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483primerV3 - Stanford University Dept of...

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Stanford University Dept. of Engineering-Economic Systems & Operations Research EES&OR483 Strategy and Marketing Primer (version 3.0) This set of "crib notes" is a review of marketing and strategy tools and concepts that you may find useful for your project in EES&OR 483. The intention is not to give you more work or reading material, but rather to provide you with an aid and reference in formulating and analyzing your problem. All of the concepts covered in lecture and the assigned readings are reviewed here. You might find the summaries a helpful reminder of what the concepts are and how they can be valuable in your project. Also, some topics found here are not covered in lectures or assigned readings (specifically, Sections 2.2, 2.4, and 5.1-5.5). These are additional topics on conceptual (i.e. MBA) marketing and strategy. Since lectures in this project course are limited and emphasize quantitative models for strategy, we do not have the time to cover all the topics in class. However, if you are not already familiar with basic marketing and strategy frameworks, we want to offer you more exposure to them. You may find this broader exposure helpful for several reasons: understand the context of what is covered in lecture properly frame your project find leads to other concepts that may be particularly relevant to your project CONTENTS 1 GENERIC STRATEGY: TYPES OF COMPETITIVE ADVANTAGE ............................................... 3 2 CONCEPTUAL STRATEGY FRAMEWORKS: HOW COMPETITIVE ADVANTAGE IS CREATED ....................................................................................................................................................... 5 2.1 P ORTER ' S 5 F ORCES & I NDUSTRY S TRUCTURE ................................................................................................ 5 2.2 C ORE C OMPETENCE AND C APABILITIES ........................................................................................................... 9 2.3 R ESOURCE -B ASED V IEW OF THE F IRM (RBV) ............................................................................................. 11 2.4 A LTERNATIVE F RAMEWORKS : E VOLUTIONARY C HANGE AND H YPERCOMPETITION ............................................... 13 3 ADDITIONAL TOOLS FOR STRATEGIC THINKING AND ANALYSIS ...................................... 15 3.1 G AME T HEORY ......................................................................................................................................... 15 3.2 O PTIONS .................................................................................................................................................. 16 3.3 S TRATEGIC S CENARIOS ............................................................................................................................... 20 3.4 O THER P ARTICULARLY R ELEVANT EES&OR C ORE C ONCEPTS ...................................................................... 21 4 MARKETING MODELS FOR PRODUCT STRATEGY .................................................................... 22 4.1 N EW P RODUCT D IFFUSION M ODELS ............................................................................................................ 22 4.2 C ONJOINT A NALYSIS ................................................................................................................................. 24 5 CONCEPTUAL MARKETING FRAMEWORKS ................................................................................ 27 5.1 T HE F OUR P’ S OF THE M ARKETING M IX ...................................................................................................... 27 5.2 M ARKET -O RIENTED S TRATEGIC P LANNING ................................................................................................... 28 5.3 M ARKET S EGMENTATION , T ARGETING , AND P OSITIONING ............................................................................... 30
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EES&OR 483 Strategy Primer 3.0 5.4 A NALYZING I NDUSTRIES AND C OMPETITORS .................................................................................................. 32 5.5 T HE T ECHNOLOGY A DOPTION L IFE C YCLE : D ISCONTINUOUS I NNOVATIONS ....................................................... 33 2
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EES&OR 483 Strategy Primer 3.0 1 Generic Strategy: Types of Competitive Advantage Basically, strategy is about two things: deciding where you want your business to go, and deciding how to get there. A more complete definition is based on competitive advantage, the object of most corporate strategy: Competitive advantage grows out of value a firm is able to create for its buyers that exceeds the firm's cost of creating it. Value is what buyers are willing to pay, and superior value stems from offering lower prices than competitors for equivalent benefits or providing unique benefits that more than offset a higher price. There are two basic types of competitive advantage: cost leadership and differentiation.
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