COMPETITIVE ADVANTAGE: GENERIC STRATEGIES MATRIX Potential Exam Question - Answer

2012

For a market of your choice, display a Generic Strategies Matrix. Then critically evaluate the strategic direction of a brand of your choice from the matrix.

Qs: Generic Strategies Matrix: For Digital Camera Market Based on a UK market perspective
SCOPE NARROW SCOPE BROAD SCOPE

BRIDGE DSLR

DIFFERETIATION

COMPACT

COMPETITIVE ADVANTAGE

STUCK IN THE MIDDLE

COMPACT

LOW COST

The digital camera market is a highly fragmented market, main market segments: y y y y Digital SLR market Digital compact camera market Digital instant Polaroid market Digital bridge camera market

Qs: Then critically evaluate the strategic direction of a brand of your choice from the matrix. Brand: Canon Canon competes in three main digital camera markets: the DSLR market (star), digital compact camera market (cash cows) and the bridge market (question marks). In all of these segments Canon competes with competitive advantage from lowest-cost producer and

Atiqah Ismail

Direct and Strategic Marketing

2012

COMPETITIVE ADVANTAGE: GENERIC STRATEGIES MATRIX

2012

differentiation focus, simultaneously with extremely high focus on quality. The digital camera market is technology and innovation-driven, hence low-cost production is essential to firms competing in the market. Lowest-cost producer Canon has achieved the lowest cost production in the overall digital camera market. Core competency in tacit and explicit knowledge of optical and imaging technology learnt over the years, with Canons tradition of innovation, anticipating tomorrows need. Integrated value chain Canon has been able to reduce cost in every aspect of the value chain. Full ownership and control over its value chain and production. Canon uses JIT production which saves lead tine and production cost (Canon, 2011). Passes cost advantage to compact digital market consumers to allow lower and competitive price (Scribd, 2010); passes cost-advantage to customer in terms of robust quality and design (not price) for its DSLR market. Ability to drive down price.

In-house fully automated production system Its in-house production system has a dual aim of cost-reduction and product innovation. Canon has a fully-automated production system which produces:      Proprietary key components and devices functional parts, circuit boards moulds and manufacturing equipments

In-house production of tools, materials and technologies including intelligent robots and automated-production systems are spread over for the production of Canons entire range of digital cameras. Optimised standardisation of products at large (global) scale. Fixed costs are spread over Canons wide and broad product range. Investment in cost-saving technology -- Canon adopts computer aided engineering (CAE) which includes and allows prototype-less technology with: 1. 2. 3. 4. 5. CAD = Computer-aided design CAA = Computer-aided analysis CIM = Computer-integrated manufacturing MRP = Material requirement planning CAP = Computer aided planning

Hence, allowing Speed up development cycles

Atiqah Ismail

Direct and Strategic Marketing

2012

COMPETITIVE ADVANTAGE: GENERIC STRATEGIES MATRIX Reduce cost Enhance product performance, functionality and quality

2012

High differentiation Distinctive capability inimitable reputation built over the years. Brand association Consumer has extremely strong positive association with the brand. Canon has a reputation for good quality and reliable, durable cameras. Canon is associated with high quality cameras, with performance to its highest quality. High awareness of Canon from intensive advertising has embedded Canon brand in consumers evoked set.

Customers are not willing to sacrifice special features due to a high price. Canon customers appreciate camera features and are passionate photographers. Moreover the high quality, reliable and robust cameras give consumers a reason to prefer. They seek the best quality. Canon is able to set its price at premium. However, indeed the source of differentiation in terms of quality and reliability are easy to imitate, especially by Canons rival in DSLR category, Nikon with almost similar competency. Although this threat is always present, Canon offsets it by innovation. Canon is constantly creating value for consumers. It has constant yearly investment in R&D (Canon USA, 2012). Innovation is its tradition (Canon Global, 2011) with culture of high product innovation and development.

Narrow Scope Canon DSLR market (stars) and Canon bridge market (question marks) Canon DSLR cameras target specific consumer segments: advanced amateur and photography professionals These target market range from sophisticated to highly sophisticated consumers, the DSLR market is broken down into further smaller market segments such as the: entry-level (e.g. Canon 450D) target photography enthusiasts, mid-range DSLR cameras (e.g. Canon 30D) specifically targeting at advanced-amateur consumers, prosumer/high-end range (e.g. Canon 5D) and professional/flagship level (e.g. Canon 1D). All are however, niche market of photography enthusiasts. General consumers of compact digital cameras are unlikely to know what to do with a high-end DSLR camera such as Canon 1D They do not have auto mode and some do not even have semi-auto mode and they do not have built-in pop-up flash, more rugged-build and double card slots. Towards the high-end range of DSLR, they are targeted at consumers who know precisely what they are doing and what they want to do with the device.

