When Marketing is Strategy

Summary: In the case “When Marketing is Strategy”, the author emphasized on moving marketing strategy
downstream towards the customers. The Author points out that downstream competitive advantage comes from
outside of the company, from the customers and other external stakeholders. In order to compete and win
downstream the author calls for a shift in focus to downstream efforts such as how you define your “competitive
set, influence customer’s purchase criteria, innovate to solve customer problems, and build advantage by
accumulating customer data and harnessing network effect.” The author has asked the readers to “rethink”
traditional strategy pillars and move thinking downstream to where competitive advantage is outside of the firm
and accumulative, to where focus is on customer needs and their purchase criteria.” The Author also notes that if
you are a late market entrant you can determine who your competitors are, and whether or not to compete
directly or through differentiation. In regards to being able to choose competitors and not just being stuck with
competitors, the author argues that this approach is determined or influenced by three decisions: “how you
position your offering in the mind of the customer, how you place yourself in relation to your competitive set within
the distribution channel, and your pricing.” The author has also discussed another area for downstream marketing
strategy to make an impact and that is innovation of market activities and tools. Competitive battles are won by
offering innovation that reduces customer costs and risks over the entire purchase, consumption and disposal
cycle

Main Lessons: Companies are increasingly finding success less from simply being responsive to customers’ stated
preferences but by carefully defining what customers are looking for and helping shape their “criteria for
purchase.” The strategic objective for the downstream business is to influence how consumers perceive the
relative importance of various existing purchase criteria within well-defined problem settings while introducing
new favorable criteria. Many executives believe technology innovations are the greatest threat to competitive
advantage but this concept is not always right as there can be many situations where company may come up with
such innovative ideas that may end up leading the company to gain competitive advantage. Continued success
depends on maintaining control of the customers’ criteria of purchase. Good solutions providers should be at the
cutting edge of such change opportunity due to their continuous assessment of the ability of solution investment
to guide customer purchase criteria.

Critics: The author did a good job of pointing out the downstream possibilities that will drive value and
competitive advantage. While we like this article for its provocative thoughts about “downstream marketing” we
caution the reader not to be impressed considering the fact that it has been published in Harvard Business Review.
The author has selected examples that prove his point. However, many examples could be found that support
market opportunity via “upstream” marketing. Such “downstream” approach may turn out to be extremely
misleading for many businesses.