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,

*
* 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

1-3
*
*
* Characteristics of a Market-Driven Strategy
Becoming Market-
Orientation

Achieving Superior Determining

Performance Distinctive
Capabilities

Customer
Value/
Capabilities
Match
1-4
*
* Market-Driven Strategy (1)
*
* Becoming market-oriented
* Customer focus
* Competitor intelligence
* Cross-functional coordination
* Performance implications

1-5
*
* 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

1-7
*
* 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

1-8
*
* 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
1-10
*
* Market-Driven Strategy (2)
*
* Becoming market-oriented
* Customer focus
* Competitor intelligence
* Cross-functional coordination
* Performance implications
* Determining distinctive capabilities

1-11
*
* 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-to-point
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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*
* Distinctive 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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*
* Desirable Capabilities
*
Desirable
Desirable
Capabilities
Capabilities

Applicable to Superior to the

Multiple Competition
Competition
Situations

Difficult to
Duplicate
Source: George S. Day, Journal of Marketing, October 1994, 49.
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*
* Market-Driven Strategy (3)
*
* Becoming market-oriented
* Customer focus
* Competitor intelligence
* Cross-functional coordination
* Performance implications
* Determining distinctive capabilities
* Types of capabilities

1-16
*
* Types of Capabilities
*
Outside-In
Processes

Spanning
Processes

Inside-Out
Processes

1-17
*
* Organization’s Process
*
EXTERNAL INTERNAL
EMPHASIS EMPHASIS
Outside-In Inside-Out
Processes Processes
Spanning
 Market sensing Processes  Financial management
 Customer order
 Customer linking fulfillment  Cost control
 Channel bonding  Pricing  Technology
 Purchasing development
 Technology
 Integrated logistics
monitoring  Customer service
delivery  Manufacturing/
 New product/service transformation
processes
development
 Human resources
 Strategy development management
 Environment health and
Source: George S. Day, Journal of Marketing, October 1994, 41.
safety
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*
* Market-Driven Strategy (4)
*
* Becoming market-oriented
* Customer focus
* Competitor intelligence
* Cross-functional coordination
* Performance implications
* Determining distinctive capabilities
* Types of capabilities
* Creating value for customers
1-19
*
* Matching Customer Value and Distinctive
* Capabilities

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.”
, 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
Benefits
Employees

Image Value
(gain/loss)
Monetary
costs Costs
Time (sacrifices)
Psychic and
physic costs

1-23
*
* Market-Driven Strategy (5)
*
* Becoming market-driven
* Marketing sensing capabilities
* Customer linking capabilities
* Aligning structure and processes

1-24
*
* 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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