1. New Challenges for Market-Driven Strategy
Chapter 01
New Challenges for
Market-Driven
Strategy

2. 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

3. Characteristics of a Market-Driven Strategy
Becoming Market-
Orientation
Achieving Superior
Performance
Determining
Distinctive
Capabilities
Customer
Value/
Capabilities
Match

4. Market-Driven Strategy (1)
Becoming market-oriented
Customer focus
Competitor intelligence
Cross-functional coordination
Performance implications

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

6. Determine the impact of changes on customer satisfaction
Increase the rate of product innovation
Pursue strategies to create competitive advantage

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 Implications
Market orientation leads to
superior organizational performances

8. Becoming a Market-Oriented Organization
Information Acquisition
Cross-Functional
Analysis of Information
Shared Diagnosis
and Coordinated
Action
Delivery of
Superior Customer
Value

9. Market Orientation Information Acquisition Inter-functional Assessment
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

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

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.”

12. 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 (group espirit)

13. Capabilities Disproportionate (higher) contribution to superior
customer value
Compelling
Logic of Distinctive
Capabilities
Provides value to
customers on a more
cost-effective basis

14. Capabilities Desirable Capabilities Applicable to Multiple
Competition Situations
Superior to the Competition
Difficult to
Duplicate

15. Market-Driven Strategy (3)
Becoming market-oriented
Customer focus
Competitor intelligence
Cross-functional coordination
Performance implications
Determining distinctive capabilities
Types of capabilities

16. Types of Capabilities Outside-In Processes Spanning Processes
Inside-Out
Processes

17. Organization’s Process
EXTERNAL EMPHASIS
INTERNAL EMPHASIS
Outside-In Processes
Inside-Out Processes
Spanning Processes
Financial management
Cost control
Technology development
Integrated logistics
Manufacturing/ transformation processes
Human resources management
Environment health and safety
Market sensing
Customer linking
Channel bonding
Technology monitoring
Customer order fulfillment
Pricing
Purchasing
Customer service delivery
New product/service development
Strategy development

18. 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

19. Matching Customer Value and Distinctive Capabilities
Value Requirements
Distinctive Capabilities

20. 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.”

21. Creating Value for Customers
Benefits Costs

22. Psychic and physic costs
Value Composition
Product
Services
Employees
Image
Benefits
Value
(gain/loss)
Monetary costs
Costs
(sacrifices)
Time
Psychic and physic costs

23. Market-Driven Strategy (5)
Becoming Customer Driven
Marketing sensing capabilities
Customer linking capabilities
Aligning structure and processes

24. 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

25. Improve existing processes Process redesign
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

26. Corporate, Business and Marketing Strategy (1)
What is corporate strategy?

27. Corporate, Business and Marketing Strategy (2)
What is corporate strategy?
Corporate strategy framework
Deciding corporate vision
Objectives
Resources
Business composition
Structure, systems and processes
Gaining advantage through multimarket

28. Corporate, Business and Marketing Strategy (3)
Business and marketing strategy relationships
Strategic marketing

29. Corporate, Business and Marketing Strategy (4)
The marketing strategy process
Markets, segments and customer value
Markets and competitive space
Strategic market segmentation
Strategic customer relationship management
Capabilities for continuous learning about markets

30. 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
Strategic brand management
Value chain strategy
Pricing strategy
Promotion strategy

31. Corporate, Business and Marketing Strategy (6)
Implementing and managing market-driven strategy
Designing market-driven organizations
Marketing strategy implementation and control

32. Challenges of a New Era for Strategic Marketing
Escalating globalization
Technology diversity and uncertainty
Internet Dynamics
Ethical behavior and corporate social responsiveness