Question for Business people/Marketers

[Mo Z. Dizzle]

does anybody what a market-based company is?

someone told me it's where a company tries to get as much of the market share they can in their industry; i'm not 100% sure about that though

edit: i posted this in the gspot, but that section seems more laid back; i think its a better fit in the TOT

[Ant]

I don't think there is a definition for "market-based business."  This is not a commonly used term.  A literal translation would mean a business that is based in a market.  Probably they mean a business that exists in a "market-based economy."

Perhaps what you mean is "market-based economy."   This is another way of saying "free-market economy."  A free-market economy is one without government regulation of industry.  Business are free to compete however they please. 

Of course there is no such thing as a pure free-market economy (or market-based economy).  All economies have some amount of regulation. 

A "free-market economy" depends on suppliers and consumers to set prices for goods and services.   This is different from a "planned economy" where the government intervenes to set prices and decide what goods are to be produced. 

Communists like planned economies.  Capitalists like market economies.  Back to your question, I would think a business that is not "market-based" is one where the company is part of a "planned-economy."

[Mo Z. Dizzle]

this was the question my prof gave for the assignment:
Question: Is it necessary to use a unique positioning strategy for each market segment targeted by a market-based company?


i looked all his notes though, he didn't even have that term in there; and i tried googling it but to no avail
wikipedia brought me to what you said though Ant

at first i was leaning more towards the answer 'yes they need unique positioning strategies' but im re-thinking that now; i dont think it would make sense to position it differently if it's the same product or service.....then again i guess it also depends on consumer wants, needs and demands

what's your opinion on it? and anybody else's for that matter

btw, props for the info Ant; it makes it a little less stressful now on me lol

[Ant]

I think that question is retarded.  Or maybe it's just a trick question

That type of stuff is never necessary in business.  For it to make any sense you'd need the example of a specific company at a point in time.  Not the vague idea of a "market-based company" trying to use a "unique positioning strategy" for "each market segment."

I know what he means by a "unique positioning strategy," but crap like that isn't real business.  Do you think youtube thought about their "unique positioning strategy" when they were building the company?  I doubt it.  But within one year they made a company worth 1.7 billion. 

In another sense... every strategy is "unique." How can two companies execute identical strategies? Its highly unlikely.   And every strategy "positions" you in some way.

But I personally don't think explicit strategy is at all necessary.  In fact, its damn obvious that "explicit" strategies are not necessary for businesses to be successful.  But every business has an "implied" strategy.  Meaning, their "pattern of action" defines their strategy.  Google didn't have an "explicit" strategy when they were starting, but you could define their strategy by describing their "pattern of action" overtime. 

In fact, most strategies are "implied" rather than "explicit."  The majority of businesses operate without ever doing any type of explicit "strategizing" or "strategic planning."  Sure the managers spend a lot of time thinking about how to improve, what's the best course of action, etc.  But they don't go through the trouble of creating a textbook "positioning strategy" like your professor asked about.

So to answer your professors question... I have a canned response to any type of question like this one.  That being:

Business don't need to "use" strategies.  They need to be concerned with making themselves better every day, and making common sense decisions about the appropriate course of action to take at any given time.  The accumulation of your common sense decisions, and attempts to improve eventually become the implied strategy.  At times an explicit strategic plan may be necessary (like when a company needs to chart a course to change drastically), but its misguided to think it always a necessity.

[Don Rizzle]

ant you were spot on with your first reply but i'm not so sure about your second.

The question is openned ended unless it goes with some specific text your supposed to refer too.

I would say in most cases businesses need a stragegy, you seem to imply every company is just blundering their way through everything but thing are far more complex than this.

Mo I would answer the question by picking out some examples to illustrate the points your trying to make. I would give some examples supporting unique positioning strategies and others opposing with a conclusion at the end.

supporting example you could use would be a clothes shop which nearly always segregate their target markets highten their appeal to their tarket market, after all do you want buy clothes from the same place as your grandma?

an opposing example would be a product like milk and milk is pretty much milk so theres only so much you can do differentiate yourself and the result is likely to have little affect on the consumer 

interesting example of where this has been changing is with the organic food produce market where before you would normally just normal milk now you can buy organic and its the same for nearly every food.

