Winning Customers in the Marketplace
Competitive service strategies
Michael Porter has argued persuasively that there are three generic competitive strategies:
Each of these strategies will be described in turn:
Managers pursuing this strategy have an over-riding concern for keeping costs, and therefore, prices, lower than those of competitors. Normally, this means extensive production or service facilities with efficient economies of scale (low unit costs of making products or delivering services). Productivity improvement is a high priority for managers following the cost leadership strategy. (Wal-Mart, Inc., is a prime example of the cost leadership strategy). Following are listed a number of ways in which companies might pursue this strategy.
Seeking out low-cost customers. Examples:
Target
http://www.target.com
Target illustrates the overall cost leadership strategy, because the
company
focuses on having high quality merchandise, and low prices. The objective
of
target is to give their customers a reliable product at a reasonable
price.
Michelle Zillmann
Food4Less
http://www.food4less.com
Food4Less's highest concern is keeping costs and prices lower than
competitors while still providing good service. They do this
by seeking out
low-cost customers and reducing the personal element in service delivery.
Mandy Swayze
Sam's Club
http://www.samsclub.com
Sam's Club gives an example of the cost leadership strategy. They give
consumers a variety of household, automotive, and pet supplies in bulk.
Their prices are cheaper compared to the individual products from other
convenient stores. "the Greater, the Cheaper"
David Adden
K-Mart
http://www.bluelight.com/
K-Mart has every day savings for shoppers that like quality products
at lower
prices. K-Mart has made a commitment to selling products, to even the
most
conservative shoppers, feel like a bargain.
Kevin Hanlin
The Home Depot
http://www.homedepot.com
The Home Depot services the do-it-yourself attitude. It provides
home improvement items at a discounted price. Home Depot provides
these
things at an affordable price.
Flynn M. Harvey
RxbyTel
http://www.rxbytel.com/
RxbyTel is an online pharmacy offering discounted prescription drugs,
sports supplements, herbs, and natural remedies. Due to worldwide
access on the web, RxbyTel can offer lower prices than local pharmacies.
With such a large customer base, this company can take advantage of economies
of scale and special supplier relations.
Eric W. Smith
Standardizing a custom service. Examples:
ETrade
http://www.etrade.com/cgi-bin/gx.cgi/AppLogic+Home
ETrade is the new way to trade stocks online. They have a market
focus of trying to get investors to trade online using there
services to cut out the brokerage fees you would otherwise have to
pay.
Chuck Schneickert
Old Navy
http://www.oldnavy.com/html/default.html
Old Navy was created by Gap, Inc. to be a whole new shopping experience.
This store offers a great selection of fachionable clothing for men, women,
and children to value-conscious customers.
Jaime Cales
Payless ShoeSource
http://www.payless.com/
Payless ShoeSource is a good example of overall cost leadership.
They
focus on selling shoes to members of the whole family at a reasonable
price, while still being stylish. They have some of the cheapest
shoes
you will find, while still being comfortable and of good quality.
They
also have a wide selection of styles to choose from.
Ashley Baldwin
Reducing the personal element in service delivery.
Examples:
Reducing network cost. Examples:
Priceline
http://www.priceline.com/
Priceline is a great way to save money on lots of services. As
a service, Priceline takes on a cost leadership strategy allowing customers
to bid their own prices on anything from airline tickets to grocery shopping.
This allows customers to find premium products and services at a discounted
cost.
Chad Patton
Taking service operations off-line. Examples:
For this strategy to succeed, a company's product or service must be considered unique by most of the customers in its industry. Advertising and promotion help the product or service stand our from the crowd. Specialized design, a widely recognized brand, leading-edge technology, or reliable service also may serve to differentiate a service in the industry. Because customers with brand loyalty will usually spend more for what they perceive to be a superior product, the differentiation strategy can yield larger profit margins than the low-cost strategy. Following are some of the ways managers may use to pursue this strategy.
Making the intangible tangible. Examples:
Rent-a-Center
http://www.rentacenter.com
Rent-a-Center provides customers from all walks of life with an easy
and affordable way for them to get the top-name-brand-quality household
merchandise immediately without acquiring a continuing obligation or having
to use their credit. Therefore, intangible merchandise is easily
tangible at Rent-a-Center.
