How does your organization compete?
Walker et al. (2010) write, “competitive strategies are based on overall patterns of purpose, practice, and performance.” After reviewing the annual report and company website, it appears that Limited Brands Inc. (LTD) does not only have one competitive strategy. Since the firm is divided into several distinct strategic business units (SBU) with differing core competencies and available resources, as well as disparate customer and competitive characteristics it employs different strategies to create value, promote growth and profitability (i.e. Victoria’s Secret and Bath & Body Works; Walker et al., 2010).
For instance, the Victoria’s Secret SBU appears to leverage a “differentiated analyzer strategy” by “actively seeking to expand into related product markets with differentiated offerings” (Walker et al., 2010). Not only does Victoria’s Secret offer a differentiated line of lingerie, but it also has expanded its product offerings to include beauty, apparel, and accessories. These expansions are largely financed and supported by the SBU’s core business (lingerie) and its profitable, strong brand reputation.
In contrast, the Bath & Body Works SBU seems to employ a “differentiated defender strategy” (Walker et al., 2010). Its activities focus on constantly improving existing offerings by modifying products as well as processes. In addition, it also defends its market position through line extensions to help insulate and fortify the company’s position from competition.
In its annual report LTD notes “we are aggressively focusing on bringing compelling merchandise assortments, marketing and store experiences to our customers” (LTD, 2011). This implies that LTD’s overarching strategy is driven by customer intimacy. The company tries to build and sustain long-term customer loyalty through continuously tailoring its offerings to meet customer demands and expectations (Treacy et al., 1993).
Is there a good fit between its competitive and marketing strategies? How do you know?
LTD’s annual spending on promotion and advertising averages $480 million over the past three years, amounting to approximately 5% of its sales revenues (LTD, 2011). Overall the company appears to have a good fit between its competitive and marketing strategies. LTD’s overall marketing strategy is based on its differentiated defender strategy. This is reflected in its product policies, which emphasize value and a high level of quality. Furthermore, its pricing strategy reflects LTD’s commitment to providing customers with a differentiated product, while its promotion policies aim at maintaining customer loyalty, engendering admiration, and awareness (Walker et al., 2010).
Nonetheless, there was one interesting thing I noticed when researching the company. LTD’s overall marketing strategy is based on its differentiated defender strategy. While one would expect that LTD would employ different marketing strategies for the different...