[Don Jacob]

i'm a business administrations major-but my concentration is in management/accounting


but i'd answer it like this:

no, it's not necessary to have but in some caseses it may be advantageous or in others disasterous, it just depends on what the business is in.  if the business is based in something say the restaurant business, no it's not necessary to have a unique positioning strategy because many successful restaurants have followed uniform posistion strategies that have been in place for decades/centuries. ex. sit down and order restaurants. but like i said earlier to have a unique position strategy can be advantageous, for examples when Ray crock bought Mc Donald's from the Mc donald brothers, he used a unique startegy to open up a different kind of restaurant for a developing maket...which succeeded GREATLY.  It could also be disasterous though for example all of those avant gard restaurants in big cities that go belly up the first year because their market is too small/they couldn't develope one.  so in my opinion a good answer would be to say no, but no not being a positive or negative.

[Ant]

Most businesses do not have strategies.  And even the one's that do have a formal "strategic plan" rarely follow it.  Keep in mind, I didn't say businesses never need a strategy.  I just said most business don't have and don't need "explicit" strategies. Explicit strategies often cause more harm than good.

This is counter to most management theory, but most management theorists don't run businesses.  Nor do they do a good job of studying businesses. 

Look around you can easily see this is the truth.  I don't know how anyone could possibly refute the fact that most business do not have explicit strategies. My answer may annoy your professor, but its very much the truth.

How can you possibly think businesses really need something as vaguely defined as a "unique positioning strategy?"  To say they need such a thing implies that every company needs to sit down and discuss "so what is our unique positioning strategy going to be?"  But plenty of businesses get by without that discussion ever taking place.  Hence a unique positioning strategy, or any form of strategic plan is not "necessary for all businesses" but may be "necessary for some businesses" (or maybe a better word is useful).  But really it all depends.

Of course, again, every business has a "unique positioning strategy" because they are all in a unique position, and acting in a unique manner.
--

On a related note... most business professors suck.  So do most business books.  If you really listen to these guys and follow their advice its a recipe for poor performance. If a professor was good he wouldn't teach.  Of course there are some good business professors, but they're a rare breed.

--

In direct response to Don R's comments

you seem to imply every company is just blundering their way through everything but thing are far more complex than this.

I am implying this, and that's what makes business strategy so complex.  You're making things simple by suggesting companies need strategies.  But the real world is more complex than that.  An organization's environment may be too confusing for a strategic plan to make sense.  Or maybe the managers don't have time to sit down and discuss such silliness.

[Don Rizzle]

I am implying this, and that's what makes business strategy so complex.  You're making things simple by suggesting companies need strategies.  But the real world is more complex than that.  An organization's environment may be too confusing for a strategic plan to make sense.  Or maybe the managers don't have time to sit down and discuss such silliness.
[/quote]There are lots of different strategies they use i'm not saying these will stay static because managers and directors should be constantly reviewing them to ensure they meet their firms objectives, which primarily will be profit maximisation.

such stratgeies could involve who to target their product to if you take the restaurant example, most traditional chineese restaurants are empty at sunday lucnch time, because we normally make a sunday roast or eat one at the pub or something, so some chineese places started to run an all you can buffet at an affordable proce and their restaurants are packed, they used a pricing strategy and modified their product to counter their loss of trade. Now more recently I've seen others modify this strategy even further by instead of making it a buffet and providing all you can eat pricing but made to order, this minimises waste and improves quality because the food hasn't been left around. you may argue these are just tactics, but the tactics are used to implement the overall strategy and therefore ensure you meet your objectives.

