PowerPoint Presentation1-*
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MARKET-DRIVEN STRATEGY
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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Strong supporting logic
Examples include:
Dell Inc.
Louis Vuitton
Southwest Airlines
Superior skills in understanding and satisfying customers
Requires involvement and support of the entire workforce
Monitor rapidly changing customer needs and wants
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Increase the rate of product innovation
Pursue strategies to create competitive advantage
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Competition Intelligence
Importance of
understanding the
customer
Involve all business functions
“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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Organizational Processes
Southwest uses a point-to-point route system rather than the hub-and-spoke design used by many airlines. The airline offers services to 57 cities in 29 states, with an average trip about 500 miles. The carrier’s value proposition consists of low fares and limited services (no meals). Nonetheless, major emphasis throughout the organization is placed on building a loyal customer base. Operating costs are kept low by using only Boeing 737 aircraft, minimizing the time span from landing to departure, and developing strong customer loyalty. The company continues to grow by expanding its point-to-point route network.
Skills and Accumulated Knowledge
The airline has developed impressive skills in operating its business model at very low cost levels. Accumulated knowledge has guided management in improving the business design over time.
Coordination of Activities
Coordination of activities across business functions is facilitated by the point-to-point business model. The high aircraft utilization, simplification of functions, and limited passenger services enable the airline to manage the activities very efficiently and to provide on-time point-to-point services offered on a frequent basis.
Assets
Southwest’s key assets are very low operating costs, loyal customer base, and high employee esprit de corps
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Compelling
Capabilities
Source: George S. Day, Journal of Marketing, October 1994, p. 38.
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Capabilities
Desirable
Capabilities
Source: George S. Day, Journal of Marketing, October 1994, 49.
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Source: George S. Day, Journal of Marketing, October 1994, 41.
EXTERNAL EMPHASIS
INTERNAL EMPHASIS
Market sensing
Customer linking
Channel bonding
Technology monitoring
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Customer Value:
Value for buyers consists of the benefits less the costs resulting from the purchase of products.
Superior value: positive net benefits
Creating Value:
begins with a business
understanding of customer
Source: C. K. Troy, The Conference Board Inc., 1996, 5.
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Sensing:
Collected information needs to be shared across functions and interpreted to determine proper actions.
Customer Linking Capabilities
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Improve existing processes
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Strategic marketing faces unprecedented challenges and opportunities:
Turbulent markets
Intense competition
Disruptive innovations
Escalating Globalization
It is important to understand the differences (and similarities) between the developed economies and the new world beyond.
Market opportunities
Competitive threats
Partnering opportunities
Outsourcing initiatives
Self-cleaning windows
Finland was ranked #1 in global competitiveness in 2004 by the World Economic Forum because of strong skills in adapting to new technology, proactive business practices, and nurturing a culture of innovation (www.weforum.org).
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Increasingly demanding ethical challenges