Telkom University OFFENSIVE STRATEGIES Dosen: Osa Omar Sharif.

Telkom University

OFFENSIVE STRATEGIES

Dosen: Osa Omar Sharif

Telkom Economic and Business School

2

• Strategic Market Plan• Offensive Strategic Market Plan• Offensive Core Strategy 1 : Invest to

Grow sales• Offensive Core Strategy 2 : Improve

Competitive Position• Offensive Core Strategy 3 : Enter New

Markets• Choosing Offensive Strategic Market

Plan

Content

3 Strategic Market PlanMany business experienced considerable growth during the 1990’s and early 2000’s, Starbucks, Apple, Toyota, Microsoft, Wal-Mart are a few example.Three Basic Performance Objective : Share Position Sales Growth Profit Performance

Telkom Economic and Business School 4

Starbucks’s Offensive Growth Strategies

$0

$1

$2

$3

$4

$5

$6

$7

$8

2004 2005 2006$389 m $494 m $564 m

Net Profit

Sale

s Re

venu

e ($

Bill

ion)

Starbucks Product Mix 2006Beverage ------------------- 77%Food Product ------------- 15%Whole Coffee Bean ----- 3 %Equipment ----------------- 5 %

Company-operated Retail Store (85% of sales) Market Penetration• 7,102 US Stores; 746 new stores in 2005, 1,040 in 2006• Includes 11 Seatle’s Best Coffee and 4 Hear Music StoresRevenue per Store• 1,600 drive-through locations• 5,100 stores carry prepared food• 640 store with warm breakfast sandwiches

Specialty Operation (13% of sales)Licensed Retail Store• 5,338 licensed retail store in 30 other countriesGrocery Stores and Warehouse Clubs• Starbucks Coffee, Seatle’s Best Coffee, Torrefrazione Italia, and

Tazo Teas in 31,900 retail outletsBranded Product (2% 0f sales)

Existing Products• Frappuccino coffee drinks• Starbucks double-shot espresso drinksNew Products• Starbucks Ice Cream, Starbucks Coffee Liqueur, and Starbucks

Discoveries (ready-to-drink Chilled Coffee, available in Japan and Taiwan)

• 24-hour Starbucks Hear Music Channel (downloadable with Apple’s iTunes)

• Starbucks Card Dueto (Visa credit card)


5

Strategic Market Plans

The Strategic Market Plans address three basic performance objective

Share Position : How will the strategic market plan contribute to the business’s share position in

served market ? Sales Growth : To what degree will the strategic

market plan contribute to sales growth ? Profit Performance : How will the strategic

market plan short- and long-run profit performance


Offe

nsiv

e

Offen

sive

DefensiveDefensive

Strategic FocusInvesting for growth and

position

Strategic FocusManaging profit and investing to protect position

EmergingMarket

EarlyGrowth

RapidGrowth

LateGrowth

MaturingMarket

MatureMarket

DecliningMarket

Product Life Cycle Stage

Mar

ket D

eman

d

Market Growth and Offensive & Defensive Strategies


Offensive Strategies


Offensive Strategies or

Defensive Strategies










0 20 40 60 80 1000

20

40

60

80

100

Competitive Position

Mar

ket A

ttra

ctive

ness

Portf

olio

Pos

ition

and

Str

ateg

ic M

arke

t Pla

ns

Offensive Strategies : Invest to grow, Improve position, New Market entry

8 Offensive Strategic Market Plan Offensive strategies can range from improving the

competitive position and market share in existing product –markets to entering new market with no establish share position.

A business could explore the possibility of using an offensive strategic market plan to cultivate an emerging or underdeveloped market

Of the six portfolio, in quadrant Offensive or Defensive, we would need more information before decide one of them.

Offensive strategic market plans are fundamentally geared for growth and inherently involve strategies for penetrating or growing existing market or entering or developing new markets



Core Strategy IIInvest to improve

competitive position

Strategic ObjectiveImprove Margin

Core Strategy IInvest to grow sales in

existing markets

Strategic ObjectiveGrow in existing markets

Core Strategy IIIInvest to enter new

markets

Strategic ObjectiveDiversify Growth

IA Grow Market Share

IB Grow Revenue per Customer

IC Enter New Market Segment

ID Expand Market Demand

IIA Improve Customer Loyalty & Retention

IIB Improve Differentia tion Advantage

IIC Lower Cost/improve Marketing Productivity

IID Build Marketing Advantage

IIIA Enter Related New Market

IIIB Enter Unrelated New Market

IIIC Enter New Emerging Markets

IIID Develop New Markets

Strategic Market Plans and Offensive Strategies

10Offensive Core Strategy I : Invest to Grow The objective of the Offensive Core

Strategy I is to grow the business in existing market.

The specific strategic market plans range from share penetration to growing market demand

A business could grow its market share , increase its revenue per customer, enter new market segments, or it could expand new demand.

Telkom Economic and Business School11

Offensive Strategy IA : Grow Market Share There are many factors can effect a business’s ability to grow share and

profitability : To what degree has the business achieved its share potential ? What factors driving share development need to be manage to grow

share in given product market ? Will share growth actually contribute profitability ?

A business estimate : 90% product awareness, 50% product preference, 80% intention to purchase, 80% Availability, and 70% rate of purchase.

It means the business has achieved only 40% of its potential market share It would have a good opportunity to grow market share with market penetration strategy.

