Professional Documents
Culture Documents
Imperatives for
Market-Driven
Strategy
McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
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* Objectives
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* 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
1-3
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Characteristics of a Market-Driven
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Strategy
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Becoming Market-
Orientation
Customer
Value/
Capabilities
Match
1-4
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* Market-Driven Strategy (1)
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* Becoming market-oriented
* Customer focus
* Competitor intelligence
* Cross-functional coordination
* Performance implications
1-5
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* BECOMING MARKET ORIENTED
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* 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
1-6
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*
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1-7
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* Characteristics of Market Orientation
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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
1-8
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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
1-9
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* Market Orientation
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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
1-10
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* Market-Driven Strategy (2)
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* Becoming market-oriented
* Customer focus
* Competitor intelligence
* Cross-functional coordination
* Performance implications
* Determining distinctive capabilities
1-11
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* DISTINCTIVE CAPABILITIES
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1-12
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Southwest Airline’s Distinctive Capabilities
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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
1-13
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* Capabilities
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Disproportionate
(higher)
contribution to
superior
customer value Compelling
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.
1-14
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* Capabilities
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Desirable
Capabilities
Difficult to
Duplicate
Source: George S. Day, Journal of Marketing, October 1994, 49.
1-15
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* Market-Driven Strategy (3)
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* Becoming market-oriented
* Customer focus
* Competitor intelligence
* Cross-functional coordination
* Performance implications
* Determining distinctive capabilities
* Types of capabilities
1-16
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* Types of Capabilities
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Outside-In
Processes
Spanning
Processes
Inside-Out
Processes
1-17
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* Organization’s Process
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EXTERNAL INTERNAL
EMPHASIS EMPHASIS
Outside-In Inside-Out
Processes Processes
Spanning Processes
Market sensing Financial management
Customer order
Customer linking fulfillment Cost control
Channel bonding Pricing Technology
development
Technology Purchasing
monitoring Integrated logistics
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
1-18
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* Market-Driven Strategy (4)
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* Becoming market-oriented
* Customer focus
* Competitor intelligence
* Cross-functional coordination
* Performance implications
* Determining distinctive capabilities
* Types of capabilities
* Creating value for customers
1-19
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* Matching Customer Value and Distinctive
* Capabilities
Value Requirements
Distinctive
Capabilities
1-20
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* CREATING VALUE FOR CUSTOMERS
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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.
1-21
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* Creating Value for Customers
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Customer
Value
Benefits Costs
1-22