Creating New Market Space Slides

Strategic Marketing & Planning
(MKT501C)
Creating New Market Space
Salman Ahmed (8519)

Fall 2011
Objective of the Article
Determining a systemic approach to value
innovation that can help companies to create
new market space via looking across six
boundaries of the existing competition

Shifting the Focus of Strategy
The Conventional CREATING NEW MARKET
HEAD-TO-HEAD COMPETITION
Boundaries of SPACE
(Focus On)
Competition (Looking Across)
Industry Industry rivalry Substitute industries
Competitive position within Looks across strategic

Strategic Group
strategic group groups within industry
Better serving the buyer Redefines the buyer group
Buyer Group
group of the industry
Maximizing the value of Complementary product
Scope of Product & product and service offerings and service offerings that
Service Offerings within the bounds of its go beyond the bounds of
industry its industry
Functional-
Improving price-performance Rethinks the functional-
Emotional
in line with the functional- emotional orientation of
Orientation of
emotional orientation its industry
Industry
Adapting to external trends Participates in shaping
Time
as they occur external trends over time
1 2 3 4 5 6
Looking Across Substitute Industries

• Companies compete with companies within their
own industry as well as with those companies that
offer substitute products
• The space between substitute industries provides
the opportunity for value innovation

Looking Across Substitute Industries…Cont.
Examples:
•Home Depot
•South-West Airline
•Intuit (financial and tax preparation software company)

Home Depot:
•Created a market of do-it-yourselfers in the space
between
– choosing contractors
– going to the hardware store, buy tools, work themselves
•Experienced sales team
•Self-service warehousing
•Economies of scale
•Minimum stock-outs
Intuit:
• Created a new value curve for managing personal
finances by combining:
– low price and ease of use of pencil with
– speed and accuracy of “Quicken” software

Intuit:
Intuit:
1 2 3 4 5 6
Looking Across Strategic Groups within

Industries
Strategic Groups:
•Companies within the same industry that pursue a
similar strategy
•Compete on Price and Performance
•Value innovators create new market space by

understanding what causes buyers to trade up or down
from one group to another
Industries….Cont.
Examples:
•Polo Ralph Lauren (Clothing Company)
•Toyota's Lexus
•Sony Walkman
Industries….Cont.
Polo Ralph Lauren:
•Fashion with no Fashion
•Compete with Haute Couture (High priced, Outdated fashion)

and Classic Lines (High priced, Long lasting Quality)
Lauren’s success factors:

•Designer name
•Elegance of stores
•Luxury of materials
•Updated price-captured classical look

Industries….Cont.
Toyota's Lexus:
•Provided the high quality of a Mercedes, BMW, or
Jaguar at a price closer to the lower-end Cadillac or
Lincoln.
Sony Walkman:
•Provided low price and convenient size portable
stereo market
1 2 3 4 5 6
Looking Across the Chain of Buyers
Rather than looking at a target customer, value
innovators pursue the chain of customers:
•Purchasers
•End Users
•Influencers
Looking Across the Chain of Buyers….Cont.
Examples:
•Bloomberg (Financial software company)
•Philips (Lighting Company)

Bloomberg:
•Compete with Reuters and Telerate (online financial
information providers)
•Upstream focus from purchasers (IT managers) to end

users (Accountants and Financial Analysts)
Philips:
•Downstream focus from purchasers to influencers
•Produced Alto (environmentally friendly light bulb)
•Promoted Alto to CFO's and public relations people
•Rapid sales growth

– traditional fluorescent lamps containing toxic mercury
were replaced in schools, stores and office buildings
1 2 3 4 5 6
Looking Across Complementary

Product and Service Offerings
Idea:
•What happens before, during and after your product
or service is purchased
Example:
•Borders Books & Music and Barnes & Noble book
superstores
Looking Across Complementary Product
and Service Offerings….Cont.
Border and B&N Books Superstore:
Features & Benefits:
•Lifelong learning and discovery
•Pleasure of reading and Intellectual exploration
•Large selection of books
•Knowledgeable staff
•Armchairs, reading tables, sofas
•Coffee bars and Music

1 2 3 4 5 6
Looking Across Functional or

Emotional Appeal to Buyers
Functionally Oriented Industries:
•Offer commodities or products with little emotions
Emotionally Oriented Industries:
•Offer extras that add price without enhancing
functionality of the product

Looking Across Functional or Emotional
Appeal to Buyers….Cont.
Examples:
Companies used Emotional Appeal:

•Starbucks
•Swatch (watch manufacturing company)
Companies used Functional Appeal:

•Body Shop
•Direct Line Insurance

Starbucks:
•Introduced the concept of Coffee Bar
• Provide coffee drinkers with an emotional

experience:
– Gathering place
– Status
– Relaxation
– Conversation
Body Shop:
•Provide customers with functional appeal
•Focus on product’s ingredients
•Cost saving through little spending on advertising

1 2 3 4 5 6
Looking Across Time

Three critical principles….the trend must be:
•Decisive
•Irreversible
•Clear Trajectory
Example:
•Cisco Systems
Looking Across Time….Cont.
Cisco Systems:
Identified the trend of growing demand for high-speed
data exchange by producing:
•Routers
•Switches
•Other networking equipment

Conclusion
• Creating new market space and value curves is

critical in a demand-starved economy for both
small and large companies
• Maintaining profitable growth is only
sustainable by creating and recreating new
space, new markets and new value

Creating New Market Space Slides

Uploaded by

Copyright:

Available Formats

Creating New Market Space Slides

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Creating New Market Space Slides

Uploaded by

Copyright:

Available Formats

Strategic Marketing & Planning

Creating New Market Space

Salman Ahmed (8519)

Determining a systemic approach to value

innovation that can help companies to create

new market space via looking across six

boundaries of the existing competition

Industry Industry rivalry Substitute industries

Competitive position within Looks across strategic

Looking Across Substitute Industries

own industry as well as with those companies that

offer substitute products

• The space between substitute industries provides

the opportunity for value innovation

•Intuit (financial and tax preparation software company)

– going to the hardware store, buy tools, work themselves

•Experienced sales team

– low price and ease of use of pencil with

– speed and accuracy of “Quicken” software

Looking Across Strategic Groups within

•Value innovators create new market space by

•Polo Ralph Lauren (Clothing Company)

•Compete with Haute Couture (High priced, Outdated fashion)

Lauren’s success factors:

•Updated price-captured classical look

Looking Across the Chain of Buyers

Rather than looking at a target customer, value

innovators pursue the chain of customers:

•Bloomberg (Financial software company)

•Philips (Lighting Company)

•Upstream focus from purchasers (IT managers) to end

•Produced Alto (environmentally friendly light bulb)

•Promoted Alto to CFO's and public relations people

•Rapid sales growth

Looking Across Complementary

•Pleasure of reading and Intellectual exploration

•Large selection of books

•Armchairs, reading tables, sofas

•Coffee bars and Music

Looking Across Functional or

•Offer commodities or products with little emotions

Emotionally Oriented Industries:

•Offer extras that add price without enhancing

functionality of the product

Companies used Emotional Appeal:

•Swatch (watch manufacturing company)

Companies used Functional Appeal:

•Direct Line Insurance

• Provide coffee drinkers with an emotional

•Provide customers with functional appeal

•Focus on product’s ingredients

•Cost saving through little spending on advertising

Looking Across Time

•Other networking equipment

• Creating new market space and value curves is

You might also like