IMT-71: COMPETITIVE ANALYSIS & MARKETING STRATEGY

PART - A

Q1. What is strategic marketing? What are its distinguishing characteristics? Specify the corporate inputs needed to formulate marketing strategy.

Q2. Majority of marketing strategists acknowledge the importance of competitive analysist but less efforts are put into detailed and formal analysis of competitors, Why? Please explain. 

Q3. What are the factors on which Porter's choice of strategy is based? Explain in detail the three generic strategies identified by Porter.

Q4. How to assess the competitors' strengths and weaknesses? Is this information necessary and for what purpose?

Q5. 'To prepare an effective marketing strategy, a company must study its competitors as well as its actual and potential customer.' Discuss.

PART - B

Q1. 'A firm needs a competitive intelligence system to keep track of various facets of its rival's businesses'. Discuss.

Q2. What is bench-marking? Explain with the help of examples how bench-marking can help improving competitive performance.

Q3. Describe BCG's strategic environment matrix. What is sustainable competitive advantage? What are the eight most significant potential competitive advantages a firm can have according to Davidson?

Q4. What is 'the boiled frog syndrome'? What is PEST analysis? What are the strategic implications of different types of environmental conditions, defined in terms of dynamism and complexity?

Q5. (a) Distinguish between a customer-centered company and market-centered company.

Q5. (b) What do you understand by 'competitor myopia'? Explain with an example.

PART - C

Q1. What is a strategic group? Is competition less intense within a strategic group and there is no rivalry among groups? While identifying strategic groups within industry, what dimensions company needs to look at? Discuss.

Q2. Gives the increasing power of retailers in consumer goods marketing, how has this affected producers brand strategy? 

Q3. Discuss briefly the strategies used by market leaders, challengers, followers and nichers in the personal computer market.

Q4. Why is niching profitable? Discuss the characteristics of an idle niche. Why most of the firms entering a market choose a niching strategy?

Q5. Do you view Vision and Mission as distinct guidelines for strategic planning? If so, discuss the subtle differences with examples.

PART - D

Q1. Describe Ansoff's growth vector matrix. What are its strategic implications? What are the levels of risk associated with each of the strategic alternatives identified in the matrix?

Q2. "A challenger rarely improve its market share by relying on only one strategy. Its success depends on combining several principles to improve its position over time". Discuss. What are the attack strategies available to market challenger.

Q3. How can the market leader protect its position? Discus various defence strategies which he can choose in different circumstances.

Q4. Maruti Udyog being a market leader in automobiles has to defend its position in the market. Identify the approaches being used to the defence of its position. How successful does the strategy appears to be?

Q5. "A business organisation cannot remain in business with out being socially relevant and responsible, and thus making investments in these areas is essential for its own existence if there is no element of social service in it?" Please discuss and comment upon above mentioned statement? What is 'societal marketing'? 

SHORT ANSWER QUESTIONS

1. What do you understand by the term strategy?

2. Define strategic marketing?

3. Explain what is meant by Product Leadership.

4. Identify different sources of competition.

5. What do you understand by the term industry?

6. Explain the meaning of environmental scanning.

7. What is meant by Balanced Portfolio?

8. What are the dimensions of market analysis?

9. What is Concentrated Marketing?

10. Define what is an SBU?

11. What is a Turnaround Strategy?

12. What do you understand by Competitor-centered Company?

13. What is Reengineering?

14. What is counter Offensive Defence Strategy?

15. What is Flank Attack Strategy?

16. What are the characteristics of a Market Leader?

17. Why and when Guerrilla Attack?

18. What is Offensive Marketing?

19. What is meant by Productivity through people?

20. What is meant by market driven company?

CASE STUDY-1

RITZ - CARLTON - THE BEST IN SERVICE QUALITY

W hen introducing himself to new employees, the president of the Ritz-Carlton Hotel Company says "My name is Horst Schulze. I'm the president, I'm a very important person around here". After a few seconds he continues, "But so are you. In fact, you are more important to customers than I am. If you don't show up, we are in trouble. If I don't show up, hardly anyone would notice."

