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Marketing Dynamics & IBM Case Study
The document discusses competitive strategies for different market structures. It outlines strategies for market leaders to expand demand and protect market share. Market challengers can attack leaders or other firms. Followers imitate and adapt, while nichers focus on small, specialized markets. The product life cycle progresses through introduction, growth, maturity, and decline. The case study describes IBM's history and transformation from hardware to consulting and analytics, helping solve major problems.
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Marketing Dynamics & IBM Case Study
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- 2. 4 Important Questions • How can market leaders expand the total market and defend market share? • How should market challengers attack market leaders? • How can market followers or nichers compete effectively? • What marketing strategies are appropriate at each stage of the product life cycle?
- 3. Hypothetical Market Structure 40% 30% 20% 10% Market Leader Maket Challenger Market Follower Market Nicher
- 4. Competitive Strategies forMarket Leaders v Expanding Total Market Demand New Customers More Usage Additional Opportunities to use the brand New Ways to use the brand
- 5. Competitive Strategies forMarket Leaders v Protecting Market Share Proac<ve Marke<ng Defensive Marke<ng Posi<on Defense Flank Defense Preemp<ve Defense Counteroffensive Defense Mobile Defense
- 6. Competitive Strategies forMarket Leaders v 6 Types of Defense Strategies
- 7. Competitive Strategies forMarket Leaders v Increasing Market Share Possibility of provoking antitrust action Economic cost Danger of pursuing wrong marketing activities Effect of increased market share on actual & perceived quality Factors to be considered
- 8. Strategies for MarketChallengers v Defining the strategic objective & opponent 1. Can attack the Market Leader 2. Can attack firms its own size that aren’t doing the job 3. Can attack small local & regional firms
- 9. Strategies for MarketChallengers v Choosing a general attack strategy AGack Strategies Frontal AGack Flank AGack Encircle ment AGack Bypass AGack Guerilla AGack
- 10. Strategies for Market-Followers Counterfeiter Cloner Imitator Adapter
- 11. Strategies for Market-Nichers v What? A leader in a small market (niche). v Competition? Avoid competing with larger firms. v Customers? Small markets of little/no interest to larger firms. v Profitability? Greater than larger firms. v ROI? Higher because they know target customers very well. ① Creating Niches ② Expanding Niches ③ Protecting Niches Three important tasks :-
- 12. Product Life Cycles Growth-Slump-MaturityCycle-Recycle Scalloped The different phases of the cycle:- ① Introduction ② Growth ③ Maturity ④ Decline
- 13. International Business Machines– A mini case study!
- 14. Manufactures & sellsComputer Hardware & Software Offers Infrastructural services Provides Global Consulting Services What does IBM do? Company Timeline 1910-‐1940 1950-‐1980 1980-‐present Thomas Watson Sr. • Focus on large-scale custom solutions for businesses • Explosive Growth • War related Technologies Thomas Watson Jr. • Worked with US Govt during cold war to build air defense SAGE sys • 70% Market Share • Beginning of the Personal Computing era Louis Gerstner & Samuel P. • Launched 1st personal computer • Outsource components of PC to Microsoft (Sales declined) • New CEO turned the fortunes, refocused co. in a strategic direction
- 15. 1880-‐1924 Custom-‐built solu<ons for businesses, Tabula<ng machines, War related technologies for WW1 & WW2 1950-‐1980 Innova<ons in computa<on, Air Defense SAGE computer, System/360 Computers, IBM Architecture-‐ Industry standard 1980-‐2000 Personal Compu<ng era-‐ Launched first PC, Outsourced components of PC to MicrosoZ, Transformed & focused on high-‐margin business like consul<ng & middleware-‐soZware development 2000-‐present Moved away from Hardware business, embraced Global Consul<ng & Analy<cs, Acquired 100 companies, focuses on solving world’s most challenging problems like, pollu<on & traffic Core Business Focus Re-thinking Marketing Strategy • In order to rebuild brand image, consolidated marketing efforts from 70 advertising agencies to 1 & created a consistent, universal message. • In 1997, IBM’s chess-playing computer system, Deep Blue, also helped lift IBM’s brand image by defeating the world’s reigning chess champion in a historic event that captured the attention of millions. • Latest campaign, “Smarter Planet”, conveys company’s vision.
- 16. IBM’s Marketing &Promotional Activities
- 17. Few companies havehad such a long history of ups and downs as IBM. What were some of the keys to its recent success? Can its plans to solve some of the world’s most challenging problems succeed? Why or why not? • The key to IBM’s recent success is focusing on big problems that might affect businesses and consumers. • Yes, I believe that IBM is able to solve some of the world’s problem, such as pollu<on, traffic conges<on, etc. With a technically proficient workforce comprising of scien<sts, engineers, consultants, and sales professionals, they can help solve some of the big problem and make people’s life easier and healthier. • IBM has been inves<ng 30% of their annual budget into R&D, which bound to yield results. We can expect them to come up with something that will fix some of the important problems that we are facing.
- 18. Who are IBM’sbiggest competitors today, and what risks do they face with their current strategy? IBM’s major rivals include Technical & Consul<ng firm that are into the Hardware & SoZware sector. For eg, Accenture, HP, XEROX, CSC, etc The risks involved with the current strategy are:-‐ • Focusing on solving big issues may involve greater resources (<me, money & energy) & may not yield desirable results. • AZer heavily inves<ng resources in solving big issues, IBM may have to face situa<ons when rival companies come out with more efficient solu<ons. • R&D may become obsolete coupled with low success rate.
- 19. SUMMARY Market Structure • Market Leader • Market Challenger • Market Follower • Market Nicher Compe<<ve Strategies • For Market Leader • For Challenger • For Follower • For Nicher Product Life Cycles • Growth-‐Slump-‐Maturity • Cycle-‐Recycle • Scalloped IBM Case Study
- 20. DISCLAIMER Created by AkshayJulka(DTU, Delhi), during a Marketing internship under Prof. Sameer Mathur, IIM Lucknow.