*

* Crafting Strategy
*

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* crafting
Potter

CLA
Y

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* April 4, 2018
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2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Year

1752 1948 2143 2357 2593 2852 3137 3451 3796 4176 4594 5053 5558 US$
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* March 20, 2019
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* The Strategic Planning, Implementation,
and Control Processes
*

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* GP Nov
* , 2020

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*

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*

the ability to understand

something instinctively,
without the need for
conscious reasoning.
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* Strategic Marketing Management
*

Planning Analysis
& &
Control Decision

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* Strategic Marketing Management
*
* Stage#1>Market led approach to planning
* Stage#2>Where are we now? Strategic, financial & marketing
analysis
* Stage#3>Where do we want to be? Techniques for analysis and
strategy development.
* Stage#4>How might we get there & which way is best? Strategy
formulation & selection
* Stage#5> How can we ensure arrival? Implementation & control

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* As we advance into the 3rd decade of the 21st century. Executives in companies
* around the world are confronted with unprecedented
strategic marketing challenges &
* exciting opportunities

Driven by

Demanding customers with complex value requirements,

Aggressive global competition,
Turbulent markets,
Rapid emergence of disruptive new technologies &
Global expansion initiatives

Strategic Marketing has become an

enterprise-spanning responsibility with major
bottom-line implications.

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*
* Strategic Marketing
*
* Strategic Marketing is

* a market driven process of strategy

development,
* taking into account
* - a constantly changing business environment
&
* - the need to deliver superior customer value.

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*
* Strategic Marketing
*
* A set of coherent decision about the firm’s approach to the
market.

* Strategy: the firm’s approach to the market

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Central to the opportunities generated by these challenges is a
* critical need to improve executives’ understanding of
*
* Markets & competitive space,
* Customer value delivery,
* Ethical behavior & social imperatives,
* Innovation culture & processes,
* Effective organizational design & processes.

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*
*
Strategic Marketing examines the
underlying logic & processes for
designing & implementing
market-driven strategies.

Delivering superior value to customers is the core

objective of market-driven strategy.

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* Strategic marketing
consists of 5 complex & interrelated processes
*

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*

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 Chapter 1
Imperatives for
Market-Driven
Strategy
Or
New Challenges for
Market-Driven
Strategy
*
* Objectives of this Chapter
*
* Pivotal role of market-driven strategy in designing
and implementing business/marketing strategies

* Links between business/marketing strategy and

corporate strategy

* Challenges in the modern environment

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*
Characteristics of a Market-Driven
*
Strategy
*
Becoming Market-
Oriented

Achieving Superior Determining

Performance Distinctive
Capabilities

Customer
Value/
Capabilities
Match
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*
* Market-Driven Strategy (1)
*
* Becoming market-oriented
* Customer focus
* Competitor intelligence
* Cross-functional coordination
* Performance implications/ connections

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* BECOMING MARKET ORIENTED
*
* Customer is the focal point of the organization
* Commitment to continuous creation of superior
customer value
* Superior skills in understanding and satisfying
customers
* Requires involvement and support of the entire
workforce
* Monitor rapidly changing customer needs and
wants

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*
*
*

* Determine the impact of changes on

customer satisfaction
* Increase the rate of product innovation
* Pursue strategies to create competitive
advantage

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*
* Characteristics of Market Orientation
*
▪ Customer Focus
What are the customer’s value requirements?
▪ Competitive 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

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*
* Becoming a Market-Oriented
* Organization
Information
Acquisition

Cross-Functional
Analysis of Information

Shared Diagnosis
and Coordinated
Action
Delivery of
Superior Customer
Value
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*
* Market Orientation
*
▪ Information Acquisition
▪ Gather relevant information on customers,
competition, and markets
▪ Involve all business function
▪ Inter-functional Assessment
▪ Share information and develop
innovative products with
people from different function
▪ Shared diagnosis and action
▪ Deliver superior customer value
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*
* Market-Driven Strategy (2)
*
* Becoming market-oriented
* Customer focus
* Competitor intelligence
* Cross-functional coordination
* Performance implications
* Determining distinctive capabilities

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*
* DISTINCTIVE CAPABILITIES
*

“Capabilities are complex

bundles of skills &
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.

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*
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
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*
* Capabilities
*
Disproportionate
(higher)
contribution to
superior
customer value
Compelling/ fasinating
Logic of Distinctive
Capabilities

Provides value to
customers on a more
cost-effective basis
Source: George S. Day, Journal of Marketing, October 1994, p. 38.
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* Capabilities
*
Desirable
Capabilities

Applicable to Superior to the

Multiple Competition
Competition
Situations

Difficult to
Duplicate
Source: George S. Day, Journal of Marketing, October 1994, 49.
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*
*

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* Nike was awarded 540 patents in 2013
*

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* Core Competencies
*
Nike, for example, does not manufacture its own shoes, because
* Certain Asian manufacturers are more competent in this task;
* Nike nurtures its superiority in shoe design and shoe
merchandising, its two core competencies.

* Core competency has 3 characteristics:

(1) It is a source of competitive advantage in that it makes a
significant contribution to perceived customer benefits,
(2) it has applications in a wide variety of markets, and (3) it is
difficult for competitors to imitate.

