Business Tactics

Business Tactics are specific operating plans which are part of and fit into the larger strategic plan. In warfare, tactics are plans made to fight and win battles. Strategy is the larger set of plans to win wars. Similarly business tactics can be viewed as short term plans to achieve smaller goals – also called targets- and are part of a larger strategic plan to achieve long term goals. A useful way of viewing tactics is to consider them as linking elements between strategy formulation and strategy implementation.

Business Tactics

There are two types of primary tactics viz. Timing Tactics and Market Location Tactics. Timing refers to the order in which a firm makes market moves in relation to its competitors. A firm may choose to be first in the market with a product or new features to an existing product. This is known as a first mover tactic. Usually a firm that employs this tactic is a market leader with an established acceptance of its brand. However a notable exception to this has been Microsoft who has launched its P.C. related software products much after the initiator companies and still managed to gain leadership positions with its products. We may recall the success of Excel which became the leader in the spreadsheet category and MS Word which gained the number one slot in word processor software. Most leading Indian firms be they in the automobile sector like Telco or in the FMCG sector like Nestle have been able to employ first mover tactics because of their undisputed position as market leaders.

Market Location Tactics are employed as responding moves to competitor’s initiating tactics. They can also be viewed as competing inside or outside the current market position. A notable Market Location Tactics is the Offensive Tactic where a competitor’s initiating tactic be it by way of an advertising campaign or a price promotion is met by an overwhelming response in Sales or Marketing. A fine example can be found in Honda’s response to Suzuki’s attempts -through massive advertising and aggressive selling to gain the no.l position in the Japanese motor cycle market. Honda’s response was to declare a war on Suzuki with the rallying slogan to all its marketing and Sales people “Annihilate Suzuki” Honda spent billions of yen over a three month period and significantly reduced its profits for that year but had the satisfaction of obtaining Suzuki’s public apology for their recklessness in trying to unseat the premier firm in the motor cycle business and to acknowledge Honda’s supremacy in the market. Sometimes firms employ ‘flanking tactics” by introducing new products that do not directly contest the marketing ” right of way” with their competitor’s product, but offer an interesting alternative. Cyrix the U.S. semiconductor manufacturer faced with Intel’s blockbuster 386 micro processor chip introduced a math co processor chip that offered an additional facility to the segment of P.C. users who favored heavy computational capability and thereby created a unique selling proposition (USP) through which it gained considerable market share. Timex Watches in India faced with the absolutely dominant position of Titan Watches in the Indian watch market, launched a complete range of Plastic watches that offered a refreshing product alternative to the market particularly to the youth market ( 18 to 35 age group) and was able to achieve a staggering sales volume of 2 million watches in just two years,- a figure that the market leader took more than five years to reach in considerably less competitive conditions.

Other business tactics include Encirclement where the firm launches a huge variety of products to minimize the impact of a single extremely strong competitor product . Frito Lay has done just that in India by launching a huge variety of salted and flavoured potato chips against the sole potato chip product of its major rival Uncle Chips. By pass tactics consist of introducing an improved product to gain advantage over one’s rivals. Motorola introduced an electronic ballast (choke) to contest the vacuum tube lamp market with its rivals in the U.S. Hindustan Lever and Procter and Gamble introduced improved detergents Surf Excel and Ariel Plus to bypass the mass market leader Nirma. Guerilla tactics are employed by two strongly positioned players who employ hit and run maneuvers to disconcert their opponents in the market place. Coke and Pepsi in India steal each others cases (the containers that hold the bottles) quite often to gain a temporary advantage in the market place. The Indian Watch marked is punctuated by the tactical promotions and discount schemes that major players resort to in order to effect increase in unit sales.

A mention must be made of defensive tactics employed by firms and these can be responsive or pre-emptive in nature. Examples of these are exclusive agreements with distributors and dealers to handle a firm’s products. Another example would be keeping prices low or even reducing them from previous levels to discourage aggressive entry of new competitors or new products from existing competitors. An exhaustive list of defensive tactics would include foreclosing on technologies through patenting and licensing favored by pharmaceutical companies and software companies, limiting outside access to facilities and personnel favored by air craft manufacturers and semi conductor companies, boycotting suppliers who deal with competitors a practice which existed for a long time in the auto industry, and Lobbying with government to prevent entry or to restrict growth of competitors, a practice universally followed in India by incumbent industry players during the long years of the license permit raj. Two examples of firms that employed several of these tactics simultaneously are Titan in India and Microsoft worldwide. Sadly these tactics provide short term advantage , usually build a lot of resentment throughout the industry and invariably draw vehement responses which tend to neutralize the initial gains.