1-1 McGraw-Hill/Irwin ©2008 The McGraw-Hill Companies, All Rights Reserved C H A P T E R ONE Market-Oriented Perspectives Underlie Successful Corporate, Business, and Marketing Strategies 1

1-2 What is a strategy? A strategy is a fundamental pattern of present and planned objectives, resource deployments, and interactions of an organization with markets, competitors, and other environmental factors

1-3  Scope  Goals and objectives  Resource deployments  Identification of sustainable competitive advantage  Synergy Components of Strategy

1-4 The Hierarchy of Strategies  Three major levels of strategy are: ‡ Corporate strategy  Business-level strategy  Marketing strategy

1-5 Market-Oriented Management  Follows a business philosophy commonly called marketing concept  Consistent focus by personnel in all departments and at all levels  Adopts a variety of organizational procedures and structures:  To improve the responsiveness of decision making

1-6 Exhibit 1.5 Guidelines for Market-Oriented Management  Create customer focus throughout the business  Listen to the customer  Define and nurture your distinctive competence  Define marketing as market intelligence  Target customers precisely  Manage for profitability, not sales volume  Make customer value the guiding star  Let the customer define quality

1-7 Exhibit 1.5 Guidelines for Market-Oriented Management (continued)  Measure and manage customer expectations  Build customer relationships and loyalty  Define the business as a service business  Commit to continuous improvement and innovation  Manage culture along with strategy and structure  Grow with partners and alliances  Destroy marketing bureaucracy

1-8 Factors that Mediate Marketing’s Strategic Role  Competitive factors affect a firm’s market orientation  Influence of different development stages across industries and global markets  Strategic inertia

1-9 Exhibit 1.7 Differences between Production-Oriented and Market-Oriented Organizations Business Activity or Function Production Orientation Marketing Orientation Product offering Company sells what it can make Company makes what it can sell Product lineNarrowBroad Pricing Based on production and distribution costs Based on perceived benefits provided Research Focus on product improvement and cost cutting in the production process Focus on identifying new opportunities and applying new technology to satisfy customer needs

1-10 Exhibit 1.7 Differences between Production-Oriented and Market-Oriented Organizations (continued) Business Activity or Function Production Orientation Marketing Orientation PackagingProtection for the product; minimize costs Designed for customer convenience; a promotional tool CreditA necessary evil; minimize bad debt losses A customer service; a tool to attract customers PromotionEmphasis on product features, quality, and price Emphasis on product benefits and ability to satisfy customers’ needs or solve problems

1-11 Recent Developments Affecting the Strategic Role of Marketing  Globalization  Increased importance of service  Information technology  Relationships across functions and firms

1-12 Exhibit 1.8 Categories of E-Commerce Source: Adapted from “A Survey of E-Commerce: Shopping Around the Web, The Economist, February 26, 2000, p. 11. BusinessConsumer Business-to-Business (B2B) Business-to-Consumer (B2C) BusinessExamples: Purchasing sites of Ford, Oracle, Cisco Supply chain networks linking producers anddistribution channel members, such as 3M and Wal-Mart Examples: E-tailers, such as E*Trade, Amazon, iTunes Producers’ direct sales sites, such as Dell, Ryanair, Safital Hotels Web sites of traditional retailers, such as Sears, Lands’ End, Marks & Spencer Consumer-to-Business (C2B) Consumer-to-Consumer (C2C) ConsumerExamples: Sites that enable consumers to bid on unsoldairline tickets and other goods and services, such as Priceline Examples: Auction sites, such as eBay, QXL Blogs praising /criticizing companies or brands

1-13 Formulating and Implementing Marketing Strategy Process  Decision-Making Focus  Analysis of the four “Cs”  Integrating firm's marketing strategy with other strategies and resources  Market opportunity analysis  Understanding Market Opportunities  Measuring Market Opportunities  Market Segmentation, Targeting, and Positioning Decisions

1-14 Formulating and Implementing Marketing Strategy Process (Continued)  Formulating strategies for specific market situations  Implementation and control

1-15 The Marketing Plan—A Blueprint for Action  A marketing plan is a written document detailing the current situation with respect to customers, competitors, and the external environment

1-16  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