Strategic Market Management

By David A. Aaker Vice-Chairman, Prophet Professor Emeritus, University of California at Berkeley

2005 John Wiley & Sons

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Chapter One
Strategic Market Management-Introduction and Overview
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Plans are nothing, planning is everything. - Dwight D. Eisenhower

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Even if you are on the right track, youll get run over if you just sit there. - Will Rodgers
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If you dont know where you are going, you might end up somewhere else.
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- Casey Stengel

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Management Tasks
Strategic Analysis Innovation Multiple BusinessStrategies and Issues Creating SCAs Developing Growth Platforms

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What is a Business Strategy?

The Product-Market Investment Strategy where to compete The Customer Value Proposition
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Assets and Competencies

Functional Strategies and Programs

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A Business Strategy Figure 1.1 Page 5

Where to Compete
The product-market investment decision

A Business Strategy
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How to Compete
Value proposition Assets & competencies Function area strategies and programs
Figure 1.1 PPT 1-8

The Product-Market Investment Strategy

Invest to grow (or enter a product market) Invest only to maintain the existing position

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Milk the business by minimizing investment

Recover as many of the assets as possible by liquidating or divesting the business

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Product-Market Growth Directions

Present Products Present Markets
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New Products

Market Penetration Market Expansion

Product Expansion Diversification

New Markets

Figure 2.4

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The Customer Value Proposition

Perceived benefit to customer:
Functional Emotional
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Social

Self-Expressive

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Customer Value Proposition Examples:

A good value Excellence on an important product or service attribute The best overall quality

Product line breadth

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Innovative offerings A shared passion for an activity or a product Global connections and prestige

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Assets and Competencies

Strategic Competency:
What a business unit does exceptionally well Has strategic importance to the business
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Based on knowledge or a process

Strategic Asset:
A resource

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Functional Strategies and Programs

Manufacturing strategy Distribution strategy Brand-building strategy
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Global strategy Logistical strategy Quality program Customer relationship program

Communication strategy Information technology strategy Sourcing Strategy

Social technology strategy

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Criteria to Select Business Strategies

Is the ROI attractive?

Is there a SCA?
Will the strategy have success in the future?

Is the strategy feasible?

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Does the strategy fit with the other strategies of the firm?

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Overview of Strategic Market Management

External Analysis
Customer Analysis Competitor Analysis Market/submarket Analysis Environmental Analysis

Internal Analysis
Performance Analysis Determinants of strategic options

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Strategic Analysis Outputs Creating, Adapting, and Implementing Strategy

Figure 2.1
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Why Strategic Market Management?

Precipitate the consideration of strategic choices. Help a business cope with change. Force a long-range view. Make visible the resource allocation decision.
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Aid strategic analysis and decision making. Provide a strategic management and control system. Provide both horizontal and vertical communication and coordination systems.
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Marketing and Strategy

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Key Learnings
Strategy needs to succeed in a dynamic market. A business strategy includes the determination of the product-market scope and its dynamics (as reflected in the intensity of the business investment), the customer value proposition, assets and competencies, and functional strategies and programs. External analysis includes analyses of customers, competitors, markets, and the environment. Internal analysis includes a performance appraisal and an examination of organizational strengths, weaknesses, problems, constraints, and strategic options. The role of these analyses is to identify existing or emerging opportunities, threats, trends, strategic uncertainties, and strategic options. The marketing team needs to be a partner in strategy and by involved in overcoming silo barriers.
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Ancillary Slides
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It isnt that they cant see the solution, its that they cant see the problem.
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- G. K. Chesterton

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Experience, to most men, is like the stern lights of a ship, which illuminate only the track it has passed.
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- Samuel Coleridge

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Strategy is a framework which guides those choices that determine the nature and direction of an organization.
-Benjamin B. Tregoe & John W. Zimmerman Top Management Strategy

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In terms of the three key players (competitors, customers, company) strategy is defined as the way in which a corporation endeavors to differentiate itself positively from its competitors, using its relative corporate strengths to better satisfy customer needs.
-Kenichi Ohmae The Mind of the Strategist
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Business has only two basic functions - marketing and innovation.

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- Peter Drucker

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Chapter 2

Customer Analysis

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Customer Analysis
Segmentation Customer Motivation Unmet needs
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(Group exercise: Pick a Company/Brand/Business on which to focus and answer the qns in the following slides. This Company/Brand/Business will continue for all group exercises for this trim)

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Segmentation
Who are the biggest customers?The most profitable? The most attractive potential customers? Do the customers fall into any logical groups based on needs, motivations or characteristics? How would the market be segmented into groups that would require a unique business strategy?
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Customer Motivations
What elements of the product/service do customers value most? What are the customers objectives?What are they really buying? How do segments differ in their motivation priorities? What changes are occurring in customer motivation? In customer priorities?
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Unmet needs
Why are some customers dissatisfied?Why are some changing brands or suppliers? What is the severity and incidence of consumer problems? What are unmet needs that customers can identify? Are there consumers unaware? Do these unmet needs represent leverage points for competition or a new business model?
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