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Reading Notes Strategic Windows - Derek F. Abell Dynamic Analysis Strategic window - limited periods during which the “fit” between key requirements of a market and particular competencies of a firm competing in that market is at an optimum ●

Investment should coincide with strategic windows

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Divestment should be considered if the firm does not align with market conditions and cannot adapt

Dynamic analysis - how well is a firm equipped to deal with changes in the market

Market Evolution ●

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Represents the following far-reaching market changes: a. New primary demand opportunities with completely different requirements than existing market segments ■ Essentially entering entirely new markets due to demand ■ Bottom-up effect b. New technologies that cannibalize existing ones ■ Generally comes from technologies developed outside of an industry ■ Reduced barriers to entry attracting new competitors c. Market redefinitions caused by the product and/or market strategy shifts ■ Redefining the market to include new products or market segments ■ Top-down effect d. Channel changes ■ Institutional/production changes that lead to shifts in distribution Resource requirements - internal requirements may shift dramatically with market changes Firm rigidity - firms change in a predictable way leading to the “strategic window” phenomenon during which an opportunity can be exploited rather than created Strategic options - options for firms to stay in business: a. Reassemble resources - to close gap between market requirements and firm competencies b. Shift efforts - to target investment on areas of fit between requirements and competencies c. Scale back - reduce funding in the market and increase the margin for short-term

profit d. Exit - Liquidate or sell capacity in a particular market

Measuring Consumer Judgements - Paul E. Green and Yoram Wind Structure 1. Characteristics - The characteristics of alternatives that consumers can choose from a. Multiattribute, across more than a single dimension 2. Characteristic value - Overall judgement of the relative values of the various characteristics.

Conjoint Measurement ● ● ●

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Comes from mathematics, psychology & psychometrics Used to sort relative importance of a product’s multidimensional attributes Process - A consumer makes decisions based on ○ Overall judgement ○ Complex alternatives Goal: Utility Scales Method ○ X-level factors - Three or two-level factors compare dimensions using 2 or 3 options respectively ○ Orthogonal Array - used to distribute a balanced set of factors across a set of test combinations Usage ○ New product formulations ○ Package design, brand name & promotional copy combinations ○ Pricing & brand alternatives ○ Verbalized descriptions of new products or services ○ Alternative service designs

Computing Utilities ●

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Utility scales - each attribute carries a certain amount of influence over consumer evaluation. ○ These scales represent a common unit across factors Total utility - utility scales for each factor are added up. Total utility corresponds closely to product ranking Problems with utility & conjoint measurement ○ Number of applications for conjoint measurement is small and thus does not have a track record

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Some products/services may not be captured by utility functions & decision rules The essence of certain products may not be well captured by decomposition

Benefit Segmentation: A Decision-oriented Research Tool Market Segmentation - Based on developments on-demand side of the market representing a rational & precise adjustment of product and market effort to consumer or user requirements.” ● Almost all markets can be segmented profitably ● Segmentation has no limits ● Which segmentation is most productive?

Segmentation Methods Geographic Segmentation - created by brands that were limited to certain regions Demographic Segmentation - based on demographic variables, but has shown to be a poor predictor of behaviour Favor-Volume Segmentation - 50% of users account for 80% of consumption. Benefit Segmentation - Market segmented by causal factors rather than descriptive. Categorization by what the consumer is seeking...