New Horizons
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As with any business, the founders of Bright Horizons daycare had to consider the market space they would occupy. At a glance, it appeared they were entering an industry that presented few barriers to entry, offered low margins, relied upon a massive labor force, offered few brand distinctions and endured the burden of governmental oversight. Furthermore, Bright Horizons boasted no proprietary technology that would provide a competitive advantage, nor did it intend to compete on price in what had become a commodity industry. In short, it appeared to be a business proposal wrought with pitfalls.
In spite of this, Roger Brown and his wife, Linda Mason, proceeded to build a successful company within this industry. Reflecting upon their success, it is evident that their strategy illustrates the importance of positioning, relying upon a market-orientation, and adhering to the principles presented by Michael Porter in his essay “How Competitive Forces Shape Strategy.”
In Porter’s essay, he outlines five competitive forces that challenge a firm’s fortuity on all flanks: the threat of new market entrants, the bargaining power of suppliers, the bargaining power of customers, the threat of substitute products or services, and the persistent threat of current competitors. Whether Bright Horizon’s position in the market was serendipitous, intuitive, or ingenious, there’s little doubt that Porter’s factors have a role in interpreting the reasons for its success.
In formulating their strategy, Brown and Mason sought to redefine who the customer was. The daycare industry was a commodity business that competed vigorously for the approval of parents. As with most commodities, the selling proposition hinged upon price and convenience. By looking across the chain of buyers, Brown and Mason recognized an interested group to whom they could deliver value, and to whom none of their competitors were focusing their energies: the employers.
By helping employers deliver a service to their employees, Bright Horizons was able to resolve a number of problems for their newly defined customers. Employers would be able to offer an employee benefit that would help them attract and keep talent from a larger pool of candidates; they would be able to reduce the amount of lost time attributed to childcare issues; they would improve their image in the minds of consumers; and they would impress their boards of director’s with their enlightened approach to employee relations.
Besides providing these benefits to their corporate customers, Bright Horizons had the peripheral advantage of being able to utilize corporate resources for marketing and the development of facilities. Moreover, since Bright Horizons was the ostensible agent of the corporation, it was able to tout quality care and professionalism as one of its pillars of performance. After all, no corporation would want to endure the stigma of contracting for anything less than the best.
In establishing this new model, Bright Horizons was able to position itself as a first mover. This tactic helped them develop a brand within an industry that had so few. Furthermore, the contractual relationship between Bright Horizons and its customers created a barrier to entry that protected it from new market entrants.
Bright Horizon’s had also established a position in the market that was unique amongst its competitors. Because of its exclusivity within the corporate compound, Bright Horizons had relative strength with regard to the