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Market-Led Strategic Change



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Market-Led Strategic Change

Transforming the Process ofGoing to Market

Fourth edition

Nigel F. PiercyProfessor of Marketing and Strategic Management

Warwick Business SchoolThe University of Warwick

AMSTERDAM BOSTON HEIDELBERG LONDON NEW YORK OXFORD

PARIS SAN DIEGO SAN FRANCISCO SYDNEY TOKYO

Butterworth-Heinemann is an imprint of Elsevier

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Butterworth-Heinemann is an imprint of ElsevierLinacre House, Jordan Hill, Oxford OX2 8DP, UK30 Corporate Drive, Suite 400, Burlington, MA 01803, USA

First edition published by HarperCollins Publishers Ltd 1991First published as a paperback edition by Elsevier Ltd 1992Second edition 1997Reissued with new cover 2000

Third edition 2002Fourth edition 2009

Copyright 2009, Nigel Piercy. Published by Elsevier Ltd. All rights reserved

The right of Nigel Piercy to be identified as the author of this work has beenasserted in accordance with the Copyright, Designs and Patents Act 1988

No part of this publication may be reproduced, stored in a retrievalsystem or transmitted in any form or by any means electronic, mechanical,photocopying, recording or otherwise without the prior written permissionof the publisher

Permissions may be sought directly from Elseviers Science & TechnologyRights Department in Oxford, UK: phone (44) (0) 1865 843830; fax (44) (0)1865 853333; email: [email protected]. Alternatively visit theScience and Technology Books website at www.elsevierdirect.com/rights

NoticeNo responsibility is assumed by the publisher for any injury and/ordamage to persons or property as a matter of products liability, negligenceor otherwise, or from any use or operation of any methods, products,instructions or ideas contained in the material herein.

British Library Cataloguing in Publication DataA catalogue record for this book is available from the British Library

Library of Congress Cataloging-in-Publication DataA catalog record for this book is available from the Library of Congress

ISBN: 978-1-85617-504-3

Typeset by Charon Tec Ltd., A Macmillan Company.(www.macmillansolutions.com)

Printed and bound in Italy

09 10 11 12 13 10 9 8 7 6 5 4 3 2 1

For information on all Butterworth-Heinemann publicationsvisit our website at www.elsevierdirect.com



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To the memory of my mother, Helena G. Piercy (19112001)



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Contents

Preface to the fourth edition ixAcknowledgements xiiiAbout the author xvWhat readers said about market-led strategic change xvii

PART I THE IMPACT OF CUSTOMER VALUEIMPERATIVES 1

Chapter 1 New marketing: marketing is dead, longlive marketing! 3

Chapter 2 The customer is always right-handed:customer satisfaction, customersophistication and market granularity 31

Chapter 3 New marketing meets old marketing: newmarketing wins! 81

Chapter 4 Value-based marketing strategy 109End-of-part cases 147Case 1 Tata, But Definitely Not Goodbye 147Case 2 Strangling the Fat Lady at EMI? 155Case 3 The Clouds Raining on the Computer Business 162

PART II DEVELOPING A VALUE-BASED

MARKETING STRATEGY 169Chapter 5 Strategic thinking and thinking strategically 171Chapter 6 Market sensing and learning strategy:

competitive strength through knowing more 219Chapter 7 Strategic market choices and targets: where to

compete and where not to 267Chapter 8 Customer value strategy and positioning: what

have you got to offer, how does it make youdifferent to the rest? 309

Chapter 9 Strategic relationships and networks: buildingthe infrastructure to deliver the strategy 343

End-of-part cases 377

Case 4 Big Blue Gets Transparent 377Case 5 Oh, the Tangled Web They Weave at BAA 388Case 6 The Wild, Wild Rover 402



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Contents

viii

PART III PROCESSES FOR MANAGING STRATEGICTRANSFORMATION 413

Chapter 10 Strategic gaps: the difference between whatwe want and what we have got 415

Chapter 11 Organization and processes for change: buildingthe infrastructure to make it happen 431

Chapter 12 Implementation process and internal marketing:making it happen 467End-of-part cases 517Case 7 Tesco Fresh & Queasy in the USA 517Case 8 When the Peddle Hits the Mittal 526Case 9 One-Laptop-Per-Child Stirs Up the Grown-Ups 532

Index 539



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Yes I fear the terrible moment has arrived whenMarket-Led StrategicChange 4 is allowed to escape and wreak havoc on staid and conven-tional academic views of the world of customers and competitors, andto wallow in the glorious turbulence and disruptive change that char-acterize modern markets!

