| What is strategic groups? | Strategic groups are competing providers within the same industry, with similar strategic characteristics, following similar strategies, or competing on similar bases.
These characteristics are different from those in other strategic groups in the same industry:
• REMA1000 and Netto are in the same strategic group
• But supermarkets convenience stores, and corner shops are in DIFFERENT strategic groups (in the same industry.)
Strategic groups help us sort and strategically respond to competitor attributes. Identify gaps and opportunities. |
| How are strategic groups identified | Strategic groups are identified through two strategic dimensions:
1. Scope of activities
Products, geographical coverage, number of market segments served, distribution channels used etc.
2. Resource commitment
Extent of branding, extent of marketing effort, extent of vertical integration, product or service quality, R&D spending, size of organisation |
| How are strategic groups mapped? | Strategic groups can be mapped on two-dimensional charts with key dimensions or axes. For example, for the advertising industry, the dimensions: (1) Global reach and (2) Range of specialist services between creative and analytic have been chosen to demonstrate strategic groups in the advertising agency:
Other dimensions could be: (1) Range of industry expertise (pharma, retail, auto, fmcg) (2) Reputation for advertising effectiveness. |
| How is the mapping of strategic groups used? | 1. Understanding who the competition is. Traditionally it is players in the same strategic group (but tradition is an unreliable guide!)
2. Analysing strategic opportunity. A strategic group map can ID strategic ‘spaces’ in an industry
3. Analysing barriers between strategic groups and advantage/cost of crossing them |
| What is a market segment and how can they be defined? | • A market segment is a group of customers who have similar needs, which are different from customer needs in other parts of the market.
• A narrow segment is called a niche
• Company strategy can choose to focus on a market segment or niche, aka ‘niche strategy’
• Niche specialization is a trade-off against volume and scope
• Market segmentation helps us sort and strategically respond to buyer attributes. Identify gaps and opportunities |
| What are some common bases of market segmentation | See pic |
