Chapter Six
Business
Marketing
Planning:
Strategic
Perspectives
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Market-Driven Organizations
• Centered on customers
• Take an outside-in view of strategy
• Demonstrate an ability to sense market
trends ahead of their competitors
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Hierarchy of Strategies
Corporate Strategy
What businesses are we in?
What are our core competencies?
How should we allocate resources?
What businesses should we be in?
Business-Level Strategy
How do we compete in a given industry?
How should we position ourselves against
competitors?
Functional Strategy
How can we allocate resources to most efficiently
and effectively support business-level strategies?
Marketing manages organization-customer
connections.
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Marketing: Perhaps Best Understood as:
1. Customer-product connection—linking the
customer to the focal offering.
2. Customer-service delivery connection—design and
delivery actions involved in providing firm’s goods and
services.
3. Customer-financial accountability connection-Activities and processes that link customers to
financial outcomes.
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Marketing’s Role in Managing Three Customer Connections
Marketing, Operations
Customer
Human Resources,
Accounting
Service Delivery
Human Resources
Product
Operations
Financial Accountability
Accounting, Management
Information Systems
Top Management
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Collective Action Perspective of Strategy Formulation Process
This approach applies to
strategic decisions that:
• Cut across
functional areas
• Involve firm’s longterm objectives
• Involve resource
allocation
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Cross-Functional Connections Explore Interrelationships
Between Marketing and Four Business Functions
Formulating Business Marketing Strategy:
Vital Cross-Functional Connections
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CUSTOMER INTERFACE
CORE STRATEGY
STRATEGIC RESOURCES
VALUE NETWORK
Fulfillment & Support
Information & Insight
Relationship Dynamics
Pricing Structure
Business Mission
Product/Market Scope
Basis for Differentiation
Core Competencies
Strategic Assets
Core Processes
Suppliers
Partners
Coalitions
EFFICIENT / UNIQUE / FIT / PROFIT BOOSTERS
Major business concept components tied together
by three important “bridge” elements: customer
benefits, configuration, and company boundaries.
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Fulfillment
and support
Information
and insight
Customer Interface
Pricing
structure
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Relationship
dynamics
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Core Strategy—Three Elements
• The business mission describes overall objective of
strategy, sets course of direction, and defines
performance criteria to measure progress.
• Product/market scope defines where firm
competes.
• Basis for differentiation captures essence of how
firm competes differently than its rivals do.
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Strategic Resources
•
•
•
Core competencies are set of skills, systems, and
technologies that creates uniquely high value for
customers.
Strategic assets are more tangible requirements for
advantage. Strategic assets include brands, customer
data, distribution coverage, patents.
Core processes are methodologies and routines that
companies use to transform competencies, assets, and
other inputs into value for customers.
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The Balanced Scorecard - Translating Strategy Into Operational Terms
Financial Perspective
Long-Term
Shareholder
Value
Revenue
Growth
Productivity
Cause-and-Effect Relationships
Defines the chain of logic by which
intangible assets will be
transformed to tangible value.
Customer Perspective
Product/Service Attributes
Price
Quality
Time
Relationship
Image
Partnership
Brand
Function
Internal Process Perspective
Manage
Operations
Manage
Customers
Manage
Innovation
Manage
Regulatory
and Social
Processes
Learning and Growth Perspective
Human
Capital
+
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Information
Capital
+
Organization
Capital
Customer Value Proposition
Clarifies conditions that create
value for the customer.
Value-Creating Processes
Defines processes that transform
intangible assets into customer
and financial outcomes.
Clustering Assets and Activities
Defines intangible assets to be
aligned and integrated to create
value
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Aligning Internal Business Processes to the Customer Strategy
Customer Strategy
The Focus of Internal Business Processes
Operations Management
Customer Relationship Management
Innovation Management
Low Total Cost Strategy
Highly Efficient Operating
Processes
Efficient, Timely Distribution
Ease of Customer Access
Superb Post-Sales Service
Seek Process Innovations
Gain Scale Economies
Product Leadership
Strategy
Flexible Manufacturing
Processes
Rapid Introduction of
New Products
Capture Customer Ideas for
New Offering
Educate Customers about Complex
New Products/Services
Disciplined, High-Performance
Product Development
First-to-Market
Complete Customer
Solutions Strategy
Deliver Broad Product/
Service Line
Create Network of Suppliers
for Extended Product/
Service Capabilities
Create Customized Solutions
for Customers
Build Strong Customer
Relationships
Develop Customer Knowledge
Identify New Opportunities
to Serve Customers
Anticipate Future Customer
Needs
Lock-in
Strategies
Provide Capacity for
Proprietary Product/
Service
Reliable Access and
Ease of Use
Create Awareness
Influence Switching Costs of
Existing and Potential
Customers
Develop and Enhance
Proprietary Product
Increase Breadth/
Applications of Standard
Source: Adapted from Robert S. Kaplan and David P. Norton, Strategy Maps: Converting Intangible Assets into Tangible Outcomes (Boston: Harvard
Business School Publishing Corporation, 2004), pp. 322-344.
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Strategy Map Template: Product Leadership
Long-Term Shareholder Value
Financial
Perspective
Productivity Strategy
Revenue Growth Strategy
Manage Total Life-Cycle
Product Costs
Revenues from
New Products
Gross Margins:
New Products
“Products and Services That Expand Existing Performance Boundaries into the Highly Desirable”
Customer
Perspective
High-Performance Products: Smaller,
Faster, Lighter, Cooler, More
Accurate, More Storage, Brighter…
First to market
Operations Management
Internal
Perspective
Flexible
Robust
Processes
Supply
Capacity
for Rapid
Growth
Customer Management
New Customer
Segments
Innovation
Regulatory and Social
Rapid
Introduction
of New
Products
Educate
Customers about
Complex New
Products/Services
Disciplined,
High-Performance
Product
Development
Minimize
Product Liability
And
Environmental
Impact
In-line
Experimentation
and
Improvement
Capture Customer
Ideas for New
Products/Services
Product
Development
Time: From Idea
to Market
Contribute to
Communities
“Find, Motivate, Grow, and Retain the Best Talent”
A Capable, Motivated and Technologically Enabled Workforce
Learning and
Growth
Perspective
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Information Capital
Human Capital
Deep
Functional
Expertise
Creative, Versatile
Employees: Crossfunctional Teamwork
Virtual Product
Prototyping and
Simulation
Computer-Aided
Design and
Manufacturing
(CAD/CAM)
Organization Capital
Creativity,
Innovation
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