My target readers remain people of practice whether managers,

students and teachers of marketing and management, or analysts andplanners rather than people of theory. I really have nothing particu-larly against academic theoreticians (thank goodness, my lie-mode chipappears to be effective), just their irritatingly superior attitudes, unde-served arrogance, stupidly smug expressions, wilfully closed mindsand their inherent belief that the trouble with good practice is thatyou have to ask if it works in theory. Why do people with no inter-est in business get involved in teaching in business schools, when theyusually arent any good at it? Such persons can best be described asmurally challenged (cant read the writing on the wall). I really thinksome of these people need to take a bite from the reality sandwich. Theworld wants more from us than untested and pointless theorizing.

Preface to the

fourth edition

Thoughts on the future of business schools

If stupidity got us into this mess, why cant it get us out?

(Will Rogers)

Lets be honest,Market-Led Strategic Change remains a book with atti-tude, and I remain insincerely apologetic to those who do not like thatattitude sorry, its the only one Ive got.

Changes in the Fourth Edition

Constant from the earlier editions of the book is our focus on the proc-ess of going to market rather than marketing, in the conventional senseof what people in marketing departments are assumed to do. This focusunderlines the point that customers do not much care how we organize



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Preface to the fourth edition

x

ourselves inside the company, until and unless it affects the value theyreceive. How we perform in the market is a concern for everyone in theorganization, not just an issue for the marketing department (if there stillis one, which is actually increasingly unlikely). Going to market is a proc-ess, usually a cross-functional process, and often an inter-organizationalprocess. The underlying goal of this book is to provide managers andmanagement students with ideas, concepts, and tools for achieving

superior performance in their markets.This means that my target reader is not just the marketing special-

ist, but all those who have to work with marketing processes, what-ever their management specialisms. This audience embraces those whomay never in their careers ever work in marketing or sales but whodo need to understand what the really important questions are thatthey should demand to have answered by their marketing colleaguesand consultants. For those who are marketing specialists you need toread it too, to know what the searching questions are you will be askedand how you should go about answering them! In fact, everyone in theworld should read it (as long as they buy their own individual copies).

The good news for some about the leaner organizations we are now

developing is that you may have to spend less on specialist market-ing functions. The bad news is that even if you are in operations, sup-ply chain, finance, or human resource management, you now share inresponsibility for the way we go to market, so you had better under-stand how it works!

While the focus and goal of the book remain constant from the lastedition, there have been substantial changes to the structure of the

book. These changes reflect the feedback from users of the last edition,and the changing realities which managers are now confronting. Therationale for the structure is explained in the first chapter (A route-map for market-led strategic change). To streamline the material andto maintain clarity of purpose, the book has been divided into threeparts with 12 chapters. Part I examines the imperatives for a focus oncustomer value. This part explains the approach we are taking andthe requirements for value-based strategy. The major addition here isa chapter that contrasts the somewhat static conventional, 4Ps, pro-grammed approach to marketing with the requirements of new mar-keting for new types of market. The logic for this change is that readershave suggested (somewhat unkindly, I thought) that to establish a basisfor new marketing, it is helpful to first clarify what is meant by oldmarketing, and I guess they have a point.

Part II provides a detailed template for developing a value-basedmarketing strategy. The core material is concerned with market learn-ing, market segmentation and positioning, value propositions andstrategic relationships. A new chapter has been added to focus on the

challenges of strategic thinking and thinking strategically about cus-tomers, competitors and markets. Part III addresses questions of imple-mentation and change from a process perspective and looks at strategicgaps between intent and reality, organizational change and implemen-tation process and internal marketing.



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Preface to the fourth edition

xi

Opportunities to consider and examine the implications for practiceare provided in the cases at the end of each part. These have all beennewly produced for this new edition.

Supporting materials

I hope that many of the users of this book will be managers who sim-ply pick it up from the bookstall or web pages as a potentially usefulread from which they may gain some new insights and ideas. Indeed,if you are such a managerial reader could I just ask if you have con-sidered buying copies for all your colleagues to enrich their lives aswell as your own?

However, I am equally aware that many users will be lecturers,teachers and trainers in marketing, who want to use the book as part oftheir marketing teaching and professional development programmes.To persuade as many of the latter group as possible that adopting the

book for their students is a really, really good idea that will make themincredibly popular with their students and gain them unbelievably

high teaching scores, there is an Instructors Manual available for adop-ters of the book. This may be found at http://textbooks.elsevier.com/manualsprotected/9781856175043. While you will need a passwordfrom the publisher, the Instructors Manual contains suggested designsfor different types of teaching programme, PowerPoint slides for eachchapter, suggested frameworks for using the case studies in teaching,and copies of the case studies that were in earlier editions and not thisone (in case you want to go on using them with the new edition). Thereare also photographs of my pathetic but very endearing three-leggedcat, who will whimper and starve if you do not adopt the book andensure that all course participants buy at least one copy (each). Indeed,there is much to be said for the view that people really need to buythree copies of this book one for home, one for the office, and one fortraveling . . .



