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Strategic Marketing

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					        Chapter One

Market Driven Strategy

         Part - 1
   Strategic Marketing
      Market Driven Strategy

• Customer should be the starting point in
  business strategy formulation.
• Understanding of Market and customer
  requirements is the key to compete in future.
• Market driven strategies improve business
  performance.
Market Driven Strategy’s Basics
• Obtaining information about customers,
  competitors and Markets.
• Viewing the information from a total business
  perspective.
• Deciding across business functions to create
  superior customer Value.
• Taking actions to ensure delivery of superior
  customer value.
Market Driven Strategy in Action
• SOUTHWEST AIRLINES
 On-Time Service
 High Aircraft Utilization
 Market-Oriented Culture
 Low Operating Expenses
 Standardized facilities such as food
 Low Fares
 Friendly crew and simple procedures for customers.
 No Connections with other airlines.
Market Driven Strategy in Action

• Dell Computers
• Value chain Strategy combines technologies from Intel, Microsoft,
  and IBM.
• Resulting in faster introduction of next generation product than it’s
  competitors.
• Effective Supplier, Distributor and service partnerships with other
  companies.
• Direct sales to customers reducing the no. of intermediaries.
• More control over price, Quality and delivery.
• Built-to-order business design.
• Close contact with customers through large sales force.
• Dell process 500,000 calls each week effectively.
• 65,000 corporate customers are linked to their own Dell Premier
  pages on the Internet.
• Sales in 2004 exceeds $47 billion.
Characteristics of Market-Driven
           Strategies
                   Market-
                  Orientation



   Achieving                      Leveraging of
    Superior                       Distinctive
  Performance                      Capabilities


                   Matching
                Customer Value
                Requirements
                to Capabilities
     Becoming Market Oriented
• A business is Market oriented when it’s culture is
  systematically and entirely committed to continuous
  creation of superior customer value.
• Understanding and satisfying customers.
• Keeping yourself close to customers, suppliers and other
  Stakeholders.
• Ability to monitor rapidly changing customer needs.
• Increasing the rate of Product innovations.
• Building the organization’s Competitive Advantage.
      Characteristics of Market
            Orientation

• Customer Focus
• Competitor Intelligence
• Cross-functional Coordination
     Distinctive Capabilities
• Capabilities are complex bundle of skills
  and accumulated knowledge, utilized
  through organizational Processes, that
  enable a firm to coordinate activities and
  make effective use of their assets.
      Components of Organizational Capabilities
      Skills                  Accumulated
      (cross-functional       knowledge
        teams)                (new product experience)




                   Organizational
                    Processes                    Superior
                                                 Customer
                    (new product
                                                  Value
                     development)




Coordination
of Activities             Assets
(communication)           (brand image)
Higher contribution to superior
customer value




                    Why to pursue
                      Distinctive
                     Capabilities



                                    Provide value to
                                    customers on a more
                                    cost-effective basis
    Distinctive Capabilities in Action
• South West Airlines
  – Organizational processes:
     • Point-to-point route system rather than hub-and-spoke
       design used by others.
     • Service to 57 cities in 29 states with average trip of 500 miles
     • Operating costs kept low through the use of 737 aircrafts,
       and limited services (no meals).
     • Minimizing time span from landing to departure.
  – Skills and Accumulated Knowledge
     • Developing Skills to improve customer loyalty.
     • Operating business at very low costs.
  – Coordination of Activities
     • Simplification of functions
     • Coordination among various dept. to deliver on-time service.
     • Customer facilitation and easy access.
  – Assets
     • Loyal customer base.
     • Major strength is team work and employee coordination.
      Distinctive Capabilities in Action
• Zara Boutique (Spanish Apparel Retailer)
   – Organizational processes:
       • $2 billion company with 924 stores in 31 countries
       • Production of 12,000 apparel styles each year.
       • Each is available in store in four weeks.
       • Renews nearly half their stock every two weeks.
       • Have more than 200 designer and produce two third of it’s clothes in
         company-owned facility in Spain.
       • Hi-tech computer guided manufacturing and facilities.
   – Skills and Accumulated Knowledge
       • Skills of unique design team.
       • Knowledge about changing fashion trends.
       • Customer and competitor guided design process
   – Coordination of Activities
       • Cross functional coordination in new product development.
       • Short time span between idea and their transformation into stores.
   – Assets
       • Information technology is vital in it’s success.
       • Strong Brand image.
               DESIRABLE
              CAPABILITIES



Superior to                   Applicable to
   the                          Multiple
Competition                   Competitive
                               Situations
               Difficult to
               Duplicate
                    TYPES OF CAPABILITIES

Outside-In                                         Inside-Out
Processes                                          Processes


                               Spanning
                               Processes

                    •Order Fulfillment
•Market Sensing                             •Financial Management
                    •Pricing
•Customer Linking                           •Cost control
                    •Purchasing
•Channel Bonding                            •Integrated Logistics
                    •Customer service
•Technology         delivery                •Manufacturing process
monitoring                                  •Human Resource
                    •New product/service
                    Development             Management

                    •Strategy Development   •Technology
    Matching Customer Value
   Requirements to Capabilities
• Company must identify Value opportunities
  existing in the Market.
• Select value opportunities that match it’s
  distinctive capabilities.
• Firm must determine where and how it can offer
  superior Value.
• Firm must pursue a positive Capability/ Value
  match.
   Creating Value for Customers
   Product
   Services
                     Benefits
  Employees
    Image
                             Value
                          (gain/loss)


Monetary Costs
                       Costs
    Time
                    (Sacrifices)
 Psychic and
 physic costs
  How to Match Customer Value
  Requirements to Capabilities?
• Inject customer focused behavior in frontline
  employees.
• Analyze target markets and boost service
  quality.
• Customer Sensing and customer Linking.
• Use cross-functional teams to develop Products
  and services.
• Innovate regularly.
• Achieve operational excellence.

				
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