CSCA® > Business-Level Strategies > Flashcards

Business-Level Strategies Flashcards

Study competitive positioning through cost, differentiation, and innovation. (39 cards)

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1
Q

What are the three main generic competitive strategies according to Michael Porter?

A
  • Differentiation
  • Cost leadership
  • Focus

These strategies are considered generic because they can be applied by any company in any industry to achieve competitive advantage.

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2
Q

What is the focus of a differentiation strategy?

A

Embedding premium features or attributes in a company’s products or services.

Differentiation can come from innovation, superior quality, or exceptional responsiveness to customer needs.

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3
Q

What does a cost leadership strategy aim to achieve?

A

The lowest cost of production and operations in the industry.

Cost leadership allows a company to attract more customers by offering lower prices, leading to increased volume and potentially higher profits.

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4
Q

In a focus strategy, what does the firm concentrate its efforts on?

A

Serving a specific market segment, niche, or geographic area more effectively than competitors who serve broader markets.

Focus strategies can be combined with either differentiation or cost leadership.

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5
Q

What is the ‘Best Value’ strategy?

A

A hybrid approach that blends differentiation and low-cost provider approaches.

A company using a best value strategy strives to provide more value while satisfying needs with respect to quality or service.

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6
Q

What are the stages of a typical innovation funnel?

A
  • Opportunity assessment
  • Capitalization of opportunities
  • Prototyping
  • Evaluation of prototypes
  • Decision about production
  • Launch of the product

The innovation funnel allows a wide array of potential innovations to be explored before gradually narrowing the field to the most promising projects.

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7
Q

What is market segmentation?

A

The process of dividing a market into distinct groups of customers who share similar needs or desires.

Segment marketing allows companies to develop more precisely tailored offerings than mass marketing would.

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8
Q

What does geographic segmentation divide the market by?

A

Location, ranging from entire countries to individual neighborhoods.

Geographic segmentation allows companies to tailor offerings based on regional preferences.

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9
Q

What is demographic and socioeconomic segmentation based on?

A

Characteristics such as:

  • Age
  • Gender
  • Occupation
  • Education
  • Income

These variables are relatively easy to measure and are often closely correlated with consumer needs and preferences.

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10
Q

What is psychographic segmentation focused on?

A

Psychological and emotional traits such as values, interests, and lifestyles.

This type of segmentation helps companies market to people who share similar attitudes or aspirations, even if their demographics differ.

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11
Q

What does behavioral segmentation group customers based on?

A

Patterns in their actions, such as buying behavior, product usage, loyalty, and the benefits they seek.

Companies often analyze purchase history and digital interactions to uncover these segments.

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12
Q

What are the four main types of market segmentation?

A
  • Geographic
  • Demographic
  • Psychographic
  • Behavioral

These segmentation types help businesses tailor their marketing strategies to specific groups based on location, personal characteristics, lifestyle, and purchasing behavior.

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13
Q

What is psychographic segmentation?

A

Segmenting a market based on lifestyle, attitudes, and aspirations.

This approach targets consumers with similar interests or values, even if their demographics differ.

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14
Q

What is behavioral segmentation?

A

Grouping customers based on patterns in their actions, such as buying behavior, product usage, loyalty, and benefits sought.

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15
Q

How does business market segmentation differ from consumer market segmentation?

A

Business market segmentation uses additional factors like customer operating characteristics, purchasing approach, and situational factors.

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16
Q

What are the benefits of market segmentation?

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A
  • Efficient allocation of marketing resources
  • Lower customer acquisition costs
  • Improved customer retention
  • Strengthened brand alignment

Effective segmentation allows firms to focus on promising targets and tailor their marketing efforts.

17
Q

What are the potential drawbacks of market segmentation?

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A
  • High implementation costs
  • Risk of misidentifying customer needs
  • Market segments becoming obsolete
18
Q

What are the five stages of the industry life cycle?

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A
  • Embryonic
  • Growth
  • Shakeout
  • Maturity
  • Decline

Each stage affects demand, product development, customer expectations, and competitive dynamics differently.

19
Q

What is the customer adoption curve?

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A

A model that describes how different groups of customers adopt innovative products over time, divided into innovators, early adopters, early majority, late majority, and laggards.

This curve is similar to the industry life-cycle curve.

20
Q

What characterizes the embryonic industry stage?

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A
  • Slow demand growth
  • Underdeveloped products
  • High production costs
  • Primarily innovators and early adopters as customers
21
Q

What strategic shift is necessary in the growth stage of an industry?

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A

Transitioning from focusing on performance and novelty to emphasizing reliability, ease of use, price, and widespread accessibility.

22
Q

What are market penetration and market skimming pricing strategies?

Study These Flashcards
A
  • Market Penetration: Low initial price to capture market share quickly.
  • Market Skimming: High initial price to maximize profit from early adopters.
23
Q

What is non-price competition?

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A

Using product and service characteristics other than price to win customers and grow market share.

This includes focusing on quality, features, location, and service to differentiate from competitors.

24
Q

What role does strategic pricing play in mature industries?

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A

It manages industry rivalry, shapes long-term competitive dynamics, and influences customer demand.

25
What is **price signaling**?
Sending cues to competitors about pricing intentions to deter aggressive pricing and promote industry-wide pricing stability.
26
What is **price leadership**?
When one company sets a benchmark price and others follow, often seen in oligopolistic industries.
27
What is **predatory pricing**?
Predatory pricing is where a company deliberately prices below cost to drive competitors out, then raises prices once it has captured a dominant market share. ## Footnote This practice is illegal in many jurisdictions and difficult to sustain without significant financial resources.
28
What are the **four main strategic responses** in declining industries?
* Leadership strategy * Niche strategy * Harvest strategy * Divestment strategy
29
What is the **goal** of a harvest strategy?
To maximize short-term cash flow by reducing or eliminating investment while maintaining the product just long enough to generate returns.
30
What is a **Blue Ocean market**?
An entirely new market space with little or no competition, where companies can set the terms of competition by delivering both differentiation and low cost.
31
In what **type of market** do companies compete on price and face crowded competition?
Red Ocean markets
32
What is the **first step** in the new product development process?
Idea Generation ## Footnote This involves gathering as many new product ideas as possible from both internal and external sources.
33
Which strategy is often **more effective** in fragmented markets?
Focus strategies ## Footnote In fragmented markets, focus strategies are often more effective, as they allow firms to target specific segments or niches.
34
What does strategic pricing involve **beyond setting numbers**?
Strategic pricing is a tool for signaling intent, shaping competitive behavior, and protecting long-term profitability.
35
What is the **purpose** of test marketing in the product development process?
Test marketing provides insights into product performance, consumer response, and marketing effectiveness before full-scale launch.
36
What is a **niche strategy**?
It focuses on areas within an industry that retain stable or loyal demand and tailors offerings to specific, often underserved segments.
37
What should a company do when entering a new market with a **complementary product**?
Connect the marketing message to the brand or product the customer already knows to build credibility and encourage adoption.
38
What is the **significance** of the concept development and testing step in new product development?
In this step, selected ideas are translated into product concepts and tested with target customers to gather feedback and refine the concept.
39
What is the **role** of business analysis in new product development?
Business analysis evaluates the financial viability of the new product based on projected sales, costs, and profitability.
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