Thursday, November 30, 2006
Monday, November 27, 2006
attack the market leader
attack firms of its own size that are not doing the job and are underfinanced
attack smaller local and regional firms
General Attack Strategies
Frontal Attack. The attacker matches its opponent's product, advertising, price and distribution.
Flank Attack. Target the enemy's weak spots.
Encirclement Attack. It involves launching a grand offensive on several fronts.
Bypass Attack. bypass the enemy and attack easier markets to broaden one's resource base. This strategy offers three lines of approach: diversifying into unrelated products, diversifying into new geographical markets, leapfrogging into new technologies to supplant existing products.
Guerrilla Warfare. It consists of waging small, intermittent attacks to harass and demoralize the opponent and eventually secure permanent footholds.
Specific Attack Strategies
lower price goods
value-priced goods and services
intensive advertising promotion
Reference: Kotler & Keller, “Marketing Management”, 12th edition
Saturday, November 25, 2006
More isn’t always better. Too many choices are often too confusing, and too much selection can become a burden, not benefit. Whatever industry you’re in, if you can find a way to prevent prospects from becoming overwhelmed, you may just turn them into customers. And simplify your own life as well.
Another article from BusinessWeek… When Fewer Choices Mean Bigger Returns.
Thursday, November 23, 2006
Monday, November 20, 2006
In Management Lite & Ezy 14, we discussed the roles played by firms in a market – leader, challenger(s), follower(s) and nicher(s). Now we will discuss how a market leader deals with competition. In general, there are three strategies that can be taken by a market leader.
Expanding the Total Market
The dominant firm normally gains the most when the total market expands. The market leader should look for new customers or more usage from existing customers.
New users can be searched among 3 groups: those who might use it but do not (market-penetration strategy), those who have never used it (new-market segment strategy), or those who live elsewhere (geographical-expansion strategy).
Usage can be increased by increasing the quantity of consumption or increasing the frequency of consumption.
Defending Market Share
How can the market leader do to defend its terrain? It can be responsive – finds a stated need of customers and fills it. It can also be anticipative – looks ahead into what needs customers may have in the near future. Finally, a firm can be creative – discovers and produces solutions customers do not ask for but to which they enthusiastically respond.
Expanding Market Share
A market leader can improve its profitability by increasing its market share. However, there are some pitfalls:
The cost of gaining further market share might exceed the value.
Too many customers can put a strain on the firm’s resources.
If “exclusivity” is a key brand benefit, existing customers may resent additional new customers.
The possibility of provoking antitrust action.
Reference: Kotler & Keller, “Marketing Management”, 12th edition
Wednesday, November 15, 2006
Sunday, November 12, 2006
We can classify firms by the roles they play in a particular market. We will use an example from the book of Kotler and Keller to explain this:
In this hypothetical market, 40% of the market share is held by a market leader; another 30% is held by a market challenger; another 20% is in held by a market follower, a firm that is willing to maintain its market share and not rock the boat. The remaining 10% is in the hands of market nichers, firms that serve small market segments not being served by larger firms.
Let's look at some real world markets...
Mobile phone – Nokia (leader), Samsung & Motorola (challengers)
Microprocessor – Intel (leader), AMD (challenger)
Operating system – Microsoft (leader), Linux movement (challenger)
Fast food – McDonald’s (leader), Burger King (challenger)
Credit card – Visa (leader)
Commercial airliner – Boeing (leader), Airbus (challenger)
However, identifying a firm's role based on its market share can be erroneous. In the market of digital SLR – a kind of high-end camera preferred by professionals – top three spots are held by Canon, Nikon and Olympus respectively. Sony entered the market by acquiring the business of Konica-Minolta. Despite being a new entrant, this consumer electronics giant has assumed the role of a challenger. Leveraging its strong brand and extensive distribution channel, Sony aims to capture 20-25% of the market.
Olympus, on the other hand, makes smaller digital SLR with features appealing to casual users. It turns out that Olympus is the real nichers.
Saturday, November 11, 2006
Read on... The B!g Idea.
Thursday, November 09, 2006
Look at the three images shown above. They are taken at different shutter speeds – 1/60 sec, 1/15 sec and ½ sec respectively. [Refer to my previous post for a brief explanation of shutter speed.]
Photographers like to take pictures of water flow at slow shutter speed. At a setting of say, ½ sec or longer, the water looks ‘silky’. This can be seen in the third picture above.
Taking picture at such a slow shutter speed presents a challenge, though. Firstly, if your hands shake, the image will be blurry. To avoid blurry picture, I stabilized my camera with a tripod.
Secondly, the image can easily overexpose (too bright), particularly if taken under sunlight. To cut down the light intensity, I used Neutral Density (ND) filter, which resembles your sunglasses.
Steps for taking silky water shots are summarized below:
Stabilize the camera with a tripod.
Place one or more ND filters in front of the camera lens. If you do not have ND filter, try sunglasses.
Select slow shutter speed of ½ second or longer. If your camera does not have function for setting shutter speed directly, try Landscape Mode. Alternatively, take the picture at night.
Monday, November 06, 2006
Michael Porter is one of the most famous management gurus. He coined the term 'value chain' which has been overused today. However, I find his articles extremely dry and difficult to read.
Anyway, I will discuss his analysis of Five Forces here. According to Porter, there are five forces which determine the attractiveness of a market. They are:
The bargaining power of customers
The bargaining power of suppliers
The threat of new entrants
The threat of substitute products
The intensity of competitive rivalry
Let's look at an example – the PC industry.
Bargaining power of customers
The PC has become a commodity. There is no brand loyalty among PC users. The use of industry standard hardware and software means a user can easily switch from one brand to another.
Bargaining power of suppliers
Intel and Microsoft have tremendous bargaining power against the PC makers (even though they are challenged by AMD and Linux lately.)
Virtually every components parts of a PC – motherboard, hard disk, DVD drive, monitor, battery (for notebook) etc – can be sourced from outside. Operating system can be licensed from Microsoft or Linux vendors. This means new competitors can enter the market fairly easily.
In fact, even desktop casing can be bought off-the-shelf. All a PC maker needs to do is to stick its own logo.
I don't see substitutes for PC coming to the market anytime soon. However, gamers may prefer PlayStation, Xbox or Nintendo.
Intensity of industry rivalry
Dell, HP, Lenova, Acer, Toshiba, NEC, Fujitsu, Gateway, Asus... you name it. These are the better known players in the PC industry. And then there are plenty of lesser known manufacturers. The rivalry is intense.
Based on the above assessment, we can conclude that PC market isn't very attractive. This probably explains why IBM sold its PC business to Lenova.
Kotler & Keller, "Marketing Management", 12th edition
Saturday, November 04, 2006
Here are a few policies and facts of Google which I copied from the company's website. Hopefully these could shed light on their secrets.
Google's hiring policy is aggressively non-discriminatory and favors ability over experience.
Googlers have been Olympic athletes and Jeopardy champions; professional chef and independent film makers.
The chief operations engineer is also a licensed neurosurgeon.
Any Googler might have our next great idea, so we make sure every idea is heard.
Googler engineers all have “20 percent time” in which they're free to pursue projects they're passionate about. This freedom has already produced Google News, Google Suggest, AdSense for Content, and Orkut – products which might otherwise have taken an entire start-up to launch.