7 Steps to Building a Better Brand

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					Module 1
Content
• Key success factors
• Driving force
• Strategic Group Mapping
Key Success Factors

• Limited number (usually between 3 to 8) of
  characteristics, conditions, or variables that have a
  direct and serious impact on the effectiveness,
  efficiency, and viability of an organization, program,
  or project.
• Activities associated with CSF must be performed at
  the highest possible level of excellence to achieve
  the intended overall objectives.
• Also called key success factors (KSF) or key result
  areas                                            (KRA).
Key Success Factors

• A key success factor is a performance area of
  critical importance in achieving consistently
  high productivity.
• There are at least 2 broad categories of key
  success factors that are common to virtually
  all organizations: business processes and
  human processes.
KSF example

• In the real estate development industry,
  acquiring land and maintaining liquidity are
  the two key success factors.
• If every other factor concerning the business
  of the development company is just average,
  but the land is well located and the firm
  maintains adequate liquidity, the company will
  do well.
KSF example

• In the computer software market, the key
  success factors are establishing efficient
  channels of distribution and providing after-
  sales support.
            example

• Sam Walton viewed Wal-Mart's distribution system
  as a key to their success - a distinctive core
  competency.
• In the mid-1990s, their distribution costs were about
  3% of ship goods, their competitors 4.5 to 5%.
• It took them 20 years to get there.
• The difference is profit, which can be applied to build
  further advantage.
• For John Deere dealers, after-market service and
  parts contribute significantly to the bottom line.
• Corporate and family farmers cannot afford to have a
  key piece of equipment fail during harvest - a key
  factor in their buying decision.
• To help the dealers hold down labor costs, to
  improve scheduling, and to perform to their
  customers expectations, John Deere has invested
  millions to develop self-diagnostic electronics so the
  machinery will inform the dealer a part is about to
  fail. "Fix it before it breaks" is a distinctive core
  competency.
Driving force

• Industries change because forces
  are driving industry participants
  to alter their actions
• Driving forces are the
  major underlying causes
  of changing industry and
  competitive conditions
• Where do driving forces originate?
  – Outer ring of macroenvironment
  – Inner ring of macroenvironment
Analyzing Driving Forces:
Three Key Steps
STEP 1: Identify forces likely to exert greatest influence over
  next 1 - 3 years
   – Usually no more than 3 - 4 factors
     qualify as real drivers of change
 STEP 2: Assess impact
   – Are the driving forces acting to cause market demand for product to
     increase or decrease?
   – Are the driving forces acting to make competition more or less
     intense?
   – Will the driving forces lead to higher or lower industry profitability?
 STEP 3: Determine what strategy changes are needed to
  prepare for impacts of driving forces
Common Driving Forces


• Emerging new Internet capabilities and applications
• Increasing globalization of industry
• Changes in who buys the product and how they use
  it
• Product innovation
• Technological change/process innovation
• Marketing innovation
Common Driving Forces

• Entry or exit of major firms
• Diffusion of technical knowledge
• Changes in cost and efficiency
• Consumer preferences shift from standardized to
  differentiated products (or vice versa)
• Changes in degree of uncertainty and risk
• Regulatory policies / government legislation
• Changing societal concerns, attitudes, and lifestyles
Strategic Group Mapping
One technique to reveal
different competitive
positions
of industry rivals is
strategic group mapping

A strategic group is a
cluster of firms in an industry
with similar competitive
approaches and market
positions
         Strategic Group Mapping


• Firms in same strategic group have two or more competitive
  characteristics in common
   – Have comparable product line breadth
   – Sell in same price/quality range
   – Emphasize same distribution channels
   – Use same product attributes to appeal
     to similar types of buyers
   – Use identical technological approaches
   – Offer buyers similar services
   – Cover same geographic areas
     Procedure for Constructing
     a Strategic Group Map
STEP 1: Identify competitive characteristics that
  differentiate firms in an industry from one another

STEP 2: Plot firms on a two-variable map using pairs of
  these differentiating characteristics

STEP 3: Assign firms that fall in about the same strategy
  space to same strategic group

STEP 4: Draw circles around each group, making circles
  proportional to size of group’s respective share of total
  industry sales
Strategic Group Mapping
    Guidelines: Strategic Group Maps

• Variables selected as axes should not be highly
  correlated
• Variables chosen as axes should expose big
  differences in how rivals compete
• Variables do not have to be either quantitative or
  continuous
• Drawing sizes of circles proportional to combined
  sales of firms in each strategic group allows map to
  reflect relative sizes of each strategic group
• If more than two good competitive variables can be
  used, several maps can be drawn
    Guidelines: Strategic Group Maps

• The closer strategic groups are
  on the map, the stronger the cross-group
  competitive rivalry tends to be
• Not all positions on the map are equally attractive
   – Driving forces and competitive pressures often
     favor some strategic groups and hurt others
   – Profit potential of different strategic
     groups varies due to strengths and
     weaknesses in each group’s market
     position

				
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posted:10/2/2012
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