CRAVENS STRATEGIC

PIERCY MARKETING

Chapter One
Market-Driven Strategy

8/e
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
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MARKET-DRIVEN
STRATEGY

 Market-Driven Strategy
 Becoming Market
Oriented
 Distinctive Capabilities
 Creating Value for
Customers
 Becoming Market Driven
 Challenges of a New Era
for Strategic Marketing
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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 pint in shaping
business strategy.
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Characteristics of a
Market-Driven
Strategy
Becoming
Market-
Orientation

Achieving Determining
Superior Distinctive
Performance Capabilities

Customer
Value/
Capabilities
Match
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BECOMING MARKET
ORIENTED
 Customer is the focal point of
the organization
 Commitment to continuous

creation of superior customer

value
 Superior skills in

understanding & satisfying

customers
 Monitor rapidly changing

customer needs and wants

 Increase the rate of product

innovation
 Pursue strategies to create

competitive advantage
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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
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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.

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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.
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Types of
Capabilities
Outside-In Connect the organization to
Processes the external environment

Spanning
Processes

Activities necessary to meet

customer & organizational
Inside-Out
requirements.
Processes
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Classifying capabilities
EXTERNAL INTERNAL
EMPHASIS EMPHASIS

Outside-In Inside-Out
Processes Processes
Spanning
Processes

 Market  Customer order  Financial

sensing fulfillment management
 Customer  Pricing  Cost control
linking  Technology
 Purchasing
 Channel development
bonding  Customer service
delivery  Integrated
 Technology logistics
monitoring  New
product/service  Manufacturing/
development transformation
processes
 Strategy
development  Human
resources
management
 Environment
health and safety
Source: George S. Day, Journal of Marketing, October 1994, 41.
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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
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Value Composition

Product

Services

Benefits
Employees

Image
Value
(gain/loss)
Monetary
costs
Costs
Time (sacrifices)

Psychic
and physic
costs
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Becoming Market
Driven
Market Sensing
Capabilities

MARKET –
DRIVEN
STRATEGIES

Customer Linking
Capabilities
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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
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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