Discusses the strategies that can be used after analyzing the Porter's 5 Forces.

1. Porter Forces and
eBusiness Strategies
UpekhaVandebona
upe.vand@gmail.com

2.  When the forces are high, the strategy is
mainly to position the company in the least
vulnerable position.
 In a position where the company is least effected
by the competitive forces.

3.  When a force is high,
 the business strategy should be to either minimize
the force or diversify in to an area that will have a
minimal effect from that force.
 When a force is low,
 the strategy should be to capitalize on the force or
to use it to get more competitive advantage.

4.  Value-added
 Similar products with minor variations that are
used by consumers when making a choice.
 Sometimes differentiation does not involve
changing the product at all, but creating a new
advertising campaign or other
sales promotions instead.
 Sometimes product differentiation can be as
simple as packaging the goods in a creative way.

5. http://www.investopedia.com/terms/p/product_differentiation.asp

6.  Market diversification means extending your
business offering to new market segments
not previously targeted.
 Product diversification means adding new
products or services to expand the business
offering within existing markets.These
new products can simply be extensions of
existing brands or they may be entirely new.
http://www.ehow.com/info_7746062_market-diversification-vs-product-diversification.html

7.  Agreement between two or more parties to
pursue a set of agreed upon objectives
(short term goals) while remaining
independent organizations.
 each company maintains its autonomy while
gaining a new opportunity.
 They join together to pursue mutual benefits.
http://www.investopedia.com/terms/s/strategicalliance.asp

8.  Offering several products for sale as one
combined product.
 The fast food industry combines separate
food items into a complete meal.
 A bundle of products may be called a package.
 A software bundle might include a word
processor, spreadsheet, and presentation
program into a single office suite.

9.  In a bundle pricing, companies sell a package
or set of goods or services for a lower price
than they would charge if the customer
bought all of them separately.
 The products and services are usually related,
but they can also consist of dissimilar
products which appeal to one group of
customers.

11.  Horizontal integration is the process of a
company increasing production of goods or
services at the same part of the supply chain.
 A company may do this via internal
expansion, acquisition or merger.
 The process can lead to monopoly if a
company captures the vast majority of the
market for that good or service.
http://www.investopedia.com/terms/h/horizontalintegration.asp

12.  Backward integration is when a firm buys a
company who previously supplied raw
materials to the firm.
 It is a type of vertical integration, but specifically
refers to the merging with firms who used to
supply the firm
 Companies pursue backward integration
when it is expected to result in improved
efficiency and cost savings.
http://www.investopedia.com/terms/b/backwardintegration.asp

13.  Type of vertical integration where a
manufacturer acquires the channels of
distribution of its outputs.
 This is commonly referred to as "eliminating
the middle man“
 Benefit of forward integration is that
manufacturers can reduce steps in the
distribution process
http://www.investopedia.com/terms/f/forwardintegration.asp

14.  Method companies use to price their
products or services.
 Almost all companies, large or small, base the
price of their products and services on
production, labor and advertising expenses
and then add on a certain percentage so they
can make a profit.

15.  Cost Leadership
 lowest cost of operation in the industry.
 The use of this strategy is primarily to gain an
advantage over competitors
 Price Leadership
 Price leadership is when a firm that is the leader in its
sector determines the price of goods or services.This
approach can leave the leader's rivals with little choice
but to follow its lead and match these prices if they
are to hold onto their market share.
 A company could be the lowest cost producer, yet not
offer the lowest-priced products or services

16.  Price Discrimination Strategies
 Charges customers different prices for the same
product or service. In pure price discrimination,
the seller charges each customer the
maximum price that he is willing to pay.
 The seller places customers in groups based on
certain attributes and charges each group a
different price.
http://www.investopedia.com/terms/p/price_discrimination.asp

17.  Line Extensions occur when a company
introduces additional items in the same
product category under the same brand
name such as new flavors, forms, colors,
added ingredients, package sizes.
 Line extension occurs when the company
lengthens its product line beyond its current
range.
 E.g. : new package size, new branch of a
franchised store

18.  An order to buy a large quantity of a good at
once.

19.  Developing new products or modifying
existing products with new or different
characteristics, so they appear new, and
offering those products to current or new
markets that offer new or additional benefits
to the customer.

20. Marketing
Customer Relationship Mgt.
(CRM)
Supply Chain Management
Discussed in a separate lectures

22.  Enhancing your marketing/brand image
 Utilizing patents
 Demonstrating your ability and desire to
retaliate to potential entrants
 Setting a product price that discourage new
entrants
 Cost leadership
 Position to reduce the price of the product/service
to an extent that newcomers cannot even come
close to the pricing structure.

