Discount Business Strategy: How the New Market Leaders are Redefining Business Strategy / Edition 1

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What people are saying about Discount Business Strategy:

"Michael Andersen and Flemming Poulfelt provide a provocative discussion of the rapidly growing role of discounters across numerous industries: how they operate; how they create uniqueness; and how they can destroy value for incumbents. Understanding the specific moves and tools that the authors analyze will be valuable for attackers and incumbents alike."
—Adrian J. Slywotzky, Director, Mercer Management Consulting USA

"This book is very timely, dealing with today's most critical strategic issue: how to provide more value to the consumer through aggressive discounting. Those players in manufacturing and distribution who master this will be the winners; many established firms will fall by the wayside. A similar set of issues are facing many nations today - Europe vs. Asia!"
—Peter Lorange, President, IMD, Switzerland

"Andersen and Poulfelt have researched one of the most important themes in today's business world - how fundamentally new business models have wiped out establishments not with new products or technologies, but by creating new rules for conventional industries. Read this book and learn how to recognize the disruption of your industry before it is too late!"
—Sigurd Liljenfeldt, Senior Partner, Monitor Group, France

"This book asks if a firm can have its cake and eat it too - that is, maintain high quality at low prices. My favourite example and shopping place is big box Costco. Ikea is another. A must read for a broad audience concerned about corporate survival!"
—Professor Larry E. Greiner, Marshall School of Business, University of Southern California, USA

The aspiration to adopt the right strategy still prevails over the business world. But is there a single 'best' strategy for a company? Can an organization create sustainable competitive advantage from an 'off-the-peg' strategy? And are most companies likely to craft a strategy that genuinely creates uncontested market space and makes the competition irrelevant?

The answer to all these questions is probably 'No'. And the rising tide of companies like Dell, CostCo, Skype and Linux means that asking them at all may soon be futile. While strategists have foundered in old paradigms, a new breed of competitors has emerged. Value destroyers. Old-style thinking understood value destruction when it was confined to an industry and driven by a new product or technology. But what are the implications when the destruction stems from a new way of thinking - from a strategy that simultaneously creates value?

The implications are enormous. Every company in every industry is potentially at risk.

This risk - or opportunity - is precisely the reason for this book and its focus on exploring why and how some companies have bridged the gap between differentiator and cost leader strategies to emerge as winners in hypercompetitive markets, and what this entails in terms of value destruction and creation. Discounting organizations are here to stay - are you?

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Editorial Reviews

From the Publisher
"pleasant to read and informative" (Petroleum Review, December 2006)
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Product Details

  • ISBN-13: 9780470033531
  • Publisher: Wiley
  • Publication date: 11/17/2006
  • Edition number: 1
  • Pages: 320
  • Product dimensions: 6.38 (w) x 9.49 (h) x 0.98 (d)

Meet the Author

Michael Moesgaard Andersen is CEO of Andersen Advisory GroupA/S. He and his team have provided strategy advice to numerouscompanies and public organizations around the world, and he is alsodirectly involved in business development through his own venturecapital company. He has worked as a lecturer at CopenhagenUniversity and as external examiner at Copenhagen Business School,and is a frequent speaker at conferences. He is the author ofnumerous articles and two books on technology and managementissues.

Flemming Poulfelt is Professor of Management and Strategyand Vice Dean at Copenhagen Business School, and Director of LOKResearch Center. He is the author of many articles and books on thesubjects of strategy, professional service firms, changemanagement, knowledge management and management consulting. Hisbooks include The Contemporary Consultant (2004) andManaging Complexity and Change in SMEs (2006). He has servedon numerous corporate boards, consults widely and is a frequentspeaker at seminars and conferences.

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Table of Contents


1. Why are some companies more successful thanothers?

The real life laboratory.

Creating value and simultaneous destruction.

The volume game.

Simplicity the word of the day.

Cut to the core.

Service? Something we’d rather do ourselves.

The black box of strategy turned upside down.

2. The oxymoron of existing strategies: where do we go fromhere?

Conventional strategic thinking.

The generic strategy framework.

Porter challenged.

Mixed strategies—the airline industry.

3. When discount strategy becomes important.

Hyper competitive markets and traditional strategy.

The position of a discount strategy.

A single form—a simple form?

