Upload
alistercrowe
View
2.059
Download
4
Embed Size (px)
DESCRIPTION
Citation preview
Market-Oriented Perspectives Underlie Successful Corporate, Business, and
Marketing Strategies
This is the latest version 12/25/07
1
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Scope Goals and objectives Resource deployments Identification of sustainable
competitive advantage Synergy
Exhibit 1.3
Components of Strategy
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Need to be Market Oriented.
Persuade customers to buy
What company has
Generic product, production
process, and delivery system
Lowest delivered cost
Volume, cost, profit margins
Short term, reactive
Persuade company to have
what customers wantAugmented product, customerbenefits, and market segments
Superior customer value
Profitable use of resources, market position, customer satisfaction, and loyalty
Medium and long-run view of threats and opportunities
Internal Orientation Market Orientation
Focus
CompetitiveAdvantage
Objectives
Time Horizon
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
How to be a Market-Driven Organization. Keep close to customers and ahead of
competition Love the customer more than the product Our legitimacy is based on customer satisfaction Do business the way the customer wants to do it Our mission is to find needs and fill them, not to
make products and sell them If we’re not customer-driven, our products won’t
be either
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Strategic Planning.
…is the managerial process of developing and maintaining a strategic fit between the organization's objectives and resources and its changing market opportunities.
Org Objectives Resources
Changing Environment
Strategic Fit
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
The Role of Strategy.
CorporateMission &Objectives
Strategy:•Corporate•Business•Functional
Operating Plans
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
An Overview of Marketing Strategies. Strategies based on market dominance: Leader,
Challenger, Follower Porter generic strategies (strategy on the dimensions of
strategic scope and strategic strength): Cost leadership, Product differentiation, Market segmentation
Innovation strategies: Pioneers, Close followers, Late followers
Growth strategies: Intensification, Vertical integration, Horizontal integration, Diversification
Management style strategies: Prospector, Analyzer, Defender, Reactor
Marketing warfare strategies - draws on parallels between marketing strategies and military strategies.
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Sun Tzu on Strategy.
“Know your enemy, know yourself, and your victory will not be threatened. Know the terrain, know the weather, and your victory will be complete.”
(from The Art of War, 6th century BCE)
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Strategic Marketing.
“Marketing Strategy is a series of integrated
actions leading to a sustainable competitive
advantage.”John Scully
President, PepsiCo (1977-1983)CEO, Apple (1983-1993)
Partner, Scully Bros. LLC (1995-Present)
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Discussion Questions
3. Does having a market orientation make sense? What are the advantages and drawbacks?
4. Why do some firms lack orientation towards the market?
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Organizational Marketing Levels.
Organizations develop strategies at three structural levels:
Corporate level—(corporate marketing) SBU level—(Strategic Marketing) Product/Market level—(Functional
Marketing)
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
What is a Strategic Business Unit? (SBU).
A set of products or product lines With clear independence from other
products or product lines for which a business or marketing strategy
should be designed
Characteristics of a viable SBU?
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Characteristics of a viable SBU. Unique business mission
Definable set of competitors Integrative planning done independently Responsible for resource management in
all areas Large enough but not so large as to
become bureaucratic
(Source: Subhash Jain, Marketing Planning & Strategy, 6th Ed.)
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Marketing at the SBU Level - Strategic Marketing.
Strategic Marketing requires Detailed understanding of market needs,
and Proactive use of competitive intelligence
at the corporate as well as SBU’s levels
Strategic Marketing Focuses on what the firm do best at the
SBU level To secure and maintain a sustainable
competitive advantage
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Other Characteristics of Competitive Advantage.
Substantiality Sustainability Ability to be leveraged
(Source: Strategic Marketing Management, Aakers)
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Seeking Competitive Advantages.
Position advantages Superior customer value Lower relative total cost
Performance advantages Customer satisfaction, Loyalty, Market Share,
Profit Sources of advantages
Superior skills & knowledge, Superior resources, Superior business process
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Key Elements of Marketing Strategy Formulation.
The strategic 3 Cs - Customers, Competitors & the Corporation
Environment analysis Strategic Marketing Decisions
- Where to compete- How to compete- When to compete
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Must have: a clearly defined market a good match between corporate
strengths and market needs significant positive differentiation in the
key success factors of the business
A Viable Marketing Strategy.
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Executive summary Current situation and trends Performance review Key issues Objectives Marketing strategy Action plans Projected profit-and-loss statement Controls Contingency plans
Exhibit 1.10
Contents of a Marketing Plan
Corporate Strategy Decisions and Their Marketing Implications
2
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Corporate Mission.
Broad purposes of the organization General criteria for assessing the long-term
organizational effectiveness Driven by heritage & environment Mission statements are increasingly being
developed at the SBU level as well
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Exhibit 2.2
Characteristics of Effective Corporate Mission Statements
Broad SpecificFunctional
Based on customer needs
Transportation business
Long-distance transportation for large-volume producers of low-value, low-density products
Physical
Based on existing products or technology
Railroad business
Long-haul, coal carrying railroad
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Corporate Objectives & Goals. Objective: a long-range purpose
Not quantified and not limited to a time period
- e.g. increasing the return on shareholders’ equity
Goal: a measurable objective of the business Attainable at some specific future date through
planned actions
- e.g. 10% growth in the next two years
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Corporate Culture.
