Monday, October 17, 2011

Corporate (Business) Strategy Examples

In general, every organization will establish its own set of business strategies in order to support the missions and vision, and ultimately achieve goals. In other words, leaders who take the initiative to analyze and understand their market, industry and other external factors can actually develop strategies that are most likely successful.

As a matter of business strategies, there are various types in order to outplay the competition and ultimately generate business “growth”. To achieve both, your business must find, evaluate and select a strategy to capture a potential market.

Two classical examples are illustrated here. More importantly, there are attractive strategies available to small and medium businesses to compete against the scale economies that larger competitors are able to achieve.

Luxury Brand-focused: LEXUS
Some companies choose to position their products (or services) at the high end of the overall competitive pricing scale. Brand like LEXUS is best to illustrate this!

Luxury brands appeal to a distinct group of consumers with ample disposable income and the desire to purchase exclusive products. Companies that choose this strategy are able to increase their ROI (Return on Investment) through product cost versus volume. The customers may be fewer, but they will buy more expensively.

Back in 1957, when TOYOTA entered the American market, they were not considered a threat at all to the American auto industry. It was believed that TOYOTA cars had no appeal to American consumers. But, in the 1970s, there were problems such as the 1973 Oil Embargo, environmental regulations, and quality control issues with some American cars. In response to these “opportunities” (when most people considered it as “crises”), TOYOTA aggressively marketed their cars to Americans as being fuel-efficient, environmentally friendly, and having better build quality than the American cars.

What’s more, TOYOTA marketed their cars as being hip and fun with memorable and fun-filled slogans like, “you asked for it, you got it, Toyota,” and with commercials involving young Toyota drivers jumping in the air. As a result, TOYOTA’s marketing campaign along with continuing problems from the Big Three auto manufacturers, allowed import cars to make up about 20%of the American car market by 1980.

After successfully gaining a sizable market share in the American market, Toyota decided to create the LEXUS brand in 1989. LEXUS is crafted to target the luxury car market segment which was dominated by Mercedes-Benz and BMW … at that time.

They decided to create a new brand because of their brand image portrayed as only offered fun and fuel-efficient compact cars. As a matter of brand differentiation strategy, the introduction of luxury models into TOYOTA existing lineup would dilute the TOYOTA brand.

Hence, TOYOTA marketing strategy was to position LEXUS as a separate company with almost no references to TOYOTA. Heavy emphases towards quality customer service and a separate dealership network from TOYOTA were implemented. Such business/marketing strategy has allowed LEXUS to outplay its competitors like BUICK, MERCURY and LINCOLN, and become one of the best-selling luxury cars in the US by 2000!

Niche Market-focused: PEPSI

Most often, when a market, business or other external factors forces a business to make important decisions about future direction of their operation vis-à-vis the rest of business initiatives and directions, niche markets are particularly interesting for business looking to grow and/or to change, perhaps.

Niche markets consist of groups of consumers (often considered as market segments) within a larger marketplace who have similar demographic, buying behavior and/or lifestyle characteristics.

Therefore, a niche-focused business strategy targets a narrow group of consumers with a product and/or service designed specifically to meet their needs and wants.

The cola wars between PEPSI and COKE began in the late 1930s when PEPSI started making gains in the market. PEPSI realized that African Americans were an untapped niche market at the time, and that PEPSI stood to gain market share by targeting its advertising directly towards them.

In 1940, PEPSI CEO Walter Mack had the unprecedented idea of putting together a "negro-markets" department. Edward Boyd led the team of 12 black professionals, making Boyd one of the first black executives in corporate America. He and his group developed a marketing strategy seeking brand loyalty among African Americans.

The strategy was one of the first attempts at niche marketing, and it worked!

PEPSI sales in targeted communities shot up over one concerted two-week campaign by 13%.

What’s more, PEPSI was a sponsor of the exhibition, its early efforts at workforce integration and racial harmony are clearly good public relations almost six decades later.

Courtesy of Marketing Channel

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