INTRODUCTION TO STRATEGIC

MARKETING

CHAPTER 1
LECTURE’S CONTENT

 Strategic Marketing.
 Market Driven Strategy.
 Corporate, Business, and Marketing
Strategy.
 Challenges of a New Era for Strategic
Marketing.
PART 1

STRATEGIC MARKETING
What is Strategic Marketing?

 It is a market-driven process of strategy

development, taking into account a
constantly changing business environment
and the need to deliver superior customer
value.
 Its link the organization with the environment
and views marketing as a responsibility of
the entire business rather than a specialized
function (Craven & Piercy, 2009).
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 Also known as strategic market

management.
 It is a system designed to help management
both precipitate and make strategic
decisions, as well create strategic vision
(Aaker, 2001).

 1999 John Wiley & Sons 2-5

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 It is a process of analyzing external

environments, internal factors, identification
and selecting a strategy so that the
organization can achieve its long term goals
and its vision.
 Why Strategic Market Management?

 Precipitate consideration of strategic choices

 Force long-range view
 Make visible resource allocation decisions
 Aid strategic analysis and decision making
 Provide a strategic management and control system
 Provide horizontal and vertical communication and
coordination systems
 Cope with change
PART 2

MARKET DRIVEN STRATEGY

WHAT IS MARKET-DRIVEN
STRATEGY?
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 The strategy that is formulated based on the

customer’s needs and wants and the
environments.
 The starting point of development of the
strategy is always based upon the
customers, competitors, the strengths and
weaknesses of the firm, the economic
condition, the cultural forces and other
market environments.
CHARACTERISTICS OF MARKET-
DRIVEN STRATEGY

 According to Craven and Piercy (2009), there

are four main characteristics of market-driven
strategy which are:
1) Market oriented.
2) Matching customer value with the firm’s
capabilities.
3) Identifying distinctive capabilities.
4) Lead to superior performance.
WHAT IS MARKET ORIENTED FIRM
OR MARKET ORIENTATION?
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 Generally there are two widely accepted

definition of market orientation.
 One is by Kohli & Jaworski and another one
by Slater & Narver.
Market orientation by Kohli & Jaworski

 The authors defined market orientation as

the organizationwide generation of market
intelligence pertaining to current and future
customer needs, dissemination of
intelligence across departments, and
organizationwide responsiveness to it.
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 Thus, based on this definition, we say the

company is market oriented when it collects
information regarding the customer needs,
share it among its employees and take
necessary actions towards those information.
Market orientation according to Slater
and Narver.

 The authors defined market orientation as a

business culture that consists five main components
such as:
- Customer focus/orientation.
- Competitor focus/orientation.
- Interfunctional or departmental coordination.
- Long-term focus (appropriate investment is
necessary).
- Profitability (so that the company can sustain its
business and achieve its long term goals)
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 Thus from those two point of views we can

summarize that:
- Market orientation is a culture of
organization that requires a whole
employees effort on acquiring
information regarding the customers, the
competitors and the market, share the
information and take actions to the
information.
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- It also focus on the customer’s

satisfaction needs and wants, focus on
competitors and requires all effort and
coordination of all department in the
organization.
- All of these efforts focus on achieving
long term profit and goals.
MATCHING CUSTOMER VALUE WITH
FIRM’S CAPABILITIES.

 Capabilities are complex bundle of skills and

accumulated of knowledge, exercised
through organizational process, that enable
the organization to coordinate activities and
make used of its assets (Day,1994).
 There are wide range of capabilities such as
product development capability, pricing
capability, marketing information system
capability, export capability, and etc.
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 Each firms has different capabilities and

even they have the same capabilities but the
level are different form each other.
 Example, Proton has the capability to make
passenger car just like Toyota, but Toyota
car’s are known for their quality and wide
product range. This is due to different
capabilities and level of capabilities that
Toyota has compared to Proton.
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 Firm must be able to match its customer’s

value or needs and wants with its own
capabilities.
 Capabilities can be improved by knowledge.
 Get new knowledge through training and
retraining, R&D, and etc.
Summary on Market Driven Strategy

