The Strategy Clock Strategies Likely to be Failure ( 6,7,8) Increased Price/Standard Value - - - When highermargins are realized if competitors

do not follow immediately; nut, risk losing market share Increased Price/Low Value - - - Only feasible inmonopoly situation Low Value/Standard Price - - - Risk Loosing of Market Share

No Frills Strategy Low priceLow perceived product/service benefitsFocus on price-sensitive market segment Low priceLow perceived product/servicebenefitsFocus on price-sensitive marketsegment For Commodity-like products or services For non-affording Price Sensitive Customers When buyer power is or when switching costsare low; generally, if customer loyalty is difficult When number of providers are small, and ifmarket shares & cost structures are almost same For low-price segment If major competitors areon non-prise basis Low Price Strategy - Lower price than competitors- Maintain similar product/service benefits Pitfalls of low price strategy Margin reduction (Competitor reaction) Inability to reinvest to develop the product,leading to loss of perceived benefit of product Hence, Low Cost Base is essential Low cost by itself may not be a basis foradvantage since it could be imitated. Hence, Low cost achieved in ways that competitorscannot match to give sustainable advantage

Differentiation Strategies 1. Offering benefits different from competitors2. Widely valued by buyers3. Better products/services at same/higher prices Success depends on Identification of StrategicCustomers and knowing what they value,And, on Knowing the Competitors- Adopt Focused differentiation if competitorbase is small/narrow- If competitor base is wide, address on whatparameters differentiate for value to customers Hybrid Strategy Simultaneously achieving differentiation & lower price Could be advantageous in the following cases If much greater greater volumes can be achieved thancompetitors, thus decreasing costs to enlarge margins If there is clarity about activities on whichdifferentiation can be built (core competences) And, be able to reduce costs on other activities Use the Hybrid Strategy to enter a market wherethere are already established competitors Focused Differentiation High perceived product/service benefits to nichemarket segments & Premium branded products

First, Choice to be made between focuseddifferentiation (5) and broad differentiation (4) Difficult when the focus strategy is applicable onlyfor part of an organizations overall strategy Possible conflicts with stakeholder expectations,when the focused benefits are not uniform New ventures usually start off this way, but it maybe difficult to grow with focused approach Market situation may change, making focusirrelevant, if differences in segments get reduced

Failure Strategies Results if perceived value-for-money doesnot get provided in terms of productfeatures or price, or both For example, Increase price withoutincreasing benefits in products orservices Or, Reduce benefits whilst maintainingprice

Sustaining Competitive Advantage When the Strategies are price based: Be ready to accept reduced margin ( either because higher volumes or by cross-subsidies ) Get ready to sustain and Win a Price War Reduce Costs through organization specificstrategic capabilities Focus on Specific Segments that value price Sustaining Competitive Advantage If the Strategies are differentiation-based: Create Difficulties of imitation Achieve imperfect mobility (of resources/competences e.g. key R & Dpersonnel) Many intangible assets such as brand, image orreputation are difficult for imitation Sustaining Competitive Advantage Derive sustenance by achieving Lock-in Status - - -- achieving proprietary position in the industry bycreating the industrys standard - - like what IBM,or Microsoft, Xerox, Intel had achieved By Achieving Size/Market Dominance By deriving First Mover Advantage Reinforcement Rigorous Enforcement thorough insistence onconformities to standards thus seeing off competitors