1-1

Market-Driven
Strategy
 1-2

Introduction

Your expectation
Introduction to
Market Driven
.
Strategy
 1-4

A Process of
Strategic Planning

Mission
Situation
Vision Strategy
Audit
Goals
 1-5

Strategic Planning
Strategic planning flows from
mission and values
Implementation follows strategy

Monitors and Controls follow

Implementation
 1-6

Marketing
Management
Philosophies

Production concept
Selling concept

Product concept

Marketing concept

Societal marketing concept

 1-7

Customer
Orientation

Core Benefit to the Consumer

Market Driven

Customer Satisfaction
Lifetime value of the customer
 1-8

The Marketing
Concept
Target Market
Needs and Wants

Integrated Marketing
 1-9

THE MARKETING PROCESS

Other Environmental Factors

Customer Competitive Company

Analysis Analysis Analysis

Opportunity
Identification

Marketing Strategy

Marketing Plans

Product Promotion Price Place

 1-10

Basic Growth
Strategies
Current New
Products Products
Current Market Product
Markets Penetration Development
New Market Diversification
Markets Development
 1-11

Sources of New
Sales
Increase the Market Size
(primary demand)
Steal from Competitors
(selective demand)
Increase Usage of Current
Customers
 1-12

Situation Audit

Internal:
Company
External
Competition
Industrydefinition
Market definition

Customer
Environmental Factors
 1-13

Influences on
customer behavior

Culture
Groups
subculture, social class,
associations, family, friends
Individual
personality, lifestyle, values,
attitudes
 1-14

Consumer decision
making
Awareness / Perception
Motivation

Information Processing
Learning
Memory
Involvement
Attitudes and Behavior
 1-15

Market Research

Surveys
Focus groups

Depth interviews

Observation
 1-16

Marketing

Strategy

Product Price Place Promo

 1-17

MARKET-DRIVEN
STRATEGY

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
1-18

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 point in shaping
business strategy.
 1-19

Characteristics of a
Market-Driven
Strategy
Becoming
Market-
Orientation

Achieving Determining
Superior Distinctive
Performance Capabilities

Customer
Value/
Capabilities
Match
Why Pursue a Market-
1-20

Driven Strategy?

Strong supporting logic

Achievements of companies
displaying market-driven
characteristics are
impressive
Examples include:
MTN Ghana
Amazon
Southwest Airlines
GCB
Airtel and Tigo
Wal-Mart
BECOMING MARKET
1-21

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
 1-22

Determine the impact of

changes on customer
satisfaction
Increase the rate of product
innovation
Pursue strategies to create
competitive advantage
 Characteristics of
1-23

Market Orientation
Customer Focus
What are the customers
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
 1-24

Becoming a Market-
Oriented Organization
Information
Acquisition

Cross-Functional
Analysis of Information

Shared Diagnosis
and Coordinated
Action

Delivery of
Superior Customer
Value
 1-25

Market Orientation
Information Acquisition
Gather relevant information on
customers, competition, and
markets
Involve all business functions
Intuits Quicken
Inter-functional Assessment
Share information and develop
innovative products with
people from different functions

Shared diagnosis and

action
Deliver superior customer
value
 1-26

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.

 1-27
Southwest Airlines 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 carriers 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
Southwests key assets are very low operating costs, loyal
customer base, and high employee esprit de corps
 1-28

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.

 1-29

Capabilities

Desirable
Capabilities

Applicable to Superior to
Multiple the
Competition Competition
Situations

Difficult to
Duplicate
Source: George S. Day, Journal of Marketing, October 1994, 49.
 1-30

Types of
Capabilities
Outside-In
Processes

Spanning
Processes

Inside-Out
Processes
 1-31

Organizations
Process
EXTERNAL INTERNAL
EMPHASIS EMPHASIS

Outside-In Inside-Out
Processes Processes
Spanning
Processes

Market Customer order Financial

sensing fulfillment management
Customer Pricing Cost control
linking Technology
Purchasing
Channel development
bonding Customer service
delivery Integrated
Technology logistics
monitoring New
product/service Manufacturing/
development transformation
processes
Strategy
development Human
resources
management
Environment
health and safety
Source: George S. Day, Journal of Marketing, October 1994, 41.
 1-32

Matching Customer
Value and Distinctive
Capabilities

Value
Requirements

Distinctive
Capabilities
 CREATING VALUE
1-33

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.
Creating Value for
1-34

Customers

Customer
Value

Benefits Costs
 1-35

Value Composition

Product

Services

Benefits
Employees

Image
Value
(gain/loss)
Monetary
costs
Costs
Time (sacrifices)

Psychic
and physic
costs
 Becoming Market
1-36

Driven
Market Sensing
Capabilities

MARKET
DRIVEN
STRATEGIES

Customer Linking
Capabilities
 1-37

BECOMING MARKET
DRIVEN

Market Sensing
Capabilities

MARKET-DRIVEN
STRATEGIES

Customer Linking
Capabilities
 Market Driven
1-38

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
 1-39

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
 CHALLENGES OF A
1-40

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
 1-41

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 worlds poor
 1-42

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 (www.weforum.org).
 1-43

Ethical Behavior and

Social
Responsiveness

Increasingly
demanding ethical
challenges

Corporate
responsibility

Responsibilities to
stakeholders