Marketing Strategy - Strategic Options and

Choices(1)
By K. Sashi Rao Training and Management Consultant

STRATEGIC OPTIONS
Basic purpose is to develop strategies to enlarge the scope of a firms operations and activities This can be done by adopting either singly or in combination the broad options of growth, stability or retrenchment/withdrawal A firms strategy is basically concerned with its choice of businesses, products and markets that it wishes to be engaged in

DEVELOPING STRATEGIC OPTIONS

SWOT ANALYSIS

ORGANIZATIONAL PURPOSE

ENVIRONMENTAL BASED OPTIONS -Generic strategies -Market options -Expansion methods

RANGE OF STRATEGIC CHOICES FINAL STRATEGIC OPTION SELECTION

RESOURCE BASED OPTIONS -Resource driven -Value chain -Cost reduction

STRATEGIC FORMULATION Values, beliefs - Framework Vision Statement

External Environment Analysis Mission Statement Objectives Goals Targets Gap Analysis Key Success Factors Internal Environment Analysis

SWOT Analysis Growth Strategies

Product-Market Portfolio Analysis Business/ Cooperative Strategies

Strategy Formulation Strategic Plan

Strategy Implementation & Evaluation

STRATEGIC GROWTH OPTIONS

Growth thro increased market size, market share and by acquiring similar businesses Growth thro other businesses by diversification into unrelated areas Growth via economic results and profitability yardsticks Growth determined by its existing resources and capabilities by higher productivity

STRATEGIC CHOICE - the definition

Strategic choice seeks answers to What shall we do?; How do we go about it? And How do we get things done Many available options exist- based on environmental and internal factors; growth/expansion/stability and others Hence, strategic choice becomes complex, unwieldy, time consuming and often confusing as it throws up contradictory choices

PRODUCT/MARKET GRID( Ansoff)

CURRENT PRODUCTS NEW PRODUCTS

CURRENT MARKETS

MARKET PENETRATION
MARKET DEVLPMNT.

PRODUCT DEVELOPMENT

NEW MARKETS

DIVERSIFICATION

PRODUCT/MARKET GRID (Ansoff)-advanced

Withdrawal Focused attention Privatization

CURRENT PRODUCTS

NEW PRODUCTS

More Products

CURRENT MARKETS

MARKET PENETRATION
MARKET DEVLPMNT.

PRODUCT DEVELOPMENT

NEW MARKETS

DIVERSIFICATION

More Customers

Related markets Unrelated markets

EXPANSION METHOD MATRIX

COMPANY
Inside Internal Development ( as already covered) Outside Merger Acquisition Joint venture Alliance Franchise Merger Acquisition Joint venture Alliance Franchise Turnkey Licensing

Home Country

GEOGRAPHICAL LOCATION
Overseas Location Exporting Overseas offices Overseas manufacture MNC operation Global operation

GENERIC STRATEGIC OPTIONS( Michael Porter)

COMPETITIVE ADVANTAGE
Low cost Differentiation

Broad

DIFFERENTIATION COST LEADERSHIP

COMPETITIVE SCOPE
Narrow MARKET FOCUS

GENERIC STRATEGIES
COST LEADERSHIP- aim here is to lower costs than ones competitors without reduced quality and achieve economies of scale; avoids costs to differentiate products PRODUCT DIFFERENTIATION- attempts to differentiate products thro innovation, added value and superior quality and service ; offer unique selling proposition MARKET FOCUS- focus on particular market segments or geographies to attain dominance
THESE STRATEGIES ARE NOT MEANT TO BE MUTUALLY EXCLUSIVE AND CAN BE USED SINGLY OR IN COMBINATION DEPENDING ON THE BUSINESS OUTLOOK AND ALSO LINKED TO PRODUCT LIFE CYCLES

GENERIC STRATEGIES FRAMEWORK(1)

Broad Competitive Scope/Target Market Narrow COST LEADERSHIP BROAD DIFFERENTATION

COST FOCUS

DIFFERENTIATION FOCUS

Basis of competitive advantage

GENERIC STRATEGIES FRAMEWORK(2)

Broad Competitive Scope/Target Market Narrow
LOW COST LEADERSHIP BROAD DIFFERENTATION

BEST COST PROVIDER (Hybrid) FOCUSED LOW COST DIFFERENTIATION FOCUS

Basis of competitive advantage

GENERIC STRATEGIES (within auto industry)- M.Porter

Toyota- low cost producer based on cost leadership thro high volumes, lean production, highly efficient supply chain/distribution and low servicing cost GM- broad differentiation strategy by competing in most segments and tries to differentiate thro better styling and innovative features Hyundai - cost focus strategy by serving its narrow niche markets at a lower cost and price than its rivals BMW/Mercedes- differentiation focus strategy catering to its exclusive luxury clientele where superior quality and features are offered and price is unimportant

GENERIC STRATEGIES - Some other examples

Cost Leadership- Nirma /Hindustan Lever detergents; Reliance/Nokia/Motorola mobiles; Toyota/Hyundai cars Product/Service Differentiation- Rolex/Omega/ watches; Reid & Taylor/Raymond suits; Nike/Adidas/Reebok shoes; BMW/Mercedes/Rolls Royce cars; Amway/Tupperware; Citibank/American Express; Yatra.com/Make My Trip. COM Market/Niche Focus- Cross pens, Tanishq jewellery, Arrow shirts, specialty restaurants, Italian shoes, medical tourism, adventure sports travel agencies, Deziree non-sugar sweets for diabetics

HYBRID STRATEGY - Best Cost Provider

Strategy/Toyota example
Such a strategy was adopted for their Lexus cars range By designing several high performance features to be comparable in performance and luxury to BMW/Mercedes/Audi Then transferring their low cost capabilities in making high quality

Toyota models at lower cost than the luxury car makers

And then using its relatively lower manufacturing costs to offer lower prices with comparable BMW/Mercedes models Establishing a network of separate Lexus dealers dedicated to

providing personalized service to such niche market customers