ProductAwareness

ProductPreference

PurchaseIntention

ProductAvailability

PurchaseRate

Market Share

Potential = x x x x

= 0.90 x 0.50 x 0.80 x 0.80 x 0.70= 20.2 %

If the business actual market share was 8%

Current Market Share

Market Share PotentialShare Development Index = = 8% / 20.2% x 100 = 40


Offensive Strategy IB : Grow Revenue per Customer

Business with its share potential almost fully realized, over all performance improvement relies more on growing sales with existing customer, which increases the amount of revenue per customer

Revenue per customer can also increased through price premium. Business that enhance their product with value-added services or built superior reputation for quality can change higher prices.


Offensive Strategy IC : Enter New Market Segments

Celeron

Pentium

Xeon

0

$ 1,000

$ 2,000

$ 3,000

Performance (capacity, speed, features)

Pric

e

Intel New SegmentEntry Strategy

Personal Computer Market Segments


Offensive Strategy ID : Expand Market Demand

$0

$5

$10

$15

$20

$25

$30

Price Segment

Under $ 10

Traditional Segment $ 10 - $ 15

PremiumSegment $ 15 - $ 25

Super PremiumSegment $ 25 - $ 35

Perceived Quality (brand image, taste, packaging)

Pric

e pe

r Bott

le

Level(New SegmentEntry)

Absolute Spirits(Core brand primary segments)

DanzkaNew segment entry

New Segment Offensive Growth Strategy in the VODKA Market


Strategies to enlarge a business’s customer base include : focus on winning over competitor’s customers and focus on growing

market demand by drawing new customers into market

Example :o The market of flat-screen TVs was 4 million per year in 2003o Although Sony and Samsung battle each other for market share,

their common offensive strategies is to grow market demando They estimate this market increased from 14 million per year in

2005 to 30 million per year in 2007

o This means, the market is very potential who various reason have not entered it.

Market Development Index (MDI)

Market Demand for Flat TV 2007

Market Potential for Flat TV=

30 million

100 million (worldwide)= x 100 = 30


Factors to be Address in Growing Market Demand

Personal UsersSegment (40%)

Business Segment (60%) Current

MarketDemand

Awareness

Availability

Compatibility

Interest

Price / Cost

UntappedMarket

Demand

Potential Buyers unaware ofFlat-panel TV benefits.

Product unavailable at localRetail outlet

Product incompatible withLifestyle or use situation

Product doesn’t have attractivebenefits

Potential buyers can’t effortThe product at current price

Current MarketDemand

MarketPotential

Num

ber o

f Cus

tom

ers

17Offensive Core Strategy II : Improve Competitive Position

Situation attractive market but weak competitive position invest to improve competitive position is the best way.

Better competitive position better chance of achieving price premium, high level of customer retention, improve margin and net marketing contribution.


18

Offensive Strategy II : Improve Competitive Position

Offensive Strategy IIA : Improve Customer Loyalty Business spend money to attract new customers to growing markets, but if they don’t retain these customers, they will experience higher marketing expenses and lower marketing profit.

Offensive Strategy IIB : Improve Differentiation Advantage One of the major customer’s complain in the wireless communication market is reliability. To address this problem and turn it into differentiation advantage, Verizon Wireless created a team of 50 “road warriors” in specially equipped cars to test the reliability of networks.

Offensive Strategy IIC : Lower Cost / Improve Marketing Productivity Sony found its profit margins were shrinking in consumer electronic as prices eroded faster than manufacturing cost could be lowered.

Offensive Strategy IID : Build Marketing Advantage Nautilus was a pioneer brand in the $ 5 billion home-fitness equipment market

19Offensive Core Strategy III : Enter New Market

Every business will need to examine growth opportunities outside its existing markets.

Any of three fundamental reasons : A limited number of attractive market opportunities

within existing markets Attractive opportunities in term of meeting the

business’s overall performance objective outside existing market

A desire diversity sources of profitability to reduce variation in performance


Offensive Strategy IIIA : Enter Related New Markets

StrongTaste

FruitFlavor

BitterTasting

SweetTasting

FruitJuice

FruitDrink

Non ColaSoft

Drinks

ColaSoft DrinksBottled

& Mineral Water

SportDrink

ClubSoda

Ice Tea &

Coffee

EnergyDrink

New

Mar

ket E

ntry

Opp

ortu

nitie

s fo

r Coc

a Co

la


Offensive Strategy IIIB : Enter Unrelated New Markets

Westinghouse acquired CBS in 1990, Disney had acquired ABC

One of the primary advantage of an unrelated new market entry strategy is reduced market dependency

There three reasons : New Source of growth, new market diversification offers

the potential of adding to the business’s sales growth and profit performance

Smoother Performance, new market diversification offers customer diversification , which can reduce the magnitude of swings in sales and profit performance

Reduce Vulnerability reduce market dependence and vulnerability


Offensive Strategy IIIC : Enter New Emerging Markets

When the current customers is small but market potential is great business can grow by entering emerging market, this strategy can enable a business to establish a early leadership position in the market

High technology markets have rapidly emerging market demand and relatively short product life cycles.

The pioneer has potential to achieve competitive advantage

As an emerging markets begins to grow, early follower enter the market, early follower emulate the dominant design and enter the market after letting the pioneer invest in developing the technology


Offensive Strategy IIID : Develop New Markets

Apple’s initial entry into the personal computer market was a market-growth strategy that focused on the enormous untapped potential of the PC market.

Product that operate by electricity have no market in rural area of underdeveloped countries where no electricity service available GE adapted its technology to enable business in area with no electricity power to produce their own electricity and sell their excess to local utilities.

A growth strategy to develop untapped new market potential involve high risk but offers the potential high return

Telkom University OFFENSIVE STRATEGIES Dosen: Osa Omar Sharif.

Documents

strategic market plan

sales market penetration7

starbucks coffee liqueur

chilled coffee

coffee bean

seatles best coffee

new stores

retail outletsbranded