Lecture 8. Market sensing and learning strategy Strategic market choices and targets Customer value strategy and positioning Strategic relationships and.

Lecture 8

Marketsensingandlearningstrategy

Strategicmarketchoicesandtargets

Customervaluestrategyand positioning

Strategicrelationshipsandnetworks

Strategic thinking andthinking strategically

Strategictransformationand strategyimplementation

Customer relationships Competitor and contingent relationships Collaborator relationships Co-worker relationships The network of key relationships

Do we know what we want the customer relationship to be?

Do we have that relationship or can we get it?

Can we deliver that relationship? Do we understand the link between the

strength of the customer relationship and the attractiveness of that customer’s business?

Customer relationship

Customerattractiveness

Strong Weak

High

Low

Prime targetcustomers -

achieve synergy aswe retain the “best”customers (we hope)

Targets forconversion -

are they attractiveenough to be

worth chasing?

Stickycustomers -

they want us, wedon’t want them,

so what do we do?

Mutualantipathy -

they don’t want us,we don’t want them,

end of discussion

Some fundamental issues: every organization has competitors every company says “we know who our

competitors are” and frequently get it wrong most think that “competitors are in our

industry” – see back to the Competitive Box to dispel that myth

Really understanding the competition conventional analysis develops a competitor

response profile the psychology of competition may be just as

significant – e.g., how ugly are the competitors around here?

Competitor’s goalsWhat are they tryingto achieve in thismarket?

Competitor’s strategyWhat is this company’scurrent strategicposition?

Competitor’s strategicassumptions - How does managementlook at the market?

Competitor’scapabilities - What aretheir strengths andweaknesses

Competitor’s response profileIs this competitor satisfied with its current position?What are the likely moves they may make?Where is this competitor most vulnerable?What is this competitor sensitive about, what ismost likely to provoke a competitive reaction?

Adapted from: Michael E. Porter, Competitive Strategy, New York: Free Press, 1980.

Competitive reactionto our move?

Competitiveaggression

Yes No

High

Low

Fight tothe death

Showdisdain

Weakcounter-attack

Ignoreus

Where is the competition coming from in this market? can we predict the strategic moves of our competitors

and maintain our competitive advantage? do we recognise new potential competitors and new

technologies? does our value proposition give us a specific positioning

thatb plays to our strengths and avoids head-on competition?

Critical contingents: shapers of opinion regulators recommenders gatekeepers suppliers supply chain partners

From outsourcing to alliances and networks outsourcing partnership alliance vertical integration

Short-term

Long-term

Permanent

Jointventure

Verticalintegration

Arm’slength

Outsourcing

Partnership

Alliance

Ownership

Closeness ofrelationship

Low

High

Nature of the relationship

Purchase of goods and servicesfrom outside the company, possiblyover the long termShort-term focus, but coordinatedactivities between partner companies

Longer-term focus with integration ofactivities between partner companies

“Permanent” arrangement withpartner companies highly integrated

Shared ownership in an operationwith a collaborator company

Full ownership of the activities or operations

Advantages in collaboration: cost efficiency customer service marketing advantage strategic advantage profit stability and growth

Network organizations a new organization form: the hollow or

networked organization

Calyx & Corolla

Customers

FederalExpress

Flowergrowers

1. Customer orders fromcatalogue: phone, fax,mail, e-mail

2. C&C notifies orderto Federal Express andthe chosen flower growerby computer

3. Federal Expresscollects flowers

4. Federal Expressdelivers flowers

Collaborations that crash synergy or “ygrenys”

Managing partnerships and collaborations corporate compatibility management style and techniques mutuality symmetry

Partnership-based strategy should consider time and cost in: establishing the partnership monitoring the partnership strengthening the partnership getting out of the partnership

Can and will employees/managers in the company/alliance deliver the promise of the value proposition to the customer? do not assume everyone will think our

strategy is great and buy-in be realistic about capabilities

Link to internal marketing strategy

Relationships with customers, competitors, contingents, collaborators and co-workers are connected

Challenge is to test market choices and value propositions against the network’s capabilities

Competitors and contingents Virgin antagonism continues;low cost operators attackingthrough courts; European regulator investigates;no help from government

Collaborators USAir alliance crashed; American Air alliance stalled;travel agents are hostile;

Customers Customer satisfaction levelsfalling; premium passengersswitching brands; higherservice image weakened

Co-workers Climate surveys go down; newbranding is resisted; industrialaction takes place and moreis threatened

BAStrategy

The danger is developing and pursuing attractive strategies that rely on relationship network capabilities which do not exist