Hierarchy of Strategies

There are three levels of strategy in most large

multiproduct organisations:
1) Corporate Strategy 2) Business-Level Strategy

3) Functional Strategy
1) Corporate Strategy-defines the businesses in which a
company competes,preferably in a manner that uses
resources to convert distinctive competence into
competitive advantage.At this level of strategy, the role of
marketing is to 1) assess market attractiveness the
competitive effectivenes of the firm !) to promote a
customer orientation to the various constituencies in
management decision making ")formulate the firm#s
overall value proposition

Business-level Strategy:centers on how a firm competes in
a given industry positions itself against its competitors.The
competition is between individual units of an organisation
which are Strategic Business UnitsSBU)!
A Strategic Business Unit is a single business or collection
of businesses that has a distinct mission,a responsible
manager and its own competitors which is relatively
independent of other business units.A $%& could be one or
more divisions of the industrial firm,a product line within one
division or even a single product.
$%&s may share resources such as sales force with other
business units to achieve economies of scale.
Functional Strategy centers on how resources allocated to
various functional areas can be used most efficiently
effectively to support the business level strategy.

"anaging #hree Custo$ers Connections

#he custo$er-pro%uct connection:This involves linking

the customer to the focal offering,particularly the
knowledge skills to discover customer needs connect
them to product design.

#he custo$er-service %elivery connection:This

comprises of the design delivery actions involved in
providing a firm#s goods services to the customer the
activities involved in satisfying retaining
customers,particularly customer relationship management.

#he custo$er-financial accounta&ility connection :This

refers to activities processes that link customers to
financial outcomes.$ince,customers provide revenue for a
firm,marketing e'penditures are considered as
investments in customer assets that create long-term
value


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Function-
1) "anufacturing- (etermines the volume,variety
)uality of products that can be marketed
-*nfluences the speed with which the business marketer
can respond to changing market or competitive need
steps.
The above is dependant upon accurate timely sales
forecasts to be provided by marketing department.
2) '01- +rovides critical technical direction in new-
product-development process
,emains abreast of competetive technology

This is dependant upon data on market competitive trends
marketing research on product features desired by target
segments to be provided by the marketing department!
3) Logistics- provides on-time accurate shipments to
customers
-(evelops timely order tracking status reports.
This is dependant upon accurate timely sales forecasts
delivery service re)uirements by customer or segment the
information for which has to be given by the marketing
department.
2) #echnical Service-implements post-sale activities such as
installation training
-serves as troubleshooter for customer problems.
The support re)uired from the marketing department is in the
form of account-specific goals plans promises made to
the customer during the selling process.
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Co$ponents of a Business "o%el
There are four components of a business model:

-ustomer *nterface

-ore $trategy

$trategic ,esources

.alue /etwork
Custo$er *nterface This provides the bridge between the
core strategy the customer interface.There are four
elements in this:
1) Fulfill$ent 0 Support:refers to the channels a
business marketing firm uses to reach customers the
level of service support,it provides.

2) *nfor$ation 0 *nsight:refers to the knowledge captured
from customers the degree to which this information is used
to provide enhanced value to customers.
3) 'elationship 1yna$ics refers to the nature of the
interaction between the firm its customers
2) -ricing Structure: A business concept may offer several
pricing choices.
Core Strategy :determines how the firm chooses to
compete.There are three elements that are involved in setting
a core strategy.
1) Business "ission -describes the overall ob0ectives of the
strategy,sets a course direction and defines a set of
performance criteria that are used to measure progress.
2) -ro%uct3"ar4et Scope-defines where the firm competes
3) Basis for 1ifferentiation -A business is differentiated
when some value-adding activities are performed in a way
that leads to perceived superiority along dimensions that are
valued by customers.1or these activities to be profitable,the
customer must be willing to pay a premium for the benefits
e 2

the premium must e'ceed the added cost of superior
performance.
Strategic 'esources:This includes core
competencies,strategic assets core processes.
1) Core Co$petencies are the set of skills,systems
technologies a company uses to create high value for
customers.
2) Strategic +ssets: are the more tangible competencies
re)uirements for advantage that enable a firm to e'ercise its
capabilities which include brands,customer data,distribution
coverage,patents other resources that are rare valuable.
3) Core -rocesses:are the methodologies routine
companies use to transform competencies,assets other
inputs into values for customers.
#he 5alue )et6or4- This complements and further enriches
the firm#s research base and includes suppliers,strategic
alliance partners and coalitions.

-rofit -otential:1our factors determine the profit potential of
a business concept.
-The degree to which a business concept provides an efficient
way of providing customer benefits.
-The e'tent to which the business concept is uni)ue on
dimensions shared by the customer.
-The degree of fit or internal consistency among the various
components business concept
-The e'tent to which the business concept can create profit
boosters that provide the opportunity for above-average
returns.
3e
that

Balance% Scorecar%

The balanced scorecard provides managers with a

comprehensive system for converting a company#s vision
and strategy into a tightly connected set of performance
measures.This scorecard e'amines the performance of a
business unit from four perspectives:1) 1inancial !)
-ustomer ") *nternal %usiness +rocesses ") 4earning
5rowth

Financial -erspective:The balanced scorecard seeks to

match financial ob0ectives to a business unit#s growth life
cycle stages.Three stages of a business are isolated
linked to appropriate financial ob0ectives.
/ro6th-%usiness &nits that have products services with
significant growth potential that must commit
considerable resources to capitali6e on the market

7pportunity.
2) Sustain : %usiness units that e'pect to maintain or to
moderately increase market share from year to year.
3) Harvest: 8ature business units that warrant only enough
investment to maintain production e)uipment capabilities.
Custo$er -erspective- *n this,the marketing managers must
identify the value proposition-how the firm proposes to deliver
competitively superior sustainable value to the target
customers market segments.%!% firms typically choose
among four forms of differentiation in developing a value
proposition:
Lo6 #otal Cost : customers are offered attractive pri6es,
e'cellent consistent )uality,ease of purchase responsive
service
-ro%uct *nnovation 0 Lea%ership:customers receive
products thate'pand e'isting performance boundaries
through new features functions.
through

Co$plete Custo$er Solutions--ustomers feel that the
company understands them provide customi6ed products
services tailored to their uni)ue re)uirements.
Loc4-in- customers purchase a widely used proprietary
product from the firm incur high switching costs.
*nternal Business -rocess -erspective : *nternal business
processes supports two crucial elements of a company#s
strategy.1) they create deliver the value proposition for
customers and !)they improve processes reduce
costs,enriching the productivity component in the financial
perspective.
Learning 0 /ro6th -erspective : This highlights how the
firm#s intangible assets must be aligned to its strategy to
achieve long-term goals.*ntangible Assets represent the
capabilities of the company#s employees to satisfy customer
needs.
Two
costs
sp