Transcript Market-Driven Strategy

Strategic Marketing
1. Imperatives for Market-Driven Strategy
2. Markets and Competitive Space
3. Strategic Market Segmentation
4. Strategic Customer Relationship Management
5. Capabilities for Learning about Customers and Markets
6. Market Targeting and Strategic Positioning
7. Strategic Relationships
8. Innovation and New Product Strategy
9. Strategic Brand Management
10. Value Chain Strategy
11. Pricing Strategy
12. Promotion, Advertising and Sales Promotion
Strategies
13. Sales Force, Internet, and Direct Marketing Strategies
14. Designing Market-Driven Organizations
15. Marketing Strategy Implementation And Control
Chapter 1
Imperatives for
Market-Driven
Strategy
McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
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Objectives
* Pivotal role of market-driven strategy
in designing and implementing
business/marketing strategies
* Links between business/marketing
strategy and corporate strategy
* Challenges in the modern environment
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Characteristics of a Market-Driven Strategy
Becoming MarketOrientation
Achieving Superior
Performance
Determining
Distinctive
Capabilities
Customer
Value/
Capabilities
Match
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Market-Driven Strategy (1)
* Becoming market-oriented
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Customer focus
Competitor intelligence
Cross-functional coordination
Performance implications
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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
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* Determine the impact of changes on
customer satisfaction
* Increase the rate of product innovation
* Pursue strategies to create competitive
advantage
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Characteristics of Market Orientation
 Customer Focus
What are the customer’s value requirements?
 Competitive Intelligence
Importance 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 a Market-Oriented
Organization
Information
Acquisition
Cross-Functional
Analysis of Information
Shared Diagnosis
and Coordinated
Action
Delivery of
Superior Customer
Value
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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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Market-Driven Strategy (2)
* Becoming market-oriented
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Customer focus
Competitor intelligence
Cross-functional coordination
Performance implications
* Determining distinctive capabilities
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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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Southwest Airline’s Distinctive Capabilities
Organizational Processes
Southwest uses a point-to-point route system rather than the hub-and-spoke design
used by many airlines. The airline offers services to 57 cities in 29 states, with an
average trip about 500 miles. The carrier’s value proposition consists of low fares
and limited services (no meals). Nonetheless, major emphasis throughout the
organization is placed on building a loyal customer base. Operating costs are kept
low by using only Boeing 737 aircraft, minimizing the time span from landing to
departure, and developing strong customer loyalty. The company continues to grow
by expanding its point-to-point route network.
Skills and Accumulated Knowledge
The airline has developed impressive skills in operating its business model at very
low cost levels. Accumulated knowledge has guided management in improving the
business design over time.
Coordination of Activities
Coordination of activities across business functions is facilitated by the point-topoint business model. The high aircraft utilization, simplification of functions, and
limited passenger services enable the airline to manage the activities very efficiently
and to provide on-time point-to-point services offered on a frequent basis.
Assets
Southwest’s key assets are very low operating costs, loyal customer base, and high
employee esprit de corps
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Capabilities
Disproportionate
(higher)
contribution to
superior
customer value
Compelling
Logic of Distinctive
Capabilities
Provides value to
customers on a more
cost-effective basis
Source: George S. Day, Journal of Marketing, October 1994, p. 38.
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Capabilities
Desirable
Capabilities
Applicable to
Multiple
Competition
Situations
Superior to the
Competition
Difficult to
Duplicate
Source: George S. Day, Journal of Marketing, October 1994, 49.
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Market-Driven Strategy (3)
* Becoming market-oriented
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Customer focus
Competitor intelligence
Cross-functional coordination
Performance implications
* Determining distinctive capabilities
* Types of capabilities
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Types of Capabilities
Outside-In
Processes
Spanning
Processes
Inside-Out
Processes
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Organization’s Process
EXTERNAL
EMPHASIS
Outside-In
Processes
INTERNAL
EMPHASIS
Inside-Out
Processes
Spanning Processes
 Market sensing
 Customer linking
 Customer order
fulfillment
 Channel bonding
 Technology
monitoring
 Pricing
 Purchasing
 Customer service
delivery
 New product/service
development
 Strategy development
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Financial management
Cost control
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Technology
development
Integrated logistics
Manufacturing/
transformation
processes
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Source: George S. Day, Journal of Marketing, October 1994, 41.
Human resources
management
Environment health and
safety
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Market-Driven Strategy (4)
* Becoming market-oriented
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Customer focus
Competitor intelligence
Cross-functional coordination
Performance implications
* Determining distinctive capabilities
* Types of capabilities
* Creating value for customers
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* Matching Customer Value and Distinctive
Capabilities
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Value Requirements
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
Customer
Value
Benefits
Costs
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Value Composition
Product
Services
Employees
Benefits
Image
Value
(gain/loss)
Monetary costs
Time
Costs
(sacrifices)
Psychic and
physic costs
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Market-Driven Strategy (5)
* Becoming market-driven
* Marketing sensing capabilities
* Customer linking capabilities
* Aligning structure and processes
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Becoming Market Driven
Market Sensing
Capabilities
MARKET –
DRIVEN
STRATEGIES
Customer Linking
Capabilities
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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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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?
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CORPORATE STRATEGY
Deciding the Scope
and Purpose of
the 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
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Deciding corporate vision
Objectives
Resources
Business composition
Structure, systems and processes
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CORPORATE STRATEGY
COMPONENTS
Management’s long-term vision for the
corporation
Objectives
Assets, skills, and capabilities
Businesses in which the corporation
competes
Structure, systems, and processes
Creation 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
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Corporate, Business and
Marketing Strategy (4)
* The marketing strategy process
* Markets, segments and customer value
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Markets and competitive space
Strategic market segmentation
Strategic customer relationship management
Capabilities for continuous learning about
markets
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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
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Strategic brand management
Value chain strategy
Pricing strategy
Promotion strategy
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Corporate, Business and Marketing
Strategy (6)
* Implementing and managing marketdriven strategy
* Designing market-driven organizations
* Marketing strategy implementation and
control
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MARKETING STRATEGY PROCESS
Markets,
Segments
And Value
Implementing
and Managing
Market-Driven
Strategy
Designing
Market-Driven
Strategies
Market-Driven
Program
Development
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Challenges in the modern
environment
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Escalating globalization
Technology diversity and uncertainty
The Web 2.0
Ethical behavior and corporate social
responsiveness
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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 PLAN
OUTLINE
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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MARKETING PLAN
OUTLINE
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.
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IV. Market Mix Strategy for
Each Market Target
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 product
deletion candidates.
B.
Price Strategy
The 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 Strategy
Describe specific distribution strategies for each market target. Issues to be addressed are
intensity of distribution (market coverage), how distribution will be accomplished, and
assistance provided to distributors. The role of the sales force in distribution strategy should
also be considered.
D.
Promotion Strategy
Promotion 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, the
attributes 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’s
responsibilities 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.
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VII.
Marketing Research
Describe the market research problem and the kind of
information needed. Include a statement which addresses
why this information is needed. The specific market
research strategies can be written once the above two
steps have been followed.
Coordination with Other Business Functions
Indicate other departments/functions that have
responsibilities for implementing the marketing plan.
Sales Forecasts and Budgets
Contingency Plans
Indicate how your plans should be modified if events
should occur that are different from those assumed
in the plan.
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