Marketing91

  • Home
  • Discounts and Deals
    • Marketing Tools Discounts
    • Financial Tools Discounts
  • Brands Analysis
    • Competitors
    • Top Brands Lists
    • SWOT of Brands
    • Brand Ownership
Home » Strategy » Strategic Groups Definition – Meaning And Examples

Strategic Groups Definition – Meaning And Examples

December 19, 2024 | By Hitesh Bhasin | Filed Under: Strategy

Table of Contents

  • Definition
  • Meaning and explanation of strategic group
  • Examples of the strategic group
    • 1. The pricing policy
    • 2. The extent of products or services diversity
    • 3. The extent of branding
    • 4. Distribution Channel used

Definition

Strategic groups can be defined as a group of companies within a particular industry that follows a similar strategy or similar business model. The companies that are part of the same strategic group have more competition with the members of the strategic groups than the competitors outside the strategic group.

Meaning and explanation of strategic group

Meaning and explanation of strategic group

A strategic group is a name given to the group of companies in a particular industry that uses a similar business model or a set of strategies. These strategic groups provide services of a specific segment of the industry. Each strategic group is segmented based on their operating environment, threats, and opportunities of the industry.

Because of this, all the companies that provide services in a particular segment of the industry are referred to as members of one strategic group. For example, in the restaurant industry, there are different strategic groups formed based on different variables such as presentation, preparation time, and pricing of the food, etc. The various strategic groups in the restaurant industry are fast food, fine dining, etc.

The composition of the strategic group depends on the way the strategic group is defined. A strategic group differentiates the direct rival of a company from its indirect rivals. The direct competitors of strategic group members are those who are part of the strategic group, and an indirect opponent of a strategic group is the one which is part of the industry but not a member of the strategic group. For example, Burger King and Mcdonalds are direct rivals to each other, whereas any fine dining restaurant will be an indirect rival to both Burger King and Mcdonalds.

What tools can help analyze strategic groups effectively?

Porter’s Five Forces Framework: Developed by Michael Porter, this tool helps businesses assess the competitive forces within their industry, including the intensity of rivalry within strategic groups. By understanding these forces, companies can identify their position in the market and develop strategies to enhance their competitive advantage.

Also Read  What is Strategy and what are the four components of Strategy?

Strategic Group Mapping: This analytical technique involves plotting companies on a two-dimensional graph based on key strategic dimensions such as pricing strategies, product quality, or distribution channels. Strategic group maps allow businesses to visualize the competitive landscape, identify close competitors, and uncover potential opportunities or threats. According to a 2022 report by the Harvard Business Review, firms that utilized strategic group mapping improved their market positioning by up to 15%.

The term “Strategic group” is introduced by Micheal S. Hunt, a Harward professor in 1972, in his doctoral thesis report. While studying the appliances industry, he learned that the companies that are part of subgroups have high competition among them.

Later the concept of “Strategic groups” was developed by Micheal Porter, and he applied the idea of the strategic group in his strategic analysis. He used the concept of “strategic group” to define the term mobility barrier. The notion of mobility barrier is applied to the company that becomes part of a specific strategic group.

The strategic group causes the industry to have more innovation, lower profitability, decreased prices, and better quality of products and services. Let us understand the concept of strategic groups with the help of examples.

Examples of the strategic group

Examples of the strategic group

The strategic groups are identified based on the similar characteristics followed by the companies. The following are the characteristics based on which the strategic group of the industry is formed

1. The pricing policy

The pricing policy is one of the main features based on which the strategic groups are formed. For example, the companies that sell products at low prices are direct competitors to one another. The giant retailers like Walmart and Target are direct competitors to each other as both follow the low pricing policy.

2. The extent of products or services diversity

The companies that provide different products and services are part of one strategic group. For example, ITC and Hindustan Unilever companies are part of one strategic group as both companies offer different products and services.

3. The extent of branding

Companies whose products and services are recognized by people based on their brand’s name and not based on the quality of the products or services are part of one strategic group. For example, cosmetic brand companies like Lakme, Bobby Brown, and Loreal companies are part of one strategic group.