Having a strategy also helps ensure you get all the elements of the business on the same foot, so they're all thinking along the same lines. You can have a excellant product but if your marketing or marketing don't know how or who to sell too, then it probably won't make any money.

I do agree the books are always as helpful because every business will have their own business model, but their are fundemental business principles can be learnt and the rest will come down to experience.

[Ant]

Again... this sounds great in textbooks, but your missing the point.  Quite simply:

EXPLICIT STRATEGIES ARE NOT NECESSARY AND OFTEN ARE NOT USED.

If you study businesses (actual businesses, not the subject of business) you cannot deny this truth.  If you study business, it appears otherwise.  "Business" literature puts strategic planning, strategizing, etc. front and center.  If you study "business" you see strategy everywhere, and it appears to be soooooo important.  If you study real businesses, you find that it's not.

You say:

managers and directors should be constantly reviewing them to ensure they meet their firms objectives, which primarily will be profit maximisation.

This is wrong in a few ways. 

1) Managers and directors do not need to constantly review strategies.  They don't even need explicit strategies.  Again, if you study businesses you will find that most companies exist without doing what you are suggesting.  So how can this be necessary? 

It's also not always feasible.  In most businesses strategic discussions are not even feasible.  Lots of business people have no desire to talk "strategically."  They prefer to talk plainly.  They talk about how can they cut costs, how can they improve service, what should they being doing to improve, etc.  But they don't sit down in a conference room, and edit their master strategy document once a year.

Instead, many companies improve through casual interaction.  So and so say... let's try this.  It seems to make sense.  So they do it.


2) Profit maximization is not the ultimate goal.  I hate when people suggest it is.  For some firms it is, but firms that care primarily about profit maximization are at a strategic disadvantage to firms that care passionately about other things.  I think a much better objective is "value maximization."  Meaning, businesses should focus on making their customers happy by doing things that are valuable.

But that's just my opinion.  But many companies exist without a concern for "profit maximization."  Google's initial passion was to be the best at search.  That's why they existed and that's what drove them to be so successful.  Their core objective is to "organize the world's information and make it univerally accessible."

The owner of a coffee shop might aspire to make amazing coffee.  Restaurants owner's have a goal of being the trendiest restaurants... having the best tasting food.. etc.  Clothing companies might be obsessed with having lots of people wear their clothes.

Tons of new internet companies are selling for millions of dollars, but they aren't even making money.  Youtube sold for 1.7 billion, but they are losing money.  They weren't concerned with profit maximization.  They were concerned with being great at sharing videos, social networking, and whatever else made them tick.   

Those guys weren't sitting around with some retarded strategic plan.  They were just doing what they thought made sense. 

====

The worst thing about business literature is it tells everyone "You must do this."  But that's never the case, and often the literature is dead wrong.

They tell people "if you want to start a business, you need a plan."  That's retarded.  Most mega companies started without a plan.  Just a few people dicking around trying to do something cool.  Google started with two guys screwing around with search algorithms. 
They didn't even want to make money at first.  The owners fought for months about adding Advertising to their site.  They didn't want to because they thought it would make the site cluttered.  And it would decrease the efficiency of search.

Eventually they changed their minds, and Google is now worth 130 billion.  Not only didn't they have a "plan" but they didn't even want to do the thing that made them so rich.  They cared about other things more than they did profit maximization.




 

[Mo Z. Dizzle]

i finally figured it out; a vague description is that a market0based company tries to get as much of the market share as they can.

my friend told me this tonight; he asked the prof on wednesday and then told me the next.
at that time, i didn't know he asked the prof; when i asked him where he got the info from that day he said he didnt remember.
and tonight he tells me that the prof told me.

a little frustrating because i could've ripped this yesterday and done other work tonight but whatever.
ill show you guys whatever i typed up, it's pure BS but i think it'll atleast get me a few marks.

