market driven+strategy
TRANSCRIPT
1-1
Market-Driven Strategy
1-2
Market-Driven Strategy
Becoming Market Oriented
Distinctive Capabilities
Creating Value for Customers
Becoming Market Driven
Challenges of a New Era for Strategic Marketing
MARKET-DRIVEN STRATEGY
1-3
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.
1-4
Achieving Superior
Performance
DeterminingDistinctive
Capabilities
CustomerValue/
CapabilitiesMatch
Becoming Market-
Orientation
Characteristics of a Market-Driven
Strategy
1-5
Why Pursue a Market-Driven
Strategy? Strong supporting logic
Achievements of companies displaying market-driven characteristics are impressive Examples include:
Dell Inc.Louis VuittonSouthwest AirlinesTescoTiffany & Co.Wal-MartZara
1-6
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
1-7
Determine the impact of changes on customer satisfaction
Increase the rate of product innovation
Pursue strategies to create competitive advantage
1-8
Characteristics of Market Orientation
Customer FocusWhat are the customer’s
value requirements? Competition Intelligence
Importance ofunderstanding the competition as well as thecustomer
Cross-Functional CoordinationRemove the walls betweenbusiness functions
Performance ConsequencesMarket orientation leads tosuperior organizational performances
1-9
Information Acquisition
Cross-Functional Analysis of Information
Shared Diagnosis and Coordinated Action
Delivery of Superior Customer Value
Becoming a Market-Oriented
Organization
1-10
Market Orientation Information Acquisition
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
1-11
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.
1-12
Southwest Airline’s Distinctive Capabilities
Organizational ProcessesSouthwest 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 KnowledgeThe 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 ActivitiesCoordination 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.
AssetsSouthwest’s key assets are very low operating costs, loyal customer base, and high employee esprit de corps
1-13
CompellingLogic of Distinctive
Capabilities
Disproportionate (higher)contribution to superiorcustomer value
Provides value tocustomers on a morecost-effective basis
Capabilities
Source: George S. Day, Journal of Marketing, October 1994, p. 38.
1-14
Capabilities
DesirableCapabilitiesDesirable
Capabilities
Applicable to Multiple
Competition Situations
Difficult toDuplicate
Superior to the
Competition
Source: George S. Day, Journal of Marketing, October 1994, 49.
1-15
Types of Capabilities
Outside-InProcesses
Inside-OutProcesses
SpanningProcesses
1-16
Organization’s Process
Source: George S. Day, Journal of Marketing, October 1994, 41.
Spanning Processes
Outside-In Processes
Inside-Out Processes
EXTERNAL EMPHASIS
INTERNAL EMPHASIS
Market sensing
Customer linking
Channel bonding
Technology monitoring
Customer order fulfillment
Pricing Purchasing Customer service
delivery New
product/service development
Strategy development
Financial management
Cost control Technology
development Integrated
logistics Manufacturing/
transformation processes
Human resources management
Environment health and safety
1-17
Value Requirements
Distinctive Capabilities
Matching Customer Value and Distinctive
Capabilities
1-18
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.
1-19
Creating Value for Customers
Benefits Costs
CustomerValue
1-20
Value Composition
Monetary costs
Time
Psychic and
physic costs
Product
Services
Employees
Image
Benefits
Costs(sacrifices)
Value(gain/loss)
1-21
Becoming Market Driven
MARKET – DRIVEN
STRATEGIES
Market Sensing Capabilities
Customer LinkingCapabilities
1-22
BECOMING MARKET DRIVEN
Market Sensing Capabilities
Customer LinkingCapabilities
MARKET-DRIVEN
STRATEGIES
1-23
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
1-24
Aligning Structure and Processes– Potential change of
organizational designImprove existing processesProcess redesign
– Cross-functional coordination and involvement
– Primary targets for reengineering:
Sales and marketing, customer relations, order fulfillment, and distribution
1-25
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
1-26
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
1-27
Technology Diversity and UncertaintyRadical 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 (www.weforum.org).
1-28
Ethical Behavior and Social
Responsiveness
Increasingly demanding ethical challenges
Corporate responsibility
Responsibilities to stakeholders