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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 wit ...