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Exhibit 1.3
Components of Strategy
Scope Goals and objectives Resource deployments Identification of sustainable competitive advantage Synergy
Focus
Persuade company to have what customers want Augmented product, customer benefits, and market segments
Time Horizon
close to customers and ahead of competition Love the customer more than the product Our legitimacy is based on customer satisfaction Do business the way the customer wants to do it Our mission is to find needs and fill them, not to make products and sell them If were not customer-driven, our products wont be either
Strategic Planning.
is the managerial process of developing and maintaining a strategic fit between the organization's objectives and resources and its changing market opportunities.
Resources
Changing Environment
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Operating Plans
Strategies based on market dominance: Leader, Challenger, Follower Porter generic strategies (strategy on the dimensions of strategic scope and strategic strength): Cost leadership, Product differentiation, Market segmentation Innovation strategies: Pioneers, Close followers, Late followers Growth strategies: Intensification, Vertical integration, Horizontal integration, Diversification Management style strategies: Prospector, Analyzer, Defender, Reactor Marketing warfare strategies - draws on parallels between marketing strategies and military strategies.
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Know your enemy, know yourself, and your victory will not be threatened. Know the terrain, know the weather, and your victory will be complete.
Strategic Marketing.
Marketing Strategy is a series of integrated actions leading to a sustainable competitive advantage. John Scully
President, PepsiCo (1977-1983) CEO, Apple (1983-1993) Partner, Scully Bros. LLC (1995-Present)
Discussion Questions
3.
4.
Does having a market orientation make sense? What are the advantages and drawbacks? Why do some firms lack orientation towards the market?
With clear independence from other products or product lines for which a business or marketing strategy should be designed
Unique business mission Definable set of competitors Integrative planning done independently Responsible for resource management in all areas Large enough but not so large as to become bureaucratic
Strategic Marketing
Focuses on what the firm do best at the SBU level To secure and maintain a sustainable
competitive advantage
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Position advantages
Superior customer value Lower relative total cost Customer satisfaction, Loyalty, Market Share, Profit Superior skills & knowledge, Superior resources, Superior business process
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Performance advantages
Sources of advantages
The strategic 3 Cs
- Customers, Competitors & the Corporation
Exhibit 1.10
Current situation and trends Performance review Key issues Objectives Marketing strategy Action plans Projected profit-and-loss statement Controls Contingency plans
2
Corporate Strategy Decisions and Their Marketing Implications
Corporate Mission.
Broad purposes of the organization General criteria for assessing the long-term organizational effectiveness Driven by heritage & environment Mission statements are increasingly being developed at the SBU level as well
Exhibit 2.2
Specific
Long-distance transportation for large-volume producers of lowvalue, low-density products
Long-haul, coal carrying railroad
Railroad business
Not quantified and not limited to a time period - e.g. increasing the return on shareholders equity
Attainable at some specific future date through planned actions - e.g. 10% growth in the next two years
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Corporate Culture.
The most abstract level of managerial thinking How do you define culture? What is the significance of culture to an organization? How does marketing affect culture in
the organization?
Value proposition Assets & competencies Function area strategies and programs Implementation
Discussion Question
5. Ansoff says there are four strategies for growing a business. What are their merits and drawbacks?.
Sources of Synergy
1. Knowledge-based synergies 2. Corporate identity-based synergies 3. Corporate branding-based synergies
GE, IBM, Amazon etc. Virgin Records, Virgin Airlines, etc. Individual brands such as P & Gs Ivory, Pampers, cheer, Clairol, Olay, etc.
3
Business Strategies and Their Marketing Implications
In practice SBUs are defined by productmarkets requiring similar technologies, production facilities, and employee skills
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
How Business Strategies Differ in Scope, Objectives, Resource Deployments, and Synergy Exhibit 3.4.
Dimensions Scope
Goals and obj. Adaptability (new product success) Effectiveness ( mrkt share) Efficiency (ROI) Resource deployment Synergy
Low
High Generate excess cash (cash cows) Need to seek operating synergies to achieve efficiencies
How Business Strategies Differ in Scope, Objectives, Resource Deployments, and Synergy Exhibit 3.4.
Dimensions Scope
Goals and obj. Adaptability (new product success) Effectiveness ( mrkt. share) Efficiency (ROI) Resource deployment Synergy Prospector Broad/dynamic domains; tech. and cust. segments not well-established Extensive Analyzer Mixture of defender and prospector strategies Mix. of defender & prospector strats. Mix. of defender & prospector strats. Mix. of def. & prosp. strats Need cash for prod. dev. but < prospectors Danger in sharing operating fac. and programs - better to share tech./mktg. skills
High Low Need cash for product dev. (? or *) Danger in sharing operating fac. and programs - better to share tech./mktg skills
Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
4
Understanding Market Opportunities
Industry Domains
Industry Attractiveness
Ability to Execute on CSFs
Micro Level
Sustainable Advantage
Discussion Question
1. Whats a market? 2. Whats an industry?
Is the market vs. industry distinction important? Why or why not?
Discussion Questions
6. Does industry attractiveness matter? Why or why not?
Source: Adapted from Michael E. Porter, Industry Structure and Competitive Strategy: Keys to Profitability, Financial Analysts Journal, July-August 1980, p. 33.
Identifying an Industry
A firm is a pert of an industry where suppliers of key inputs, processes which create added value, and buyers are similar to other firms in the industry of which the company considers itself a part. Sources of information for macro-level industry analysis: Exhibit 4.12, p. 99
Involves looking at the company and whether it has a sustainable competitive advantage
Opportunities are only as good as the people who will pursue them
5
Measuring Market Opportunities: Forecasting and Market Knowledge