STRATEGIES TO CRACK WELL-GUARDED MARKETS

STRATEGIES TO CRACK: WELL-GUARDED MARKETS.
By: Bryce, David J., Dyer, Jeffrey H.,
Harvard Business Review,
May 2007, Vol. 85, Issue 5

The most attractive markets are almost always the hardest to profitably break into. The trick is to be indirect, so incumbents don't notice you until it's too late

Examples offered in article: Red Bull, Jakks Pacifics Toymax division

Indirect assault is the leitmotif of successful entries into attractive industries, especially when companies haven't developed technological innovations.

Successful companies use three basic approaches. First, they leverage their existing assets and resources. They use their excess capacity, often combining it with partners' assets or resources, to lower the cost of entering new markets. For instance, a company may place a new product in shelf space it already owns or manufacture goods with machines that would otherwise be idle.

Second, companies reconfigure their value chains by changing the activities or the sequence of activities they perform. They borrow elements from other industries or use technological advances to create value chains that differ from those of incumbents. When a company bypasses bricks-and-mortar retail outlets and sells its products through a Web site, for example, it is reconfiguring the industry's value chain.

Third, enterprises create niches by developing offerings that appeal only to some customers. That can mean offering premium features at a price that only certain consumers are willing to pay or dropping features that some people don't care to pay for.

David J. Bryce (dbryce@byu.edu) is an assistant professor of organizational leadership and strategy, and Jeffrey H. Dyer (jdyer@byu.edu) is the Horace Pratt Beesley Professor of Strategy, at Brigham Young University's Marriott School of Management, in Provo, Utah.