1. Market-oriented perspectives underlie successful corporate, business, and marketing strategies Flashcards
A strategy
is a fundamental pattern of:
- present and planned objectives,
- resource deployments,
- interactions of an organisation with markets, competitors and other environmental factors.
Definition suggests that a strategy should specify
– what (objectives to accomplish)
– where (industries and product markets under focus)
– how (which resources and activities to allocate).
what: objectives
where: industries and product
how: resources and activities
components of strategy
- Scope: “Breadth” of the strategic domain
- Goals and objectives: “What” is to be accomplished
- Resource deployments: Allocation of “limited” resources
- Identification of sustainable competitive advantage: How the organisation will “compete”
- Synergy: Whole “greater” than the sum of parts (when two marketing initiatives create a response greater than the sum of the combined response the two would have elicited alone)
The hierarchy of strategies (Three major levels of strategy)
- Corporate strategy
▪ Decisions about the organisation’s scope and resource deployments across its divisions
or businesses - Business-level strategy
▪ How a business unit competes within its industry - Marketing strategy (functional)
▪ Effective allocation and coordination of marketing resources and activities
- Corporate: scope, resource deployments
- Business-level: how to compete
- Marketing: marketing resources and activities
Marketing’s role in formulating and implementing strategy
- Primary “strategic responsibility” of “managers” is to look outwards: – To identify “threats and opportunities”.
- Marketing managers are on the boundary between the firm and its customers, distributors and competitors.
- Marketing managers therefore play a significant role in formulating and implementing overall strategy.
Managers:
- -> threats and opportunities
- -> boundary: firm, customers, distributors, competitors
- -> formulating and implementing overall strategy
Market-oriented management
- Follows a business philosophy commonly called the “marketing concept”
- “Consistent focus” by personnel in “all departments and at all levels”
- Adopts a variety of organisational “procedures and structures” – To improve the “responsiveness of decision-making”
Market-oriented management (mkt concept, consistent focus, procedures and structures - responsiveness of decision-making)
Guidelines for market-oriented management
- Create “customer focus” throughout the business.
- “Listen” to the customer.
- Define and nurture your “distinctive competence”.
- Define marketing as “market intelligence”
- “Target” customers precisely.
- Manage for “profitability, not sales volume”.
- Make customer value the “guiding star”
- Let the “customer define quality”.
- Measure and manage “customer expectations”.
- Build customer “relationships and loyalty”.
- Define the business as a “service business”.
- Commit to “continuous improvement and innovation”.
- Manage “culture” along with “strategy and structure”.
- Grow with “partners and alliances”.
- Destroy “marketing bureaucracy”.
Do customers always know what they want?
- Customers “cannot always articulate their needs and wants”
- Critics argue that “paying too much attention to customer needs and wants can stifle innovation”
- Same is not true for industrial buyers – “Many products are initiated by customers and developed and refined with their input”
- Still need to consider “whether customers value benefits of new product”
Does being market-oriented pay?
- Likely that “market-oriented businesses perform better” than others – Paying careful “attention to customer needs and competitive threats”
- Marketing concept consistent with focusing “only on segments that business can satisfy effectively and profitably”
- Studies show that “market orientation has positive effect on performance” – Return on assets, sales growth, new product success
Factors that mediate “marketing’s strategic role”
- “Competitive factors” affect a firm’s market orientation
- Influence of “different development stages” across industries and global markets
- Strategic inertia (tính trì trệ)
Influence of “different stages of development” (stages –> adoption of orientation, earlier - fewer market-oriented, different philosophies)
- Degree of “adoption of marketing orientation” varies across industries
- Industries in “earlier stages of life cycles” likely to have “fewer market-oriented businesses” – Also in industries that benefit from barriers to entry
- Entire economies in different stages of development – “Different business philosophies” across countries
Strategic inertia
• Sometimes businesses lose touch with the market because managers are reluctant to tamper with strategies and marketing programs that worked in the past
(Đôi khi các doanh nghiệp mất liên lạc với thị trường vì các nhà quản lý không muốn can thiệp vào các chiến lược và chương trình tiếp thị đã từng hoạt động trong quá khứ)
– Dangerous because customers’ needs and competitive offerings change over time
Recent developments affecting the strategic role of marketing
- Globalisation – Decisions on “local versus global”
- Increased importance of service – Fastest “growing sector of developed economies”
- Information technology – “Computer related technologies” changing the nature of marketing management
- “Relationships” across functions and firms – Changing nature of exchange and cooperative relationships
Future role of marketing
- Apparent that businesses and industries will have to be “market-oriented, tightly focused” on customer needs and desires, highly adaptive to succeed and prosper
- “Effective performance of marketing activities” even more critical for formulation and implementation of strategies
- “Performance of marketing tasks” will become “everybody’s business, not just marketing managers”
(*) Formulating and implementing marketing strategy process (decision -> 4 Cs -> other strategies and resources -> opportunity analysis)
- “Decision-making” focus
- Analysis of the four ‘Cs’ (*)
- Company
- Context
- Competitors
- Customers
• Integrating marketing strategy with the firm’s “other strategies and resources”
• Market “opportunity analysis”
– Understanding market opportunities
– Measuring market opportunities
– Market segmentation, targeting and positioning decisions
– Formulating strategies for specific market situations
– Implementation and control
