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International Marketing Management Treacy And Wiersema’s

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Question:

Analysis of Treacy and Wiersema’s proposed generic competitive strateg.
 
 

Answer:

International marketing has become a key concept in today’s competitive era. Most of organizations are focusing on the development of product at international level because of higher target market and demand in the market. Organizations are attempting to satisfy the needs and wants of customers at domestic and international level. It is stated that it is too complex to sustain in rapidly increasing competitive market and retain the brand value in perspective market. It is necessary for organization to implement the strategic approach for maintain positive relations with mass level customer. Organizations are developing rapidly in market and these markets are influenced by the emerging operations of competitors. Nowadays organizations are facing the dynamic changes in global market. Further, the market has become customer centric. Marketers are identifying the value creating dimensions to satisfy the customer and gain the competitive advantages over the rivalries.                 

From the view point of Treacy and Wiersema there are three effective strategies to cater the need of customers. These strategies are as product leadership, operational excellence and customer intimacy (Harmon, 2014). Organization can adopt these effectively to attain the competitive advantages.

Generic strategies was which proposed by the Michael Treacy and Fred Wiersema to derive the strategic values has discussed as follows:      

Product Leadership Strategy    

Product is the crucial element of the company to deliver the customers. Basically, the customers are focused on the product of company and customers known the product before its company. Therefore, it is essential for company to effectively address the mass customer by its unique product. It is the responsibility of product manager to ensure the quality and differentiation between the own and market product to attract the potential customers. It is known that successful companies have dominant product value. At the same time, attributes of product are liked by the customer its meet the expectations of customers and they take it immensely. Quality of products depends on the two factors one is level and another is consistency.

Moreover, customer value prepositions derive the practice of strategic and effective relation with customer. Product differentiation is the unique attribute of company to defeat the emerging rivalries in the market (Colb, 2015). Leading and successful organization adopt the stigma of low cost because of its value creating aspect. It is considered that low cost is the attraction of mass customer. On the other hand, it is criticized that only low price product may not be successful in market wining. Further, the organization brought innovation in its product regarding the new features. Apple is one of the most example of product leadership, because it is delivering the unique product to the international customers. In addition to this, Sony is another example of product leadership in market. The product differentiation strategy of these companies is the game changer in market and creates competitive advantages (Vogelaar, 2011). Along with this, they created unique brand recognition in the market. With this, product leadership drives the customer satisfaction and made the insightful to market king. It also developed the brand loyalty towards the products. In addition to this, these organizations focus on adding the comical features in its products and attract the target market audience (Verweire, 2014). The operational efficiency of Apple and Sony is too forward which creates value preposition and earning profit continuously. Moreover, the customer base has increased over the time span. On the other hand, it is complex to gain the product leadership in this most competitive market.

 

Operational Excellence as market winning strategy

Operational Excellence is another generic strategy to achieve the competitive advantage over its rivals. Companies focus on the effective goods and service delivery of the product. It is considered that only effective product is not the successful but its expertise in operation is also crucial. It is also an important strategy to focus on enabling the organization as a leader in specific product management. Operational excellence can be termed as a process of delivering the service without any challenges. Basically, operational excellence is the process of meeting the customer expectation through delivering the product at its best manner (Verweire and Grande, 2011). In market there are many customers who want the product at cheaper rate to meeting the demand. So the companies defeat the competitors on the basis of low price and effective service. Further, the marketing team focuses on the continuous improvement.

Operational excellence can be achieved through price and convince elements. Basically, these are important to influence the customers. Price is an important factor to create product development and it depends on the perceived value by the customers like basic need, performance need and excitement need (Hope and Player, 2012). It is stated that if a customer is satisfies with its quality and perceived service then they would ready to pay. Further, the performance of product derives value for customer by delivery, substitute products and competition in the market. At the same time, organization can build its operation efficiently through adding performance feature in product. In addition to this, excitement need is another value creating phenomena which is extended to the behavior of customer at the time of buying product. In this competitive market two different nature people exist one is early adopter and another is late adopter, early adopter seeks to quality driven nature and pay high price. On the other hand, late adopters are price conscious and they don’t want to pay high price and wait until price get down (Wallace and Xia, 2014). For instance, mobile phones are the best example to meet the basic, performance and excitement need of the customer because of its pricing and convince strategy as per time frame. Organizations can attain the competitive advantage through operational excellence by cutting the cost of product and make it available at low price as compare to the competitors in homogeneous product category.

