1
Market-Oriented Perspectives Underlie
Successful Corporate, Business, and
Marketing Strategies
This is the latest version 12/25/07
Exhibit 1.3
Components of Strategy





Scope
Goals and objectives
Resource deployments
Identification of sustainable
competitive advantage
Synergy
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Need to be Market Oriented.
Internal Orientation
Market Orientation
Persuade customers to buy
What company has
Generic product, production
process, and delivery system
Lowest delivered cost
Volume, cost, profit margins
Short term, reactive
Focus
Persuade company to have
what customers want
Augmented product, customer
benefits, and market segments
Competitive Superior customer value
Advantage
Objectives
Time
Horizon
Profitable use of resources,
market position, customer
satisfaction, and loyalty
Medium and long-run view of
threats and opportunities
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How to be a Market-Driven Organization.
 Keep
close to customers and ahead of competition
 Love the customer more than the product
 Our legitimacy is based on customer satisfaction
 Do business the way the customer wants to do it
 Our mission is to find needs and fill them, not to
make products and sell them
 If we’re not customer-driven, our products won’t be
either
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Strategic Planning.
…is the managerial process of developing
and maintaining a strategic fit between the
organization's objectives and resources
and its changing market opportunities.
Org Objectives Strategic Fit
Resources
Changing Environment
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The Role of Strategy.
Corporate
Mission &
Objectives
Strategy:
•Corporate
•Business
•Functional
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Operating
Plans
An Overview of Marketing Strategies.






Strategies based on market dominance: Leader,
Challenger, Follower
Porter generic strategies (strategy on the dimensions
of strategic scope and strategic strength): Cost
leadership, Product differentiation, Market
segmentation
Innovation strategies: Pioneers, Close followers, Late
followers
Growth strategies: Intensification, Vertical integration,
Horizontal integration, Diversification
Management style strategies: Prospector, Analyzer,
Defender, Reactor
Marketing warfare strategies - draws on parallels
between marketing strategies and military strategies.
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Sun Tzu on Strategy.

“Know your enemy, know yourself, and
your victory will not be threatened.
Know the terrain, know the weather, and
your victory will be complete.”
(from The Art of War, 6th century BCE)
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Strategic Marketing.
“Marketing Strategy is a series of integrated
actions leading to a sustainable competitive
advantage.”
John Scully
President, PepsiCo (1977-1983)
CEO, Apple (1983-1993)
Partner, Scully Bros. LLC (1995-Present)
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Discussion Questions
3.
4.
Does having a market orientation
make sense? What are the
advantages and drawbacks?
Why do some firms lack
orientation towards the market?
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Organizational Marketing Levels.
Organizations develop strategies at three
structural levels:
 Corporate level—(corporate marketing)
 SBU level—(Strategic Marketing)
 Product/Market level—(Functional
Marketing)
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What is a Strategic Business Unit?
(SBU).

A set of products or product lines


With clear independence from other
products or product lines
for which a business or marketing strategy
should be designed
Characteristics of a viable SBU?
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Characteristics of a viable SBU.





Unique business mission
Definable set of competitors
Integrative planning done independently
Responsible for resource management in
all areas
Large enough but not so large as to
become bureaucratic
(Source: Subhash Jain, Marketing Planning & Strategy, 6th Ed.)
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Marketing at the SBU Level - Strategic
Marketing.
Strategic Marketing requires


Detailed understanding of market needs, and
Proactive use of competitive intelligence at
the corporate as well as SBU’s levels
Strategic Marketing
 Focuses on what the firm do best at the SBU
level
 To secure and maintain a sustainable
competitive advantage
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Other Characteristics of Competitive
Advantage.
Substantiality
 Sustainability
 Ability to be leveraged

(Source: Strategic Marketing Management, Aakers)
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Seeking Competitive Advantages.

Position advantages



Performance advantages


Superior customer value
Lower relative total cost
Customer satisfaction, Loyalty, Market Share,
Profit
Sources of advantages

Superior skills & knowledge, Superior resources,
Superior business process
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Key Elements of Marketing Strategy
Formulation.

The strategic 3 Cs
- Customers, Competitors & the Corporation


Environment analysis
Strategic Marketing Decisions
- Where to compete
- How to compete
- When to compete
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A Viable Marketing Strategy.
Must have:
 a clearly defined market
 a good match between corporate
strengths and market needs
 significant positive differentiation in the
key success factors of the business
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Exhibit 1.10
Contents of a Marketing Plan
 Executive summary









Current situation and trends
Performance review
Key issues
Objectives
Marketing strategy
Action plans
Projected profit-and-loss statement
Controls
Contingency plans
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2
Corporate Strategy Decisions
and Their Marketing Implications
Corporate Mission.




Broad purposes of the organization
General criteria for assessing the long-term
organizational effectiveness
Driven by heritage & environment
Mission statements are increasingly being
developed at the SBU level as well
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Exhibit 2.2
Characteristics of Effective Corporate
Mission Statements
Broad
Specific
Functional
Based on
customer
needs
Transportati
on business
Long-distance
transportation for
large-volume
producers of lowvalue, low-density
products
Physical
Based on
existing
products or
technology
Railroad
business
Long-haul, coal
carrying railroad
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Corporate Objectives & Goals.

