STRATEGIC MARKETING

By

David W. Cravens and Nigel F. Piercy

 Chapter One

The Fundamentals of Strategic Marketing

and Imperatives for Market-Driven Strategy
 1. STRATEGY and MARKET-DRIVEN
STRATEGY

 Strategy is a way of achieving the vision.

 Market driven strategy or strategic marketing is a way of
coordinating a strategic fit between the organization’s mission and its
changing marketing dimensions in order to achieve the vision.
 Market-Driven Strategy
• -----All business strategy decisions should start with a clear
understanding of markets, customers, and competitors.

• -----The market and the customers that form the market should be the
starting point in shaping business strategy.
2. Characteristics of a Market-Driven Strategy
Becoming
Market-
Orientation

Achieving
Determining
Superior
Distinctive
Performance
Capabilities

Customer
Value/
Capabilities
Match
 A. BECOMING MARKET ORIENTED

• Customer is the focal point of the organization

• Commitment to continuous creation of superior
customer value
• Monitor rapidly changing customer needs and wants
• Increase the rate of product innovation
• Superior skills in understanding & satisfying
customers (Marketing Research)
• Pursue strategies to create competitive advantage
Characteristics of Market Orientation
 Customer Focus
What are the customer’s value requirements?
 Competition Intelligence
Importance of understanding the competition
as well as their competitive position in the market
 Cross-Functional Coordination
Remove the walls between business functions
 Performance Consequences
Market orientation leads to superior organizational
performances
B. DETERMINING DISTINCTIVE CAPABILITIES

“Capabilities are complex bundles of

skills and 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.38.3

 Capabilities
Desirable
Desirable
Capabilities
Capabilities

Applicable to Superior to
Multiple the
Competition Competition
Situations

Difficult to
Duplicate
Source: George S. Day, Journal of Marketing, October 1994, 49.
C. Customer Value/ Capabilities Match or Types of
Capabilities

Outside-In Connect the organization to the external

Processes environment

Spanning
Processes

Inside-Out Activities necessary to meet customer &

organizational requirements.
Processes
 Classifying capabilities
EXTERNAL INTERNAL
EMPHASIS EMPHASIS

Outside-In Inside-Out
Processes Processes
Spanning
Processes
 Financial management
 Market sensing  Customer order
 Cost control
 Customer linking fulfillment
 Technology development
 Channel  Pricing
bonding  Integrated logistics
 Purchasing
 Technology  Manufacturing/
 Customer service transformation processes
monitoring delivery
 Human resources
 New product/service management
development
 Environment health and
 Strategy development safety
D. ACHIEVING SUPERIOR PERFORMANCE/ 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

Customer
Value

Benefits Costs
Value Composition
Product

Services

Benefits
Employees

Value
Image (gain/loss)

Monetary
costs Costs
Time (sacrifices)

Psychic
and physic
costs
 E. Becoming Market Driven

Market Sensing
Capabilities

MARKET –
DRIVEN
STRATEGIES

Customer Linking
Capabilities
 Market Driven Initiatives

Market Sensing Capabilities

– Effective processes for learning about markets
– Sensing:
• Collected information needs to be shared
across functional departments & interpreted
to determine proper actions.
Customer Linking Capabilities
– Create and maintain close customer
relationships
3. CORPORATE, BUSINESS AND MARKETING STRATEGY

• Corporate strategy
• Business and marketing strategy
• Marketing strategy process
• Internet strategy
• Preparing the marketing plan
CORPORATE, BUSINESS AND MARKETING
STRATEGY
 A. CORPORATE STRATEGY
Deciding the Scope
and Purpose of
the Business

Business
Objectives

Actions and
Resources for
Achieving
Objectives
 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.
 ORGANIZATIONAL CHANGE
Vertical
Disaggregation

Internal
Redesign

New
Organizational
Forms
 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.
 B. BUSINESS AND MARKETING STRATEGY

• Developing the strategic plan for each business

• Business and marketing strategy relationships
• Strategic marketing:
– Developing a vision about the markets of interest to the
organization, select market target strategies, setting
objectives, and developing, implementing and managing
the marketing program positioning strategies designed to
meet the value requirements of customers in each market
target
C. MARKETING STRATEGY PROCESS
Situation
Analysis