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It is always the case with work like this that those who deserve thanksare too numerous to mention, and trying to do so would require meto be a much nicer person than I actually am. Many colleagues, busi-ness people, research collaborators, and students have played a partin reshaping Market-Led Strategic Change (though admittedly often anunwitting and reluctant part).

Nonetheless, I would like to express particular gratitude to ProfessorDavid W. Cravens of Texas Christian University, from whom I havelearned enormously in our research and writing collaborations. Daveis genuinely inspirational. I would also like to draw attention to

Professor Malcolm McDonald, Emeritus Professor at Cranfield Schoolof Management, who has had a profound influence on my thinkingabout marketing.

Sheila Frost, Departmental Secretary for the Marketing and StrategicManagement Group at Warwick Business School, deserves specialthanks for numerous kindnesses and supporting activities in gettingthe book produced and delivered.

I suppose I should also thank my proofreaders: Dr Carolyn Strong(University of Bath), Dr Nikala Lane (University of Warwick) andDr Niall Piercy (University of Bath). It would have been nice if theycould have restricted their comments to the typing errors they wereactually asked to find. But, what can I say everyones a critic . . . just

in some cases not very well-informed critics. I dont think they got myunderlying premise that if I want your opinion, Ill give it to you. (Ifthat line survives it is absolute proof they did not check the Preface,and are therefore idle as well as picky.)

Clearly, the shortcomings and limitations of this book (in the unlikelyevent they were to exist), and any errors contained, remain the respon-sibility of the author (until such time as he can find someone else to

blame, which usually does not take very long).

Nigel PiercyWarwick Business School

September 2008

Acknowledgements



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About the author

Professor Nigel F. Piercy BA, MA, PhD, DLitt is one of the best-knownbusiness school academics in marketing and strategy in the UK. He isProfessor of Marketing and Strategic Management at Warwick BusinessSchool, having previously held a chair in strategic marketing atCranfield School of Management, where he was head of the marketinggroup, and having earlier held the Sir Julian Hodge Chair in Marketingand Strategy at Cardiff University. In addition to UK business schoolexperience, he has been a visiting professor at: Texas ChristianUniversity; the University of California, Berkeley; Columbia BusinessSchool, New York; the Fuqua School of Business, Duke University,

North Carolina; Athens Laboratory of Business Administration; andthe Vienna University of Business and Economics. He has presentedseminars and workshops at business schools throughout the world. Hehas managerial experience in retailing, and was in business planningwith Nycomed Amersham plc (now part of GE Healthcare).

He has extensive experience as a consultant and management work-shop speaker with many organizations in different parts of the world;he has worked with managers and management students in the UK,the USA, Europe, the Far East, South Africa and Zimbabwe. He focuseson issues of market strategy development, planning and implementa-tion, and recent company work includes: TNT, EMC, EON, Amey plc,British Telecom, Allied Dunbar, Ford Cellular, AT&T, Honeywell, AIB

Group, ICL, Yellow Pages, as well as other smaller organizations. Hehas presented and chaired management development programmesfor: the Chartered Institute of Marketing, the Academy of Marketing,the Institute of Management, the Institute of Directors, the TavistockInstitute and Henley Management College.

His research interests are in strategic marketing and strategy imple-mentation, recently emphasizing the sales/marketing interface and theimpact of strategic customers on buyerseller relationships. ProfessorPiercy has published 18 books and written around 300 articles andpapers appearing in the management literature throughout the world.Recent books include: Marketing Strategy & Competitive Positioning4th edn (with Graham Hooley and Brigitte Nicoulaud) (HemelHempstead: FT/Prentice-Hall, 2008) and Strategic Marketing, 9th edn

(with David W. Cravens) (Burr Ridge IL: McGraw-Hill/Irwin, 2009).He is also author with Nikala Lane of Strategic Customer Management:Strategizing the Sales Organization (Oxford: Oxford University Press,2009). Among other awards and prizes, he was the UK Marketing

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About the author

xvi

Author of the Year for three years. He has published academic papersin the Journal of Marketing, the Journal of the Academy of MarketingScience; theJournal of World Business and theJournal of Business Research,and has written on management and marketing issues in The SundayTimes and The Independent newspapers.



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