4. Case 1: CBB.

Cultivating a hyper competitive market by way of a consistentapproach to the notion of discount strategy.

A contradiction to the bursting of the IT-bubble.

The mobile sector—hyper competition.

CBB as the enhanced service provider.

The original mission and strategy.

Crisis and the filing of a petition for bankruptcy.

The discount strategy—not a single quick fix.

New management.

Reinvention of the IT-systems.

A new customer care concept.

New brand and branding.

Reverse relationship marketing.

Political mass marketing.

Reorganization of the distribution.

Cost cutting programs.

Active price leadership.

CBB’s discount product—cheaper and better.

Product production characteristics.

Product marketing characteristics.

CBB’s use of price as a tactical weapon.

The importance of the price vis-à-vis the customers.

Active leadership in price wars.

Results—best in class.

A revolution in the mobile sector?


5. Case 2: Lidl.

Gaining ground in a hyper competitive market by a consistentdiscount strategy.

The German conquest.

The grocery retail sector—hyper competition.

The original mission and strategy of Lidl.

The discount strategy—all encompassing.

Structured to control the impact of external factors.

Leadership through continuity.

The look and feel of Lidl.

High service level with a discount concept.

Squeezing the brands.

Aggressive go to market strategy.

Publicity through secrecy.

Active price leadership.

Lidl’s discount product—cheaper and better.

Product marketing characteristics.

The use of price as a tactical weapon.

Active leadership in price wars.

Results—top of the class.


6. Case 3: Ryanair.

Reshaping a competitive market through a consistent discountstrategy.

Flying with the giants.

The airline industry—liberalized to full competition.

The early days of deregulation.

Towards the liberalized sky with a new strategy.

A transformed and polarized industry.

Ryanair as the alternative independent carrier.

Financial collapse evaded at the 11th hour.

The no frills, low fare strategy—not just one route.

New management.

Cost cutting programs.

Productivity-based compensation schemes.

Outsourcing to third parties.

Re-organizing sales and distribution.

Harmonizing and scrutinizing the fleet.

Customer care concept.

New brand and branding.

Political mass marketing.

Active price leadership.

Ryanair’s discount product—cheaper and better.

Product production characteristics.

Product marketing characteristics.

The use of price as a tactical weapon.

The customers’ perception of price.

Leading the price wars.

Results—Best in class.

Perspectives—a revolution in the airline industry?

7. The building blocks of a discount businessstrategy.

Maturity and liberalization in different industries.

The building blocks of a ‘discount strategy’.

The product.

The brand.

The customers.


The four blocks as one discount strategy.

8. The attractiveness of the core product.

From peaceful coexistence to disruption.

Disruption and the corresponding value destruction.

Lean and unbundled nature of the discount product.

Self-service an important ingredient.

Aggressive pricing.

Demand-driven products.

Value creation.

Back to basics.        

9. A good brand is much more than a good brand.

The growing importance of ‘brandr’.

‘You need to invest money in the establishment of a goodbrand’.

We cannot afford to spend.

David against Goliath.

The Gorilla image.

Branding as a tool-kit in the discount strategy.

Low prices as a new corporate social responsibilityposition.

Brand extension and discount .

The good brand.

10. The discount customer and social capital.

The pivotal role of the customer in a discount strategy.

Customers as social capital.

Social capital and the discount customers—the Xfactor.

The social factor in the discount strategy.

Social capital and egalitarianism.

The dismissal of relationship marketing.

Psychology, culture and the discount strategy.

The View on discount.

Exploitation of the cognitive dissonance.

Life-style and satisfaction.

The advent of the viral ambassador.

The patronizing of customers.

The rise and fall of patronizing.

Increasing brand promiscuity.

Simplicity prevails.

How to save costs and increase perceived quality?

The main execution tactics.

11. Finding the suitable technology.

Finding technology.

The innovator’s dilemma and the innovator’ssolution.

The choice of ‘discount’ technology.

Proven technology.


Technology supporting the simple.

Impact on back office system.

Technological exuberance avoided.

12. Value creation and value destruction.

Strategy and war.

Strategy revisited.

The building blocks of the discount strategy model.

The various execution processes.

13. Epilogue.

How to reflect thoroughly on the wider repercussions ofsuccessful discount business strategies?




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