Porter identifies high market share with cost leadership, citing GM as a successful practitioner of this strategy. However, GM became a market share leader in the American automobile industry due to a strategy of mark...Porter identifies high market share with cost leadership, citing GM as a successful practitioner of this strategy. However, GM became a market share leader in the American automobile industry due to a strategy of market segmentation, differentiation and a broad scope shaped during the 1920s. Porter argues that cost leadership and differentiation offer an equally viable path to competitive success. Nevertheless, a differentiation strategy based on superior quality compared to competition is more profitable than cost leadership strategy. It can lead a business to become a market share leader, and consequently even a low-cost leader. Research indicates that differentiation and cost leadership can co-exist. However, Porter insists that each generic strategy requires a different culture and a totally different philosophy. The problem is that Porter＇s generic strategies are too broad. It is not his logic that is flawed, but his basic premise that prescribes cost leadership strategy as the only route to market share leadership, and presents a narrow view of differentiation with a unique product--sold at a premium price--on the one hand, and a ＂standard, or no-frills＂ product on the other. Mintzburg （1988） says Porter＇s cost leadership strategy should be called ＂price differentiation＂： a strategy that is based on a lower price than that of the competition. He suggests that business strategy has two dimensions： differentiation and scope. Thus, setting scope aside, competitive strategy has only one component： differentiation. So, the key question is not whether to differentiate, but how？ First, make customer-perceived quality as the foundation of competitive strategy because it is far more critical to long-term success than any other factor. Second, serve the middle class by competing in the mid-price segment, offering better quality than the competition at a somewhat higher price. It is this path that can lead to market share leadership--a strategy that can be both profitable--and sustainable.展开更多
Barney and Hoskisson （1990） argue that the strategic group research has neither established the existence of strategic groups, nor their relationship to firm performance. The primary reason behind the unsatisfactory...Barney and Hoskisson （1990） argue that the strategic group research has neither established the existence of strategic groups, nor their relationship to firm performance. The primary reason behind the unsatisfactory results is the lack of a theoretical framework： what strategic variables to include in the analysis and their relative importance; the definition of an industry, and how to make competitive strategy operational. First, the author presents a customer-oriented theory of management which submits that, like Procter and Gamble, understanding customers should be the primary focus of a business. Second, the author proposes an integrated approach to competitive strategy. Because customer-perceived quality is far more critical to long-term success than any other factor, it should be the centerpiece of competitive strategy. The author suggests that competitive strategy should be divided in two interdependent dimensions： external and internal. It is the external strategy that should be considered the primary dimension because it reflects the customers＇ perspective, and provides a sense of direction regarding how the internal resources should be used. Next, the author presents an operational framework of competitive strategy which proposes that the best route to market share leadership in consumer markets is competing in the mid-price segment, offering superior quality compared to competition at a somewhat higher price： （1） to maintain an image of quality, and （2） to ensure that the strategy is profitable and sustainable. Finally, the author offers a framework of business or industry definition that extends Abell＇s （1980） three dimensions to seven. He suggests that an integrated approach to market segmentation provides the foundation for conducting strategic group analysis in consumer markets. So, in strategic group research, we need a bottom-up approach that begins with a product-market segment. In each product market, real competition occurs at the brand level. This is the ground where actual competitive wars are fought, and this is where the rich dynamics of competition often come to light.展开更多
Porter identifies high market share with cost leadership strategy which is based on the idea of competing on a price lower than that of the competition. However, in most consumer markets a business should serve the mi...Porter identifies high market share with cost leadership strategy which is based on the idea of competing on a price lower than that of the competition. However, in most consumer markets a business should serve the middle class by competing in the mid-price segment, offering quality better than that of the competition at a somewhat higher price. It is this path that can lead to market share leadership： a strategy that can be both profitable and sustainable. The U.S. men＇s shaving cream market consists of two major product-market segments： gel and foam. We test the hypothesis that the best-selling brand is very likely to be a member of the mid-price segment with a price tag that is higher than that of the nearest competition. This study is based on annual U.S. sales data for 2008 and 2007 from discount retail stores, food stores, and drug stores. We performed two separate analyses for 2008 and 2007, using cluster analysis as the main analytic tool. The results were remarkably consistent between the two years. In the gel segment--by far the most important--the price-quality segmentation analysis supported our hypothesis. An interesting finding is that, for both the gel and foam segments, we found the rank order correlation of brand unit price between 2007 and 2008 as highly significant. This means that in this market management considers the price of a brand as a strategic rather than a tactical variable. Although, technically the results for the foam segment were negative, this does not necessarily contradict our hypothesis. Finally, we discovered six strategic groups in the industry and have tried to articulate what their competitive strategy is.展开更多