The most abstract level of managerial thinking
How do you define culture?What is the significance of culture to an
organization?How does marketing affect culture in
the organization?
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
How do Firms Compete.
Value proposition Assets & competencies Function area strategies and programs Implementation
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Discussion Question
5. Ansoff says there are four strategies for growing a business. What are their merits and drawbacks?.
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Sources of Synergy1.Knowledge-based synergies
2.Corporate identity-based synergies
3.Corporate branding-based synergies GE, IBM, Amazon etc. Virgin Records, Virgin Airlines, etc. Individual brands such as P & G’s Ivory,
Pampers, cheer, Clairol, Olay, etc.
4.Shared resources-based synergy
Business Strategies and Their
Marketing Implications
3
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
How SBUs are Defined Product-markets should be clustered into an
SBU on the bases of Technical compatibility Similarity in customer needs Similarity in customer characteristics or behavior
In practice SBUs are defined by product-
markets requiring similar technologies,
production facilities, and employee skills
How Business Strategies Differ in Scope, Objectives, Resource Deployments, and
Synergy Exhibit 3.4.
Dimensions• Scope
• Goals and obj. Adaptability (new product success) Effectiveness
(↑ mrkt share) Efficiency (ROI)
• Resource deployment
• Synergy
Low-cost defenderMature/stable/well-defined domain; mature tech.and cust. segments
Very little
Low
HighGenerate excess cash (cash cows)
Need to seekoperating synergies to achieve efficiencies
Differentiated defenderMature/stable/well-defined domain; mature tech.and cstmr segment
Little
Low
HighGenerate excess cash (cash cows)
Need to seek operating synergies to achieve efficiencies
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
How Business Strategies Differ in Scope, Objectives, Resource Deployments, and
Synergy Exhibit 3.4.
Dimensions• Scope
• Goals and obj. Adaptability (new product success) Effectiveness (↑ mrkt.share) Efficiency (ROI)
• Resource deployment
• Synergy
ProspectorBroad/dynamic domains; tech. and cust. segments not well-established
Extensive
HighLowNeed cash for product dev. (? or *)
Danger in sharing operating fac. and programs - better to share tech./mktg skills
AnalyzerMixture of defender and prospector strategies
Mix. of defender & prospector strats.
Mix. of defender & prospector strats.
Mix. of def. & prosp. strats Need cash for prod. dev. but < prospectors
Danger in sharing operating fac. and programs - better to share tech./mktg. skills
Understanding Market Opportunities
4
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
The Seven Domains of Attractive Opportunities
Macro Level
Micro Level
Market Domains Industry Domains
Mission, Ability toAspirations, Execute Propensity on CSFsfor Risk
Connectedness up and down Value Chain
Team Domains
Market Attractiveness
Target Segment Benefits and Attractiveness
Industry Attractiveness
Sustainable Advantage
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Discussion Question
1. What’s a market?
2. What’s an industry?
Is the market vs. industry distinction important?
Why or why not?
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Macro Trend Analysis
Demographic environment
Sociocultural environment
Economic environment
Regulatory environment
Technological environment
Natural environment
Think of an example of each and its impact
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Discussion Questions
6. Does industry attractiveness matter? Why or why not?
A Tool for Assessing Industry Attractiveness:
Porter’s Five Forces
Rivalry among Rivalry among existing industry existing industry
firmsfirms
Threat of substitute Threat of substitute productsproducts
BargainingBargainingpowerpower
of buyersof buyers
Bargaining Bargaining powerpower
of suppliersof suppliers
Source: Adapted from Michael E. Porter, “Industry Structure and Competitive Strategy: Keys to Profitability,” Financial Analysts Journal, July-August 1980, p. 33.
Threat of newThreat of new entrantsentrants
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Identifying an Industry A firm is a pert of an industry where suppliers
of key inputs, processes which create added value, and buyers are similar to other firms in the industry of which the company considers itself a part.
Sources of information for macro-level industry analysis: Exhibit 4.12, p. 99
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Understanding Markets at the Micro LevelInvolves looking individually at customers to understand
the attractiveness of the target segment.
Attractive opportunities exist when: 1. there is a clearlydefined source of customer pain, for some in the targetsegment, which the offering resolves, 2. the offeringprovides customer benefits that others do not 3. thetarget segment is likely to grow and 4. the current segment may provide a springboard for future entry intoother segments.
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Understanding Industries at the Micro Level
• Involves looking at the company
and whether it has a sustainable
competitive advantage
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
The Team Domains
• Opportunities are only as good
as the people who will pursue them
Measuring Market Opportunities: Forecasting and Market Knowledge
5