Tuesday, April 3, 2012

Class # 18 Highlights


In this class, we studied Judo strategies. These strategies use a combination of look forward, reason back along with marketing mix and inflexibility of an incumbent to make profits even under extremely unfavorable industry settings.

The key is to choose a marketing mix to provoke an accommodate rather than a fight response from the incumbent. To do this, one needs either a low price, a niche presence, or both. The other ingredient is some exploitable inflexibility on the part of the incumbent. While the experiment focused on the inability of the incumbent to price discriminate, other inflexibilities are possible such as brand inflexibility or cannibalization inflexibility.

This "puppy dog ploy" strategy allows success even when a firm has no competitive advantage whatsoever, a common situation for a new entrant.

Key Takeaways

  • Use LFRB to choose a marketing mix that provokes an accommodate response.
  • Success is a mix of niche presence and low prices.
  • An inflexibility on the part of the incumbent is required for this to work.
  • In a suitable setting, competitive advantage is not needed for a firm to make profits using this strategy.

No comments: