Defining your business using product-customer matrices

Long Range Planning

Volumn 29, Issue 1, 1996, Pages 38-48

  Boardman, Anthony E ^a   Vining, Aidan R ^b  

^a UNIVERSITY OF BRITISH COLUMBIA   (Canada)

^b SIMON FRASER UNIVERSITY   (Canada)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0041711633     PISSN: 00246301     EISSN: None     Source Type: Journal    
DOI: 10.1016/0024-6301(95)00064-X     Document Type: Article

References (38)

1. See, for example, D.F. Abell, Defining the Business: The Starting Point of Strategic Planning, Prentice-Hall Inc., Englewood Cliffs (1980);
2. D.A. Aaker, Developing Business Strategies (2nd edn), especially pp. 39-50, John Wiley and Sons, New York (1988);
3. R. Brown, Making the product portfolio a basis for action, Long Range Planning 24 (1), 102-110 (1991);
4. and R. McTavish, One more time: what business are you in? Long Range Planning 28 (2), 49-60 (1995).
5. Also see C.J. Clarke and K. Brennan, Building synergy in the diversified business, Long Range Planning 23 (2), 9-16 (1990).
6. We use the term 'product-customer' matrix and avoid the term 'product-market' matrix. Companies do not serve markets; they serve customers in markets. A market is where buyers and sellers interact, not a synonym for buyers or customers. Thus, to clarify our terminology, we use a 'product-customer' matrix to segment a product market.
7. The term 'business' is almost synonymous with the term 'industry'. However, we prefer the term 'Business' because it is broader; it includes firms with products similar in customer substitutability or firms with similar core competencies, in addition to including firms with similar production technologies. We discuss this issue in depth later in the section on constructing a Business PCM.
8. Most frameworks for strategy formulation contain an analysis of the current situation (analysis of the external environment, description of the organization's current strategies, and the organization's internal characteristics and current performance), an assessment of the current situation or strategic gap analysis, and generation and evaluation of alternatives leading to a strategic plan; see, for example. Figure 1 in N.B. Zabriskie and A.B. Huellmantel, Marketing research as a strategic tool, Long Range Planning 27 (1), 107-118 (1994) at p. 109
9. or Figure 2-5 in A.A. Thompson, Jr. and A.J. Strickland, III, Crafting and Implementing Strategy: Text and Readings, (6th edition), Irwin, Chicago (1995) at p. 47.
10. D.M. Reid, Where planning fails in practice, Long Range Planning 23 (2), 85-93 (1990), at p. 90.
11. See, for example, J. Hillidge, Planning for growth in a small company, Long Range Planning 23 (3), 76-81 (1990).
12. V.A. Zeithaml, A. Parasuraman and L.L. Berry, Delivery Quality Service: Balancing Customer Perceptions and Expectations, The Free Press, New York (1990).
13. D. Walters and D. Knee, Competitive strategies in retailing, Long Range Planning 22 (6), 74-84 (1989).
14. J. Lidstone, Market segmentation for pharmaceuticals, Long Range Planning 22 (2), 54-62 (1989).
15. Of course, one could construct a three-dimensional PCM with one product axis and two customer axes, but such matrices are hard to 'read' and are usually more trouble than they are worth.
16. Of course, sponsors contribute to the organization in exchange for some benefit, such as 'networking'. The non-profit organization's contribution to this beneficial product or service should be treated as a type of product on the product axis of a PCM.
17. For a case study on how Sun Microsystems recognized the need to engage in a more formal strategic planning process and to map competitors more effectively see S. Kukalis and B. Kanazawa, Sun Microsystems reorganizes for growth, Long Range Planning 26 (5), 42-48 (1993).
18. T. Levitt, Marketing myopia, Harvard Business Review 38 (4), 45-56 (1960).
19. G. Stigler, Monopolistic Competition Revisited, reprinted in The Organization of Industry, Richard D. Irwin, Homewood (1968).
20. J.A. Kay, Identifying the strategic market, Business Strategy Review 1 (1), 2-24 (1990), at p. 12.
21. C.K. Prahalad, and G. Hamel, The core competence of the corporation, Harvard Business Review, 79-87 (1990).
22. See, for example, P. Very, Success in diversification: building on core competencies, Long Range Planning 26 (5), 80-92 (1993).
23. Potential entrants make the market 'contestable'; see R.J. Gilbert, The role of potential competition in industrial organization, Journal of Economic Perspectives 3 (3), 107-127 (1989);
24. and, for an interesting practical discussion, F.M. Fisher, J.J. McGowan and J.E. Greenwood, Folded, Spindled, and Mutilated: Economic Analysis and U.S. v. IBM, MIT Press, Cambridge, Mass (1983).
25. See, for example, J.B. Quinn, T.L. Dooley and P.C. Pacquette, Technology in services: rethinking strategic focus, Sloan Management Review 31 (2), 79-87 (1990)
26. and M.H. Meyer and J.M. Utterback, The product family and the dynamics of core capability, Sloan Management Review 34 (3), 29-47 (1993).
27. M.E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors, The Free Press, New York (1980).
28. See, M.E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance, especially pp. 234-236, The Free Press, New York (1985).
29. A. Miller and G.G. Dess, Assessing Porter's (1980) model in terms of its generalizeability, accuracy and simplicity, Journal of Management Studies 30 (4), 553-585 (1993).
30. See Porter (1980), Journal of Management Studies op. cit., especially pp. 34-46.
31. For evidence that firms do engage in combination strategies see L. Kim and Y. Lim, Environment, generic strategies, and performance in a rapidly developing country: a taxonomic approach, Academy of Management Journal 31 (4), 802-827 (1988);
32. and P. Wright, M. Kroll, H. Tu and M. Helms, Generic strategies and business performance: an empirical study of the screw machine products industry, British Journal of Management 2, 1-9 (1991).
33. See J. McGee and H. Thomas, Strategic groups: theory, research and taxonomy, Strategic Management Journal 7 (2), 141-160 (1986);
34. K.J. Hatten and M.L. Hatten, Strategic groups, asymmetrical mobility barriers and contestability, Strategic Management Journal 8 (4), 329-342 (1987);
35. D.F. Amel and S.A. Rhoades, Strategic Groups in Banking, Review of Economics and Statistics 70 (4), 685-689 (1988);
36. P. Nayyar, Strategic Groups: A comment, Strategic Management Journal 10, 101-103 (1989);
37. J.B. Barney and R.E. Hoskisson, Strategic groups: untested assertions and research proposals, Managerial and Decision Economics 11, 187-198 (1990).
38. H.I. Ansoff, Strategies for diversification. Harvard Business Review, September-October, 113-124 (1957).