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*
* Market-Driven Strategy (3)
*
* Becoming market-oriented
* Customer focus
* Competitor intelligence
* Cross-functional coordination
* Performance implications
* Determining distinctive capabilities
* Types of capabilities

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*
* Types of Capabilities
*
Outside-In
Processes

Spanning
Processes

Inside-Out
Processes

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* Organization’s Process
*
EXTERNAL INTERNAL
EMPHASIS EMPHASIS

Outside-In Inside-Out
Processes Processes
Spanning Processes
▪ ▪ Financial management
Market sensing ▪ Customer order
▪ Customer linking fulfillment ▪ Cost control
▪ Channel bonding ▪ Pricing ▪ Technology
development
▪ Technology ▪ Purchasing
▪ Integrated logistics
monitoring ▪ Customer service
delivery ▪ Manufacturing/
transformation
▪ New product/service processes
development
▪ Human resources
▪ Strategy development management
▪ Environment health and
Source: George S. Day, Journal of Marketing, October 1994, 41. safety
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* Market-Driven Strategy (4)
*
* Becoming market-oriented
* Customer focus
* Competitor intelligence
* Cross-functional coordination
* Performance implications
* Determining distinctive capabilities
* Types of capabilities
* Creating value for customers

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*
* Matching Customer Value and Distinctive
* Capabilities

Value Requirements

Distinctive
Capabilities

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* 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.
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* Creating Value for Customers
*
Customer
Value

Benefits Costs
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* Value Composition
*
Product

Services
Benefits
Employees

Image Value
(gain/loss)
Monetary costs
Costs
Time (sacrifices)
Psychic and
physic costs

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* Market-Driven Strategy (5)
*
* Becoming market-driven
* Marketing sensing capabilities
* Customer linking capabilities
* Aligning structure and processes

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* Becoming Market Driven
*
Market Sensing
Capabilities

MARKET –
DRIVEN
STRATEGIES

Customer Linking
Capabilities
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* 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
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*
*
Aligning Structure and Processes
* Potential change of organizational design
* Improve existing processes
* Process redesign
* Cross-functional coordination and
involvement
* Primary targets for reengineering:
* Sales and marketing, customer relations,
order fulfillment, and distribution

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* Corporate, Business and Marketing
* Strategy (1)
* What is corporate strategy?

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* The Strategic Planning, Implementation,
and Control Processes
*

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* CORPORATE STRATEGY
*
Deciding the Scope
and Purpose of
the Business

Business
Objectives

Actions and
Resources for
Achieving
Objectives

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CHARACTERISTICS OF SUCCESSFUL
*
STRATEGY
*
Unique competitive position for the
company.
Activities tailored to strategy.
Clear trade-offs and choices vis-à-vis
competitors.
Competitive advantage arises from fit
across activities.
Sustainability comes from the activity
system not the parts.
Operational effectiveness a given.
Source: Michael E. Porter, “What Is Strategy,” Harvard Business Review, November-December 1996, 74.

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*
* Corporate, Business and Marketing
* Strategy (2)
* What is corporate strategy?
* Corporate strategy framework
* Deciding corporate vision
* Objectives
* Resources
* Business composition
* Structure, systems and processes

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* CORPORATE STRATEGY
* COMPONENTS

Management’s long-term vision for the

corporation
Objectives
Assets, skills, and capabilities
Businesses in which the corporation
competes
Structure, systems, and processes
Creation of value
Source: David J. Collis and Cynthia A. Montgomery, Corporate Strategy, Chicago: Irwin, 1997,
7-12.
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*
* Corporate, Business and Marketing Strategy (3)
*
* Business and marketing strategy
* Business and marketing strategy relationships
* Strategic marketing

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* CORPORATE, BUSINESS AND
* MARKETING STRATEGY

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*

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*

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* Business Strategy
*
• A business strategy is the means by which it sets out to
achieve its desired ends (objectives).

• It can simply be described as a long-term (3-5 years)

business planning.

• A business strategy is concerned with major resource

issues e.g. raising the finance to build a new factory or
plant.

• Strategies are also concerned with deciding on what

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* Business Strategy
*
•Re-engineering the corporation
•TQM
•Building Distinctive Competencies
•Reinventing the organization
•Supply Chain Strategy
•Strategic Partnering

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*
MARKETING STRATEGY PROCESS
*
Markets,
Segments
And Value
Implementing
and Managing Designing
Market-Driven Market-Driven
Strategy Strategies

Market-Driven
Program
Development

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* Corporate, Business and
* Marketing Strategy (4)
* The marketing strategy process
* 1) Markets, segments and customer value
* Markets and competitive space
* Strategic market segmentation
* Strategic customer relationship management
* Capabilities for continuous learning about markets

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* Corporate, Business and Marketing Strategy (5)
*
* 2) Designing market-driven strategies
* Market targeting and strategic positioning
* Strategic relationships
* Innovation and new product strategy
* 3) Market-driven program development
* Strategic brand management
* Value chain strategy
* Pricing strategy
* Promotion strategy

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* Corporate, Business and Marketing Strategy (6)
*
* 4) Implementing and managing market-driven
strategy
* Designing market-driven organizations
* Marketing strategy implementation and control

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*
*

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* Challenges in the modern environment
*

* Escalating globalization
* Technology diversity and uncertainty
* The Internet Dynamics
* Ethical behavior and corporate social
responsiveness

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