23.  Strengthen the barriers of entry
 Adding value to the product/service by product
differentiation strategy or product bundling.
 Form strategic alliances or partnerships
with associated products to strengthen the
company’s position in the market.
 Customer Relationship Management (CRM)
or in other words, providing a better,
convenient, less costly customized service to
the customer is also another strategy.

25.  To minimize price competition distinguish your
product from your competitors’ by innovating or
improving features.
 Focusing on a unique segment of the market
 Distributing your product in a novel channel
 Trying to form stronger relationships with
customers
 Build customer loyalty.

26.  Value addition or Product differentiation will
move the product from a very competitive
market to a market segment which would not
be that much competitive.
 Product bundling will provide a total solution
to the customer which many competitors
would not be able to provide.
 This is practiced a great deal in the tourist
industry where they deal with ticketing, hotel
bookings, car rentals, etc.

27.  With internet technologies, it is very easy to link
up with partners to form strategic alliances.
 Organizations can link up horizontally with the
supply chain to provide a value added better
service to the customer increasing CRM.
 Target marketing or niche marketing are
effective marketing strategies which will make a
major difference in creating awareness of the
company and it’s products/services.

28.  Another effective strategy would be the, pricing
strategies including price discrimination strategy .
 There are many Internet shopping agents, offering
price comparisons and a lot of other information to
customers to compare products/features and prices.
 Companies can change different prices for different
market segments or different combinations of
product/service offerings for different prices.
 Discounted pricing can also be offered depending on
quantities as well.This makes it difficult for customers to
compare prices of alternate products offerings.

30.  Use tactics such as staying closely in tune
with customer preferences
 Differentiate your product by branding
 Collective advertising for an industry
 Value added products that would take your
products to a different market.
 Diversifying into a new product or market is
a permanent solution of avoiding the
pressure of dealing effectively with substitute
products/services, but, is not always possible.

31.  Strategic alliances and product bundling can
add value to the basic product/service taking it
away from direct competition from substitutes.
 One good example would be how soft drink producers
link up with major food chains such as McDonalds and
KFC to beat the competition coming from ready-to-
drink fresh juice producers and diary drink producers.
 In certain markets, with price-sensitive
customers, cost effective pricing strategies
would negate the force coming from substitute
products.

33.  Forming a buying group of small producers, to
buy as one large-volume customer.
 Produce your own inputs by purchasing one of
your key suppliers or doing the production
yourself.
 Evaluate market information in suppliers
business.

34.  Backward integration will allow a company to
become a component manufacturer or a raw
material dealer reducing or eliminating the
barrier of dealing with the bargaining power of
suppliers.
 Bulk ordering is also a good strategy where
few companies who are in need of the same
material get the pricing advantage by ordering
in larger quantities.

35.  Supply Chain Management will definitely
improve the relationships with the nodes of the
value chain where the raw material ordering,
manufacturing, buying from suppliers and
tracking raw material orders, and these will
result in lowering the bargaining power of the
suppliers.
 Electronic links/ Strategic Alliance with
suppliers will help the transfer of valuable
information with regarding to raw material
which will ease the situation.

37.  Increase their loyalty to your business
through partnerships or loyalty programs
 Selling directly to consumers
 Increasing the inherent or perceived value of
a product by adding features or branding.
 Select the customers who have little
knowledge of the market and have less
power.

38.  Product differentiation is improving the
product and adding value to it to be different
from the competitors.
 CRM will let the company focus on high value
customers and have a customized approach
rather than a mass-production approach.
 This will create brand loyalty and trust among
customers.

39.  Online and offline marketing strategies and
Customer Relationship Marketing are
important ways of promoting the company
and products to reach the customers.
 There can be so many other mechanisms that
can be used such as product based
marketing, customer based marketing,
segmented and behavior oriented marketing.

40.  Traditionally, the price of a product/service depends
on quality, features, quantity, type of customer, etc.
 On the Internet, there are many more strategies
used and one such technique is customized
negotiated pricing, used by priceline.com. (C2B)
 Another pricing strategy would be to camouflage
the real price by bundling or unbundling the
product/service related components or features
thereby making it difficult for customers to compare
the pricing with similar products/ services.

41.  eAuctions such as eBay.com and reverse
auctions are also ways of reaching the cyber
customers in the e-marketplace.
 Expanding the product line can also give the
customer a wider variety and choice creating
a customized approach to selling
products/services.
 The other strategies proposed are forward
integration, cost leadership, product
development.

42. Depending on which force is working on the company, the strategies are developed and the
suitable eBusiness models are being used.