文摘Porter identifies high market share with cost leadership, citing GM as a successful practitioner of this strategy. However, GM became a market share leader in the American automobile industry due to a strategy of market segmentation, differentiation and a broad scope shaped during the 1920s. Porter argues that cost leadership and differentiation offer an equally viable path to competitive success. Nevertheless, a differentiation strategy based on superior quality compared to competition is more profitable than cost leadership strategy. It can lead a business to become a market share leader, and consequently even a low-cost leader. Research indicates that differentiation and cost leadership can co-exist. However, Porter insists that each generic strategy requires a different culture and a totally different philosophy. The problem is that Porter＇s generic strategies are too broad. It is not his logic that is flawed, but his basic premise that prescribes cost leadership strategy as the only route to market share leadership, and presents a narrow view of differentiation with a unique product--sold at a premium price--on the one hand, and a ＂standard, or no-frills＂ product on the other. Mintzburg （1988） says Porter＇s cost leadership strategy should be called ＂price differentiation＂： a strategy that is based on a lower price than that of the competition. He suggests that business strategy has two dimensions： differentiation and scope. Thus, setting scope aside, competitive strategy has only one component： differentiation. So, the key question is not whether to differentiate, but how？ First, make customer-perceived quality as the foundation of competitive strategy because it is far more critical to long-term success than any other factor. Second, serve the middle class by competing in the mid-price segment, offering better quality than the competition at a somewhat higher price. It is this path that can lead to market share leadership--a strategy that can be both profitable--and sustainable.
文摘Barney and Hoskisson （1990） argue that the strategic group research has neither established the existence of strategic groups, nor their relationship to firm performance. The primary reason behind the unsatisfactory results is the lack of a theoretical framework： what strategic variables to include in the analysis and their relative importance; the definition of an industry, and how to make competitive strategy operational. First, the author presents a customer-oriented theory of management which submits that, like Procter and Gamble, understanding customers should be the primary focus of a business. Second, the author proposes an integrated approach to competitive strategy. Because customer-perceived quality is far more critical to long-term success than any other factor, it should be the centerpiece of competitive strategy. The author suggests that competitive strategy should be divided in two interdependent dimensions： external and internal. It is the external strategy that should be considered the primary dimension because it reflects the customers＇ perspective, and provides a sense of direction regarding how the internal resources should be used. Next, the author presents an operational framework of competitive strategy which proposes that the best route to market share leadership in consumer markets is competing in the mid-price segment, offering superior quality compared to competition at a somewhat higher price： （1） to maintain an image of quality, and （2） to ensure that the strategy is profitable and sustainable. Finally, the author offers a framework of business or industry definition that extends Abell＇s （1980） three dimensions to seven. He suggests that an integrated approach to market segmentation provides the foundation for conducting strategic group analysis in consumer markets. So, in strategic group research, we need a bottom-up approach that begins with a product-market segment. In each product market, real competition occurs at the brand level. This is the ground where actual competitive wars are fought, and this is where the rich dynamics of competition often come to light.
文摘Porter identifies high market share with cost leadership strategy which is based on the idea of competing on a price lower than that of the competition. However, in most consumer markets a business should serve the middle class by competing in the mid-price segment, offering quality better than that of the competition at a somewhat higher price. It is this path that can lead to market share leadership： a strategy that can be both profitable and sustainable. The U.S. men＇s shaving cream market consists of two major product-market segments： gel and foam. We test the hypothesis that the best-selling brand is very likely to be a member of the mid-price segment with a price tag that is higher than that of the nearest competition. This study is based on annual U.S. sales data for 2008 and 2007 from discount retail stores, food stores, and drug stores. We performed two separate analyses for 2008 and 2007, using cluster analysis as the main analytic tool. The results were remarkably consistent between the two years. In the gel segment--by far the most important--the price-quality segmentation analysis supported our hypothesis. An interesting finding is that, for both the gel and foam segments, we found the rank order correlation of brand unit price between 2007 and 2008 as highly significant. This means that in this market management considers the price of a brand as a strategic rather than a tactical variable. Although, technically the results for the foam segment were negative, this does not necessarily contradict our hypothesis. Finally, we discovered six strategic groups in the industry and have tried to articulate what their competitive strategy is.
