AGGRESSIVENESS STRATEGIES
are rated according to their marketing assertiveness, their risk propensity, financial leverage, and product innovation, speed of decision-making and other measures of business aggressiveness.
Typically the range of aggressiveness strategies is classified into four categories:
- Prospector
- Defender
- Analyzer
- Reactor
1 Prospector strategy
- This is the most aggressive of the four strategies. It typically involves active programs to expand into new markets and stimulate new opportunities.
- New product development is vigorously pursued and attacks on competitors are a common way of obtaining additional market share.
- They respond quickly to any signs of market opportunity, and do so with little research or analysis.
- A large proportion of their revenue comes from new products or new markets.
- The risk of product failure or market rejection is high. .
- Advertising, sales promotion, and personal selling costs are a high percentage of sales.
2 Defender Strategy
- This strategy entails a decision not to aggressively pursue markets. A defender strategy entails finding, and maintaining a secure and relatively stable market.
- In their attempt to secure this stable market they either keep prices low, keep advertising and other promotional costs low, engage in vertical integration,
- offer a limited range of products or offer better quality or service.
3 Analyzer
- The analyzer is in between the defender and prospector.
- They take less risk and make fewer mistakes than a prospector, but are less committed to stability than defenders.
- Most firms are analyzers. They are seldom a first mover in an industry but are often second or third place entrants.
- They tend to expand into areas close to their existing core competency.
- Rather than expand into wholly new markets, they gradually expand existing markets.
- They try to maintain a balanced portfolio of products
4 Reactor
- A reactor has no proactive strategy. They react to events as they occur. They respond only when they are forced to by macro environmental pressures.
- This is the least effective of the four strategies. It is without direction or focus.
OTHER STRATEGIES
COST LEADERSHIP STRATEGY
- By producing high volumes of standardized products, the firm hopes to take advantage of economies of scale and experience curve effects.
- Maintaining this strategy requires a continuous search for cost reductions in all aspects of the business.
- To be successful, this strategy usually requires a considerable market share advantage or preferential access to raw materials, components, labour, or some other important input.Successful implementation also benefits from:
- process engineering skills
- products designed for ease of manufacture
- sustained access to inexpensive capital
- close supervision of labour
- tight cost control
- incentives based on quantitative targets
DIFFERENTIATION STRATEGY
- Differentiation involves creating a product that is perceived as unique.
- The unique features or benefits should provide superior value for the customer if this strategy is to be successful.
- Because customers see the product as unrivaled and unequaled, the price elasticity of demand tends to be reduced and customers tend to be more brand loyal.
To maintain this strategy the firm should have:
- strong research and development skills
- strong product engineering skills
- strong creativity skills
- good cooperation with distribution channels
- strong marketing skills
- incentives based largely on subjective measures
- be able to communicate the importance of the differentiating product characteristics
- stress continuous improvement and innovation
- attract highly skilled, creative people
MARKET SEGMENTATION STRATEGIES
- In this strategy the firm concentrates on a select few target markets. It is also called a focus strategy or niche strategy.
- It is hoped that by focusing your marketing efforts on one or two narrow market segments and tailoring your marketing mix to these specialized markets,
SCENARIO PLANNING
- is a strategic planning method that some organizations use to make flexible longterm plans.
- These combinations of fact and possible social changes are called “scenarios.”
- The chief value of scenario planning is that it allows policy-makers to make and learn from mistakes without risking important failures in real life.
- Further, policymakers can make these mistakes in a pleasant, unthreatening, game-like environment,
How scenario planning is done
1. Decide on the key question to be answered by the analysis.
it is possible to assess whether scenario planning is preferred over the other methods.
2. Set the time and scope of the analysis.
Take into consideration how quickly changes have happened in the past, and try to predict common trends in demographics, product life cycles.A usual timeframe can be 5 to 10 years.
3. Identify major stakeholders.
Decide who will be affected and have an interest in the possible outcomes. Identify their current interests, whether and why these interests have changed over time
4. Map basic trends and driving forces.
This includes industry, economic, political, technological, legal and societal trends.Assess to what degree these trends will affect your research question.
5. Find key uncertainties.
Map the driving forces on two axes, assessing each force on an uncertain/(relatively) predictable and important/unimportant scale.(for exp. full employment and zero inflation).
6. Check for the possibility to group the linked forces and if possible, reduce the forces to the two most important.
7. Define the scenarios:
plotting them on a grid if possible. Usually, 2 to 4 scenarios are constructed.The current situation does not need to be in the middle of the diagram (inflation may already be low), and possible scenarios may keep one (or more) of the forces relatively constant, especially if using three or more driving forces. In the end, try to avoid pure best-case and worst-case scenarios.
8. Write out the scenarios.
Narrate what has happened and what the reasons can be for the proposed situation. Try to include good reasons why the changes have occurred
9. Assess the scenarios.
Are they relevant for the goal? Are the internally consistent? Are they archetypical?Do they represent relatively stable outcome situations?
10. Identify research needs.
Based on the scenarios, assess where more information is needed. Where needed,obtain more information on the motivations of stakeholders,possible innovations that may occur in the industry and so on.
11. Develop quantitative methods.
If possible, develop models to help quantify consequences of the various scenarios,such as growth rate, cash flow etc.
12. Converge towards decision scenarios.
Retrace the steps above in an iterative process until you reach scenarios which address the fundamental issues facing the organization.
