OFFENSIVE STRATEGIES
Telkom University
Dosen: Osa Omar Sharif
Content
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Telkom Economic and Business School
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Strategic Market Plan
Many business experienced considerable growth
during the 1990’s and early 2000’s, Starbucks,
Apple, Toyota, Microsoft, Wal-Mart are a few
example.
Three Basic Performance Objective :
 Share Position
 Sales Growth
 Profit Performance
Starbucks’s Offensive Growth Strategies
$8
Sales Revenue ($ Billion)
$7
$6
$5
$4
$3
$2
Starbucks Product Mix 2006
Beverage ------------------- 77%
Food Product ------------- 15%
Whole Coffee Bean ----- 3 %
Equipment ----------------- 5 %
$1
$0
2004
2005
2006
$389 m
$494 m
$564 m
Net Profit
 Company-operated Retail Store (85% of sales)
Market Penetration
• 7,102 US Stores; 746 new stores in 2005, 1,040 in 2006
• Includes 11 Seatle’s Best Coffee and 4 Hear Music Stores
Revenue per Store
• 1,600 drive-through locations
• 5,100 stores carry prepared food
• 640 store with warm breakfast sandwiches
 Specialty Operation (13% of sales)
Licensed Retail Store
• 5,338 licensed retail store in 30 other countries
Grocery Stores and Warehouse Clubs
• Starbucks Coffee, Seatle’s Best Coffee, Torrefrazione Italia, and
Tazo Teas in 31,900 retail outlets
 Branded Product (2% 0f sales)
Existing Products
• Frappuccino coffee drinks
• Starbucks double-shot espresso drinks
New Products
• Starbucks Ice Cream, Starbucks Coffee Liqueur, and Starbucks
Discoveries (ready-to-drink Chilled Coffee, available in Japan
and Taiwan)
• 24-hour Starbucks Hear Music Channel (downloadable with
Apple’s iTunes)
• Starbucks Card Dueto (Visa credit card)
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Strategic Market Plans
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The Strategic Market Plans address three basic performance
objective
 Share Position : How will the strategic market plan contribute
to the business’s share position in served market ?
 Sales Growth : To what degree will the strategic market plan
contribute to sales growth ?
 Profit Performance : How will the strategic market plan shortand long-run profit performance
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Market Growth and Offensive & Defensive Strategies
Defensive
Market Demand
Strategic Focus
Managing profit
and investing to
protect position
Strategic Focus
Investing for
growth and
position
Emerging
Market
Early
Growth
Rapid
Growth
Late
Growth
Maturing
Market
Mature
Market
Declining
Market
Product Life Cycle
Stage
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Economic and Business School
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80
Market Attractiveness
Portfolio Position and Strategic Market Plans
100
60
40
20
0
0
Offensive
Strategies
Offensive
Strategies
Offensive
Strategies or
Defensive
Strategies
Offensive
Strategies or
Defensive
Strategies
Offensive
Strategies or
Defensive
Strategies
Offensive
Strategies or
Defensive
Strategies
Defensive
Strategies
Defensive
Strategies
Defensive
Strategies
20
40
60
80
100
Competitive Position
Offensive Strategies : Invest to grow, Improve position, New Market entry
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Offensive Strategic Market Plan




Offensive strategies can range from improving the competitive
position and market share in existing product –markets to entering
new market with no establish share position.
A business could explore the possibility of using an offensive
strategic market plan to cultivate an emerging or underdeveloped
market
Of the six portfolio, in quadrant Offensive or Defensive, we would
need more information before decide one of them.
Offensive strategic market plans are fundamentally geared for
growth and inherently involve strategies for penetrating or growing
existing market or entering or developing new markets
Strategic Market Plans and Offensive Strategies
Offensive Strategies
Core Strategy I
Invest to grow sales in
existing markets
Core Strategy II
Invest to improve
competitive position
Core Strategy III
Invest to enter new
markets
Strategic Objective
Grow in existing markets
Strategic Objective
Improve Margin
Strategic Objective
Diversify Growth
IIA Improve Customer
Loyalty & Retention
IIIA Enter Related New
Market
IIIB Enter Unrelated
New Market
IIIC Enter New Emerging
Markets
IIID Develop New
Markets
IA Grow Market Share
IB Grow Revenue per
Customer
IC Enter New Market
Segment
ID Expand Market
Demand
IIB Improve Differentia
tion Advantage
IIC Lower Cost/improve
Marketing Productivity
IID Build Marketing
Advantage
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Offensive Core Strategy I : Invest to Grow
The objective of the Offensive Core Strategy I is
to grow the business in existing market.
 The specific strategic market plans range from
share penetration to growing market demand
 A business could grow its market share , increase
its revenue per customer, enter new market
segments, or it could expand new demand.

