Development Strategy

20.1. Competitive Strategy

•  When it comes to the competitive strategy we have chosen differentiation. This was a rather easy choice for us because cost leadership is not really a possibility for Jotun. In differentiation there are distinctive qualities to the product which are significant to the buyer and which create something that is perceived as being unique compared to competitor’s products. We feel that this is the right way to go for Jotun with the qualities that are linked with their products. These qualities are for instance long-lasting and good coverage. In addition, and perhaps most

important, are the customer relationships and the easy solutions that Jotun can offer their clients and which do not seem to exist in today's market. In fact, the key success factors mentioned earlier are what we see as the reasons for why we should go for differentiation.

They can separate Jotun from the competitors because the company should excel at these factors and therefore differentiate themselves. We see the key success factors of

environmentally friendly products, long-lasting products and customer relationship systems as extremely important. This seems to be essential to big parts of the market and Jotun has a good advantage on these factors already, for instance through the One-Source Solution, the long-lasting paint and the efforts when it comes to development of “green” paint. If the company uses these factors correctly they will be able to take a differentiated strategy from their competitors.

•  When it comes to the choice of growth strategy we have decided that vertical integration in the form of forward integration would be the best alternative for Jotun. We believe that Jotun has a problem at this point with not being in the consumers top-of-mind. If they wish to grow in the market of private hospitals, which have decision-making processes that highly rely on the buyer’s top-of-mind, they need to change this. The aim of Jotun should be to make sure that the consumers are directly in contact with someone controlled by the company and who promotes the image of Jotun. Forward integration will not only help Jotun get closer to their customers and into their top-of-mind, but it will also help them to have a better understanding of the needs of the consumers. The One Source Solution that Jotun is working on to enhance the relationships with their clients would be an important step in such a process of forward integration. Through this system they will be the ones sitting on the information of how their customers behave and what needs they have. This will help them to a great degree, almost as if we were talking about a consumer industry and the company was to create their own outlets.

As we have pointed out in the SWOT-analysis, almost all of the biggest competitors have their own retail stores where their industrial customers buy their products. This is something which obviously has enabled them to be among the brands that consumers think about when

considering what product to use. On the other hand, this is not what we recommend for Jotun, because we believe that personal contact and their own sales force (travelling to the client,

20.3. Competitive Attitude

•  To decide what competitive attitude we want Jotun to take it is important for us to base this on a realistic assessment of the forces at work in the industry and to see this in combination with the defined objectives of the company. The industry’s competitiveness has been set as

medium-high and this is important to keep in mind when we have to decide this competitive attitude. It will also be very influenced by where Jotun stands in the market; the market share of the company.

•  The most important thing for us when choosing the competitive attitude for Jotun was the

objectives that were defined under the mission of the company. The objective which is assigned under “position” is for Jotun to have a strong position that can give them the opportunity to influence and drive the markets. They are also committed to being a leading player in the markets they select. This leads us to conclude that the challenger attitude is the most

suitable for Jotun. Even though the competitiveness of the industry is rather high we see the strengths that Jotun have as sufficient for them to take a shot at the market leader position, at least in the long run. We would also like to highlight that the company has the 13th highest market share and holds a good challenger position. This we can also say on the basis of the fact that they have the same product portfolio as the biggest competitors and they already have a leader position in other countries they are present in. This also seems to be their long-run objective on a global scale, something we believe is very important to be in line with.