market when there are no short-term profits to be made
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Portfolio Management

• Grow versus Harvest/Divest
• General Motors
• Chevrolet, Pontiac, Oldsmobile, Cadillac, Buick,
  GMC, Saturn, Hummer, Saab, Opel
• Harvest Oldsmobile
• Grow Cadillac

8
Portfolio Analysis and Strategic Market Plan

• Business Performance what will we end up with?
• Market Attractiveness what do we need to
  succeed?
• Competitive Advantage what resources do we have?

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Snack Foods Market

• 32 billion / year
• Potato chips , pretzels, corn chips, popcorn,
  crackers, snack nuts, tortilla chips, party mix,
  meat snacks, etc.
• Major brands
• Frito-Lay (Pepsi), Pringles (PG), Nabisco,
  Keebler
• Trends
• Healthier snacks
• Sales in mass merchandise stores versus grocery
  stores
• Fat free

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Market Attractiveness

1. Market Forces
2. Competitive Intensity
3. Market Access

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Market Attractiveness - 1
MarketForces Attractive-ness
Market Size
Growth Rate
Buying Power
Customer Loyalty
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Market Attractiveness - 2
Competitive Intensity Attractive-ness
Competitors
Price Rivalry
Ease of Entry
Substitutes
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Market Attractiveness - 3
Market Access Attractive-ness
Customer Familiarity
Channel Access
Sales Requirements
Company Fit
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Offensive vs. Defensive Strategies

• Offensive?
• Defensive?

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Portfolio Analysis
Offense(grow) Offense (grow)Defensive (protect) Defensive(protect)
Offense (grow) Defensive(protect/harvest) Offense (grow) Defensive(protect/focus) Offense (grow)Defensive(protect/focus)
Defensive(divest or harvest) Defensive(divest or harvest) Defensive(divest or harvest)
Market Attractiveness
Competitive Advantage
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Portfolio Analysis
VeryAttractive
Offense(grow) Offense(grow) ?
Offense(grow) Offense(grow) Offense(grow)

Market Attractiveness
VeryUnattractive
Very Weak
Very Strong
Competitive Advantage
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Portfolio Analysis
VeryAttractive
Defense Defense
Defense Defense Defense
Defense Defense Defense
Market Attractiveness
VeryUnattractive
Very Weak
Very Strong
Competitive Advantage
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Life Cycle Effects
Offensive/Defensive
Defensive
Offensive/Defensive
Defensive
Offensive
Offensive
Offensive
Emerging Market
Maturing Market
DecliningMarket
Rapid Growth
Early Growth
Late Growth
Mature Market
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HP versus Dell
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Offensive Strategies?
Products
Prices
Distribution
Promotion
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Market Penetration
Grow Market Share
Grow Customer Purchases
Enter New Market Segments
Grow Market Demand
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New Market Entry
Related New Markets
Diversified New Market Entry
Enter New Emerging Market
Develop New Market Potential
23
Amazons Efforts

• Attract More customers
• Free Shipping on orders over 25
• Result 3rd quarter revenue increased 33
• Lower Fulfillment Costs
• Now 12 of revenue vs. 15 last year
• How? Better inventory control at 6 warehouses
• Reduce deliveries
• Free shipping has slower delivery dates
• Provides time to consolidate more orders
• Work with Postal Service
• By delivering books from warehouse to USPS depot
  get reduced rates

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Expand Distribution

• Expand Offerings
• New Clothing Store with items from The Gap and
  Nordstrom
• Amazon Marketplace
• Provide services for other merchants
• Fulfillment for Bertelsmann, Borders

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Wall Street Likes Amazon

• Stock Performance
• 12.2 in Jan 2002
• 21.3 in Jan 2003
• 54 end of Nov 2003
• Market Capitalization
• 21.6 billion for Amazon
• 2.2 billion for Barnes Noble
• (5. 6 billion in sales 132 million profit)

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Why Wall Street Likes Amazon

• Tremendous Sales Growth
• 3.1 billion (2001)
• 3.9 billion (2002)
• 5.0 billion est. (2003)
• Improving Net Income
• (-1.4 billion) in 2001
• (-567 million) in 2002
• (-149 million) in 2003

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BMWs Offensive Strategy

• Product Improvements
• Product Line Stretching
• Controlled production
• Financing