Chapter 1


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Chapter 1

  1. 1. Strategic Marketing
  2. 2. Why this CourseIntegrate what you have learned in earlier courseseither Marketing and other discipline (Marketingstrategy, Strategic Marketing planning, StrategicBrand Management, Marketing in new Economy oranything else)This course will ask to apply what you have learn todecision making in cases that bring alive realmarketing situation and may require you to completea term long project of some kind like makingmarketing plan for new or existing product or a newventure.Focus on decision making and concise strategicfoundation and evaluate the decision and decisionprocess 3-2
  3. 3. Some Questions to Judge What’s a strategy ?..... Widely differing definitions & Interpretations….. What exactly is strategy? 3-3
  4. 4. STRATEGYA strategy is a fundamental pattern ofpresent and planned objectives, resourcedeployment and interactions of anorganization with its markets, competitorsand other environmental factors 3-4
  5. 5. The Components of StrategyScope Goals and Objectives Resource Deployment Identification of Suitable Competitive environment Synergy 3-5
  6. 6. ScopeBreadth of its strategic domainNo and Types of industriesProduct lineMarket segments it competes or enterStrategic scope should reflect mgt viewof the firm’s purpose or mission 3-6
  7. 7. Goals and ObjectivesStrategies should also details thedesired level of accomplishment on oneor more dimensions of performancei.e Volume Growth, Profit Contribution,ROI – over specified time period 3-7
  8. 8. Resource DeploymentEvery organization has limitedresourcesDecide how to obtain and deployAcross business, product markets,functional departments and activities 3-8
  9. 9. Identification of a Sustainable Competitive Advantage Specification of how the organization will compete in each business and product market How can it position itself to develop sustain a differential advantage over competition 3-9
  10. 10. SynergySynergy exists when the firmsbusiness, products-markets, resourcedeployment and competenciescomplement and reinforce each otherand becomes greater than the sum ofits parts… 3-10
  11. 11. Hierarchy of StrategyCorporate StrategyBusiness StrategyFunctional Strategy 3-11
  12. 12. MARKETINGThe aim of marketing is to know andunderstand the customer so wellthat the product or service fits himor her and sells itself… Peter F. Drucker 3-12
  13. 13. MARKET-DRIVEN STRATEGY Flow of Learning… Market Driven Strategy Its Role in Design, Implementing Business & Marketing Strategies Importance / process of becoming market oriented Capabilities of market oriented organizations Creating value for customers Initiatives necessary to become market oriented 3-13
  14. 14. MARKET-DRIVEN STRATEGY Market and Customer forms a Market – Starting point of Strategy formulation Understand market and how it changes in future? Information  Customer  Competitors  Markets Dell 500 K customers – 65 K Corporate (internet) Viewing information from total business perspective How to deliver superior customer value 3-14
  15. 15. 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 MarketingAll 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. 3-15
  16. 16. Characteristics of a Market-Driven Strategy Becoming Market- OrientationAchieving Superior Determining Performance Distinctive Capabilities Customer Value/ Capabilities Match 3-16
  17. 17. 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• Determine the impact of changes on customer satisfaction• Increase the rate of product innovation• Pursue strategies to create competitive advantage 3-17
  18. 18. Characteristics of Market Orientation Customer Focus 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 3-18
  19. 19. Becoming a Market-Oriented Organization Information Acquisition Cross-Functional Analysis of Information Shared Diagnosis and Coordinated Action Delivery of Superior Customer Value 3-19
  20. 20. Market Orientation Information Acquisition Gather relevant information on customers, competition, and markets Involve all business functions Inter-functional Assessment Share information and develop innovative products with people from different functions Shared diagnosis and action Deliver superior customer value
  21. 21. 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.”
  22. 22. CapabilitiesDisproportionate (higher)contribution to superiorcustomer value Compelling Logic of Distinctive Capabilities Provides value to customers on a more cost-effective basis 3-22
  23. 23. Capabilities Desirable Desirable Capabilities CapabilitiesApplicable to Superior to Multiple theCompetition Competition Situations Difficult to Duplicate
  24. 24. Types of CapabilitiesOutside-In SpanningProcesses Processes Inside-Out Processes
  25. 25. Organization’s Process EXTERNAL INTERNAL EMPHASIS EMPHASIS Outside-In Inside-Out Processes Processes Spanning Processes Market sensing  Customer order  Financial fulfillment management Customer Linking  Pricing  Cost control Channel  Purchasing  Technology bonding development  Customer service Technology delivery  Integrated logistics monitoring  New product/service  Manufacturing/ development transformation  processes Strategy development  Human resources management  Environment health and safety
  26. 26. Matching Customer Value and Distinctive Capabilities Value Requirements Distinctive Capabilities
  27. 27. CREATING VALUE FOR CUSTOMERSCustomer Value:  Value for buyers consists of the benefits less the costs resulting from the purchase of products.  Superior value: positive net benefitsCreating Value: “Customer value is the outcome of a process that begins with a business strategy anchored in a deep understanding of customer needs.”
  28. 28. Creating Value for Customers Customer Value Benefits Costs 3-28
  29. 29. Value CompositionProductServices BenefitsEmployee s Image Value (gain/loss )Monetary costs Costs Time (sacrifices) Psychicand physic costs
  30. 30. Becoming Market DrivenMarket Sensing Capabilities MARKET – DRIVEN STRATEGIES Customer Linking Capabilities
  31. 31. Market Driven InitiativesMarket 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 relationshipsAligning 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
  32. 32. 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
  33. 33. Escalating GlobalizationIt 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
  34. 34. Technology Diversity and UncertaintyRadical 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 (
  35. 35. Ethical Behavior and Social Responsiveness Increasingly demanding ethical challenges Corporate responsibility Responsibilities to stakeholders