Stephen Page
Restoration Hardware
http://www.restorationhardware.com/
Restoration Hardware prides themselves on providing a very select aray
of
"high-quality and unique items for the home: furniture, lighting, cabinet
hardware, interior and exterior fittings, gardenware, fixtures, tools,
books,
devices and amusements." Many of the products they carry
are difficult to
find any where else, and are just unusual enough to make you "Have
to have
it!"
Brian Winsor
Priceline
www.priceline.com
Priceline offers leading-edge technology in the fact that they allow
their
customers to "name their price." This is the only website that
allows their
customers to choose their price. This is a new concept in the
world of
marketing and advertising.
Tabitha Thomas
Customizing the standard product. Examples:
Calvin Klein
http://www.calvinklein.com
Calvin Klein provides a lot of good and quality
design to attract consumers
of the young generation. Most of Calvin
Klein's products are 100%
satisfactory.
Michelle Zillmann
Title: Harley Davidson Homepage
URL: www.harleydavidson.com
Explanation: Harley is known for their
differentiation in products. They
customize bikes to meet the customer's needs,
including price, style, and
accessories.
Angie Chilcott
The Gap
http://www.gap.com
Gap offers quality clothing for babies, kids,
and adults. The Gap is known
for their quality designs. Gap attracts
style conscious consumers of all
ages.
Jessica Steckler
The Body Shop
http://www.the-body-shop.com
The Body Shop was the first company to differentiate in the cosmetic
industry by offering cosmetics, hair and skin care products that are
all
made from natural ingredients. The Body Shop also strives to
be active with
any social issues that it feel important.
Jennifer Mader
Reducing perceived risk. Examples:
Intel
URL: http://www.intel.com
Intel is a leading-edge technology by producing powerful and high quality
computer processors. Their products is recognized worldwide, very reliable
and meets today's business needs and home applications.
Giving attention to personnel training. Examples:
Jiffy Lube
http://www.jiffylube.com
At Jiffy Lube eacho of their technicians receives exhaustive classroom,
video, and hands-on training in all aspects of lubrication services.
This training covers both the technical and safety aspects of each service
and is supported with written and hands-on performance exams with their
technical experts. Each test must be successfully completed before
they are certified to work on the customers' cars.
Shannon Schuman
Controlling quality. Examples:
Abercrombie & Fitch
www.abercrombie.com
This web site is an example of differentiation. Abercrombie
& Fitch is a specialty retailer of casual, classic American sportswear,
targeted to men and women approximately 15 to 25 years of age. They
carry their own brand of clothing and has been the trendy sportswear worn
by many for the last 2-3 years.
Debbie Freeman
This generic strategy involves achieving a competitive edge by delivering a superior service to a limited audience. Following are some of the ways managers may choose to pursue this strategy.
Careful customer selection. Examples:
A particular buyer group. Examples:
http://www.synthavoice.on.ca
This is the web site of a company that produces a screen-reader for
the blind. Since it is a company that focuses on a particular group
of buyers, this would be considered a market focus strategy company.
Hank Pearce
Siemens Hearing Instruments, Inc.
http://www.siemens-hearing.com
Siemens Hearing Instruments designs and manufactures the latest advancement
in hearing aids. This company has a market focus. They
help improve the
quality of life for the hearing impaired.
Cherie Dixon
Motherhood
http://www.motherhood.com/
Motherhood stores cater to the expectant mother with all types of clothes
and accessories.
Most customers are short-lived and will only need the services of this
store for a few months. Satisfied customers will recommend this store
to their friends, and a new customer base will begin.
Vicki McQuain
A segment of the market. Examples:
NIKE
http://www.nike.com/
The main market focus of NIKE is to sports interested
individuals. They
have a wide market, because they now sell not
only shoes, but also shirts,
hats, and other clothing products. The
focus is on being active and fit.
The image is created and then posed to the public.
It is an image that
people want, so it doesn't exclude anyone.
Michelle Zillmann
toysrus.com
URL: www.toysrus.com
Short explanation: This website is an example
of market focus. This page
focuses on children and parents of small children.