Objective: a long-range purpose


Not quantified and not limited to a time period
- e.g. increasing the return on shareholders’
equity
Goal: a measurable objective of the
business

Attainable at some specific future date through
planned actions
- e.g. 10% growth in the next two years
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Corporate Culture.
The most abstract level of managerial
thinking
How do you define culture?
What is the significance of culture to an
organization?
How does marketing affect culture in
the organization?
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How do Firms Compete.




Value proposition
Assets & competencies
Function area strategies and programs
Implementation
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Discussion Question
5. Ansoff says there are four
strategies for growing a business.
What are their merits and
drawbacks?.
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Sources of Synergy
1.Knowledge-based synergies
2.Corporate identity-based synergies
3.Corporate branding-based synergies



GE, IBM, Amazon etc.
Virgin Records, Virgin Airlines, etc.
Individual brands such as P & G’s Ivory,
Pampers, cheer, Clairol, Olay, etc.
4.Shared resources-based synergy
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3
Business Strategies and Their
Marketing Implications
How SBUs are Defined

Product-markets should be clustered into an
SBU on the bases of



Technical compatibility
Similarity in customer needs
Similarity in customer characteristics or behavior
In practice SBUs are defined by productmarkets requiring similar technologies,
production facilities, and employee skills
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How Business Strategies Differ in Scope, Objectives,
Resource Deployments, and Synergy Exhibit 3.4.
Dimensions
• Scope
• Goals and obj.
Adaptability (new
product success)
Effectiveness
(↑ mrkt share)
Efficiency (ROI)
• Resource
deployment
• Synergy
Low-cost defender
Mature/stable/welldefined domain;
mature tech.and
cust. segments
Differentiated defender
Mature/stable/welldefined domain;
mature tech.and
cstmr segment
Very little
Little
Low
Low
High
Generate excess
cash (cash cows)
Need to seek
operating
synergies to
achieve efficiencies
High
Generate excess cash
(cash cows)
Need to seek operating
synergies to achieve
efficiencies
How Business Strategies Differ in Scope, Objectives,
Resource Deployments, and Synergy Exhibit 3.4.
Dimensions
• Scope
• Goals and obj.
Adaptability
(new product
success)
Effectiveness
(↑ mrkt.
share)
Efficiency
(ROI)
• Resource
deployment
• Synergy
Prospector
Broad/dynamic
domains; tech. and
cust. segments not
well-established
Extensive
High
Low
Need cash for product
dev. (? or *)
Danger in sharing
operating fac. and
programs - better to
share tech./mktg skills
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Analyzer
Mixture of defender
and prospector
strategies
Mix. of defender &
prospector strats.
Mix. of defender &
prospector strats.
Mix. of def. & prosp.
strats
Need cash for prod.
dev. but < prospectors
Danger in sharing
operating fac. and
programs - better to
share tech./mktg. skills
4
Understanding Market
Opportunities
The Seven Domains of Attractive
Opportunities
Market Domains
Macro
Level
Industry Domains
Market Attractiveness
Industry Attractiveness
Mission,
Aspirations,
Propensity
for Risk
Ability to
Execute
on CSFs
Team
Domains
Micro
Level
Connectedness up
and down Value Chain
Target Segment Benefits
and Attractiveness
Sustainable Advantage
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Discussion Question
1. What’s a market?
2. What’s an industry?
Is the market vs. industry distinction important?
Why or why not?
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Macro Trend Analysis
Demographic environment
Sociocultural environment
Economic environment
Regulatory environment
Technological environment
Natural environment
Think of an example of each and its impact
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Discussion Questions
6. Does industry attractiveness
matter? Why or why not?
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A Tool for Assessing Industry
Attractiveness: Porter’s Five Forces
Threat of new
entrants
Bargaining
power
of suppliers
Rivalry among
existing industry
firms
Bargaining
power
of buyers
Threat of substitute
products
Source: Adapted from Michael E. Porter, “Industry Structure and Competitive Strategy: Keys to Profitability,” Financial Analysts Journal, July-August 1980, p. 33.
Identifying an Industry


A firm is a pert of an industry where suppliers
of key inputs, processes which create added
value, and buyers are similar to other firms in
the industry of which the company considers
itself a part.
Sources of information for macro-level
industry analysis: Exhibit 4.12, p. 99
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Understanding Markets at the Micro Level
Involves looking individually at customers to understand
the attractiveness of the target segment.
Attractive opportunities exist when: 1. there is a clearly
defined source of customer pain, for some in the target
segment, which the offering resolves, 2. the offering
provides customer benefits that others do not 3. the
target segment is likely to grow and 4. the current
segment may provide a springboard for future entry into
other segments.
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Understanding Industries at the
Micro Level
•
Involves looking at the company
and whether it has a sustainable
competitive advantage
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The Team Domains
•
Opportunities are only as good
as the people who will pursue them
Copyright 2008 by The McGraw-Hill
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5
Measuring Market Opportunities:
Forecasting and Market Knowledge