Principles of Management

Session 2
Prof Dr Willem Standaert
[email protected]

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 Planning Sessions
• Session 1 (16/9 – Opéra)
• Session 2 (23/9 – Opéra)
• Session 3 (30/9 – Opéra)
• Session 4 (07/10 – Opéra) + guest lecture Voxdale
• Session 5 (14/10 – Opéra) + guest lecture TBC
• Sessions 6 (21/10 – Opéra) + guest lecture element61
• Session 7 (4/11 – Online): Case assignment and discussion
• Session 8 (18/11 – Opéra): see Dr. Pirsoul
• Session 9 (25/11 – Opéra): see Dr. Pirsoul
• Session 10 (2/12 – Opéra): see Dr. Pirsoul
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 Objectives of this Partim
• Defining management and classifying management models
• Analysing the different market dimensions that impact value for a
specific company
• Understanding how to create value by segmenting, targeting,
and positioning
• Defining a business model and go-to-market approach (4 P’s) to
deliver and capture value
• Developing an approach to sustain value through:
• Digitalization and Internationalization
• Innovation
• Branding and Sustainability
• Platform strategies
• Measuring outcomes and adjusting the strategy

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Managing the External Environment
Value Perspective
Business Intelligence - The 5 C’s

UNDERSTAN- Collaborators
Context Company Competitors Customers
DING VALUE /Value system

Market
CREATING VALUE Selection of Target Positioning
Segmentation Market
The 4 P’s
DELIVERING &
CAPTURING Product / Solution Place / Channel Promotion / Price
VALUE Communication

Innovation Brand Equity Internationalization

SUSTAINING
VALUE
Customer
CSR/Sustainability Digitalization Relationship
Management

Measuring outcomes and

adjusting strategy

Adapted from Dwyer & Schurr

Creating Value
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 Market Segmentation
• A market segment is a group of customers
who share one or more similar
characteristics.
• Customers within one segment are expected
to respond in a similar way to the marketing
mix (4Ps).
• The goal is to identify segments that are
internally similar (homogeneous), but that
may differ significantly from other segments
(heterogeneous).

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 Market Segmentation
“If you’re not thinking segments, you’re not thinking. To
think segments means you have to think about what
drives customers, customer groups, and the choices that
are or might be available to them.”
– Theodore Levitt

“I will know when our businesses are doing a good job

when they can articulate who we should not sell to.”
– Chuck Lillis

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Segmentation Variables

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© Houghton Mifflin Company
 Demographic
Millennial Shopping Behavior

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The Silver Economy

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Geographic

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Psychographic: Motives & Lifestyle

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Behavioristic: End use

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Behavioristic: Brand Loyalty
 Selection of Target Markets
• Targeting can be done by assessing 4 criteria, for which
information can be gathered through market research:
• Market segment size and growth
• Potential share of market (value and volume)
• Competitive intensity (see Porter 5 forces)
• Company fit

• While you want the first two criteria to be as high as possible,

competitive intensity is preferably low.
• Finally, it is important to evaluate the fit with the overall
company strategy, which feeds into Positioning (see next
slide).

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 Positioning
“The act of designing the company’s and product’s image so
that it occupies a distinct and valued place in the target
customers’ minds.”

Positioning is the key step in between understanding the

needs of customer segments and developing a market
offering.
Positioning relates closely to the direction in which the profit
equation is read, from left to right (focus on innovation) or
from right to left (focus on reducing costs).
Another way to put this, is what is the strategic priority of the
company, which we will discuss next.
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Porter’s Generic Strategies

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 Strategic Priority
• Operational excellence (= cost leader): providing
customers with reliable products or services at
competitive prices and delivered with minimal
difficulty or inconvenience
• Further refinement of generic strategy of
differentiation (see above):
• Product leadership: offering customers leading-edge
products and services that consistently enhance the
customer’s use or application of the product, thereby
making rivals’ goods obsolete
• Customer intimacy: segmenting and targeting markets
precisely and then tailoring offerings to match exactly
the demands of those niches

(Source: Treacy & Wiersema, 1993 23

https://hbr.org/1993/01/customer-intimacy-and-other-value-disciplines)
 Examples
• Operational excellence

• Product leadership

• Customer intimacy

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“One of our most exciting peculiarities is poorly understood.
People see that we’re determined to offer both world-leading
customer experience and the lowest possible prices, but to
some this dual goal seems paradoxical if not downright
quixotic. Traditional stores face a time-tested tradeoff
between offering high-touch customer experience on the one
hand and the lowest possible prices on the other. How can
Amazon.com be trying to do both?”
Jeff Bezos, founder of Amazon

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 Company Statements
Different types of company statements can be distinguished. Too
often, companies mix up the three types of statements and come
up with one large and complex text. While all three statements
should be aligned, they are tailored towards a different target
audience, as shown on the slide.

Describes the ‘big picture’ of the future and how the company will
Vision shape and change the world. This is important for all stakeholders. It is
a strategic message.
Describes purpose and rational of the company and is important for
Mission
employees. It is an operational message.
Focuses on the customer’s view of the company. It emphasizes the
Positioning differences to the competition. It is important for customers. It is a
marketing message.

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 Whose vision statement is it?
• To bring inspiration and innovation to every athlete in the
world.
• To make the best products on earth, and to leave the world
better than we found it.
• To create the most compelling car company of the 21st
century by driving the world’s transition to electric vehicles.
• To help people and businesses throughout the world realize
their full potential.
• To be Earth’s most customer-centric company, where
customers can find and discover anything they might want
to buy online.
• To be the best global entertainment distribution service.

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Positioning: “The act of designing the company’s and
product’s image so that it occupies a distinct and
valued place in the target customers’ minds.”
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(Barney, 1991)
 Resource-based view
• Tangible resources: Land-location, buildings,
machinery, equipment and capital
• Intangible resources: Brand reputation, trademarks,
skills, capabilities, intellectual property, know-how
• To obtain a sustainable competitive advantage,
bundles of resources (“core competences”) should be:
• Valuable: Resources help to reduce cost or increase
differentiation
• Heterogeneous: Resources differ across companies (
perfect competition)
• Immobile: resources cannot be (easily) replicated (usually,
intangible resources are harder to copy in the short run)

(Barney, 1991) 31
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Core competences

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Different EV Technology Strategies

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Willem Standaert, PhD
Associate Professor HEC Liège

[email protected]
Willem Standaert

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