Tag Archives: competitors

How to Choose a Marketing Strategy (continued)

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DISTINCTIONS THAT APPEAL TO A BROAD AUDIENCE Example: American Airlines

After de-regulation of the airlines in 1978, many carriers quickly became mired in price competition and service cutbacks that shortchanged the mainstay of the airline business -the business traveler. Although American used frequent-flier coupons to attract pleasure travelers, the company decided the best way to hold regular prices firm and retain business travelers was to sell service, not prices. It pioneered a two-tier wage structure that held down labor costs, and still managed to stay at the top of the industry in on-time performance, safety and luggage handling. It’s advertising emphasized those statistics, along with the promise to coddle passengers with the best in-flight service possible. American’s market share grew without the company having to resort to cut-throat price competition that knocked some of its competitors out of the air.

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How to Choose a Marketing Strategy

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Finding a market niche Harvard Business School professor Michael Porter argues that companies must choose among four different strategies in order to prosper:

INDUSTRY-WIDE COST ADVANTAGE Example: Procter & Gamble’s Ivory Soap

Introduced in the 19th Century as a premium quality, pure skin cleaner that was far different than the coarse, brown soaps of the era, Ivory Soap for decades was sold as a mass-market good that commanded a premium price. Ads featured women and babies bubbling up with the white soap that was 99 & 44/100th pure. Ivory even advertised a novelty that prevented the soap from getting lost in bathtub suds: It floats! Seventy years later, however, competitors forced a shift in strategy. By the 1950s, white soaps were commonplace and rival soap makers added perfumes and skin moisturizers to their bars. Procter & Gamble decided to change Ivory’s strategy instead of its formula. It cut the price and began peddling Ivory as an all-purpose, no-nonsense family soap. Sales and profits soared.

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