MGT-519
STRATEGIC MARKETING
AAMER SIDDIQI
LECTURE 4
RECAP
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Implementation of Competitive Advantage
Porters "Value Chain”
Sustaining Competitive Advantage
Core Competencies and Capabilities
Resource-Based View of the Firm (RBV)
EVOLUTIONARY CHANGE AND HYPER COMPETITION
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EVOLUTIONARY CHANGE
Competing on the Edge, Eisenhardt & Brown (1998)
Draw analogies between biological evolution and business
In the real world analysis and planning is often a rarity
Strategies based on flexibility, experimentation, continuous change and
learning even more important than rigorous analysis and planning
Right balance between order and chaos - firms can then successfully
evolve and adapt to their unpredictable environment
At the "edge of chaos," firm creates an organization that can change
and produce a continuous flow of competitive advantages
Firms not hindered by too much planning or centralised control
Organized to happen! By organising in this way they promote an
entrepreneurial philosophy.
EVOLUTIONARY CHANGE (CONT’D)
• React to the evolutionary pressure of customers’ needs, mistakes but
relentlessly reinvent the business by discovering new growth
opportunities
• Strategy is unpredictable, uncontrolled and inefficient
• Important…firms should not just react well to change, but must anticipate
• In successful businesses, change is time-paced
• Triggered by the passage of time rather than events
• Unplanned, evolutionary change can be an important component to
success.
• Strategy and planning should foster and complement such change, not
suffocate it.
EVOLUTIONARY CHANGE (CONT’D)
• Certain core beliefs are fundamental to organizations, and should be
preserved at all costs.
• Not everything about an organization is for change in considering
alternative strategies
EVOLUTIONARY CHANGE AND HYPER COMPETITION
HYPER COMPETITION
• Today’s business environment has become dynamic
• Traditional sources of competitive advantage erode rapidly
• sustaining advantages can be a distraction from developing new
ones
• With fragmentation of markets niche seeking competition has
intensified
• Traditional sources of advantage more vulnerable; price & quality,
timing and know-how
• Entry barriers have fallen, deep pockets, resource dominance no
longer sufficient means by which to control and dominate
HYPER COMPETITION (CONT’D)
• Hypercompetition suggests that strategy should also involve the
creative destruction of opponent’s advantage
• A strong emphasis on SWOT analysis
• Primary goal of this new approach is disruption of the status quo
• To seize the initiative through creating a series of temporary
advantages
• speed and intensity of movement that characterizes
hypercompetition
• From economic theory there is no equilibrium as in perfect
competition
• Only temporary profits are possible in hypercompetition markets
HYPER COMPETITION (CONT’D)
• Resulted in rise of new marketing trends
– Guerrilla
– Ambush
– Astroturfing
– Viral
– Stealth
• Designed to create temporary advantages in markets
• Evolved Game Theory:Tool for analysing customers’ and
competitors’ responses to a firm’s competitive moves
• The theory attempts to mathematically capture behaviours in
strategic situations
HYPER COMPETITION (CONT’D)
GAME THEORY
• Helps predict scenarios of market macroenvironment
• Key pivotal points for disruption to be identified
• 3 elements for successful strategy in hypercompetitive markets
1. Vision for how to disrupt a market
Setting goals, building core competencies necessary to create specific
disruptions
2. Key capabilities enabling speed and surprise in a wide range of
actions
3. Disruptive tactics illuminated by game theory
Shifting the rules of the game, signalling, simultaneous and strategic
thrusts
THE MARKETING CONCEPT
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Four eras in the development of business
The Production Era
Minimal dialogue between customers and suppliers
Mass production
Homogenous products
Distribution is the focus of marketing
The Institutional Period and Selling Orientation
Rapid growth
More focus on cost, inventory asset management
Selling focus (company builds it and sales person sells it)
Minimal customer voice
Increasing need for marketing communications
The development of the 4Ps
THE MARKETING CONCEPT (CONT’D)
3. The Marketing Concept
• Companies should only make what they can market instead of trying
to market what they have made
• Increasing customer focus
4. Relationship Marketing/ Supply Chain Era
• Customers now have a dialogue, not just a voice
• Close, long-term relationships based on mutual trust
• More emphasis on win-win outcomes
5. Value Chain Era
• Start with customer requirement and build infrastructure to deliver
maximum value
• Integration of supply and demand chains
• Proactive, knowledge-based relationships
THE MARKETING CONCEPT (CONT’D)
• Consumer choice and attitude of this period, “any colour as long as
it’s Black” - Henry Ford
• Marketing concept, the shift from a seller’s market to a buyer’s
market
• 3 alternatives to marketing orientation
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Sales orientation
Selling the product which they have is the main problem
Use of selling, pricing, promotion and distribution skills
Little attention to customer needs and wants
Don’t try particularly hard to create suitable products or services
THE MARKETING CONCEPT (CONT’D)
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Production orientation
Concerned with making as many units as possible.
Exploiting economies of scale
Needs of customers are secondary compared to need to increase
output.
• Effective when a business operates in very high growth markets or
where the potential for economies of scale is significant
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Product orientation
Subtly different from a production orientation.
Business is “arrogantly obsessed” with its own products
Their products may start out as fully up-to-date and technical
leaders
SUMMARY
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Implementation of Competitive Advantage
Sustaining Competitive Advantage
Core competencies and capabilities
Resource-Based View of the Firm (RBV)
Evolutionary change and Hyper competition
The Marketing Concept
THANKYOU!