Atiqah Ismail

Direct and Strategic Marketing

2012

COMPETITIVE ADVANTAGE: GENERIC STRATEGIES MATRIX

2012

Image quality and editing facilities are important for DLSR consumers, and they are less concerned about price. Canon bridge market The bridge or compact system cameras are new developed cameras introduced in 2010 which bridges DSLR and compact cameras, although incompatible with DSLR but are targeted at those consumers who seek high quality images (comparable to compact cameras) with basic function of most DSLR cameras, such as interchangeable lenses, but are more portable due to smaller size.

Broad scope The compact digital camera (cash cows) is targeted to the general consumer and household consumer segment, they do not demand exceptionally high image quality, and are price sensitive. The market for digital compact camera is saturated, with slow growth and more competition as consumers are less picky and involved in purchase decision making as compared to DSLR market. Consumers are faced with many competitions, such as Sony, Nikon and Pentax.

Recommendation: Canon has been focusing development on its DSLR cameras, which continued to grow. Canon can continue product development and innovation with its DSLR range to maintain market dominance. On the other hand, Canon can focus the following strategies for its compact digital camera market. Market development (existing products, new market) Compact digital camera. Product positioning to focus on the grey consumer -- Euromonitor (2010) has reported those older consumers are set to become an important segment in markets such as Japan, China and the UK. They are interested in outdoors hobbies, such as travelling. Penetrate this new market with new product dimensions, easier to use with less tech complexities. Rise investment on developing the new product dimensions and on promotion. Market penetration (existing market, existing product) Compact digital camera. Heighten exposure of compact digital cameras with GPS geo-tagging to the Facebook generation who are heavy, brand-conscious compact digital camera users. The bridge camera range is a particularly new product development. According to Euromonitor the market share for Canons bridge is increasing, hence implying a potential star. Hence, possible strategies for Canons bridge segment could be to hold that is to do nothing or wait and see. Canon may also adopt market penetration for its bridge range by

Atiqah Ismail

Direct and Strategic Marketing

2012

COMPETITIVE ADVANTAGE: GENERIC STRATEGIES MATRIX

2012

increasing its investment in promotion to increase exposure and to build market share for the bridge market.

By: Atiqah Ismail

Atiqah Ismail

Direct and Strategic Marketing

2012

COMPETITIVE ADVANTAGE: GENERIC STRATEGIES MATRIX COMPETITIVE ADVANTAGE: GENERIC STRATEGIES MATRIX References:

2012

1001 Noisy Cameras (2011). Canon destroyed Nikon in 2010 global DSLR market share. [Online] Available at: http://www.1001noisycameras.com/2011/04/canon-destroyed-nikonin-2010-dslr-market-share-yir-6.html [Accessed 19.12.11] BBC, (2006). Konica Minolta Quits Photo Market. [Online] Available at: http://news.bbc.co.uk/1/hi/business/4627002.stm [Accessed 10.12.11] Canon Global, (2011). Canon. [Online] Available at: http://www.canon.com/ [Accessed 13.12.11] Canon USA, (2012). Canon Innovation. [Online] Available at: http://www.usa.canon.com/cusa/about_canon/standard_display/abtcan_in_canonInnovation_ misc [Accessed at: 12.12.11] Euromonitor, (2010). Consumer Lifestyles in the United Kingdom. [Online] Available at: https://www.portal.euromonitor.com/Portal/Pages/Search/SearchResultsList.aspx [Accessed 13.12.11] Market Research World, (2011). Innovation Drives The Market For Digital Cameras. [Online] Available at: http://www.marketresearchworld.net/index.php?option=com_content&task=view&id=4471& Itemid=76 [Accessed 10.12.11] Mintel Oxygen, (2011). Social Media and Networking UK, May 2011. [Online] Available at: http://academic.mintel.com/sinatra/oxygen_academic//display/&id=545141 [Accessed 16/12/11] Mintel, (2011). Digital Trends Autumn - UK - September 2011. [Online] Available at: http://academic.mintel.com/sinatra/oxygen_academic/search_results/show&/display/id=5451 47 [Accessed 13.12.11] Radiant Lite Photography, (2010). Samsung to quit DSLR market, placing bet on mirrorless hybrid cameras. [Online] Available at: http://www.radiantlite.com/2010/01/samsung-to-quitdslr-market-placing-bet-on-mirrorless-hybrid-cameras.html [Accessed 10.12.11]

Atiqah Ismail

Direct and Strategic Marketing

2012