Chapter 7 - Small Business Strategies: Imitation with a Twist

competitor

any other business in the same industry as yours

focus strategy

a generic strategy that targets a portion of the market, called a segment or niche

differentiation strategy

a type of generic strategy aimed at clarifying how one product is unlike another in a mass market

boom

a type of life cycle growth stage marked by a very rapid increase in sales in a relatively short time

shake-out

a type of life cycle stage following a boom in which there is a rapid decrease in the number of firms in an industry

supply chain

a way to think about the line of distribution of a product from its start as materials outside the target firm, to its handling in the target form, to its handling by sellers, with placement into the hands of customers

goal

an intended outcome for your business

industry dynamics

changes in competitors, sales, and profits in an industry over time

benefit

characteristic of a product or service that the target customers would consider worthwhile, such as low cost or high quality

strategic actions

competitive responses requiring a major commitment of resources

tactical actions

competitive responses with low resource requirements

competitive advantage

the particular way a firm implements customer benefits that keeps the firm ahead of other firms in the industry

magic number

the postal income the entrepreneur personally seeks from the business

pure innovation

the process of creating new products or services, which results in a previously unseen product or service

scope

a characteristic of a market that defines the geographic range covered by the market - from local to global

mass market

a customer group that involves large portions of the population

cost strategy

a generic strategy aimed at mass markets in which a firm offers a combination of cost benefits that appeals to the customer

perceptual map

a graphic display that positions products, services, brands, or companies according to their scores on important strategic dimensions

decline stage

a life cycle stage in which sales and profits of the firm begin a falling trend

niche market

a narrowly defined segment of the population that is likely to share interests or concerns

industry analysis (IA)

a research process that provides the entrepreneur with key information about the industry, such has its current situation and trends

blue ocean strategy

a strategy based on creating a new product or service that has no competitors

growth stage

an industry life cycle stage in which customer purchases increase at a dramatic rate

incremental innovation

an overall strategic approach in which a firm patterns itself on other firms, with the exception of one or two key areas

innovative strategy

an overall strategic approach in which a firm seeks to do something that is very different from what others in the industry are doing

imitative strategy

an overall strategic approach in which the entrepreneur does more or less what others are already doing

generic strategies

three widely applicable classic strategies for businesses of all types - differentiation, cost, and focus

scale

a characteristic of a market that describes the size of the market - a mass market or a niche market

gross profit

funds left over after deducting the cost of goods sold

value proposition

small business owners' unique selling points (also known as benefits) that customers can expect from your goods or services, including benefits that differentiate your offering from those of the competition

marketing

the actions of a business related to promoting and selling products or services

net profit

the amount of money left after operating expenses are deducted from the business

profit before taxes

the amount of profit earned by a business before calculating the amount of income tax owed

market

the business term for the population of customers for your product or service

degree of similarity

the extent to which a product or service is like another

industry

the general name for the line of product or service being sold, or the firms in that line of business

entry wedge

an opportunity that makes it possible for a new business to gain a foothold in a market

retrenchment

an organizational life cycle stage in which established firms must find new approaches to improve the business and its chances for survival

parallel competition

an imitative business that competes locally with others in the same industry

strategy

the idea and actions that explain how a firm will make its profit

introduction stage

the life cycle stage in which the product or service is being invented and initially developed

maturity stage

the third life cycle stage, marked by a stabilization of demand, with firms in the industry moving to stabilize or improve profits through cost strategies