Table Of ContentKH
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Contents
List of Figures vii
Preface xi
Chapter 1: An Introduction to Competitive Business Strategies 1
Historical Concepts of Business and Competitive Strategy 2
The Transaction Premium 4
Terms 6
Review/Discussion Questions 6
Suggested Readings 7
Chapter 2: The Value Frontier 9
Dimensions of the Value Frontier 9
Competitive Strategy on the Value Frontier 15
Terms 17
Review/Discussion Questions 17
Suggested Readings 17
Chapter 3: Thinking Strategically 19
The Strategic Planning Process 19
The Elements of Effective Strategies 24
Terms 26
Review/Discussion Questions 26
Suggested Readings 26
Chapter 4: Product and Brand Strategies 27
Customer Economic Rationality on the Value Frontier 27
Competitive Behavior and the Value Frontier 30
Terms 32
Review/Discussion Questions 32
Suggested Readings 33
Chapter 5: The Firm’s Alternative Market Entry Strategies 35
Required Level of Investment 37
Barriers to Competitor Entry 38
iii
iv Contents
Opportunities for Product Line Extension 39
Initial Market Risk 40
Customer Brand Identification 40
Relative Length of Remaining Market Life 41
Terms 42
Review/Discussion Questions 42
Suggested Readings 42
Chapter 6: Competitive Differentiation and Competitive Advantage 43
Pioneering Strategies 43
Penetration Strategies 45
Skimming Strategies 48
Alternative Customer Responses to Price 50
Challenger Strategies 50
Flanking Strategies 50
Leapfrog Strategies 52
Price and Performance-based Leapfrog Strategies 55
Challengers versus Followers 56
Lock-in Strategies 57
Sunk Cost Lock-in 57
Network Lock-in 58
Bundling Strategies 60
Terms 60
Review/Discussion Questions 61
Suggested Readings 61
Chapter 7: Competitive Response 63
Counter-flanking Strategies 63
Counter-leapfrog Strategies 69
Temporary Price-based Leapfrog (Price Promotions) Strategies 70
Contingent Price-based Leapfrog (Price Matching) Strategies 71
Countering Lock-in and Bundling Strategies 72
Terms 73
Review/Discussion Questions 73
Suggested Readings 73
Chapter 8: Mature Markets and Irrational Competitors 75
Irrational Competitors: Loss Leaders and Predators 76
Signaling Strategies 80
Terms 81
Review/Discussion Questions 82
Suggested Readings 82
Contents v
Chapter 9: Cooperative Strategies 83
The Basis for Cooperation 83
The Intended Effects of Cooperation 84
Terms 86
Review/Discussion Questions 87
Suggested Readings 87
Chapter 10: The Product Life Cycle on the Value Frontier 89
Stages in the Product Life Cycle 89
Strategic Decision-making and the PLC 91
Terms 95
Review/Discussion Questions 95
Suggested Readings 95
Chapter 11: Strategic Business Unit and Divisional Strategies 97
Strategic Business Unit (SBU) Level 97
Division Level 99
The Company’s SBU Portfolio 99
Contribution Margin versus Full Cost Coverage 101
Sunk Costs versus Recoverable Costs 103
Terms 105
Review/Discussion Questions 105
Suggested Readings 106
Chapter 12: Growth, Integration, and Diversification 107
Relative Competitive Position (RCP) and the Mid-life Extension 107
Forward Integration Strategies and Vertical Marketing Systems (VMS) 109
Diversifying to Internalize Economic Externalities 112
Terms 115
Review/Discussion Questions 115
Suggested Readings 115
Chapter 13: The Art and Science of Competitive Strategy 117
Tools for Evaluating Brand Positions 117
Image Development (Social Cause Marketing) 119
Co-branding and Brand Licensing 120
Customer Relationship Management (CRM) 122
Customer Life-Cycle (CLC) Planning 123
Putting It All Together: The Integrated Competitive Strategy 125
Terms 126
Review/Discussion Questions 127
Suggested Readings 127
vi Contents
Chapter 14: Competitive Strategy in the Age of Technology 129
Enhanced Information Input, Storage, and Retrieval 130
Inputs 130
Storage 131
Retrieval 132
Information Processing 132
Information dissemination 134
Applying Digital Technologies to Enhance Competitiveness on the Value Frontier 135
Competitive Response 136
New Technologies for Developing and Maintaining Customer Relationships 137
Short Message Service 138
Multimedia Message Services 139
Push Notifications 139
App-based Marketing 140
In-game Mobile Marketing 141
Quick Response Codes 142
Bluetooth 142
Proximity Systems 143
Location-based Services 143
Ringless Voicemail 144
The Evolving Digital Marketplace 145
Terms 145
Review/Discussion Questions 145
Suggested Readings 146
Chapter 15: Competitive Strategy in Increasingly Competitive Markets 147
The Competitive Planning Hierarchy 148
The Macroenvironmental Context for Competitive Strategy 151
Why Products Fail 153
The Importance of Continual Environmental Scanning 154
Isolating New Business Initiatives 155
Sustainable Competitive Advantage through Brand Positioning 156
Brand Excellence 156
Customer Relationship Development 157
Reliability and Advanced Design 157
Price Leadership 158
High Style and Fashion 159
Social Status 160
The Future of Competitive Strategy 161
Terms 161
Review/Discussion Questions 161
Suggested Readings 162
Glossary 163
List of Figures
Figure 1.1 The Firm’s Operational and Competitive Strategies 2
