Lecture 7.11 MSAP

8/6/2019 Lecture 7.11 MSAP

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Starting Soon

ar e ng ra egy

And Planning.

Seminar 7

John Hendrickson1School of Marketing


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Jaworski, Kohli and Sahay (2000) MarketDriven Vs Driving Markets Journal of theAcademy of marketing Science, V28, pp 45

54.



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Being market driven is good

Learn about market developments and adapt yourofferings

Enhance customer value within the constraints of theexisting market structure and the behaviour of theexisting market players

Learn understand and res ond to the erce tions andbehaviours of all the players in the market

market regulators (if any) as the market evolves overtime



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Driving the market is better

Either changing the composition and / or roles of theplayers in the market

r c ang ng t e e av ours o t e p ayers n t e mar etOr doing both

It is a matter of degree, dependent upon how many

changes you make, and their magnitudeBeing first with the idea is not important, but making aquantum impact on market behaviour is.

o a ora on w o er p ayers can e more e ec vethan solo strategies

e purpose s o mprove cus omer va ue an or eperformance of the organisation



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A combination of driving the marketand being

e.g. the dual strategy of simultaneously protecting acash generating business based on old technology;

while building a new line of business with newtechnology



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Driving markets is about identifying causes, not just .

O erational

EffectivenessEffect

StrategyCause

Marketing PlanningCompetitor ConsumerBehaviour Behavior


Hendrickson (2007)


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Driving the market by changing the players..

1. Deconstruction eliminating players in the industryvalue chain

The purpose is usually to improve delivered value tothe customer and / or do it at a lower cost.

(remember Porter on Operational Effectiveness in L3?)

e. . Dell com uters eliminated their retail channel andchanged the behaviour of customers, who wereprepared to trade off in store service for lower prices

e.g. Shell Australia eliminated their franchisees 1993 to1995 in order to set u their retail business for eventualsale to Coles Myer



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1. Deconstruction continued

You can eliminate com etitors or su liers in our

markets by joint ventures, hostile takeovers,partnerships, mergers, and acquisitions.

e.g. Price waterhouse and Coopers Lybrand merged.BP took over Amoco. Ampol took over Golden Fleece,then Caltex took over Ampol.

Microsoft took over Visio and added it to the Officesuite of programs.otoro a purc ase reesca e t en woun t up.



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2. Construction building a new or modified set ofplayers.

e.g. Shell encouraged Woolworths to enter the petrolmarket so that Coles had to follow, then Shell enabledColes to enter the market, but at a premium price.

This enabled Shell to im lement their strate ofretreating to the refinery gate and concentrating onbecoming the lowest cost producer in a mature market.

This was a strategy of de-integration, see Harrigan andPorter L6.



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3. Functional modification changing the functionsperformed by players in the market.

Forward or backward integration of individual firms orgroups of firms.

A group de-integrating their manufacturing processes

and then erformin s ecialised manufacture for eachother at lower costs.

to integrated supply logistics management, fromsu lier to lineside in se uence ust in time.



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Driving the market by shaping player behaviour

This involves proactively changing how players in themarket behave.

Markets can be shaped when needs are either obviousor latent.

Latent needs are not obvious to less perceptive players

or to customers. This ives us an o ortunit tosurprise our competitors and delight our customers.

latent, because consumers are unable to articulate whatthe need.



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Shaping player behaviour directly

Build customer constraintse.g. IKEA control customer movement in store

Remove customer constraintse.g. e-bay

Build competitor constraints

e. . De Beers now controls the world diamond marketRemove competitor constraints

vs Optus/Elders in rural broadband servicesmarket



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Shaping player behaviour indirectly

Create new customer preferencese.g. e a m o crea e a new mar e w cMicrosoft then addressed in collaboration with HP.

Reverse existing customer preferencese.g. the Body Shop shifted focus from glamour to

ea t y v ng

Create new competitor preferencese.g. you could publicly state your strong intention todominate a declining market, thereby encouraging your

competitors to exit gracefully.(see Harrigan and Porter)

Reverse existing competitor preferencese.g. Coles every day low prices made Woolworthsabandon the fresh food people slogan and join them


for a while. (They have changed back now)


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Do you have to be big to drive your market?

Big firms have resources and a strong brand. Thatprobably helps.

Small firms like start ups have no pre conceived notionof what works in the market so presumably would bewilling to try something different, and they dont have to

worry about the impact on their existing industryinvestments, because they dont have any.


D i i k t i b l d h t


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Driving markets requires a balanced approach to

right brainGame Theory

analysis

creativityGame Theory

control

improviseGame Theory

proactivereactive Game Theory

EmergentPlanned Game Theory



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Intermission



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A marketing planning process



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Wood Chapter 7. Outcomes:


But first let us revise the concepts of


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But first, let us revise the concepts of

Marketing is about positioning yourself as oneof the parties involved in an exchange, with theo ect ve o creat ng va ue or ot part es

The conce t of value varies accordin to theposition you take:

are you the consumer or the supplier?


Value the consumer perspective


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Value the consumer perspective

Value can be expressed as:The gap between the total price paid and the perceivedlevel of benefits gained.

The actual monetar cost The time taken to finalise the purchase The learnin cost

The return on investment of effort The cost of switchin


Customer value


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Customer value..

Product

us omer

Value

ene ts

Customer

Product

benefits

Brand

benefitsPrice

Price

Service

benefits

ServiceNon price Non price


benefits ene scosts cos s


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Value The suppliers perspective

Value = Price - Cost

i.e. Value can be altered by manipulating either

Cost for the supplier is more than just the price of

E.g. the opportunity cost of what the capitalcou earn t was emp oye e sew ere



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The School of Marketing


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Lecture 7.11 MSAP

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