Marketing Strategy (1) Conceptual foundartions of marketing strategy

Question 1

Marketing strategy involves answers to questions about Where ? and How?

Answer 1

1. Where to compete ?
   Product-market investment decision
2. How to compete ?
   - Customer value proposition
   - Resurces and capabilities
   - Functional area strategies and programs

Question 2

Where to Compete ?

Answer 2

Product market investment decision = scope of business and its dynamics
Specifications:
- product offered + products not affected
-markets served + markets not served
- competitors attacked + competitors avoided
- level of vertical integration

Excample: amazon´s business scope: international leadership in the e-commerce & cloud market

Question 3

How to compete ``? (Customer value proposition, specifications)

Answer 3

Customer value proposition = perceived benefit provided by offering relative to perceived costs.

Specifications:

• relevant and meaningful to customer
• reflected in positioning of products and services
• sustainable over time
• differentiated from competition

Question 4

How to compete ? (resources, capabilities)

Answer 4

Resources= stocks of availbable factors that are owned or controlled by the firm
Capabilities = firm specific capacity to deploy resources

resources: Tradable know-how, physical assets, human capital

Capabilities: manufacturing flexibility, responsiveness to market trends, short product development cycles

Functional area strategies and programs= suppotirve set of strategy imperatives

specifications: GLobal strategy, Manufacturing strategy, Innovation strategy, Communication strategy, Distribution strategy, quality program, Customer relationship program

Question 5

Decisions about “How” and “where” to compete are influenced by..

Answer 5

Customer

Competitor(s)

Company

Question 6

Corporate Strategy and Marketing Strategy

Answer 6

Corporate Strategy: basic orientation of the company with regard to where and how to compete involving a long-term planning horizon.

Marketing strategy: a market-oriented process, taking into account a constantly changing busness environment and the need to deliver superior customer value employing coordinated market-driven actions.

Question 7

Variations of dominance of the marketing strategy in organizations

Answer 7

1. one of several functional strategies
   - The corporate strategy represents the framework for formulating the marketing strategy
   - marketing strategy is concerned with strategic questions regarding the use of marketing instruments
2. a dominant functional strategy
   - Marketing strategy plays a key role compared to other functional strategies
   - the marketing area has a central role with respect to strategic issues in the company
3. … the corporate strategy
   - the definition of the company philosphy and strategic objectives constitute main tasks of strategic marketing.
   - Marketing strategy has a vary high value for the company

Question 8

Marketing strategy as a market-oriented approach

Answer 8

Market orientation implies to orientate the organizational cutlure, organizational structure, and organizational processes towards customers and competitors.

Question 9

Essential ingredients for market orientation

Answer 9

1. Market orientation of organizational culture:
   - The layer of values/ norms, artifacts
2. Market orientation of organizational structure:
   - considerations of cutoemr-related aspects when dealing with organizational divisions
3. Market orientation of organizational processes:
   - Delegation of decision authority to employees in customer contact

Question 10

Market-driven and market driving

Answer 10

Market-driven companies accept market structure and behavior as given

Market driving companies shape market structure and behavior

Market drivers: Create or change customer preferences and shape competitive conduct.
–>Both facets are crucial for long-term sustainable competitive advantage.

Risks of beeing market driven:
simply focusing on customer needs could be dangerous for sustainable competitive advantage

Question 11

How to drive markets ?

Answer 11

1. Shape market structure

• eliminating players in a market (deconstruction approach)
• Building a new or modified set of players (construction approach)

2. Shape market behavior
   - Build customer constraints
   - remove customer constraints
   - build competitor constraints
   - create new customer preferences by offering innovations