[Suga Foot]

I own a business.  That just goes to show that any schmuck with some money can do it

[Mo Z. Dizzle]

here it is; i made it as long as allowed; gimme your opinions, lol:

Grade Builder Assignment

     A market-based company mainly wants to gain the most market share they can in the industry. In order to do this, the company must do market research on the different segments they are targeting, create a unique positioning strategy for each of those segments and then developing a marketing plan to use the positioning strategies they developed.

     Before a company develops a unique positioning strategy, they must do market research. With market research, the company obtains market intelligence, consumer intelligence and competitive intelligence. Market intelligence is important to know as it helps a company comprehend information about the external market and also whether or not the company has a chance in succeeding¹. Consumer intelligence is important to know as it aids a company in understanding consumer attitudes, lifestyles and values; this plays an important role in whether or not a product has a chance of succeeding. Competitive intelligence is also important to know as it keeps a company informed on what their competition is doing better and worse than they are. Once these are determined, the company can determine what positioning strategy to use for each market segment².

     After doing the market research, a company must create different positioning strategies for its different segments. This is because consumers in a market segment have needs, wants and demands that differ from other segments. Also, different market segments seek different benefits from one another. A company must present the product attributes and benefits that apply to the different segments to assist in making consumers aware of the product. This will help the company to create their marketing plan and also allow them to use their positioning strategies for the different segments.

     Once a company develops unique positioning strategies for the target markets, they can develop a marketing plan. This will give the company an opportunity to apply the strategies they have developed. Consumers will have different cognitive responses (i.e. varied perceptions) on products which is why it is necessary for them to create unique positioning strategies³. Once the different positioning strategies are presented, it will gain the attention of consumers within the target markets and will also convince consumers to buy the product because they will know that the product can satisfy the needs, wants demands and/or benefits they require. The more the customers buy, the bigger the company’s market share will become.

     In order for a market-based company to gain as much of the market share they can in the industry, it is necessary for them to develop unique positioning strategies. Different types of consumers have different perceptions of products and also have different wants, needs and demands about products. It would not make sense for a company to use the same positioning strategy to all the different markets as consumers may feel that the product might not be what they require and therefore not buy the product.


¹ “Market Intelligence.” Wikipedia. 10 October 2006. 18 November 2006.
<http://en.wikipedia.org/wiki/Market_Intelligence>

²“Vincent Barabba: Understanding the Enterprise as a System.” University of Pennsylvania. 2000. 18 November 2006. <http://www.acasa.upenn.edu/VBinterview.pdf>

³“Positioning (marketing).” Wikipedia. 10 November 2006. 19 November 2006. <http://en.wikipedia.org/wiki/Positioning_(marketing)>

[Ant]

^^ It's humorous, but sad that so many people think that businesses talk in these terms.  I don't fault you for writing that, I fault your professor for teaching nonsense.

Businesses can't run on vague concepts and theoretical babble.  It's obnoxious, and I think the business world would be better off if they just tossed out all these assholes professors and shitty books. 

There are some impressive business educators, but they are few and far between.  Generally, the more theoretical their teachings the worse they are.

Here's some solid advice on the inadequacies of "business-speak":

From: http://plain-text.co.uk/a_to_z/business_speak.html

BUSINESS-SPEAK

Business-speak, corporate-ese, MBA-speak. Call it what you like, the language of the corporate world rarely makes rewarding reading. Why do businesses say things like: 'Our mission is to provide innovative solutions that drive value into our customers' businesses'? Here are several reasons:

    * The truth just doesn't sound 'important' enough -- OK, so what you actually do is provide consulting services for the telecoms sector. Why not say so?
    * If we don't use the latest jargon, everyone will laugh at us -- they'll laugh a lot more when you try and explain what 'envisioneering' is...
    * We want to make our products sound as awesome as possible -- who doesn't? But describing them as an 'end-to-end turnkey solution' is not the best way. By the time the customer has worked out what you're talking about, it may be too late
    * Baffling customers is what we do for a living -- there's no hiding the fact that a dense cloud of business-speak works for certain sectors. But in an era where business myths are being exploded daily, for how long will obfuscation keep working?