Also Read  Functional level Strategy: Definition, Examples And Variables

4. Distribution Channel used

Companies that use similar distribution channels are part of one strategic group.

Let us take the example of the aviation industry. In the aviation industry, there are different segments, such as luxury class, business class, and economy class. The aviation companies that provide luxury class services are part of one strategic group. Similarly, the aviation companies that offer business-class services are part of one strategic group.

Liked this post? Check out the complete series on Strategy

Related posts:

  1. What are Strategic Business Units? Definition, Types & Examples
  2. Strategic Goals – Definition, Importance and Examples
  3. Strategic Alliance: 4 Types, Examples, Advantages, and Disadvantages
  4. What is Strategic Management? Definition, Importance & Example
  5. Disruptive Technology: Definition, Meaning and Examples
  6. 6 reasons why Strategic Business Units are Important
  7. Role of strategic planning in an organization
  8. Difference between Strategic marketing and marketing management
  9. The Importance of Strategic Planning in an Organization
  10. Strategic Control – Types, Process and Contribution

About Hitesh Bhasin

Hitesh Bhasin is the Founder of Marketing91 and has over a decade of experience in the marketing field. He is an accomplished author of thousands of insightful articles, including in-depth analyses of brands and companies. Holding an MBA in Marketing, Hitesh manages several offline ventures, where he applies all the concepts of Marketing that he writes about.

All Knowledge Banks (Hub Pages)

  1. Marketing Hub
  2. Management Hub
  3. Marketing Strategy
  4. Advertising Hub
  5. Branding Hub
  6. Market Research
  7. Small Business Marketing
  8. Sales and Selling
  9. Marketing Careers
  1. Internet Marketing
  2. Business Model of Brands
  3. Marketing Mix of Brands
  4. Brand Competitors
  5. Strategy of Brands
  6. SWOT of Brands
  7. Customer Management
  8. Top 10 Lists
Not found what you are looking for? Search this website.
Advertisement
Recent Posts
  • Sellerboard Promo Code 2 Months Free (Save up to $158)
  • Helium 10 35% Off Coupon Code on Monthly Plans
  • Best Semrush Alternatives in 2025: 10 Top Competitors Compared
  • 3 Crucial Tools for Digital Acquisition Marketing – All for Free
  • Best Prop Firms for US Traders in 2025
Advertisement
Strategic Marketing Module 5 & 6
Module 5: Management of Strategy
  1. Features Of Strategy
  2. Strategic Planning
  3. Importance Of Strategic Planning
  4. Formulation Of Strategy
  5. Strategy Formulation
  6. Strategy Framework
  7. Implementing A Strategic Plan
  8. Strategy Implementation
  9. Exit Strategy
  10. Time Of Entry
  11. Strategic Goals
  12. Critical Success Factors
  13. Strategic Business Units
  14. Strategic Business Units Are Important
  15. Strategic Control
  16. Strategic Decision Making
  17. Tactical Planning
  18. Strategic Groups
  19. Strategic Management
  20. Strategic Planning
  21. Hedgehog Concept
Module 6: Strategy in Marketing
  1. Elements Of Marketing Strategy
  2. Importance Of Marketing Strategy
  3. Marketing Strategy
  4. Marketing Strategy Can Fail
  5. Need For Marketing Strategy
  6. Reasons To Form A Marketing Strategy
  7. Strategic Marketing
  8. Strategic Marketing And Marketing Management
  9. Differentiated Marketing
  10. What Is Marketing Strategy
  11. Successful Marketing Strategy

Marketing91

ABOUT THIS WEBSITE:

  • About Marketing91
  • Marketing91 Team
  • Sitemap
  • Contact us
  • Advertise with us
 

LEGAL NOTICES:

  • Privacy Policy
  • Cookie Policy
  • Disclaimer
  • Editorial Policy
  • Terms of Use
Marketing91 - Discounts and Coupon Codes on Best Online Tools

Copyright © 2009 - 2025 Marketing91 All Rights Reserved