3. 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.
5. Why Pursue a
Market-Driven
Strategy?
1-5
Strong supporting logic
Achievements of companies
displaying market-driven
characteristics are
impressive
Examples include:
Dell Inc.
Louis Vuitton
Southwest Airlines
Tesco
Tiffany & Co.
Wal-Mart
Zara
6. 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
7. 1-7
Determine the impact of
changes on customer
satisfaction
Increase the rate of product
innovation
Pursue strategies to create
competitive advantage
8. 1-8
Characteristics of
Market
Customer Focus
Orientation
What are the customer’s
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
9. 1-9
Becoming a MarketOriented Organization
Information
Acquisition
Cross-Functional
Analysis of Information
Shared Diagnosis
and Coordinated
Action
Delivery of
Superior Customer
Value
10.
Market
Orientation
Information Acquisition
1-10
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
11. 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.
12. Southwest Airline’s
Distinctive Capabilities
1-12
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 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 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
Southwest’s key assets are very low operating costs, loyal
customer base, and high employee esprit de corps
13. Capabilities
1-13
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.
18. 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.
23. Market Driven
Initiatives
1-23
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
24. 1-24
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
25. 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
26. Escalating
Globalization
1-26
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
27. Technology
Diversity and
Uncertainty
Radical New Product
1-27
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).