For example Dell business is pursuing with operational excellence strategy to gain the competitive advantage (Burns, 2014). It is a winning strategy at national and international level so companies should focus on deliver high quality product with its efficient price structure effectively and it would be resulted into the attraction of customer which should ultimately create a competitive advantage over the business competitors.    

 

Customer Intimacy as competitive strategy

Treacy and Wiersema included one another strategy as customer intimacy for business to gain competitive advantage. Customer intimacy is also a value proposition strategy and it builds the positive relation with customer. It emphasizes on the serving the better quality to its customer in order to satisfy the need and wants of customers (Byrnes, 2011). Organizations focus on the delivering service as per the desire of the customers and fulfill the needs of customers. At the same time, it is necessary for business to aware about the knowledge of customer behavior and achieves the successful intimacy of customers.

Further, most of organizations are following the customer centric approach to focus on the customer’s expectations. Companies understand the nature of customer regarding the needs of customer and treat them as well through meeting the desired demand efficiently. Along with this, customer intimacy can be developed by the product development and operational excellence in the market in order to gain competitive advantage. Creating customer intimacy may be costly for company because of value propositions through innovative strategies in the market. It is stated that company desires to maintain the loyal customer then it should address the preferences of customers. Moreover, successful companies introduce the innovative technology covering the current market trend. Along with this, social media is a supportive tool to embrace the group of the loyal customer and get the creative and desired product.

Brand loyalty and customization are the most factors that can pursue to get the excellence over the product, customer service and competitors through putting the value and quality in front of these. In order to creating the brand positioning in market companies can segmented the market as per the different criteria (Kotler, 2011). Thereafter it can focus on the target market customers through benefiting by superior value determinants. Further, companies should enhance the communication process with customers and develop an integrating marketing system. In concern to this, major corporations are focusing on the customer relationship by serving the effective and efficient service to targeted customer. For example, Amazon and Nordstrom are the best examples of the companies which have been focusing on the customer intimacy though delivering the qualitative service to the customers (Dorris, 2013). Business should focuses on the dilemma of value creating in eyes of customer through which it can maintain the positive relations with customers and which would be resulted into the brand loyalty. 

 

Porter’s five forces analysis of food industry of Australia

Australia is one of the most leading economies which is growing rapidly to tempt the international overlook. Australian economy has experienced the increased growth rate and standard living since last five years (the guardian, 2016). It is the most private business own country which flourished the trade, partnership and investment from the major country over the globe.   

Fast food industry is the major contributor in sharpening the growth in Australian economy. Further, it has undertaken the economic reforms since last ten years. Porter’ five forces is undertaken to analyze the competitive analysis of fast food industry in Australia. Fast food industry has shaped into the new dimension to consider the health and neutral aspect (Taylor, 2016).  Porter’ five force evaluation is a strategic evaluation to pin the economy and understand the future perspective of business. An industry can be easily analyzed strategically.  

Porter’s five force analysis is as follows:

Rivalries among existing industry- High

Australian food market has developed with rapid growth and the international marketers are pushing the economy to invade over the highly competitive economy. Australian fast food restaurant has grown by $34.8 % in year 2015. The competition level in Australia is very high and many leading fast food business are seeking to enter into the market. Competitors desire to become the part of market because of the high revenue. At the same time, demand for fast food has increased but the people are health conscious (Mialon, et.al, 2016). Along with this, many smaller competitors entered in the market which can impact the business of existing large market players. It generated $19 billion revenue in this industry. Moreover, the number of restaurant for fast food has increased and companies are bringing creativity in market through adopting new market luring strategies in food sector.            

McDonalds is the leading market player in fast food with 29.5 % market share and new fast food store are also entering to grab the profit from the market (Jager, 2014). In addition to this, other market rivalries are KFC, Subway, Hungry Jack’s, Domino’s Pizza and Red Rooster.

