“Business has only two basic
functions - marketing and innovation.”
- Peter Drucker
What is Strategy?
“Strategy is a framework which
guides those choices that determine
the nature and direction of an
organization.”
-Benjamin B. Tregoe &
John W. Zimmerman
“Top Management Strategy”
“Strategy is the creation of a unique
and valuable position, involving a
different set of activities.”
-Michael Porter
“What is Strategy?”
Harvard Business Review
“In terms of the three key players
(competitors, customers, company)
strategy is defined as the way in which a
corporation endeavors to differentiate
itself positively from its competitors,
using its relative corporate strengths to
better satisfy customer needs.”
-Kenichi Ohmae
“The Mind of the Strategist”
A Business Strategy
Where to Compete
The product-market investment decision
A Business Strategy
How to Compete
Value
proposition
Assets &
competencies
Function area
strategies and programs
Figure 1.1
The Product-Market Investment Decision
Invest to grow (or enter a product market)
Invest only to maintain the existing position
Milk the business by minimizing investment
Recover as many of the assets as possible by
liquidating or divesting the business
The Customer Value Proposition
Perceived benefit to customer:
Functional
Emotional
Social
Self-Expressive
Customer Value Proposition Examples
A good value
Excellence on an important product or service
attribute
The best overall quality
Product line breadth
Innovative offerings
A shared passion for an activity or a product
Global connections and prestige
Assets and Competencies
Strategic Competency:
What a business unit does exceptionally well
Has strategic importance to the business
Based on knowledge or a process
Strategic Asset:
A resource
Functional Strategies and Programs
Manufacturing strategy
Distribution strategy
Brand-building strategy
Communication strategy
Information technology strategy
Global strategy
Segmentation strategy
Quality program
Customer relationship program
THE EIGHT QUESTIONS OF MARKETING
STRATEGY
We can use a strategic framework to address the feasibility of any strategic
initiative:
Company Strengths
and Weaknesses
What are we good at?
Can we do this?
Corporate
Objectives
Where do we want to go?
Will this get us there?
Customers’
Needs
What do customers want?
Will they value this?
Market
Characteristics
What is the market like?
Will the market support this?
Not only do we get a Go/No Go answer, we identify leverage points.
THE ELEMENTS OF MARKETING
STRATEGY AT THE CORPORATE LEVEL
Strategy as a marketing process
Company
Strengths
Customer
Needs

Let’s not do anything that will not be valued by the marketplace

Let’s not attempt to do anything for which we do not have the skills
(or cannot get the skills)
MARKETING STRATEGY IS THE PROCESS OF
MATCHING OUR STRENGTHS TO THE MARKET’S
NEEDS
Company
Strengths and
Weaknesses
Market
Needs
Critical Success
Factors
It also involves us choosing the markets which
best fit our company objectives
Company
Objectives and
Imperatives
Elements of Market
Attractiveness
Market
Characteristics
STRENGTHS AND WEAKNESSES
What are the things we do well?
What are our weak points?
Strengths
Weaknesses
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How should we use this analysis?
TYPICAL STRENGTHS AND WEAKNESSES
OF MAJOR CORPORATIONS
Strengths
Weaknesses
Financial Robustness
Discourage Innovation
Strong Customer Base
Lack of Understanding of
Market Opportunities
Good Distribution and
Market Power
Competitive Relationship
with Channels
Strong Brand Equity
Ad Hoc Product Extension Strategy
Good Technical Capability
Poor Quality Control
Well-Trained Staff
Poor Industrial Relations
Highly-Empowered Senior
Management
Lack of Strategic Direction and Vision
COMPANY CRITERIA FOR EVALUATING
MARKET OPPORTUNITIES
To evaluate market opportunities we have to answer the question
“What features do we value in a market?”
(i.e., What do we want from a market?)
For our organization, what features would be considered desirable for a new or
existing market opportunity? This could be at a product or account, an SBU or a
segment.
EXAMPLES OF DESIRABLE
MARKET CHARACTERISTICS
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Large market size / Segment size
High Growth
Low Seasonality; Stability; Cyclicality
Low price sensitivity
Low strength of trade; Good supplier relations
Highly differentiated; Aids innovation; Enhances reputation
Long life cycles
Interaction with core businesses; Synergy; Fits profile
Strong category growth; Low cannibalization
High contribution / Profit; Cash flow
High barriers to entry;
Adds to market coverage
Customer Needs
Customers
Competition
What do we have to do well to be a good company from a customers’ perspective? What
do customers need and what are the critical success factors in meeting those needs?
CRITICAL SUCCESS FACTORS
TO MEETING NEEDS
Typical Elements of Competitive Capability
Market Related
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Customer Base and Reach
Product Quality (Perceived and Actual)
Market Image
Degree of Innovation
Control of Channel
Market and Competitor Intelligence
Internal Skills
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Marketing and Other Staff
Production Capability
Cost Efficiency
Technology
Financial Resources
MARKET CHARACTERISTICS
What are some of the ways, qualitative and quantitative that we would use to
describe the markets in which we compete?
ELEMENTS OF MARKET CHARACTERISTICS

Customers

Competitors
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Channels of Distribution
– Size and Nature of Market
– Segmentation & Product Life Cycle
– Price Sensitivity
– Market Structure (Market Shares)
– Level of Competitive Rivalry
– Sources of Competitive Advantage
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Concentration
Market Power
Strategic Alliances
Sophistication
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Climate
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Regulatory
Environmental
Technology
Related Industries