INTRODUCTION TO STRATEGIC MARKETING

CHAPTER 1

LECTURE’S CONTENT

Strategic Marketing. Market Driven Strategy. Corporate, Business, and Marketing

Strategy. Challenges of a New Era for Strategic

Marketing.

PART 1

STRATEGIC MARKETING

What is Strategic Marketing?

It is a market-driven process of strategy development, taking into account a constantly changing business environment and the need to deliver superior customer value.

Its link the organization with the environment and views marketing as a responsibility of the entire business rather than a specialized function (Craven & Piercy, 2009).

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Also known as strategic market management.

It is a system designed to help management both precipitate and make strategic decisions, as well create strategic vision (Aaker, 2001).

ã 1999 John Wiley & Sons 2-5

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It is a process of analyzing external environments, internal factors, identification and selecting a strategy so that the organization can achieve its long term goals and its vision.

Why Strategic Market Management?

Precipitate consideration of strategic choices Force long-range view Make visible resource allocation decisions Aid strategic analysis and decision making Provide a strategic management and control system Provide horizontal and vertical communication and

coordination systems Cope with change

PART 2

MARKET DRIVEN STRATEGY

WHAT IS MARKET-DRIVEN STRATEGY?

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The strategy that is formulated based on the customer’s needs and wants and the environments.

The starting point of development of the strategy is always based upon the customers, competitors, the strengths and weaknesses of the firm, the economic condition, the cultural forces and other market environments.

CHARACTERISTICS OF MARKET-DRIVEN STRATEGY

According to Craven and Piercy (2009), there are four main characteristics of market-driven strategy which are:1) Market oriented.2) Matching customer value with the firm’s

capabilities.3) Identifying distinctive capabilities.4) Lead to superior performance.

WHAT IS MARKET ORIENTED FIRM OR MARKET ORIENTATION?

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Generally there are two widely accepted definition of market orientation.

One is by Kohli & Jaworski and another one by Slater & Narver.

Market orientation by Kohli & Jaworski

The authors defined market orientation as the organizationwide generation of market intelligence pertaining to current and future customer needs, dissemination of intelligence across departments, and organizationwide responsiveness to it.

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Thus, based on this definition, we say the company is market oriented when it collects information regarding the customer needs, share it among its employees and take necessary actions towards those information.

Market orientation according to Slater and Narver.

The authors defined market orientation as a business culture that consists five main components such as:- Customer focus/orientation.- Competitor focus/orientation.- Interfunctional or departmental coordination.- Long-term focus (appropriate investment is

necessary).- Profitability (so that the company can sustain its business and achieve its long term goals)

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Thus from those two point of views we can summarize that:- Market orientation is a culture of organization that requires a whole employees effort on acquiring information regarding the customers, the

competitors and the market, share the information and take actions to the information.

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- It also focus on the customer’s satisfaction needs and wants, focus on competitors and requires all effort and

coordination of all department in the organization.

- All of these efforts focus on achieving long term profit and goals.

MATCHING CUSTOMER VALUE WITH FIRM’S CAPABILITIES.

Capabilities are complex bundle of skills and accumulated of knowledge, exercised through organizational process, that enable the organization to coordinate activities and make used of its assets (Day,1994).

There are wide range of capabilities such as product development capability, pricing capability, marketing information system capability, export capability, and etc.

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Each firms has different capabilities and even they have the same capabilities but the level are different form each other.

Example, Proton has the capability to make passenger car just like Toyota, but Toyota car’s are known for their quality and wide product range. This is due to different capabilities and level of capabilities that Toyota has compared to Proton.

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Firm must be able to match its customer’s value or needs and wants with its own capabilities.

Capabilities can be improved by knowledge. Get new knowledge through training and

retraining, R&D, and etc.

Summary on Market Driven Strategy

Market Driven Strategy requires the firm:

- Customer focus (satisfaction of the needs and wants and thus customer analysis is very important

- Competitor focus (competitors analysis is crucial).

- Market environment analysis is crucial.

- Generate information, shared it and take actions.

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To build and develop capabilities that match up with the customer’s expectation and value.

Treat human capital as the main resources of the firm (human as a source of capabilities).

Customer focus, competitor focus, market focus and development of capabilities will lead to superior performance.

PART 3

CORPORATE, BUSINESS AND MARKETING STRATEGY

THE STRATEGY-MAKING PYRAMID(DIVERSIFIED COMPANY)

Corporate strategy

Business Strategy

Functional Strategy

Operating Strategy

THE STRATEGY-MAKING PYRAMID(SINGLE BUSINESS COMPANY)

Business Strategy

Functional Strategy

Operating Strategy

CORPORATE STRATEGY

It concerns how a diversified company intends to establish business positions in different industries and the actions and approaches to improve the performance of the group of business the company has diversified into (Thomson & Strickland,2001).

Among the major concern of this level are determining the corporate vision or mission, the corporate objectives, corporate strategies (growth), resource allocation, establish synergy among the business and structure of the organization.

The responsibility belong to corporate level managers.

BUSINESS STRATEGY

It concerns the actions and approaches to produce successful performance in one specific line of business.

The central business strategy issue is how to build stronger long-term competitive position or sustainable competitive advantage (Thomson & Strickland, 2001).

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Among strategies that are executed at this level are such as deciding what product/service attributes offer the best chance to win a competitive advantage; developing expertise, resource strengths, and competitive capabilities that set the company apart from rivals and ; competing strategies/approaches such as niche strategy, building technological superiority, and etc.

FUNCTIONAL STRATEGY

It concern on executing functional activities or process within a business such as marketing, finance, production, manufacturing, and etc.

Marketing strategies are such as market targeting and positioning, building marketing relationship, introducing new product, pricing strategy, promotion strategy, and etc.

All these activities must be based on the developed business strategy.

OPERATIONAL STRATEGY

It concerns on executing operating tasks and daily operations.

Examples executing advertising campaign through television for the first two weeks of January 2009.

CRITERIA FOR STRATEGY SELECTION

The question is that how to choose and select appropriate strategy?

There are several criteria that we could use as a guideline.

As suggested by Aaker, those are such as:

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1. Consider the strengths, weaknesses, opportunities and threats (SWOT) analysis that are performed earlier.

2. The strategy chosen must lead to building SCA.

3. Be consistent with the company’s vision and objectives.

4. Be feasible (can be done with the available resources, culture, organization structure and etc.)

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5. Consider the relationship with other firm strategies such as fostering synergy, enhancing flexibility and balancing the sources and cash flow.

PART 4

CHALLENGES OF NEW ERA IN STRATEGIC MARKETING

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Among the challenges are such as:

- Escalating globalization.

- Technology diversity and uncertainty.

- Fast developing internet.

- The demand to become more socially responsible.

SUMMARY OF STRATEGIC MARKETING

Strategic marketing is a process of identification and implementation of market driven strategy so that the company can achieve its long term performance and mission or vision.

Market driven strategy is a strategy that is market oriented; lead to long term performance; build capabilities and SCA; and match customers’ value with the company’s capabilities.

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Market oriented firm is the firm that is customer focus, competitor focus, have good cooperation among departments or functions, focus on performance, value information and respond to its and require participation from every employee.

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There are criteria that we could use as a guideline for selecting and choosing a strategy.

The framework for strategic marketing as suggested by Aaker consist three main components such as external analysis; internal analysis and; strategy identification and selection.

STRATEGIC MARKETING FRAMEWORK

Long termPerformanceAnd Vision

Market Driven

Strategy

ExternalAnalysis

InternalAnalysis

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