These comments reflect Mr. Schulze's attitude that employees are the crucial component in quality service. Therefore, the Ritz-Carlton very carefully selects only those applicants with an appropriate caring attitude. For every new employee at an introductory orientation session, ten others applied, and employees are told that they were not hired, they were selected. Once selected, each employee learns the Ritz-Carlton corporate culture in a two-day orientation, followed by extensive on-the-job training that results in job certification.

Each employee learns the Ritz-Carlton Gold Standards, which include a credo, 20 basics of service, and the three steps of service. The steps include: (1) a warm and sincere greetings; (2) anticipation and compliance with guest needs; and (3) a fond farewell, using the guest's name if possible. Employees may even have to modify their language. They should say "Good morning", not "Hi, how's it going?" when asked to do something, they should respond "Certainly", or "My pleasure". In addition, all employees should learn the 20 Ritz-Carlton basics of quality service , which range from knowledge of one's work area and the Ritz-Carlton Credo to answering the telephone with a smile and wearing immaculate uniforms. At the Ritz-Carlton employees are not servants, they are "ladies and gentlemen serving ladies and gentlemen".

To back up all this training, employees are empowered to handle any customer complaint on the spot and can spend up to $2,000 doing so. And they can demand the immediate assistance of other employees. Twenty minutes later, they should telephone the guest to make sure that the complaint was handled properly. In addition, once employees learn of particular customer wants, such as foam pillows or a desire for a particular newspaper, that information goes into a 240,000 person database so that the customer will automatically get the desired service the next time he or she stays at a Ritz-Carlton.

This attention to qualify is not confined to hotel staff. Mr. Schulze and the other senior executives meet weekly to review measures of product and service quality, guest satisfaction, market growth and development, and other business indicators. From top management down, Ritz-Carlton's approach to quality management is characterized by detailed planning. Quality teams at all levels set objectives and devise action plans, and each hotel has a quality leader and work area teams responsible for problem solving, strategic planning and setting quality-certification standards for each position.

Each hotel aims to create a two-to-one ratio of internal to external complaints. Internal complaints are made by employees who spot problems in service delivery. By eliminating internal problems, Ritz-Carlton removes the causes of external complaints by customers. Management thinks that solving problems before they arise is cost-effective. Once problem has occurred, there are additional costs of employee time to fix the problem plus hotel remedies such as complimentary cocktails and a follow-up letter, not to mention the possible cost of losing a customer. Patrick Mene, vice President of quality, expresses this as the 1-10-100 rule:" What costs a dollar to fix today will cost $10 to fix tomorrow and $100 to fix downstream."

To ensure that quality standards are maintained, Rit-Carlton collects daily reports from each of the 720 work areas in each of the 30 hotels it manages. The company tracks measures such as annual guest-room preventive-maintenance cycles, percentage of check-ins with no queuing, time spent to achieve industry-best clean-room appearance, and time to service an occupied room.

Not surprisingly, Ritz-Carlton won the prestigious Malcolm Baldrige National Quality Award in 1992. this moved the firm into very select company - only one service firm had ever won this award. You might think Ritz-Carlton would be satisfied with a customer satisfaction rating of 97 percent, one of the lowest employee turnover rates in the hotel industry (30 percent). But not Ritz-Carlton! Mr. Schulze has set new quality performance standards to be reached by 1996: a 100-percent customer satisfaction rating and a reduction of defects to just four for every million customer encounters.

Eliminating virtually all problems, however, is a costly process that can reduce company profit, and some critics believe that Ritz-Carlton is not sensitive enough to its bottom line. For example, to improve customer satisfaction 97 percent to 98 percent, some would say, is a marginal improvement that could require a great deal of employee effort and expense for a low dollar return. Besides, how can any firm anticipate all possible problems in order to eliminate complaints? Should it even desire to do so?

