Marketoriented Perspectives Underlie Successful Corporate4784

7/29/2019 Marketoriented Perspectives Underlie Successful Corporate4784

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Market-Oriented Perspectives UnderlieSuccessful Corporate, Business, and

Marketing Strategies

This is the latest version 12/25/07

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Copyright 2008 by The McGraw-HillCompanies, Inc. All rights reserved.

Scope

Goals and objectives

Resource deployments Identification of sustainable

competitive advantage

Synergy

Exhibit 1.3

Components of Strategy


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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 want

Augmented product, customer

benefits, 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

Competitive

Advantage

Objectives

Time

Horizon


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How to be a Market-Driven Organization.

Keep close to customers and ahead of competitionLove the customer more than the product

Our legitimacy is based on customer satisfaction

Do business the way the customer wants to do itOur mission is to find needs and fill them, not to

make products and sell them

If were not customer-driven, our products wont be

either


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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


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The Role of Strategy.

Corporate

Mission &

Objectives

Strategy:Corporate

Business

Functional

Operating

Plans


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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): Costleadership, Product differentiation, Marketsegmentation

Innovation strategies: Pioneers, Close followers, Latefollowers

Growth strategies: Intensification, Vertical integration,Horizontal integration, Diversification

Management style strategies: Prospector, Analyzer,Defender, Reactor

Marketing warfare strategies - draws on parallelsbetween marketing strategies and military strategies.
http://en.wikipedia.org/wiki/Market_dominancehttp://en.wikipedia.org/wiki/Porter_generic_strategieshttp://en.wikipedia.org/wiki/Marketing_warfare_strategieshttp://en.wikipedia.org/wiki/Marketing_warfare_strategieshttp://en.wikipedia.org/wiki/Porter_generic_strategieshttp://en.wikipedia.org/wiki/Market_dominance


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Sun Tzuon Strategy.

Know your enemy, know yourself, andyour victory will not be threatened.

Know the terrain, know the weather, andyour victory will be complete.

(from The Art of War, 6th century BCE)


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Strategic Marketing.

Marketing Strategy is a series of integrated

actions leading to a sustainable competitive

advantage.John ScullyPresident, PepsiCo (1977-1983)

CEO,Apple (1983-1993)Partner, Scully Bros. LLC (1995-Present)
http://en.wikipedia.org/wiki/PepsiCohttp://en.wikipedia.org/wiki/PepsiCo


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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?


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Organizational Marketing Levels.

Organizations develop strategies at threestructural levels:

Corporate level(corporate marketing)

SBU level(Strategic Marketing)

Product/Market level(FunctionalMarketing)


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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?


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Characteristics of a viable SBU.

Unique business mission Definable set of competitors

Integrative planning done independently

Responsible for resource management inall areas

Large enough but not so large as to

become bureaucratic(Source: Subhash Jain, Marketing Planning & Strategy, 6th Ed.)


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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 SBUs levelsStrategic Marketing Focuses on what the firm do best at the SBU

level

To secure and maintain a sustainablecompetitive advantage


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Other Characteristics of Competitive

Advantage.

Substantiality

Sustainability

Ability to be leveraged

(Source: Strategic Marketing Management, Aakers)


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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


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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


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Must have: a clearly defined market

a good match between corporatestrengths and market needs

significant positive differentiation in thekey success factors of the business

A Viable Marketing Strategy.


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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


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Corporate Strategy Decisions

and Their Marketing Implications

2


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Corporate Mission.

Broad purposes of the organization

General criteria for assessing the long-termorganizational effectiveness

Driven by heritage & environment Mission statements are increasingly being

developed at the SBU level as well


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Exhibit 2.2

Characteristics of Effective Corporate

Mission Statements

Broad Specific

Functional

Based on

customer

needs

Transportati

on business

Long-distance

transportation for

large-volume

producers of low-value, low-density

products

Physical

Based onexisting

products or

technology

Railroad

business

Long-haul, coal

carrying railroad


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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


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Corporate Culture.

The most abstract level of managerialthinkingHow do you define culture?What is the significance of culture to an

organization?

How does marketing affect culture inthe organization?


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How do Firms Compete.

Value proposition

Assets & competencies

Function area strategies and programs

Implementation


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Discussion Question

5. Ansoff says there are four

strategies for growing a business.

What are their merits anddrawbacks?.


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Sources of Synergy

1. 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 & Gs Ivory,

Pampers, cheer, Clairol, Olay, etc.

4. Shared resources-based synergy


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Business Strategies and Their

Marketing Implications

3


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Copyright 2008 by The McGraw-Hill

Companies, Inc. All rights reserved.

How SBUs are Defined

Product-markets should be clustered into anSBU 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


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How Business Strategies Differ in Scope, Objectives,

Resource Deployments, and SynergyExhibit 3.4.

Dimensions

Scope

Goals and obj .

Adaptability (new

product success)

Effectiveness

( mrkt share)

Efficiency (ROI)

Resourcedeployment

Synergy

Low -cost defender

Mature/stable/well-

defined domain;

mature tech.and

cust. segments

Very little

Low

High

Generate excesscash (cash cows)

Need to seek

operating

synergies to

achieve efficiencies

Differentiated defend er

Mature/stable/well-

defined domain;

mature tech.and

cstmr segment

Little

Low

High

Generate excess cash(cash cows)

Need to seek operating

synergies to achieve

efficiencies


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How Business Strategies Differ in Scope, Objectives,

Resource Deployments, and SynergyExhibit 3.4.

Dimensions

Scope

Goals and obj .

Adaptability

(new product

success)

Effectiveness

( mrkt.

share)

Efficiency

(ROI)Resource

deployment

Synergy

Prospector

Broad/dynamic

domains; tech. and

cust. segments not

well-established

Extensive

High

Low

Need 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


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Understanding Market

Opportunities

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The Seven Domains of Attractive

Opportunities

Macro

Level

MicroLevel

Market Domains Industry Domains

Mission, Ability toAspirations, ExecutePropensity on CSFsfor Risk

Connectedness up

and down Value Chain

Team

Domains

MarketAttractiveness

Target Segment Benefits

and Attractiveness

IndustryAttractiveness

SustainableAdvantage


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Discussion Question

1. Whats a market?

2. Whats an industry?

Is the market vs. industry distinction important?

Why or why not?


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Macro Trend AnalysisDemographic environmentSociocultural environment

Economic environment

Regulatory environmentTechnological environment

Natural environment

Think of an example of each and its impact


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Discussion Questions

6. Does industry attractiveness

matter? Why or why not?


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A Tool for Assessing Industry

Attractiveness: Porters Five Forces

Rivalry amongexisting industry

firms

Threat of substituteproducts

Bargainingpower

of buyers

Bargainingpower

of 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 new

entrants


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Identifying an Industry

A firm is a pert of an industry where suppliersof 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


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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 clearly

defined source of customer pain, for some in the target

segment, which the offering resolves, 2. the offeringprovides customer benefits that others do not 3. the

target segment is likely to grow and 4. the current

segment may provide a springboard for future entry into

other segments.


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Understanding Industries at the

Micro Level

Involves looking at the company

and whether it has a sustainablecompetitive advantage


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The Team Domains

Opportunities are only as good

as the people who will pursue them


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Measuring Market Opportunities:

Forecasting and Market Knowledge

5

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Marketoriented Perspectives Underlie Successful Corporate4784