Bargaining power of buyers- High

Bargaining power of buyers is very high because market has lot many rivalries as fast food restaurant at that customer can easily be treated and it impact the business loyalty as it have with customers. Further, new entrants are targeting the customer through low price tangent and attract the customer towards new food chain which is harmful for business to serve the mass customer base. Bargaining power of customer can also influence the business process as to other competitors meets the demand and expectation of customer with low price and quality service preference. Australian people are loyal towards brand performance but many a time price and service elements in fast food also impacts the business of major players in Australian market (Brown, 2015). Fast food sector is experiencing eating trends in this industry. If the competitors in market are delivering the better quality and operational activities are well structured than it can affect the fast food restaurant’s potential. So the high bargaining power is a challenge for fast food restaurants. At the same time, product differentiation, qualitative service and efficient cost structure are the factors that impact the perception of buyers. Moreover, the high bargaining power of buyers leads to the setting of price by customer and marketers cannot avail the benefit of their price segment.  


Figure: Porter’s five forces analysis

(Source: Walder, 2013)

 

Bargaining power of suppliers- Low     

Bargaining power of suppliers is another tangent of porter’s five forces which can also affect the business significantly. Bargaining power of suppliers of suppliers in Australia fast food market is low because bulk of suppliers in the market existing to supply the raw material. In this market the market leaders are the price allocators because of the high power against the market (Wijnands and Verhoog, 2016). If the price of the raw material for food sector than business can easily switch the suppliers, it would not affect the business but suppliers demand may be affected.                   

It is an advantage for fast food industry in Australia to gain the benefit of significant presence. At the same time, suppliers are targeting the large size food stuff for their long term relationship. It can be stated that suppliers are charging reasonable price for the raw material to supply. Along with this, the revenue for food industry is increasing with the stable rate so it is necessary for suppliers to maintain the relationship with large scale business in Australian market. In this market, dynamic changes have taken place by the introduction of globalization. Further, the healthier food divergence is also important concern for the fast food business because of the customer’s intentions. Forward integration of suppliers is also an influencing factor in which business involve the effective distribution chain.             

Threats of new entrants or barrier to the entry in the industry – Moderate

Fast food industry is growing very well in Australia so the new entrants are coming in the market consequently of tuff competition. Further, industry is facing the low threats from the new entrants because existing player’s performance also matter so it is complex for new entrants to beat the leading market players (Gough, 2014). Along with this, new comers in the industry cannot determine the level of relationship with customers as existing market players have. Moreover, economies of scale entail the decrement in cost as the restaurant business increases but at the time of entry it requires more investment so it can become a hurdle for new entrants. On the other hand, fast food entrants does not requires to get the license for starting a business but it need to follow the strict guidelines regarding the safety of health for consumers. Along with this, new entrants need to adopt the standards as per the industry norms to become a renowned marketer in food segment because of the health conscious nature of Australian.     

Threats of substitutes – High

Substitutes are the products that are close to the main product and the demand of substitutes may be increased if the price differentiation takes place. The treats of substitutes are higher. In fast food sector there are many substitutes are available for the product like pizza, burger sandwich. So, in this market threats of substitutes is high and it can impact the business of market leaders if they charge high price for same product as the competitors charge comparatively less price. It is considered that price is the major competition in food market for the availability of substitutes (Schlosser, 2012). In Australian market people are ready to pay if the perceived quality and amenities are up to the expectation. On the other hand, cheaper price of fast food products can attract the mass customer because of their intensity to consume the food at low price. It is a disadvantage for the industry to avail the benefit of substitute products. McDonalds and KFC’s product contains the high value for its product and they can get the benefit of product differentiation.                  

Importance of Porter’s five forces analysis for companies to enter in the market

Porter’s five force analysis is a strategic evaluation tool which is used to determine the level of specific industry and business which are pursuing. It examines the all factors of business that can impact the business process. Basically, the competition is a major concern for business to enter. If any company is entering in the fast food industry it can use this information effectively to understand the dimension of business and create the business policy accordingly. With this, it can get the idea about competition, buyer, supplier’s perspectives, entry and exit in the market to follow for a successful business. By adopting this information, newly entrant company can defeat the external market through determining the opportunities in the market so get success (Gandellini, et. al, 2012). This analysis would help the company to use the resources efficiently. It is assessed that Australian economy is experiencing the better growth in fast food industry so a company can easily enter in the market through implementing customer centric dilemma and can gain the competitive advantage over the competitors.   

