2. 1-2
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.
4. 1-4
Characteristics of Market
Orientation
Customer Focus
What are the customer’s value requirements?
Competitor 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
5. 1-5
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.
6. 1-6
Southwest Airline’s 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 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
9. 1-9
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.
13. 1-13
Market Driven 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
14. 1-14
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