Implementing Designing
and Managing Marketing
Marketing Strategy
Strategy

Marketing
Program
Development
MARKETING STRATEGY PROCESS

• Strategic situation analysis

• Market vision, structure and analysis
• Segmenting markets
• Continuous learning about markets
Ci. SITUATION ANALYSIS

Market
Vision, Structure,
and Analysis

Continuous Segmenting
Learning Markets
About
Markets
C ii. MARKET-DRIVEN STRATEGIES

Designing Market-
Driven Strategies

Market Targeting Relationship Planning

and Strategic Strategies for New
Positioning Products
C iii. Positioning Strategy Development
Product
strategy

Positioning
strategy

Promotion Market Distribution

strategy target strategy

Price
strategy
C iv. IMPLEMENTING AND MANAGING MARKET-DRIVEN
STRATEGY

Designing Effective
Market-Driven
Organizations

Implementing and
Managing Market-Driven
Strategy

Strategy
Implementation
and Control
4. CHALLENGES OF A NEW ERA FOR STRATEGIC
MARKETING

 Strategic marketing faces unprecedented challenges

and opportunities:
Turbulent markets
Intense competition
Escalating customer demands
 Ethical Challenges
 Societal and Global Change
 Social Responsiveness of Organizations
 5. MARKETING PLAN OUTLINE
I. Strategic Situation Summary
Summarize the key points from your situation analysis (market analysis, segments,
industry/competition) in order to recount the major events and provide information to better
understand the strategies outlined in the marketing plan.
II. Market-Targets and Objectives

The market target may be defined demographically (key characteristics only),

geographically, or in social/economic terms. Each market target should have needs and wants
that differ to some degree from other targets. These differences may be with respect to types
of products purchased, use situation, frequency of purchase, and other variations that indicate
a need to alter the positioning strategy to fit the needs and wants of each target.

An objective is a quantified goal identifying what is expected when. It specifies the end
results expected. The objectives should be written for each target market.

Objectives should also be included for the following program components:

(1) product, (2) price, (3) distribution, (4) promotion (salesforce, advertising, sales promotion,
and public relations), and (5) technical services.
 MARKETING PLAN OUTLINE
III. Positioning Statements

Write statements that describe how you want each market

target to perceive each product relative to competition.

State the core concept used to position the product (brand) in

the eyes and mind of the targeted buyer.

The positioning statement should describe: (1) What criteria or

benefits the customer considers when buying a product along
with the level of importance, (2) What we offer that
differentiates our product from competition, and (3) The
limitations of competitive products.
 IV. Market Mix Strategy for Each Market Target

A. Product Strategy
Identify how each product fits the market target. Other issues that may be addressed
would be new product suggestions, adjustments in the mix of existing products, and
product deletion candidates.
B. Price Strategy
The overall pricing strategy (I.e., competitive, premium-priced, etc.) should be identified
along with a cost/benefit analysis if applicable. Identify what role you want price to
play,
i.e., increase share, maintenance, etc.
C. Distribution Strategy
Describe specific distribution strategies for each market target. Issues to be addressed
are intensity of distribution (market coverage), how distribution will be accomplished,
and assistance provided to distributors. The role of the sales force in distribution
strategy should also be considered.
D. Promotion Strategy
Promotion strategy is used to initiate and maintain a flow of communication between
the company and the market target. To assist in developing the communications program,
the attributes or benefits of our product should be identified for each market target. How our
product differs from competition (competitive advantage) should be listed. The sales force’s
responsibilities in fulfilling the market plan must be integrated into the promotion strategy.
Strategies should be listed for
(1) personal selling, (2) advertising, (3) sales promotion, and
(4) public relations.
 E. Marketing Research

Describe the market research problem and the kind of information needed.
Include a statement which addresses why this information is needed. The specific
market research strategies can be written once the above two steps have been
followed.
V. Coordination with Other Business Functions

Indicate other departments/functions that have responsibilities for

implementing the marketing plan.
VI. Sales Forecasts and Budgets

VII. Contingency Plans

Indicate how your plans should be modified if events should occur that are
different from those assumed in the plan.

End of Chapter one