ENTREPRENEURSHIP AND

NEW VENTURE CREATION

DR. BARRY CASIMIR : BSC (2003), MACE (2014), EDD (2020)
MITCH JNO. CHARLES: B.SC. MBA
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 Five Competitive Strategies

 Low-Cost Provider Strategies
 Differentiation Strategies
 Best-Cost Provider Strategies
 Focused (or Market Niche) Strategies
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 Competitive advantage exists when a firm’s strategy gives it an edge in

 Attracting customers and
 Defending against competitive forces
 Key to Gaining a Competitive Advantage
 Convince customers firm’s product / service offers
 superior value
 A good product at a low price
 A superior product worth paying more for
 A best-value product
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 What is competitive Strategy

 Deals exclusively with a company’s business plans to compete successfully
 Specific efforts to please customers
 Offensive and defensive moves to counter maneuvers of rivals
 Responses to prevailing market conditions
 Initiatives to strengthen its market position
 Narrower in scope than business strategy
The Five Generic
Competitive Strategies
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 Low-Cost Provider Strategies

Keys to Success
 Make achievement of meaningful lower costs than rivals the theme of firm’s
strategy
 Include features and services in product offering that buyers consider
essential
 Find approaches to achieve a cost advantage in ways difficult for rivals to
copy or match
 Low-cost leadership means low
 overall costs, not just low

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 When Does a Low-Cost Strategy Work Best?
 Price competition is vigorous
 Product is standardized or readily available from many suppliers
 There are few ways to achieve differentiation that have value to buyers
 Most buyers use product in same ways
 Buyers incur low switching costs
 Buyers are large and have significant bargaining power
 Industry newcomers use introductory low prices to attract buyers and
build customer base
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 Pitfalls of Low-Cost Strategies
 Being overly aggressive in cutting price
 Low cost methods are easily imitated by rivals
 Becoming too fixated on reducing costs and ignoring
 Buyer interest in additional features
 Declining buyer sensitivity to price
 Changes in how the product is used
 Technological breakthroughs open up cost reductions for rivals
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Objective
 Incorporate differentiating features that cause buyers to
prefer firm’s product or service over brands of rivals.
Keys to Success
 Find ways to differentiate that create value for buyers and
are not easily matched or cheaply copied by rivals
 Not spending more to achieve differentiation than the
price premium that can be charged Objective Keys
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 Benefits of Successful Differentiation

 A product / service with unique, appealing attributes
allows a firm to
 Command a premium price and/or
 Increase unit sales and/or
 Build brand loyalty
= Competitive Advantage
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 Incomplete knowledge of buyers causes them to judge value based

on such signals as
 Price
 Attractive packaging
 Extensive ad campaigns
 Ad content and image
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 Characteristics of seller
 Facilities
 Customers
 Professionalism and personality of employees

 Signals of value may be as important as actual value when

 Nature of differentiation is hard to quantify
 Buyers are making first-time purchases
 Repurchase is infrequent
 Buyers are unsophisticated
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 When Does a Differentiation Strategy Work Best?

 There are many ways to differentiate a product that have value and
please customers
 Buyer needs and uses are diverse
 Few rivals are following a similar differentiation approach
 Technological change and product innovation are fast-paced
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 When Does a Differentiation Strategy Work Best?

 There are many ways to differentiate a product that have value and
please customers
 Buyer needs and uses are diverse
 Few rivals are following a similar differentiation approach
 Technological change and product innovation are fast-paced
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 Pitfalls of Differentiation Strategies

 Buyers see little value in unique attributes of product
 Appealing product features are easily copied by rivals
 Differentiating on a feature buyers do not perceive as lowering
their cost or enhancing their well-being
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 Over-differentiating such that product features exceed

buyers’ needs
 Charging a price premium buyers perceive is too high
 Not striving to open up meaningful gaps in quality,
service, or performance features vis-à-vis rivals’ products
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 Best-Cost Provider Strategies

 Combine a strategic emphasis on low-cost with a
strategic emphasis on differentiation
 Make an upscale product at a lower cost
 Give customers more value for the money
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 Deliver superior value by meeting or exceeding buyer

expectations on product attributes and beating their price
expectations
 Be the low-cost provider of a product with good-to
excellent product attributes, then use cost advantage to
under-price
 comparable brands
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 Competitive Strength of a Best-Cost Provider Strategy

 A best-costprovider’s competitive advantage comes from
matching close rivals on key product attributes and beating
them on price.

