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Imperatives for Market- Driven Strategy McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

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Page 1: Introduction

Imperatives for Market-Driven Strategy

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Page 2: Introduction

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1-2

Achieving SuperiorPerformance

DeterminingDistinctiveCapabilities

CustomerValue/

CapabilitiesMatch

Becoming Market-Orientation

Characteristics of a Market-Driven Strategy

Page 3: Introduction

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1-3

1. Market Orientation

Information Acquisition Gather relevant information on customers,

competition, and markets Involve all business function

Inter-functional Assessment Share information and develop

innovative products with people from different function

Shared diagnosis and action Deliver superior customer value

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1-4

Characteristics of Market Orientation

Customer FocusWhat are the customer’s value requirements?

Competitive IntelligenceImportance of understanding the competition

as well as the customer Cross-Functional Coordination

Remove the walls between business functions Performance Consequences

Market orientation leads to superior organizational performances

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BECOMING MARKET ORIENTED

* Customer is the focal point of the organization* Commitment to continuous creation of superior customer

value* Superior skills in understanding and satisfying customers* Requires involvement and support of the entire

workforce* Monitor rapidly changing customer needs and wants* Determine the impact of changes on customer

satisfaction* Increase the rate of product innovation* Pursue strategies to create competitive advantage

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Information Acquisition

Cross-Functional Analysis of Information

Shared Diagnosis and Coordinated Action

Delivery of Superior Customer Value

Becoming a Market-Oriented Organization

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2. DISTINCTIVE CAPABILITIES

“Capabilities are complex bundles of skills and accumulated knowledge, exercised through organizational processes, that enable firms to coordinate activities and make use of their assets.”

George S. Day, Journal of Marketing, October 1994, p.38.

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Capabilities

DesirableCapabilities

Applicable to Multiple

Competition Situations

Difficult toDuplicate

Superior to the Competition

Source: George S. Day, Journal of Marketing, October 1994, 49.

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Types of Capabilities

Outside-InProcesses

Inside-OutProcesses

SpanningProcesses

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Organization’s Process

Source: George S. Day, Journal of Marketing, October 1994, 41.

Spanning Processes

Outside-In Processes Inside-Out Processes

EXTERNAL EMPHASIS

INTERNAL EMPHASIS

Market sensing Customer linking Channel bonding Technology

monitoring

Customer order fulfillment

Pricing Purchasing Customer service

delivery New product/service

development Strategy development

Financial management Cost control Technology

development Integrated logistics Manufacturing/

transformation processes

Human resources management

Environment health and safety

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Value Requirements

Distinctive Capabilities

3. Matching Customer Value and Distinctive Capabilities

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CREATING VALUE FOR CUSTOMERS

Customer Value: Value for buyers consists of the benefits less

the costs resulting from the purchase of products. Superior value: positive net benefits

Creating Value: “Customer value is the outcome of a process that

begins with a business strategy anchored in a deep understanding of customer needs.”

Source: C. K. Troy, The Conference Board Inc., 1996, 5.

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Creating Value for Customers

Benefits Costs

CustomerValue

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Value Composition

Monetary costsTime

Psychic and physic costs

Product

Services

Employees

Image

Benefits

Costs(sacrifices)

Value(gain/loss)

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1-15

Becoming Market Driven

MARKET – DRIVEN

STRATEGIES

Market Sensing Capabilities

Customer LinkingCapabilities

Page 16: Introduction

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Market Driven Initiatives

Market Sensing Capabilities* Effective processes for learning about

markets* Sensing:

*Collected information needs to be shared across functions and interpreted to determine proper actions.

Customer Linking Capabilities* Create and maintain close customer

relationships

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1-17

Aligning Structure and Processes* Potential change of organizational design

* Improve existing processes*Process redesign

* Cross-functional coordination and involvement

* Primary targets for reengineering:*Sales and marketing, customer relations,

order fulfillment, and distribution

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Corporate, Business and Marketing Strategy (1)

* What is corporate strategy?

Page 19: Introduction

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CORPORATE STRATEGY

Deciding the Scopeand Purpose ofthe Business

Business Objectives

Actions and Resources for Achieving Objectives

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CHARACTERISTICS OF SUCCESSFUL STRATEGY

Unique competitive position for the company.

Activities tailored to strategy. Clear trade-offs and choices vis-à-vis

competitors. Competitive advantage arises from fit

across activities. Sustainability comes from the activity

system not the parts. Operational effectiveness a given.

Source: Michael E. Porter, “What Is Strategy,” Harvard Business Review, November-December 1996, 74.

