Overview • Developing Market Strategy – is the process of studying how to exploit a firm’s resources to achieve short-term and long-term marketplace success, deciding on what course of action to pursue, and flexibility updating it as learning occurs during implementation.
Developing Market Strategy Business Strategy Update Business Strategy Resources: Fundamental Value Based Strategies Orderly Radical # Core competencies # Product leadership advance advance # Capabilities # Customer intimacy # Partners resource # Operational excellence Update Market Strategy Knowledge Orderly Radical Market Strategy •Deliberate advance advance What do we What do we How will we •Emergent know? want to do it? accomplish? Anderson, James, James Narus and Das Narayandas (2009), Business Market Management: Understanding, Creating, and Delivering Value, Third Edition, Prentice Hall.
Business Strategy is the foundation fordeveloping Market Strategy • Strategy is written more than any other topic in management practice • What is strategy? Porter contends that firms fail to distinguish between Operational effectiveness – “means performing similar activities better than rivals perform them” • Porter says Strategy “is the creation of a unique and valuable position, involving a different set of activities.
Business Strategy as the foundation fordeveloping Market Strategy A Resource Based View of the Firm • The resourced based view “sees companies as very different collections of physical and intangible assets and capabilities”. • No two companies are alike. • Resources are the building blocks for strategy.
Business Strategy as the foundation fordeveloping Market Strategy • Core Competencies – A core competence is “ a complex harmonisation of individual technologies and production skills” – As an example 3M Company has core competencies in substrates, coatings, and adhesives that it has brought together in distinct ways to create a number of successful businesses.
Business Strategy as the foundation fordeveloping Market Strategy • Capabilities – A capability is “a set of business processes strategically understood” – i.e. Walmart - is an example of a capability, which closely coordinates business processes of Walmart - and its strategic suppliers to provide superior inventory turns.
Business Strategy as the foundation fordeveloping Market Strategy • Partner Resource – Partner resource is how firms share technology and processes to improve speed to market with other firms – i.e. IBM - is an example of a firm that shares resources and relies on outside partners to develop complex ICT solutions.
Fundamental Value Based Strategies • Product Leadership – Leading edge products and services that consistently enhance the customer’s use or application of the product, thereby making rivals obsolete. – Company pursues innovation relentlessly – Variety based positioning – i.e. Apple - is an example of a company that develops leading edge products that change the basis of competition
Core Marketing Strategies:Product Leadership Strategic Direction Corporate Culture Ideas to Products Experimental Skillful marketing Out of box thinking Systems Organization Rewards innovation Ad hoc, Organic New product success Flexible, Changes
Fundamental Value Based Strategies • Customer Intimacy – Customer Intimacy “means segmenting and targeting markets precisely and then tailoring offerings to match exactly the demand of those niches”. – Retaining customers over time – Needs based positioning – Your share of the customers business
Core Marketing Strategies:Customer Intimacy Strategic Direction Corporate Culture Provide solutions FlexibleImprove customer’s business Have it your way Systems Organization Measures cost of service Empowerment Customer loyalty Close to customer
Fundamental Value Based Strategies • Operational Excellence – Operational Excellence means “ providing customers with reliable products or services at competitive prices and delivered with minimal difficulty or inconvenience. – Dell is an example of a company that has pursued operational excellence.
Core Marketing Strategies:Operational Excellence Strategic Direction Corporate Culture Distribution Predictable No-hassle service One-size-fits-all Systems Organization Standard operating Central authority procedure Finite empowerment
Business Strategy as the Foundation forMarket Strategy Strategy Making • How firms develop strategy is a topic of keen interest. • Who Makes Strategy? • Defining Purpose. • Implementing change if needed.
Business Strategy as the foundation forMarket Strategy • Who Makes Strategy? – Conventional view is that top management make strategy – Top down Vs Bottom up – Need to promote broader involvement of managers across the firm is preferable. – This requires a more democratic process of strategy making. – Identify revolutionary thinkers with fresh perspectives
Business Strategy as the foundation forMarket Strategy • Defining Purpose – Cornerstone of strategy making is defining purpose in a mission or vision statement. – Purpose can also be defined as strategic intent (Hamal and Prahalad 1992) – i.e. Komatsu
Planning Market Strategy “Chance favours the prepared mind” Quote- Louis Pasteur
Planning Market Strategy In BusinessMarkets What Do we Know? • It is important to emphasize the word know • It is important to distinguish between what they know, what we believe, and what we want to believe. • We must be willing to challenge what they think we know.
Planning Market Strategy In BusinessMarkets What Do We Want to Accomplish? • Management team attempts to reach a shared agreement. • Marketing strategy begins with targeting segments and customer firms. • Setting Goals and Objectives • Positioning • Building Brands
Planning Market Strategy In BusinessMarkets How Will We Do It? • The question is about thinking through implementation of the market strategy. • Firms can propose the most wonderful sounding market strategies, but if they lack the requisite knowledge, skills, and abilities to put them into play, little will be accomplished.
Summary• Developing market strategy is the process of studying how to exploit a firm’s resources to achieve short term and long term success.• It requires significant participation from many functional areas.• Business Strategy involves a resource based view, product leadership or customer intimacy view of the firm.• Radical change versus orderly advance.• Through planning market strategy members of a management team can compare, revise and update individual market views, so as to devise alternative courses of action
Summary • We need to ask fundamental questions about our firms operation such as – What do we know? – What do we want to accomplish? – How we will do it?
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