 Success depends on having the skills and capabilities to

 provide attractive performance and features at a lower
 cost than rivals
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 A best-cost producer can often out-compete both a low-

cost provider and a differentiator when
Standardized features/attributes won’t meet diverse needs of
buyers
 Many buyers are price and value sensitive
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 Risk of a Best-Cost Provider Strategy

 A best-cost provider may get squeezed between strategies
of firms using low-cost and differentiation strategies
 Low-cost leaders may be able to siphon customers away
with a lower price
 High-end differentiators may be able to steal customers
away with better product attributes
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 Focus / Niche Strategies

 Involve concentrated attention on a narrow piece of the total market
 Objective
 Serve niche buyers better than rivals
 Keys to Success
 Choose a market niche where buyers have distinctive preferences,
special requirements, or unique needs
 Develop unique capabilities to serve needs of target buyer segment
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 What Makes a Niche Attractive for Focusing?

 Big enough to be profitable and offers good growth potential

 Not crucial to success of industry leaders
 Costly or difficult for multi-segment competitors to meet
specialized needs of niche members
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 Focuser has resources and capabilities to effectively serve

an attractive niche
 Few other rivals are specializing in same niche
 Focuser can defend against challengers via superior
ability to serve niche members
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 Risks of a Focus Strategy

 Competitors find effective ways to match a focuser’s
capabilities in serving niche
 Niche buyers’ preferences shift towards product
attributes desired by majority of buyers – niche becomes
part of overall market
 Segment becomes so attractive it becomes crowded with
rivals, causing segment profits to be splintered
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 Unit 3
 The Customer
 Identify potential customers and understand their current and future needs
 Understanding your customers current and future needs
 Building relationships with customers and encouraging loyalty
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 MEANING OF CUSTOMER SATISFACTION

 It is a measure of how products and services supplied by a company meet or surpass the
customer’s expectations.
 Customer expectation is the needs, wants, and preconceived ideas of a customer about a
product or a service.
 If customer expectations are met then the customer is satisfied.
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 WHO ARE CUSTOMERS

 Internal Customer : are people, departments, units and groups within an organization
served by what we do.

• External Customer : are end users of the organization's product or services depositors,
borrowers, investors, etc.
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Why customer satisfaction

• Customer is the boss of the market.
• Customer dictates market trends and direction.
• The organization is dependent on the customer and not the other
way round.
• Customer satisfaction means loyalty towards the organization.
• The satisfied customers will help in bringing the new customers by
the “word of mouth”.
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 Factors affecting customer satisfaction

• PRICE – micromax
• QUALITY - rolls royce
• SERVICE - dell
• BRAND NAME - apple
• REPUTATION - nokia
• FEATURES – Samsung
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 LEVELS OF CUSTOMER
 SATISFACTION
 1. Basic Needs (Dissatisfies)
 A service that the costumer takes for granted. He expects it to be present in the product.
 Absence of this need will lead to dissatisfaction for the customer but the presence of it
will not lead to any satisfaction as such.
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 Performance needs (satisfiers)

 It is a need or want of the customer which he specifically asks for.

 Better the performance more will be the satisfaction of the customer.
 These factors becomes the benchmarks in the competitive market.
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 Excitement Needs (delighters)

 A delighter is an unspoken or unexpected requirement of a customer.
 It leads to very high level of satisfaction or customer delight.
 Absence of delighters does not result in customer dissatisfaction while its presence will
enhance customer satisfaction.
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 CUSTOMER SATISFACTION FACTS

 5% increase in loyalty can increase profits by 25% to 85%.

 Only 4% of unsatisfied customers will complain.
 An unhappy customer tells 9 other people.
 A happy customers tells to about 5 other people.
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 CUSTOMER SATISFACTION PROCESS

 Step 1: Understanding customer expectations

 Step 2: Promises to customers
 Step 3: Execution
 Step 4: Ongoing dialog with a customer
 Step 5: Customer satisfaction surveys
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 CUSTOMER RETENTION
 Customer satisfaction should lead to customer loyalty and customer retention.
 This is the real test and bottom line- when the customer repeatedly comes
back to you for repeat orders and to purchase new products manufactured
by you. (In spite of stiff competition and multiple Suppliers/Sources! )
 Firm orders received or cash payments registered , market share, customer
referrals and customer retention are an indication of your customer
success and penetration in the market.
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 CUSTOMER FEEDBACK
 Customer feedback must be continually done and monitored.
 It enables an organization to:
 Discover customer’s dissatisfaction
 Discover relative priorities of quality
 Identify customer need
 Determine opportunities for improvement
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 How to ensure customer satisfaction

 Surveys
 Customer feedback
 Comparison with alternatives
 Employee feedback
 Internet/blogs
 Toll free numbers
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 Quality is defined as excellence in the product or service that fulfils

or exceeds the expectations of the customer.
 There are 9 dimensions of quality that may be found in products that produce customer
satisfaction.
 Though quality is an abstract perception, it has a quantitative measure Q= (P / E ) , where
Q=quality,
 P= performance(as measured by the manufacturer.), and E = expectations( of the
customer).
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 9 Dimensions Of Quality
 Performance
 Features
 Conformance
 Reliability
 Durability
 Service
 Response of Dealer/Manufacturer to Customer
 Aesthetics of the Product
 Reputation of the Manufacturer/Dealer