By focusing on a
specific market, they learn better what their
customers want.
Melissa Sims
Southwest Airlines
http://www.iflyswa.com
Southwest Airlines fits into two of the catagories
very well. SWA is the
largest and leading airline in the low-cost catagory. With 300
planes and
flights to over 55 cities they are by far the largest low-cost provider
in
their field.
The company is market focused also. They have
targeted the people and
companies that want to fly at a low rate and don't care if they get
a meal
while on the plane. Transportation is their first concern.
Ken Ramsey
Natural Wonders
http://www.naturalwonders.com/
This store is devoted to selling products appealing to the amateur
naturalist
or the growing numbers of the environmentally conscious shopper.
The
majority of the products sold focus on a particular philosophy of unity
with
nature or conservation.
Maria Johnston
A geographic market. Examples:
Winning Customers in the Marketplace
Winning customers in the marketplace may be pursued as a service strategy using one or more of the following themes:
Availability. Examples:
Wal-Mart
http://www.walmart.com/estore/pages/pg_g1.jsp
Wal-Mart is an organization that is at the top of their industry.
One of the ways they win their customers is with their availability.
Virtually anywhere you go in the US you can find a Wal-Mart that
is
open 24-7 or you can shop online with them. Either way, they
are
probably the most accessible retailer there is.
Chuck Schneickert
Saint Luke's-Shawnee Mission Medical Group
http://www.saint-lukes.org
The Saint Luke's-Shawnee Mission Medical Group operates more than 14
physician offices throughout the Kansas City metro and surrounding area.
This group includes more than 69 providers and is comprised of family practice
physicians, pediatricians, and internists, as well as several specialists.
Shannon Schuman
Choice Hotels International
http://www.hotelchoice.com
Choice Hotel International is known for its 5,000 hotels, inns, all-suite
hotels and resorts in 36 countries. There are different hotel
brands that
Choice Hotels International offer. The most familiar brands are
Comfort
Inn, Quality Inn, and Sleep Inn. You are sure to find one of
these hotels
anywhere you travel. Every brand of hotel offers 100% satisfaction.
Cherie Dixon
Convenience. Examples:
Pizza Hut Homepage
URL: www.pizzahut.com
Explanation: This website is an example of convience and reputation.
Pizza
Hut has a wonderful reputation all over the country. On this
site you can
find the nearest Pizza Hut to your location. You can also find
out all of
their menu items. In some areas, you are even able to place your
order over
the Internet. This is convience at its greatest!
Melissa Sims
Quik-Trip
http://www.quiktrip.com
This website gives the example of convenience for consumers.
Their variety
of merchandise with food items is available 24-7. The only exceptions
the
price of their gas, but they can't do anything about that.
David Adden
Amazon.com
http://www/amazon.com
Though this web site may illustrate many of the winning people strategies,
I have chosen to expound upon the convenience factor. Amazon.com
not only has many different products and books, it makes obtaining them
extremely easy for many reasons.
Hank Pearce
NAPA-Genuine Parts Company
http://www.genpt.com
Napa, which has been in operation for more than 70 years,
has built a
reputation for selling quality parts at a fair price and service that
can't
be beat. NAPA also has convenient locations and great parts availability.
Ken Ramsey
Fazoli's
www.fazolis.com
Fazoli's Italian restaraunt brings together two of America's most popular
dining concepts -- the italian family restaraunt and the fast food outlet.
They offer reasonable prices, quick service and great food - something
different from the fast food burger joint.
Debbie Freeman
Staples
http://www.businessdepot.com
This is the business web site run by Staples office supply stores.
The
website offers convenience in ordering offices supplies. The
site offers a
wide variety of items and a easy way of keeping track of office supply
costs
open easily accessable through the web.
Maria Johnston
Target Homepage
http://www.target.com
Super Target makes shopping convenient by offering grocery items, household
items, and banking all in one place. Target makes shopping a one stop
experience, which is convenient for today's busy lifestyle.
Jessica Steckler
Eddie Bauer
http://www.eddiebauer.com
Eddie Bauer provides quality clothing and other items to the
customer 24 hours a day and 7 days a week. If you have the internet,
telephone, fax machine or a stamp. You can buy from Eddie Bauer.
