| Business strategies can be categorized in many ways. One popular method is to assess strategies based on their degree of
aggressiveness. Aggressiveness strategies are rated according to their marketing assertiveness, their risk propensity,
financial leverage, product innovation, speed of decision making, and other measures of business aggressiveness. Typically the
range of aggressiveness strategies is classified into four categories: prospector, defender, analyzer, and reactor.
Prospector strategy
This is the most aggressive of the four strategies. It typically involves active programs to expand into new markets and
stimulate new opportunities. New product development
is vigorously pursued and attacks on competitors are a common way of obtaining additional market share. They respond quickly to any signs of market opportunity, and do so
with little research or analysis. A large proportion of their
revenue comes from new products or new markets. They are often highly levered, sometimes with a substantial equity position held by venture capitalists. The risk of product failure or market rejection is high. Their market domain is
constantly in flux as new opportunities arise and past product offerings atrophy. They value being the first in an industry, thinking that their “first
mover advantage” will provide them with premium pricing opportunities and high margins. Price skimming is a common way of recapturing the cost of development. They can be opportunistic in
headhunting key employees, both technical and managerial. Advertising, sales
promotion, and personal selling costs are a high percentage of sales. Typically the
firm will be structured with each strategic business unit having considerable autonomy. The industry that they operate in tends
to be in the introduction or growth stage of its life cycle with few competitors and evolving technology.
Defender strategy
This strategy entails a decision not to aggressively pursue markets. As a result, they tend to do none of the things
prospectors do. A defender strategy entails finding, and maintaining a secure and relatively stable market. Rather than being on
the cutting edge of technological innovation, product development, and market dynamics, a defender tries to insulate themselves
from changes wherever possible. In their attempt to secure this stable market they either keep prices low, keep advertising and
other promotional costs low, engage in vertical
integration, offer a limited range of products or offer better quality or
service. Then tend to be slower in making decisions and will only commit to a change
after extensive research and analysis. Their goals tend to be efficiency oriented rather than effectiveness oriented. The
industry tends to be mature with well defined technology, products, and market segments. Most sales tend to be repeat or replacement purchases. Individual strategic business units
typically have moderate to low levels of autonomy.
Analyzer
The analyzer is in between the defender and prospector. They take less risk and make less mistakes than a prospector, but are
less committed to stability than defenders. Most firms are analyzers. They are seldom a first mover in an industry but are often
second or third place entrants. They tend to expand into areas close to their existing core competency. Rather than develop wholly new products, they make incremental improvements in existing
products. Rather than expand into wholly new markets, they gradually expand existing markets. They try to maintain a balanced
portfolio of products with some stable income generators and some potential
winners. They watch closely the developments in their industry but don’t act until they are sure that the time is
right.
Reactor
A reactor has no proactive strategy. They react to events as they occur. They respond only when they are forced to by macroenvironmental pressures. This is the least effective of
the four strategies. It is without direction or focus.
See also
Finding related topics
References
- Miles, R.E. and Snow, C. (1978) Organizational Strategy, Structure and Process, New York, McGraw Hill, 1978.
- Walker, O. and Ruekert, R. (1987) Marketing’s role in the implementation of business strategies, Journal of
Marketing, July 1987, pg 31.
- Boyd, H. and Walker, O. (1990) Marketing Management, A Strategic Approach, Boston, Irwin, 1990, ISBN 0-256-05827-X
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