Questions

 1. Why is it important for Ritz-Carlton to insist that employees not think of themselves as servants, but rather as ladies and gentlemen?

2. In what ways does Ritz-Carlton engage in relationship marketing?

3. Is quality at Ritz-Carlton cost-effective? Even if it costs $2,000 an incident? 4. Should Ritz-Carlton attempt to move towards Mr. Schulze's latest goals? Why or why not?

CASE STUDY-2

SNEAKER WARS

Sneakers have become a national obsession. Everyone seems to have them and everyone likes them - from the sports enthusiast and the health conscious to the junior executive, the fashion conscious, and the active home-maker. Indeed, according to one analyst, one-third of all shoes sold in the United States today are sneakers.

Two giants dominate the athletic shoe industry : Nike from Oregon and Reebok from Boston control approximately 50 percent of the sneaker business. Nike's success was based on creating a performance shoe for the fitness boom, specifically for the jogging craze of the 1970s, while Reebok made it on the new relaxed life-style of the 1980s, recognizing that 80 percent of all sneakers sold are for leisure use. Now both companies make hundreds of styles for both performance and recreational use.

Today in the battle to the number one, it has become Nike substance versus Reebok style. In the mid-1980s, by focusing on a special shoe for women, Reebok roared past Nike, unseating them from the position atop the athletic shoe industry. It was the aerobic shoe that propelled Reebok to number one. Although the wrinkled leather was originally a production mistake, management loved it and so did the customer.

Paul Fireman, Reebok's CEO and founder of Reebok in the United States, was a salesman who once ran a small family sporting goods business. Because of the success of Reebok, he has become one of the highest-paid executives in the nation. Even he is surprised by the success of the business. But Fireman concedes that it is consumers who have made his company number one. Therefore, Reebok will continue to focus its efforts on satisfying the customer. A recent example of the customer orientation is the introduction of hand painted sneakers for the masses.

Nike was founded by Phil Knight, a runner from the University of Oregon. Knight and his former track coach, Bill Baumann, started the company and rode the running boom to instant success. Knight is the driving force, and remains immensely competitive. While Nike has made concessions to fashion, it is technology the company is counting on to win the war against Reebok. A recent innovation is the Air Revolution, a plastic airbag in the heel of the shoe that is the visible. Reebok has developed its own system, called Energy Return, which involves the placement of plastic tubes in the shoes. It may ultimately include a window so that the tubes would be visible.

Both companies spend enormous amounts on advertising and endorsements. Nike has long favoured prominent athletes like Salazar, McEnroe and Jordan as spokespersons. Their strategy seems to be paying off. Their advertising campaign with the slogan "Just do it", coupled with the success of their Air Pocket shoes such as the air Jordan has allowed Nike to move past Reebok and recapture the number-one position in the industry. But Reebok is expected to rebound from its recent slump, which some analysis say was brought on by its avant-grade "Reebok Let UBU" promotional campaign. This $25 million campaign with fairy godmothers, three-legged men, tub-playing swimmers, and bobby-soxed twins was seen as two weird, and it failed to enhance sales.

The competition never ceases. An upstart company called L.A. Gear sneers at research, development, and technology - simply letting people wear their sneakers and then listen to what is said about them. L.A. Gear came from nowhere in 1987 to capture an 11 percent share of the market and $600 million in sales by 1990.

The industry is cyclical. Today's leaders could easily go the way of Keds, Converse, and Adidas - popular in the 1970s, 1960s, and 1970s, respectively, and still on the market, but nowhere near number one today.

Questions

1. Explain how Reebok has been both a market leader and a market challenger.

2. Explain why Nike should properly be classified as a market-centered company.

3. Discuss market-expansion strategies that Nike either has used or could use to enhance its market position.