Module A - Marketing Strategy A.1 Conceptual Foundations of Marketing Strategy Flashcards
What are the conceptual foundations of marketing strategy?
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Where to compete?
- Product-market investment decision
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How to compete?
- Customer value proposition
- Resources & Capabilities
- Functional area strategies and programs
Where to compete?
- Product-market investment decision = scope of business and its dynamics
- Specifications:
- Products offered + Products not offered
- Markets served + Markets not served
- Competitiors attacked + Competitors avoided
- Level of vertical integration
- Product markets to be entered + Product markets to be left in upcoming years
- Investment pattern
- Example: IKEA
- IKEA’s well defined business scope: well-designed furniture at low prices
How to compete?
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Customer value proposition = perceived benefit provided by offering relative to perceived cost.
- Specifications:
- Relevant and meaningful to customer
- Reflected in positioning of products and services
- Sustainable over time
- Differentiated from competition
- Specifications:
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Resources = Stocks of available factors that are owned or controlled by the firm
- Specifications:
- Tradable know how
- Physical assets
- Human capital
- Specifications:
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Capabilities = Firm-specific capacity to deploy resources
- Specifications:
- Manufacturing flexibility
- Responsiveness to market trends
- Short product-development cycles
- Customer focus
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Functional area strategies and programs = supportive set of strategy imperatives.
- Specifications:
- Manufacturing strategy
- Innovations strategy
- Distribution strategy
- Brand-building strategy
- Communication strategy
- Information technology strategy
- Global strategy
- Segmentation strategy
- Quality program
- Customer relationship program
- Specifications:
What is the relationship between marketing strategy and corporate strategy?
Corporate strategy is not necessarily equal to marketing strategy. Depending on the organization, its domiance varies. It can be one of several functional strategies, a dominant functional strategy or the corporate strategy.
What is corporate strategy?
Corporate Strategy = Defines the basic orientation of the company with regards to where and how to compete involving a long-term planning horizon.
What is marketing strategy?
Marketing strategy = A market-oriented process, taking into account a constantly changing business environment and the need to deliver superior customer value employing coordinated market-driven actions.
The dominance of marketing strategy depends on the individual organization.
What is market-orientation?
Market orientation is an organization-wide generation, dissemination and responsiveness to market intelligence.
Market orientation implies to orientate the organizational culture, organizational structure and organizational processes towards customers and competitors.
What are the essential ingredients for market orientation?
- Market orientation of organizational culture
- The layer of values
- The layer of norms
- The layer of artifacts
- Market orientation of organizational structure
- Consideration of customer related aspects when dealing with organizational divisions
- Prominent hierarchical position of the head of marketing/sales
- Market orientation of organizational processes
- Generation, cross-functional sharing, and use of market-related information and knowledge
- Delegation of decision authority to employees in customer contact
- Make processes relative to customer transparent and responsive
Which objectives does market orientation impact?
- Market orientation initially impacts objectives related to
- Market potential (e.g. customer reputation, customer satisfaction, etc.)
- Market success (e.g. sales, numbers of customers, market share, etc.);
- Economic marketing objectives (e.g. marketing costs, profit, return on sales, etc.)
- and ultimately drives economic success!
How to drive markets?
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Shape market structure:
- eliminating players in market (deconstrution approach)
- building a new or modified set of players (construction approach)
- changing the functions performed by players (functional-modification approach
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Shape market behaviour directly
- Build customer constraints
- Remove customer constraints
- Build competitor constraints
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Shape market behaviour directly
- Create new customer preferences or revers existing customer preferences.
What are decisions about “how” and “where” to compete influenced by?
Decisions about “how” and “where” to compete are influenced by the 3C’s: Customer, Company, Competition
What are market-driven companies?
Market-driven companies accept market structure and behaviour as given
What are market-driving companies?
Market-driving companies shape market structure and behaviour
What are the risks of being market-driven?
- Simply focusing on customer needs could be dangerous for sustainable competitive advantage.
- Companies that are only market-driven risk falling behind.
- (Henry Ford: “If I had asked people what they wanted, they would have said faster horses”)
What are market drivers?
Market drivers create or change customer preferences and shape competitive conduct.
