CANS 406 Lecture Notes - Lecture 8: Cost Leadership, Total Quality Management, Market Segmentation
Business Strategy
Jan 30th, 2018
Generating competitive advantage
• Use the 5 forces framework to determine an industry's potential for profitability
•
• Business-level strategy
o Integrated and coordinated set of commitments and actions the firm uses to gain a
competitive advantage by exploiting core competencies in specific product markets
o
o Purpose:
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• Business-level strategies are intended to create differences between the firm's
competitive position and those of its competitors
• To position itself, firm must decide whether it intends to
▪ Perform activities differently
▪ Or perform different activities as compared to its rivals
o Relationship with customers
o
• Who: determining the customers to serve
▪ Process used to cluster people with similar needs into individual and identifiable
groups
▪
▪ Potential components for market segmentation
• Consumer markets
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• Demographic factors
• Socioeconomic factors
• Geographic factors
• Psychological factors
• Consumption patterns
• Perceptual factors
• Industrial markets
• End-use segments
• Product segments
• Geographic segments
• Common buying factor segments
• Customer size segments
• What: determining which customers needs to be satisfied
▪ Customer needs are related to product's benefits and features
▪ Customer needs are neither right or wrong, good or bad
▪ Customer needs represent desires in terms of features and performance
capabilities
• How: determining core competencies needed to satisfy customer needs
▪ Firms must decide
• Who to serve, what customer needs to meet, how to use core
competencies to implement value creating strategies that satisfy target
customers' needs
▪ Only firms with capacity to continuously improve, innovate and upgrade their
competencies can expect to meet and/or exceed customer expectations across
time
o Cost and differentiation advantages
o
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