 

References:

Bankwest, (2017) Food and Beverage Services Industry Report. Available at: file:///C:/Users/sd/Downloads/food-services.pdf (Accessed: April 12, 2017).    

Brown, L. (2015) State of the World 2000. USA: Island Press.  

 Burns, P. (2014) New Venture Creation: A Framework for Entrepreneurial Start-Ups. UK: Palgrave Macmillan.

Byrnes, J. (2011) Customer Intimacy vs. Operations Excellence: Why not have both. Available at: https://www.fastcompany.com/1745758/customer-intimacy-vs-operations-excellence-why-not-have-both (Accessed: April 11, 2017).  

Colb, B. (2015) Entrepreneurship for the Creative and Cultural Industries.  UK: Routledge.

 Dorris, M. (2013) What’s Your Strategy? Operational Excellence, Product Leadership or Customer Intimacy. Available at: https://www.digitalgov.gov/2013/12/02/whats-your-strategy-operational-excellence-product-leadership-or-customer-intimacy/ (Accessed: April 11, 2017). 

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Goldenberg, B. (2015) The Definitive Guide to Social CRM: Maximizing Customer Relationships with Social Media to Gain Market Insights, Customers, and Profits. USA: Pearson education.  

Gough, A. (2014) McDonald’s still on top but new fast food outlets continue to enter the Australian market. Available at: https://www.couriermail.com.au/news/national/mcdonalds-still-on-top-but-new-fast-food-outlets-continue-to-enter-the-australian-market/news-story/b93753d82421271a96365c4a5f5a3134 (Accessed: April 12, 2017).      

Harmon, P. (2014) Business Process Change. USA: Morgan Kaufmann. 

Hope, J. and Player, S. (2012) Beyond Performance Management: Why, When, and How to Use 40 Tools and Best Practices for Superior Business Performance. USA: Harvard Business Press.  

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Jager, C. (2014) Which Is Australia's Favourite Fast Food Chain. Available at: https://www.lifehacker.com.au/2014/03/which-is-australias-favourite-fast-food-chain/ (Accessed: April 12, 2017).  

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Mialon, M., Swinburn, B., Allender S. and Sacks, G. (2016) Systematic examination of publicly-available information reveals the diverse and extensive corporate political activity of the food industry in Australia. BMC Public Health, pp., 1-20.   

Schlosser, E. (2012) Fast Food Nation: The Dark Side of the All-American Meal. USA: Houghton Mifflin Harcourt. 

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The guardian, (2016) Temporary factors' behind Australia's recent economic growth spurt, IMF says. Available at: https://www.theguardian.com/business/2016/nov/15/temporary-factors-behind-australias-recent-economic-growth-spurt-imf-says (Accessed: April 12, 2017).    

Verweire K. and Grande J. (2011) Operational Excellence: What does it mean? What does it take. Available at: https://www.vlerick.com/en/research-and-faculty/knowledge-items/knowledge/operational-excellence-what-does-it-mean-what-does-it-take (Accessed: April 11, 2017).

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Vogelaar, R. (2011) The Superpromoter: The Power of Enthusiasm. UK: Palgrave Macmillan. 

Walder, J. (2013) A critical evaluation of Michael Porter’s five forces framework A critical evaluation of Michael Porter’s five forces framework. Germany: GRIN Verlag. 

Wallace, W. and Xia, Y. (2014) Delivering Customer Value through Procurement and Strategic Sourcing: A Professional Guide to Creating A Sustainable Supply Network. USA: Pearson Education.    

Westcott, B. (2014) Australia's fast-food market is getting smaller, healthier and more diverse. Available at: https://www.canberratimes.com.au/act-news/australias-fastfood-market-is-getting-smaller-healthier-and-more-diverse-20140501-zr2j7.html (Accessed: April 12, 2017). 

Wijnands, J. and Verhoog, D. (2016) Competitiveness of the EU food industry.  Ex-post assessment of trade performance embedded in international economic theory, pp., 1-83.       

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