Market-driven strategies for competitive advantage

Abstract

C omplacency is a forerunner to disaster in the turbulent marketplace. Automobile industry experts were skeptical about Honda's plan to enter the European-dominated luxury import segment of the car market. Attracted by the higher profit margins and growth opportunities of the luxury import segment, Honda's management positioned Acura as an allnew market entry with an exciting design offering high-quality performance. Two years after its 1986 entry into the U.S. market, Acura gained first place in sales and customer satisfaction ahead of BMW, Mercedes Benz, Volvo, and Audi. Attempting to duplicate the success of the Acura, Toyota introduced the Lexus in the U.S. in 1989 and Nissan introduced the Infiniti, also targeted to the luxury auto segment, in 1990. While it is too early to judge the success of Toyota's and Nissan's entries, initial reviews from Car a n d Driver magazine compared Lexus and Infiniti favorably to German automobiles costing twice as much (comparing manufacturers' suggested retail prices). The Japanese have an impressive success record for planning and implementing market-driven strategies for competitive advantage. Unprecedented global competition is only one force driving executives to alter their business and marketing strategies to improve competitive advantage. The marketplace is becoming increasingly dynamic, influenced by massive demographic and socioeconomic shifts in the population base. These changes are accompanied by dramatic compression in the length of time for competitive reaction to be felt and changes in consumer behavior to be incorporated into product design. In response to these market changes, executives are drastically altering their business and marketing strategies. Strategic actions may include downsizing, repositioning, market niching, altering the business portfolio, and strategic alliances between companies. These actions pervade many industries. For example, over onehalf of the Fortune 500 companies restructured during the 1980s. Designing effective business and marketing strategies is essential in coping with a turbulent global business environment. Our objective is to identify global competitive challenges and describe means by which executives may respond Today,s turbulent marketplace will require companies to serve their markets or lose out to those who will.