MRKT 690 Week 2 DB Forum 1 Example

Discussion Board Forum 1: Thread and Two Replies

MRKT 690 Marketing Strategy Capstone, Discussion Board Forum 1 (thread and two replies)

Thread by [Student Name]

The prompt, the e-bike company and the classmates' posts are composites standing in for the course's own forum; the published studies are real; the requirements follow Liberty's public course guide for MRKT 690.

Thread

A regional electric-bike maker in North Carolina has grown from 400 to 3,000 bikes a year in four years, selling through twenty independent bike shops and its own website. The e-bike market is growing, and the company has room to pursue one segment hard. Its two options are commuters, who ride to work in cities such as Raleigh and Charlotte and want reliability, cargo capacity and theft protection, and recreational riders, who ride greenways and mountain trails on weekends and want range, comfort and style.

Market orientation research gives a first test. In Narver and Slater (1990), a market-oriented business watches its customers, watches its rivals and gets its departments working together, and across the business units they surveyed, units that did more of all three earned clearly higher profits. The lesson is that the choice should rest on evidence about what each segment needs and what rivals offer it, not on what the founders like to ride. The company's warranty records and shop interviews show that commuters ride three times as many miles a year, wear out drivetrains faster and value fast repairs above all, while recreational buyers compare bikes mostly on price and appearance.

Day and Wensley (1988) argue that a business should diagnose its advantage from two perspectives, the customer's and the competitor's, and should look at both the sources of advantage, its skills and resources, and the positions of advantage those sources create, superior customer value or lower cost. From the competitor's side, the recreational segment is crowded with large national brands that can outspend a small maker on design and promotion. From the customer's side, the commuter segment rewards a skill the company already has: a dealer network that can repair a bike within a day. That source of advantage is hard for an online-only rival to copy, and it creates a position of superior value for riders who cannot go a week without their bike.

The commuter segment is the better choice because it matches the company's real source of advantage, fast local service, to what those customers value most. I would recommend three moves: a cargo-ready commuter model with integrated lights and a frame lock; a service plan that guarantees 24-hour repairs at partner shops; and partnerships with two or three large employers that offer commuting benefits. The company should keep its recreational models but stop adding to that line, and shift the design budget it would have spent on new trail models to the commuter bike and the service network.

The risk is that national brands will enter the commuter segment once it grows. The response is to deepen the service advantage, by adding shops and training mechanics, so that the position remains costly to copy. The company should also track the measures that would show whether the strategy is working: the share of sales going to commuters, repeat purchases of accessories and service plans, and average repair time at partner shops. If the commuter share has not risen within two years, the company would have evidence, not guesswork, for revisiting the choice, which is exactly the discipline a market-oriented firm applies to its own strategy.

Classmates: in your company's market, which source of advantage would a larger rival find hardest to copy?

Reply to Hector

Hector, your thread recommended that the meal-kit company you studied cut prices by 20 percent to win share in a growing market, on the reasoning that the largest company in a market is the most profitable. The logic is common, but the research is more cautious. Szymanski et al. (1993) performed a meta-analysis of 276 market share-profitability findings from 48 studies and found that, on average, market share does have a positive effect on profitability. They also found that the size of the relationship depends heavily on how studies are designed, and that when studies account for firm-specific intangible factors, such as management skill or brand strength, the relationship may be largely artifactual. In other words, share and profit may both result from the same underlying strengths rather than one causing the other.

For a meal-kit company, which faces high customer acquisition costs and frequent cancellations, buying share with discounts may attract customers who leave when the discount ends. A plan that builds the underlying strengths, such as menu quality and delivery reliability, may produce both share and profit more durably, and it avoids training customers to wait for the next discount.

Does the company have data on how long discount-acquired customers stay compared with those who paid full price?

Reply to Brianna

Brianna, your thread argued that the wearable technology startup you studied should rush its smart ring to market before larger competitors, because first movers build loyalty and set the standard. The first-mover literature that Lieberman and Montgomery (1988) surveyed does name genuine edges for early entrants, among them a technology lead, first claim on scarce inputs and the cost buyers face in switching, yet it names drawbacks just as real, since followers can copy what pioneers paid to learn and pioneers must guess at technology and demand.

The historical record is sobering. Working from historical records instead of surveys of the firms that survived, Golder and Tellis (1993) traced roughly 500 brands across 50 categories and saw nearly one pioneer in two disappear, with surviving pioneers holding far smaller shares than earlier research suggested. Early market leaders, firms that entered on average 13 years after the pioneers, were far more successful.

For a smart ring, this suggests that the startup's advantage may come less from being first than from being best when the market takes off. It might be wiser to perfect battery life and sizing, the problems early buyers complain about, and enter when the category is ready, with a product that the early entrants' frustrated customers would switch to.

What evidence did you find about the startup's ability to defend its position once larger firms arrive?

References

Day, G. S., & Wensley, R. (1988). Assessing advantage: A framework for diagnosing competitive superiority. Journal of Marketing, 52(2), 1-20. https://doi.org/10.1177/002224298805200201

Golder, P. N., & Tellis, G. J. (1993). Pioneer advantage: Marketing logic or marketing legend? Journal of Marketing Research, 30(2), 158-170. https://doi.org/10.1177/002224379303000203

Lieberman, M. B., & Montgomery, D. B. (1988). First-mover advantages. Strategic Management Journal, 9(S1), 41-58. https://doi.org/10.1002/smj.4250090706

Narver, J. C., & Slater, S. F. (1990). The effect of a market orientation on business profitability. Journal of Marketing, 54(4), 20-35. https://doi.org/10.1177/002224299005400403

Szymanski, D. M., Bharadwaj, S. G., & Varadarajan, P. R. (1993). An analysis of the market share-profitability relationship. Journal of Marketing, 57(3), 1-18. https://doi.org/10.1177/002224299305700301