1. Although the three strategies may appear similar to Michael Porter's "generic strategies" of segmentation, low cost/low price, and differentiation (Competitive Strategy: Techniques for Analysing Industries and Competitors [New York: Free Press, 1980]), these similarities are more apparent than real. Porter's strategy of low cost/low price is indeed similar to the volume orientation described here, but the other two strategies described by Porter (segmentation and differentiation) describe marketing tactics rather than business strategies. Additionally, Porter's schema describes the market segmentation strategy as a "focus" approach that is limited in scope. In the framework presented here, the low-volume strategy (margin orientation) is most appropriately characterized as a product-differentiation strategy, whereas market segmentation is often used as a necessary corollary whenever very highly differentiated offerings are offered. Typical examples of the margin orientation include businesses providing professional services (e.g., accountants, independent law offices), specialty publishers, independent bakeries and restaurants, niche automobile manufacturers, and other businesses with high variable costs. Furthermore, although Porter's original schema described these three generic strategies as mutually exclusive, many marketing and strategy scholars have pointed out that product differentiation and market segmentation are frequently used concurrently in practice. In the typology presented here, both margin orientation and margin-volume-differentiation describe basic business strategies in which market segmentation and product differentiation are likely to be used together. The margin-volume-differentiation strategy has also been demonstrated in practice to effectively and profitably combine both a volume and differentiation approach, which Porter initially described as untenable. Indeed, most large businesses in developed countries now implement a MVD approach, utilizing both economies of scale and product differentiation, and typically targeting multiple market segments simultaneously.
2. P.J.D. Wiles, Price, Cost, and Output (New York: Frederick A. Praeger, 1961).
3. The volume orientation should not be confused with the "American System of Production" (David A. Hounshell, From the American System to Mass Production, 1800-1932: The Development of Manufacturing Technology in the United States [Baltimore, MD: Johns Hopkins University Press, 1984]), which describes a mass-production approach to making durable products. A VO strategy is typical in process industries such as brewing and refining, is essential to many high-overhead service industries (such as airlines), and may be effectively utilized in retailing (such as exemplified by Amazon and Wal-Mart).
4. Eliot Jones, "Is Competition in Industry Ruinous," Quarterly Journal of Economics, 34 (May) (1920): 473-519. Frederick M. Scherer, Industrial Market Structure and Economic Performance, second edition (Boston: Houghton Mifflin, 1980).
5. Hounshell, American System.
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7 . Jones, "Is Competition in Industry Ruinous"; Scherer, Industrial Market Structure.
8. Of course, collusion also offers relief from price competition, although this solution is typically illegal.
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11. Jagdish N. Sheth and Rajendra S. Sisodia, The Rule of Three: Surviving and Thriving in Competitive Markets (New York: Free Press, 2002).
12. Can Uslay, Z. Ayca Altintig, and Robert D. Winsor, "An Empirical Examination of the Rule of Three: Strategy Implications for Top Management, Marketers, and Investors," Journal of Marketing, 74 (March) (2010): 20-39.
13. Uslay, Altintig, and Winsor, "An Empirical Examination of the Rule of Three. "
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17. Blackhurst and Henderson, "Regional Integration Agreements."
18. Scherer, Industrial Market Structure, 67-68.
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Similarly, the second wave of U.S. mergers in the 1920s has been attributed to heightened competitiveness resulting from the rise of automobile transportation and radio advertising (Markham, "Survey"). Automobile ownership enabled the rise and subsequent dominance of supermarkets, discount stores, and regional shopping malls as competitive retail forms by increasing the trading areas available to these distributors. As these new retail forms came into dominance, thousands of smaller "mom and pop" retailers that served small, local markets, were displaced. The elimination of barriers through improved communications also parallels the phenomenon of transportation enhancements, as the impediments of space and time are transcended. As Cherry ("The Telephone System") noted, new communication technologies such as the telephone network profoundly impacted the conditions of economic organization by allowing scattered branches of an industrial unit to operate as a unified whole. This further enhanced the ability of producers to expand their distribution and become national in scope, enabling them to compete with distant rivals. Those with expanded distribution could then exploit economies of scale in advertising that were unavailable to those with exclusively local scopes (Scherer, Industrial Market Structure).
20. K. G. Elzinga, "The Beer Industry," in The Structure of American Industry, seventh edition, ed. W. Adams (New York: Macmillan, 1986), 202-238.
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22. Jagdish N. Sheth, "Impact of Emerging Markets on Marketing: Rethinking Existing Perspectives and Practices," Journal of Marketing, 75 (July) (2011): 166-182.
23. Alexandra Harney, The China Price: The True Cost of Chinese Competitive Advantage (New York: Penguin, 2008).
24. The only significant exception to this was the R.E. Olds Company, which made the first mass-produced car. During 1901-1903, Olds produced nearly 7,000 units of the Curved Dash Runabout model that accounted for about one-fourth of all car production during 1902 and 1903. These cars were powered by one-cylinder, 4-7 horsepower engines, and sold for approximately $850.
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26. Harold Katz, The Decline of Competition in the Automobile Industry, 19201940 (New York: Arno Press, 1977).
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28. Sloan, My Years with General Motors.
29. James Wren, "Advertisements," in Encyclopedia of American Business History and Biography: The Automobile Industry, 1896-1920, ed. George S. May (New York: Facts on File, 1990), 4-6; James D. Norris, Advertising and the Transformation of American Society, 1865-1920 (New York: Greenwood Press, 1991).
30. Ford and Chrysler made up the Big Three.
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37. Originally known as the International Tractor Company of India (ITCI).
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45. Sheth, "Impact of Emerging Markets."
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49 . Katz, The Decline of Competition.
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