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Corporate, Business and Marketing Strategy (2)

* What is corporate strategy?* Corporate strategy framework

* Deciding corporate vision* Objectives* Resources* Business composition* Structure, systems and processes

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CORPORATE STRATEGYCOMPONENTS

Management’s long-term vision for the corporation

ObjectivesAssets, skills, and capabilitiesBusinesses in which the corporation

competesStructure, systems, and processesCreation of value

Source: David J. Collis and Cynthia A. Montgomery, Corporate Strategy, Chicago: Irwin, 1997, 7-12.

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Corporate, Business and Marketing Strategy (3)

* Business and marketing strategy* Business and marketing strategy

relationships* Strategic marketing

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CORPORATE, BUSINESS AND MARKETING STRATEGY

Page 25: Introduction

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Corporate, Business and Marketing Strategy (4)

* The marketing strategy process* Markets, segments and customer value

* Markets and competitive space* Strategic market segmentation* Strategic customer relationship management* Capabilities for continuous learning about

markets

Page 26: Introduction

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1-26

Corporate, Business and Marketing Strategy (5)

* Designing market-driven strategies* Market targeting and strategic positioning* Strategic relationships* Innovation and new product strategy

* Market-driven program development* Strategic brand management* Value chain strategy* Pricing strategy* Promotion strategy

Page 27: Introduction

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Corporate, Business and Marketing Strategy (6)

* Implementing and managing market-driven strategy* Designing market-driven organizations* Marketing strategy implementation and

control

Page 28: Introduction

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MARKETING STRATEGY PROCESS

Markets,SegmentsAnd Value

Market-DrivenProgram

Development

Implementingand ManagingMarket-Driven

Strategy

DesigningMarket-Driven

Strategies

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1-29

Challenges in the modern environment

* Escalating globalization* Technology diversity and uncertainty* The Web 2.0* Ethical behavior and corporate social

responsiveness

Page 30: Introduction

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Strategic Marketing Planning

* Developing the strategic plan for each business* Preparing the marketing plan

* Planning relationships and frequency* Planning considerations

* Responsibility for preparing plans* Planning unit

* Preparing the marketing plan

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MARKETING PLANOUTLINE

I. Strategic Situation Summary

Summarize the key points from your situation analysis (market analysis, segments, industry/competition) in order to recount the major events and provide information to better

understand thestrategies outlined in the marketing plan.

II. Market-Targets and Objectives

The market target may be defined demographically (key characteristics only), geographically, or in social/economic terms. Each market target should have needs and wants that differ to some degree from other targets. These differences may be with

respect to types of products purchased, use situation, frequency of purchase, and other variations that indicate a need to alter the positioning strategy to fit the needs and wants of each target. An objective is a quantified goal identifying what is expected when. It specifies

the end results expected. The objectives should be written for each target market. Objectives should also be included for the following program components: (1) product,

(2) price, (3) distribution, (4) promotion (salesforce, advertising, sales promotion, and public relations), and (5) technical services.

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III. Positioning Statements

Write statements that describe how you want each market target to perceive each product relative to competition. State the core concept used to position the product (brand) in the eyes and

mind of the targeted buyer. The positioning statement should describe: (1) What criteria or benefits the customer considers when

buying a product along with the level of importance, (2) What we offer that differentiates our product from competition, and (3) The

limitations of competitive products.

MARKETING PLANOUTLINE

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A. Product Strategy Identify how each product fits the market target. Other issues that may be addressed would

be new product suggestions, adjustments in the mix of existing products, and productdeletion candidates.

B. Price StrategyThe overall pricing strategy (I.e., competitive, premium-priced, etc.) should be identified along with a cost/benefit analysis if applicable. Identify what role you want price to play, i.e.,increase share, maintenance, etc.

C. Distribution StrategyDescribe specific distribution strategies for each market target. Issues to be addressed are intensity of distribution (market coverage), how distribution will be accomplished, andassistance provided to distributors. The role of the sales force in distribution strategy should also be considered.

D. Promotion StrategyPromotion strategy is used to initiate and maintain a flow of communication between the company and the market target. To assist in developing the communications program, theattributes or benefits of our product should be identified for each market target. How our product differs from competition (competitive advantage) should be listed. The sales force’sresponsibilities in fulfilling the market plan must be integrated into the promotion strategy. Strategies should be listed for (1) personal selling, (2) advertising, (3) sales promotion, and(4) public relations.

IV. Market Mix Strategy for Each Market Target

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E. Marketing ResearchDescribe the market research problem and the kind of information needed. Include a statement which addresseswhy this information is needed. The specific marketresearch strategies can be written once the above twosteps have been followed.

V. Coordination with Other Business FunctionsIndicate other departments/functions that haveresponsibilities for implementing the marketing plan.

VI. Sales Forecasts and Budgets

VII. Contingency PlansIndicate how your plans should be modified if eventsshould occur that are different from those assumedin the plan.


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