 Market Driven Strategy requires the firm:

- Customer focus (satisfaction of the needs
and wants and thus customer analysis is
very important
- Competitor focus (competitors analysis is
crucial).
- Market environment analysis is crucial.
- Generate information, shared it and take actions.
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 To build and develop capabilities that match

up with the customer’s expectation and
value.
 Treat human capital as the main resources of
the firm (human as a source of capabilities).
 Customer focus, competitor focus, market
focus and development of capabilities will
lead to superior performance.
PART 3

CORPORATE, BUSINESS AND MARKETING

STRATEGY
THE STRATEGY-MAKING
PYRAMID(DIVERSIFIED COMPANY)

Corporate strategy

Business Strategy

Functional Strategy

Operating Strategy
THE STRATEGY-MAKING
PYRAMID(SINGLE BUSINESS
COMPANY)

Business Strategy

Functional Strategy

Operating Strategy
CORPORATE STRATEGY

 It concerns how a diversified company intends to

establish business positions in different industries
and the actions and approaches to improve the
performance of the group of business the company
has diversified into (Thomson & Strickland,2001).
 Among the major concern of this level are
determining the corporate vision or mission, the
corporate objectives, corporate strategies (growth),
resource allocation, establish synergy among the
business and structure of the organization.
 The responsibility belong to corporate level
managers.
BUSINESS STRATEGY

 It concerns the actions and approaches to

produce successful performance in one
specific line of business.
 The central business strategy issue is how to
build stronger long-term competitive position
or sustainable competitive advantage
(Thomson & Strickland, 2001).
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 Among strategies that are executed at this

level are such as deciding what
product/service attributes offer the best
chance to win a competitive advantage;
developing expertise, resource strengths,
and competitive capabilities that set the
company apart from rivals and ; competing
strategies/approaches such as niche
strategy, building technological superiority,
and etc.
FUNCTIONAL STRATEGY

 It concern on executing functional activities or

process within a business such as marketing,
finance, production, manufacturing, and etc.
 Marketing strategies are such as market targeting
and positioning, building marketing relationship,
introducing new product, pricing strategy, promotion
strategy, and etc.
 All these activities must be based on the developed
business strategy.
OPERATIONAL STRATEGY

 It concerns on executing operating tasks and

daily operations.
 Examples executing advertising campaign
through television for the first two weeks of
January 2009.
CRITERIA FOR STRATEGY
SELECTION

 The question is that how to choose and

select appropriate strategy?
 There are several criteria that we could use
as a guideline.
 As suggested by Aaker, those are such as:
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1. Consider the strengths, weaknesses, opportunities

and threats (SWOT) analysis that are performed
earlier.
2. The strategy chosen must lead to building SCA.
3. Be consistent with the company’s vision and
objectives.
4. Be feasible (can be done with the available
resources, culture, organization structure and etc.)
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5. Consider the relationship with other firm

strategies such as fostering synergy,
enhancing flexibility and balancing the
sources and cash flow.
PART 4

CHALLENGES OF NEW ERA IN STRATEGIC

MARKETING
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Among the challenges are such as:

- Escalating globalization.
- Technology diversity and uncertainty.
- Fast developing internet.
- The demand to become more socially
responsible.
SUMMARY OF STRATEGIC
MARKETING

 Strategic marketing is a process of identification and

implementation of market driven strategy so that the
company can achieve its long term performance and
mission or vision.
 Market driven strategy is a strategy that is market
oriented; lead to long term performance; build
capabilities and SCA; and match customers’ value
with the company’s capabilities.
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 Market oriented firm is the firm that is

customer focus, competitor focus, have good
cooperation among departments or
functions, focus on performance, value
information and respond to its and require
participation from every employee.
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 There are criteria that we could use as a

guideline for selecting and choosing a
strategy.
 The framework for strategic marketing as
suggested by Aaker consist three main
components such as external analysis;
internal analysis and; strategy identification
and selection.
STRATEGIC MARKETING
FRAMEWORK

External
Analysis

Market Long term

Driven Performance
Internal Strategy And Vision
Analysis
END OF CHAPTER