Description
Book SynopsisWhat people are saying about Discount Business Strategy: Michael Andersen and Flemming Poulfelt provide a provocative discussion of the rapidly growing role of discounters across numerous industries: how they operate; how they create uniqueness; and how they can destroy value for incumbents. Understanding the specific moves and tools that the authors analyze will be valuable for attackers and incumbents alike.
Adrian J. Slywotzky, Director, Mercer Management Consulting USA
This book is very timely, dealing with today''s most critical strategic issue: how to provide more value to the consumer through aggressive discounting. Those players in manufacturing and distribution who master this will be the winners; many established firms will fall by the wayside. A similar set of issues are facing many nations today - Europe vs. Asia!
Peter Lorange, President, IMD, Switzerland
Andersen and Poulfelt have researched one of the most importan
Trade Review
"pleasant to read and informative" (Petroleum Review, December 2006)
Table of Contents
Foreword xi
1 Why are some companies more successful than others? 1
The real life laboratory 1
Creating value and simultaneous destruction 3
The volume game 6
Simplicity – the word of the day 10
Cut to the core 12
Service? Something we’d rather do ourselves 15
The black box of strategy turned upside down 17
2 The oxymoron of existing strategies: where do we go from here? 19
Conventional strategic thinking 19
The generic strategy framework 20
Porter challenged 23
Mixed strategies – the airline industry 26
3 When discount strategy becomes important 35
Hyper competitive markets and traditional strategy 35
The position of a discount strategy 38
A single form – a simple form? 41
4 CBB 43
Cultivating a hyper competitive market by way of a consistent approach to the notion of discount strategy 43
A contradiction to the bursting of the IT-bubble 43
The mobile sector – hyper-competition 44
CBB as the enhanced service provider 46
The original mission and strategy 47
Crisis and the filing of a petition for bankruptcy 48
The discount strategy – not a single quick fix 50
New management 50
Reinvention of the IT-systems 51
A new customer care concept 52
New brand and branding 53
Reverse relationship marketing 54
Political mass marketing 55
Reorganization of the distribution 56
Cost cutting programs 57
Active price leadership 57
CBB’s discount product – cheaper and better 58
Product production characteristics 58
Product marketing characteristics 62
CBB’s use of price as a tactical weapon 64
The importance of the price vis-a-vis the customers 64 `
Active leadership in price wars 65
Results – best in class 68
A revolution in the mobile sector? 70
Perspectives 72
5 Lidl 75
Gaining ground in a hyper competitive market by a consistent discount strategy 75
The German conquest 75
The grocery retail sector – hyper-competition 76
The original mission and strategy of Lidl 81
The discount strategy – all encompassing 82
Structured to control the impact of external factors 83
Leadership through continuity 84
The look and feel of Lidl 84
High service level with a discount concept 87
Squeezing the brands 89
Aggressive go to market strategy 91
Publicity through secrecy 94
Active price leadership 95
Lidl’s discount product – cheaper and better 96
Product marketing characteristics 99
The use of price as a tactical weapon 99
Active leadership in price wars 100
Results – top of the class 101
Perspectives 103
6 Ryanair 105
Reshaping a competitive market through a consistent discount strategy 105
Flying with the giants 105
The airline industry – liberalized to full competition 106
The early days of deregulation 108
Towards the liberalized sky with a new strategy 109
A transformed and polarized industry 111
Ryanair as the alternative independent carrier 114
Financial collapse evaded at the 11th hour 115
The no frills, low fare strategy – not just one route 116
New management 116
Cost cutting programs 119
Productivity-based compensation schemes 119
Outsourcing to third parties 120
Re-organizing sales and distribution 121
Harmonizing and scrutinizing the fleet 123
Customer care concept 125
New brand and branding 128
Political mass marketing 129
Active price leadership 131
Ryanair’s discount product – cheaper and better 132
Product production characteristics 133
Product marketing characteristics 135
The use of price as a tactical weapon 136
The customers’ perception of price 136
Leading the price wars 138
Results – Best in class 139
Perspectives – a revolution in the airline industry? 141
7 The building blocks of a discount business strategy 145
Maturity and liberalization in different industries 145
The building blocks of a ‘discount strategy’ 147
The product 150
The brand 152
The customers 153
Technology 155
The four blocks as one discount strategy 156
8 The attractiveness of the core product 159
From peaceful coexistence to disruption 159
Disruption and the corresponding value destruction 161
Lean and unbundled nature of the discount product 165
Self-service an important ingredient 172
Aggressive pricing 177
Demand-driven products 180
Value creation 182
Back to basics 184
9 A good brand is much more than a good brand 185
The growing importance of ‘brandr’ 185
‘You need to invest money in the establishment of a good brand’ 187
We cannot afford to spend 188
David against Goliath 193
The Gorilla image 199
Branding as a tool-kit in the discount strategy 204
Low prices as a new corporate social responsibility position 206
Brand extension and discount 207
The good brand 209
10 The discount customer and social capital 211
The pivotal role of the customer in a discount strategy 211
Customers as social capital 214
Social capital and the discount customers – the X factor 214
The social factor in the discount strategy 215
Social capital and egalitarianism 219
The dismissal of relationship marketing 221
Psychology, culture and the discount strategy 224
The view on discount 224
Exploitation of the cognitive dissonance 225
Life-style and satisfaction 227
The advent of the viral ambassador 228
The patronizing of customers 230
The rise and fall of patronizing 230
Increasing brand promiscuity 231
Simplicity prevails 233
How to save costs and increase perceived quality? 234
The main execution tactics 234
11 Finding the suitable technology 237
Finding technology 241
The innovator’s dilemma and the innovator’s solution 244
The choice of ‘discount’ technology 246
Proven technology 248
Scalability 248
Technology supporting the simple 249
Impact on back office system 249
Technological exuberance avoided 253
12 Value creation and value destruction 257
Strategy and war 258
Strategy revisited 264
The building blocks of the discount strategy model 265
The various execution processes 269
13 Epilogue 273
How to reflect thoroughly on the wider repercussions of successful discount business strategies? 273
Notes 279
Bibliography 287
Index 291