Flynn M. Harvey
MBS Direct
http://direct.mbsbooks.com
MBS Direct's website makes it very easy and convenient for students
to order
textbooks online and have them delivered to their door. This
is very
convenient because it means there will be no waiting in long lines
and the
textbooks can be purchased 24/7. Best of all, the textbooks can
be returned
and sold back.
Jennifer Mader
Dependability. Examples:
United Parcel Service
https://www.ups.com
UPS has made it their commitment to deliver packages any where in the
world
in a timely manner. UPS has a sophisticated system that is able to
locate the
package after it is shipped, and tell the customer where it is and
approximately how long it will be until it is delivered.
Kevin Hanlin
Dodge
www.4adodge.com
The advertising for Dodge makees the customer believe that their product
is
high in quality and very dependable. Their saying "like a rock"
implies
that their products are strong. Just recently they have been
applying the
"different" attitude, as we see in the website.
Tabitha Thomas
Honda
http://honda.com/
Honda has the reputation of providing dependable automobiles at an
affordable price. Because of their extensive research and development departments,
they have won customers in the marketplace.
Chad Patton
Personalization. Examples:
Personalization
http://www.personalizationmall.com
This website offers personalized stationary, wedding, baby, golf, collegiate,
and career gifts. Many of the items are quite unusual, especially
in the career area where gifts for different occupations are displayed.
The personalized gift is always a good choice for someone with everything.
Vicki McQuain
The Levi Strauss Company
http://www.levistrauss.com/
The Levi Strauss Company began a revolutionary idea in the mass production
of blue jeans. A few years back, they decided to begin personalizing
their jeans to individual consumers. Measure-to-fit women’s jeans
are available online as well as at most Levi Strauss stores. In the
next year, they plan make more styles as well as men’s jeans available
for this personalized option.
Eric W. Smith
Price. Examples:
Wal-Mart
http://www.wal-mart.com
In Wal-Mart's website, the company is focusing on low costs to the
consumer,
but with high quality products in return. The company also gives one
the
opportunity to buy items that are on sale on-line. The result is that
the
customer gets a high quality product at a relatively small cost.
Michelle Zillmann
Old Navy
http://www.oldnavy.com/html/default.html
Old Navy is known for their stylish clothes and accessories that can
be
purchased at a reasonable price. They have some of the best prices
on
their clothes, especially when they have sales or clearance items.
If for
any reason, you do like your purchase from Old Navy, you are able to
take
it back for a refund or exchange. They guarantee customer satisfaction.
Ashley Baldwin
Quality. Examples:
Title: Best Buy homepage
URL: www.bestbuy.com
Explanation: Best Buy is known for their high quality products.
They stand
behind their products by offering a hassle-free return and exchange
policy.
They also offer warranties on all of their products.
Angie Chilcott
Boulevard Brewing Co.
http://www.blvdbeer.com
Boulevard Brewing Co. carefully inspects all of it's ingredients. By
using
fresh, unprocessed whole hops,100% malted barley, European roasted
malts and
wheat grown locally in Missouri, they can ensure only top quality materials
go into their beer. They also use no pasteurization or sterile
filtering
like the big producers do. Every effort is made to guarantee
top quality in
each batch.
Brian Winsor
Sony
http://www.sony.com/
Sony is one of the world's premiere entertainment and electronics companies,
providing top quality entertainment and electronic products and services
to consumers around the world. They are the leading provider of digital
content, services, and devices in the 21st century.
Jaime Cales
Mercedes Benz
URL: http://www.mercedes.com/index_ie.htm
When it comes to quality cars Mercedes is always been known for that.
Mercedes Benz is considered unique by most the customers in the automobile
industry.
Reputation. Examples:
Gateway 2000
http://www.gateway2000.com
Gateway 2000 has an unbelievable amount of customer loyalty, because
the
company has the reputation of being a producer of high quality goods.
Gateway also has the highest customre repurchase rate ranks of all
computer
sellers.
Michelle Zillmann
Bass Pro Shop
http://www.basspro.com
The mission of the Bass Pro Shop is to be the leading merchant of outdoor
recreational products, so it offers customers a large selection of top
quality merchandise at low prices with superior service. Due to this
mission, the Bass Pro Shop has earned the reputation of being the "World's
Leading Supplier of Premium Outdoor Products".
Stephen Page
Tommy Hilfiger
http://www.tommy.com
Tommy Hilfiger has created such a reputation of "style" that the Tommy
brand
is one of the most popular brands among teens today. Some believe
that if
you wear Tommy, you have good style, and some will pay the extra price
to
wear the Tommy logo.
Mandy Swayze
Safety. Examples:
Speed. Examples:
Since most services are produced and marketed at the same place and time - and often by the same person - a service strategy usually integrates both marketing and operations.
The term strategic service vision has been coined to define such a service strategy. [33]
A strategic service vision focuses on four elements:
1. Identification of a target market segment.
2. Development of a service concept to address targeted customers' needs.
3. Design of an operating strategy to support the service concept.
4. Design of a service delivery system to support the operating strategy.
Service Operations Strategy Questions
Questions service organizations might ask in regard to operations strategy: When examined along with overall corporate objectives, effective service strategies may be developed.
1. Product technology. Fast-Food: should sandwiches be made to customer's orders (Wendy's) or made to one or more specifications and stored (McDonald's)? Grocery stores: use scanners or manual reading of prices.
2. Capacity. Is capacity the right kind? Large jet (economies of scale) or small jets and more frequent flights (greater degree of customer service).
3. Facilities and location. Location is a critical strategic decision. Hotel downtown or on expressway? Number of units and location relative to competitors.
4. Process technology. What level of technology, mechanization, and automation should be used? Increased levels of self-service, often computer-based, to replace traditional human interaction?
5. Human resources. With varying levels of demand, use part-time employees and staff that are cross-trained in a variety of skills. Personnel with more customer-contact must understand customer interactions and have better "people skills" than task-oriented personnel who work behind the scenes.
6. Operating decisions. Critical decision in customer satisfaction is that of waiting lines. What will affect customer perceptions of waiting and service quality? Groceries shift workers from stocking shelves to checkout lines as demand increases.
7. Supplier integration. The ability to meet demand requires timely and efficient delivery of supplies. Supermarkets have own distribution; fast-food corporation own cattle rather than rely on external suppliers.
8. Quality. Consistency in service delivery is key to service quality. Customers' perceptions of service quality are affected by each of the other components of strategy. [32]
This assignment consists of locating and reporting a site which will illustrate one of the factors under one of the three Michael Porter generic competitive strategies: overall cost leadership, differentiation, and market focus.
Report Format:
Title (the title here is the word or phrase of the factor you
are illustrating),
URL,
short explanation of the site (two sentences should be sufficient),
your name.
These will be posted, under the appropriate strategy factor.
Send your Report to the instructor,
subject: MG 476 3-1
Locate and report a different site which will illustrate one of the Winning customers in the marketplace subtopics (subtopic, not topic).
Report Format:
Title (the title here is the word or phrase [of the subtopic] you are
illustrating),
URL,
short explanation of the site (two sentences should be sufficient),
your name.
These will be posted.
Send your Report to the instructor,
subject: MG 476 3-2
Choose a company (not previously reported on) and discuss how you believe that company (or portion thereof) has implemented a strategic service vision. (five to seven sentences should suffice - be precise, not rambling).
These will be posted at the end of this page.
Send your Report to the instructor, subject: MG 476 - Assignment 3-3
William
L. Smith Teacher Home PageService
Management Home Page
Emporia
State UniversityIf you have comments or suggestions, email me at smithwil@emporia.edu
This page last updated July 27, 2000.
Nations Bank
http://www.nationsbank.com/
Nations Bank provides financial assistance to their surrounding communities
and are located throughout the United States. The company also provides
different accounts for different people. Based on one's needs, they
can
ssist you and help you answer any questions you may have concerning
your
investments. The organization has a well trained staff to help customers
with their transactions. The goal at Nations Bank is to satisfy customer's
needs and wants. Because Nations Bank is located all over the United
States,
customers have easy access to ATM's. Nations Bank also provides on-line
banking to improve communication and customer satisfaction.
Michelle Zillmann
Eric W. Smith