Chapter #10

Johnson Controls Inc

• Batteries, seats for autos • Heating and cooling for schools • Acquired weaker companies • Global markets • Good relations with GM, Ford, DaimlerChrysler, BMW & Toyota • Market intelligence

• Mature Markets – Maintaining Market share • Adidas , Johnson’s baby shampoo, Arm & Hammer • Declining Markets – Divest or liquidate, consolidate, harvest

• The shake out – Appearance of excess capacity – Difficult to maintain product differentiation – Intensifying of competition – Pressures on costs and profits – Weaker member fail or are acquired

Strategic traps during transition

• Failure to anticipate transition from growth to maturity – Overcapacity – Replacement sales outweigh first-time purchases • No clear competitive advantage as growth slows – Getting stuck in the middle

• Assumption that an early advantage will insulate the firm from price or service competition – Price versus quality ( HP vs Dell) • Sacrificing market share in favor of short run profit – Not investing in R&D or marketing

Strategic choices for mature markets

• Business strategy to sustain a competitive advantage, customer satisfaction and loyalty • Flexible and creative marketing programs to pursue new opportunities as conditions change

Analyzer or Defender

• Operational excellence • Product leadership • Customer intimacy • Don’t get stuck in the middle • Can you purse both a low cost and a differentiator strategy at the same time?

• Quality might be the key six sigma

Dimension of Service Quality

Low -Cost Position

• No frills Product • Innovative product design • Cheaper Raw materials • Innovative production Processes • Low-cost distribution • Reductions in Overhead

• Measuring customer satisfaction • Improving customer retention and loyalty – Loyal customers • Concentrate their purchases • Are all customer equally valuable – Fidelity Investments ($13 vs less than $1) – Redlining – Profiles change

Extending volume growth

Increased penetration – # of potential customers – Product penetration of that segment – Average frequency of use Why are non user uninterested in your product?

Convert current nonusers in target segment into users

Extended use

Market expansion

Harvesting Strategy

Maintenance

Profitable survivor strategy

Niche Strategy