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
Market Driven Strategy’s Basics
• Obtaining information about customers,
  competitors and Markets.
• Viewing the information from a total business
• Deciding across business functions to create
  superior customer Value.
• Taking actions to ensure delivery of superior
  customer value.
Market Driven Strategy in Action
 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
• Effective Supplier, Distributor and service partnerships with other
• 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

   Achieving                      Leveraging of
    Superior                       Distinctive
  Performance                      Capabilities

                Customer Value
                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
• Ability to monitor rapidly changing customer needs.
• Increasing the rate of Product innovations.
• Building the organization’s Competitive Advantage.
      Characteristics of Market

• 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)

                    Processes                    Superior
                    (new product

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

                    Why to pursue

                                    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.

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

Outside-In                                         Inside-Out
Processes                                          Processes


                    •Order Fulfillment
•Market Sensing                             •Financial Management
•Customer Linking                           •Cost control
•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
   Creating Value for Customers

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

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