1. Market-Driven Strategy

2. MARKET-DRIVEN STRATEGY
Becoming Market Oriented
Distinctive Capabilities
Creating Value for Customers
Becoming Market Driven
Challenges of a New Era for Strategic Marketing

3. MARKET-DRIVEN STRATEGY
All business strategy decisions should start with a clear understanding of markets, customers, and competitors.
The market and the customers that form the market should be the starting pint in shaping business strategy.

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

5. Why Pursue a Market-Driven Strategy?
Strong supporting logic
Achievements of companies displaying market-driven characteristics are impressive
Examples include:
Dell Inc.
Louis Vuitton
Southwest Airlines
Tesco
Tiffany & Co.
Wal-Mart
Zara

6. 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

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

8. Characteristics of Market Orientation
Customer Focus
What are the customer’s value requirements?
Competition 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

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

10. Market Orientation Information Acquisition Inter-functional Assessment
Gather relevant information on customers, competition, and markets
Involve all business functions
Intuit’s Quicken
Inter-functional Assessment
Share information and develop
innovative products with
people from different functions
Zara
Shared diagnosis and action
Deliver superior customer value

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.

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

13. 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.

14. Capabilities Desirable Capabilities Applicable to Multiple
Competition Situations
Superior to the Competition
Difficult to
Duplicate
Source: George S. Day, Journal of Marketing, October 1994, 49.

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

16. 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
Source: George S. Day, Journal of Marketing, October 1994, 41.

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

18. 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.”
Source: C. K. Troy, The Conference Board Inc., 1996, 5.

19. Creating Value for Customers
Benefits Costs

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

21. Becoming Market Driven
Market Sensing
Capabilities
MARKET –
DRIVEN
STRATEGIES
Customer Linking
Capabilities

22. BECOMING MARKET DRIVEN
Market Sensing
Capabilities
MARKET-DRIVEN STRATEGIES
Customer Linking
Capabilities

23. 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

24. 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

25. CHALLENGES OF A NEW ERA FOR STRATEGIC MARKETING
Strategic marketing faces unprecedented challenges and opportunities:
Turbulent markets
Intense competition
Disruptive innovations
Escalating customer demands
Ethical Challenges
Societal and Global Change
Social Responsiveness of Organizations

26. Escalating Globalization
It is important to understand the differences (and similarities) between the developed economies and the new world beyond.
Market opportunities
Competitive threats
Partnering opportunities
Outsourcing initiatives
The world’s poor

27. Technology Diversity and Uncertainty
Radical New Product Opportunities
Nanotechnology
Private space travel
The digital home
Self-cleaning windows
Finland was ranked #1 in global competitiveness in 2004 by the World Economic Forum because of strong skills in adapting to new technology, proactive business practices, and nurturing a culture of innovation (

28. Ethical Behavior and Social Responsiveness
Increasingly demanding ethical challenges
Corporate responsibility
Responsibilities to stakeholders