Figure 1.2 A Transaction: The Hypothetical Purchase of a Cup of Coffee (1) 5
Figure 1.3 A Transaction: The Hypothetical Purchase of a Cup of Coffee (2) 5
Figure 2.1 Customer Decision-Making Variables: Initial Salient Variables 10
Figure 2.2 Customer Decision-Making Variables: Quantification of
Surviving Variables 10
Figure 2.3 One Customer’s Ideal Point on the Value Frontier 11
Figure 2.4 Multiple Customers’ Ideal Points of the Value Frontier 11
Figure 2.5 Customers’ Ideal Points and Suppliers’ Value Propositions on
the Value Frontier 12
Figure 2.6 Projective Customer Preference Mapping (1). Hypothetical
Example: Automobile Tires 13
Figure 2.7 Projective Customer Preference Mapping (2). Hypothetical
Example: Automobile Tires 13
Figure 2.8 Customer Preferences Reflected on the Value Frontier 14
Figure 2.9 Market Segments on the Value Frontier: Identification of
Key Market Segments 14
Figure 2.10 Market Segment Migration on the Value Frontier 15
Figure 2.11 Repositioning Existing Value Propositions to Reach New
Market Segments 16
Figure 2.12 Developing New Value Propositions to Reach New Market Segments 16
Figure 3.1 Strategic Planning Process 20
Figure 3.2 Organizational O bjectives 25
Figure 4.1 Customer Ideal Points on the Value Frontier 28
Figure 4.2 Customer Ideal Points on the Value Frontier: Ideal Point Migration 29
Figure 4.3 Customer Ideal Points on the Value Frontier: Off-curve Ideal Points 29
Figure 4.4 Customer Ideal Points on the Value Frontier: Producer Quality/Price
Improvement 30
Figure 4.5 Customer Ideal Points on the Value Frontier: Value Frontier Shift 31
Figure 5.1 Alternative Market Entry Strategies 38
Figure 6.1 Pioneer Firm’s Initial Market Position 44
vii
viii List of Figures
Figure 6.2 Pioneer Firm’s Initial Market Position: Higher and Lower Range Value
Propositions 45
Figure 6.3 Pioneer Firm’s Initial Market Position: The Range of Customer Value 46
Figure 6.4 Pioneer Firm’s Initial Market Position: Market Penetration Pricing 46
Figure 6.5 Pioneer and Challenger Firms’ Market Positions: Price and Quality/
Performance-based Penetration Strategy 48
Figure 6.6 Pioneer Firm’s Initial Market Position: Skim Pricing 49
Figure 6.7 Pioneer and Challenger Firms’ Market Positions: Competitor Flanking
Strategy 51
Figure 6.8 Pioneer and Challenger Firms’ Market Positions: Price-based Leapfrog
Strategy 52
Figure 6.9 Pioneer and Challenger Firms’ Market Positions: Performance-based
Leapfrog Strategy 54
Figure 6.10 Pioneer and Challenger Firms’ Market Positions: Price and
Performance-based Leapfrog Strategy 55
Figure 6.11 The Firm’s Lock-in Strategy 59
Figure 7.1 Pioneer Firm’s Market Position: Optional-Pricing Strategy 64
Figure 7.2 Pioneer Firm’s Market Position: Product Lining Strategy 65
Figure 7.3 Pioneer Firm’s Market Position: Market Cannibalization with
Self-flanking 66
Figure 7.4 Pioneer and Challenger Firms’ Market Positions: Pioneer
Counter-flanking Strategy 67
Figure 7.5 Pioneer and Challenger Firms’ Market Positions: Fighting
Brand Strategy 68
Figure 7.6 Pioneer and Challenger Firms’ Market Positions: Price- and
Performance-based Counter-leapfrog Strategy 69
Figure 8.1 Pioneer and Follower Firms’ Market Positions: Crowding on the
Value Frontier 75
Figure 8.2 Game Theory Model: Initial Stasis 78
Figure 8.3 Game Theory Model: Initial Competitive Action 79
Figure 8.4 Game Theory Model: Competitive Response 79
Figure 8.5 Game Theory Model: Preemptive Action 80
Figure 9.1 Value Frontier Shift Following Cooperative Marketing Program
Implementation 85
Figure 9.2 Value Frontier Coverage Following Cooperative Market Program
Implementation 86
Figure 10.1 The Product Life Cycle (PLC): PLC Stages and Customer
Description 90
Figure 10.2 The Product Life Cycle (PLC): PLC Stages and Customer
Classification 92
List of Figures ix
Figure 11.1 The Levels of Organizational Competitive Decision-making 98
Figure 11.2 The SBU Portfolio: The SBU Development Process 100
Figure 11.3 The SBU Portfolio: Cash Sources and Uses 101
Figure 11.4 The Break-even Model: The Full-cost Model 102
Figure 11.5 The Break-even Model: The Variable-cost Model 103
Figure 11.6 The Product Life Cycle (PLC): PLC Stages and Profit Curve 104
Figure 12.1 The Product Life Cycle (PLC): PLC Stages and the Mid-Life
Extension 108
Figure 12.2 Vertical Marketing Systems (VMS): Three Primary Forms 109
Figure 13.1 Customers’ Ideal Points and Supplier Value Propositions on the
Value Frontier 118
Figure 13.2 The Elements of Integrated CRM Solutions 123
Figure 13.3 The Customer Life-Cycle (CLC): CLC Stages and Consumption
Patterns 124
Figure 13.4 The Elements of Competitive Advantage 126
Figure 15.1 The Competitive Planning Hierarchy 148
Figure 15.2 Core Competency Improvement: Cost Leadership and Differentiation
Strategies 149
Figure 15.3 Competitive Position on the Value Frontier: Creating Competitive
Advantage through Penetration/Leapfrog Strategy 150
Figure 15.4 Competitive Position on the Value Frontier: Creating Competitive
Advantage through Price and Performance-based Repositioning
Strategy 151