Business-speak has had its day. Customers and investors want plain speaking as much as they want good service and a good return on their money. The language you use will make a bigger impact if it makes good sense.

[Don Rizzle]

This is wrong in a few ways.  

1) Managers and directors do not need to constantly review strategies.  They don't even need explicit strategies.  Again, if you study businesses you will find that most companies exist without doing what you are suggesting.  So how can this be necessary?  

It's also not always feasible.  In most businesses strategic discussions are not even feasible.  Lots of business people have no desire to talk "strategically."  They prefer to talk plainly.  They talk about how can they cut costs, how can they improve service, what should they being doing to improve, etc.  But they don't sit down in a conference room, and edit their master strategy document once a year.

Instead, many companies improve through casual interaction.  So and so say... let's try this.  It seems to make sense.  So they do it.

This is not what i was implying, they don't have to write down a strategy document or even have a board meeting to discuss it, it maybe something which is decided verbally but at some point in the product life cycle the main players are going to discuss what direction they want to take things and what are their top priorities, the outcome of which will be they're strategy.

About reviewing they won't be constantly writing strategy docoments they will be monitoring their key success factors, if they are not doing well then they may decide to change tactics or more drasticly change strategy entirely.

2) Profit maximization is not the ultimate goal.  I hate when people suggest it is.  For some firms it is, but firms that care primarily about profit maximization are at a strategic disadvantage to firms that care passionately about other things.  I think a much better objective is "value maximization."  Meaning, businesses should focus on making their customers happy by doing things that are valuable.

But that's just my opinion.  But many companies exist without a concern for "profit maximization."  Google's initial passion was to be the best at search.  That's why they existed and that's what drove them to be so successful.  Their core objective is to "organize the world's information and make it univerally accessible."

The owner of a coffee shop might aspire to make amazing coffee.  Restaurants owner's have a goal of being the trendiest restaurants... having the best tasting food.. etc.  Clothing companies might be obsessed with having lots of people wear their clothes.

Tons of new internet companies are selling for millions of dollars, but they aren't even making money.  Youtube sold for 1.7 billion, but they are losing money.  They weren't concerned with profit maximization.  They were concerned with being great at sharing videos, social networking, and whatever else made them tick.  

Those guys weren't sitting around with some retarded strategic plan.  They were just doing what they thought made sense.  

profit maximisation is not the always the objective of every firm i agree, some firms don't even intend to make a profit, but for most firms while they may not be explicity trying to maximise profit by cutting quality or performance to improve margins in the short, because dooing business like that may have very negative impacts on your long term market share and revenues, what they will do i try and think of what is important to the their target market, think of ways to statisfy their desires in order to increase their total spend or to retain them as a customer an keep them coming back. This is why 10 years ago shops started giving out loyalty cards, as a way of retaining customers, by giving them incentives to make more purchases. Now what we are seeing is companies are using RFID tagging in the supply chain and also to see how cusomers react to their products in different positions, displays etc. also it can be used to find out when they buy their product or even use the product, this gives them a better understanding of how to sell their product.

The worst thing about business literature is it tells everyone "You must do this."  But that's never the case, and often the literature is dead wrong.

They tell people "if you want to start a business, you need a plan."  That's retarded.  Most mega companies started without a plan.  Just a few people dicking around trying to do something cool.  Google started with two guys screwing around with search algorithms.  
They didn't even want to make money at first.  The owners fought for months about adding Advertising to their site.  They didn't want to because they thought it would make the site cluttered.  And it would decrease the efficiency of search.

Eventually they changed their minds, and Google is now worth 130 billion.  Not only didn't they have a "plan" but they didn't even want to do the thing that made them so rich.  They cared about other things more than they did profit maximization.

I was never saying you must follow the litriture to a tee, I said each business is different, they will have a different business model and its unlikely there is a book out there that is written specifically for them, but they will be able to find something which is useful but there will be thousands out there which will be utterly useless.