Offensive Strategy IA : Grow Market Share
 There are many factors can effect a business’s ability to grow share and
profitability :
 To what degree has the business achieved its share potential ?
 What factors driving share development need to be manage to grow
share in given product market ?
 Will share growth actually contribute profitability ?
 A business estimate : 90% product awareness, 50% product preference,
80% intention to purchase, 80% Availability, and 70% rate of purchase.
Market
Product
Product
Purchase
Product
Purchase
Share
=
x
x
x
x
Awareness
Preference
Intention
Availability
Rate
Potential
= 0.90 x 0.50 x 0.80 x 0.80 x 0.70
= 20.2 %
If the business actual market share was 8%
Share Development Index =
Current Market Share
Market Share Potential
= 8% / 20.2% x 100 = 40
 It means the business has achieved only 40% of its potential market share  It
would have a good opportunity to grow market share with market penetration
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strategy.
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Offensive Strategy IB : Grow Revenue per Customer
 Business with its share potential almost fully realized, over
all performance improvement relies more on growing sales
with existing customer, which increases the amount of
revenue per customer
 Revenue per customer can also increased through price
premium. Business that enhance their product with valueadded services or built superior reputation for quality can
change higher prices.
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Offensive Strategy IC : Enter New Market Segments
$ 3,000
Personal Computer Market Segments
Price
Xeon
$ 2,000
Pentium
$ 1,000
Celeron
Intel New Segment
Entry Strategy
0
Performance (capacity, speed, features)
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Offensive Strategy ID : Expand Market Demand
New Segment Offensive Growth Strategy in the VODKA Market
$30
Super Premium
Segment
$ 25 - $ 35
Price per Bottle
$25
Premium
Segment
$ 15 - $ 25
$20
$15
$10
$5
$0
Traditional
Segment
$ 10 - $ 15
Level
(New Segment
Entry)
Absolute Spirits
(Core brand primary segments)
Danzka
New segment entry
Price
Segment
Under $ 10
Perceived Quality (brand image, taste, packaging)
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Strategies to enlarge a business’s customer base include : focus
on winning over competitor’s customers and focus on growing
market demand by drawing new customers into market
Example :
o The market of flat-screen TVs was 4 million per year in 2003
o Although Sony and Samsung battle each other for market share,
their common offensive strategies is to grow market demand
o They estimate this market increased from 14 million per year in
2005 to 30 million per year in 2007
Market Development
Market Demand for Flat TV 2007
=
Index (MDI)
Market Potential for Flat TV
=
30 million
100 million (worldwide)
x 100 = 30
o This means, the market is very potential who various reason
have not entered it.
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Factors to be Address in Growing Market Demand
Price / Cost
Number of Customers
Interest
Untapped
Market
Demand
Business Segment
(60%)
Personal Users
Segment (40%)
Current Market
Demand
Potential buyers can’t effort
The product at current price
Product doesn’t have attractive
benefits
Compatibility
Product incompatible with
Lifestyle or use situation
Availability
Product unavailable at local
Retail outlet
Awareness
Potential Buyers unaware of
Flat-panel TV benefits.
Current
Market
Demand
Market
Potential
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Offensive Core Strategy II : Improve Competitive
Position


Situation attractive market but weak competitive position
 invest to improve competitive position is the best way.
Better competitive position  better chance of achieving
price premium, high level of customer retention, improve
margin and net marketing contribution.
Offensive Strategy II : Improve Competitive Position
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 Offensive Strategy IIA : Improve Customer Loyalty Business spend money to
attract new customers to growing markets, but if they don’t retain these
customers, they will experience higher marketing expenses and lower
marketing profit.
 Offensive Strategy IIB : Improve Differentiation Advantage One of the major
customer’s complain in the wireless communication market is reliability. To
address this problem and turn it into differentiation advantage, Verizon
Wireless created a team of 50 “road warriors” in specially equipped cars to
test the reliability of networks.
 Offensive Strategy IIC : Lower Cost / Improve Marketing Productivity Sony found
its profit margins were shrinking in consumer electronic as prices eroded faster
than manufacturing cost could be lowered.
 Offensive Strategy IID : Build Marketing Advantage Nautilus was a pioneer
brand in the $ 5 billion home-fitness equipment market
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Offensive Core Strategy III : Enter New Market


Every business will need to examine growth opportunities
outside its existing markets.
Any of three fundamental reasons :



A limited number of attractive market opportunities within existing
markets
Attractive opportunities in term of meeting the business’s overall
performance objective outside existing market
A desire diversity sources of profitability to reduce variation in
performance
Strong
Taste
Energy
Drink
Ice Tea
&
Coffee
Club
Soda
Sport
Drink
Bottled
&
Mineral
Water
Fruit
Juice
Fruit
Flavor
Bitter
Tasting
Non Cola
Soft
Drinks
Cola
Soft Drinks
Fruit
Drink
Sweet
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Business School
New Market Entry Opportunities for Coca Cola
Offensive Strategy IIIA : Enter Related New Markets
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Offensive Strategy IIIB : Enter Unrelated New Markets
 Westinghouse acquired CBS in 1990, Disney had acquired
ABC
 One of the primary advantage of an unrelated new market
entry strategy is reduced market dependency
 There three reasons :
 New Source of growth, new market diversification offers
the potential of adding to the business’s sales growth and
profit performance
 Smoother Performance, new market diversification offers
customer diversification , which can reduce the
magnitude of swings in sales and profit performance
 Reduce Vulnerability  reduce market dependence and
vulnerability
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Offensive Strategy IIIC : Enter New Emerging Markets
 When the current customers is small but market potential is
great  business can grow by entering emerging market,
this strategy can enable a business to establish a early
leadership position in the market
 High technology markets have rapidly emerging market
demand and relatively short product life cycles.
 The pioneer  has potential to achieve competitive
advantage
 As an emerging markets begins to grow, early follower enter
the market, early follower emulate the dominant design and
enter the market after letting the pioneer invest in
developing the technology
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Offensive Strategy IIID : Develop New Markets
Apple’s initial entry into the personal computer market
was a market-growth strategy that focused on the
enormous untapped potential of the PC market.
Product that operate by electricity have no market in
rural area of underdeveloped countries where no
electricity service available  GE adapted its technology
to enable business in area with no electricity power to
produce their own electricity and sell their excess to
local utilities.
A growth strategy to develop untapped new market
potential involve high risk but offers the potential high
return
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