Imperatives for

Market-Driven
Strategy

Dr. Javeria Hassan Khan

 Corporate,
Market-Driven Business, and
Strategy Marketing
Topics to be Strategy

covered Challenges of a
New Era for
Strategic
Marketing
What Is a Strategy?
• Although strategy first became a popular business buzzword during the 1960s, it continues
to be the subject of widely differing definitions and interpretations.

• The following definition, however, captures the essence of the term:

“A strategy is a fundamental pattern of present and planned objectives, resource deployments,

and interactions of an organization with markets, competitors, and other environmental
factors”.

Our definition suggests that a strategy should specify

(1) what (objectives to be accomplished),
(2) where (on which industries and product-markets to focus), and
(3) how (which resources and activities to allocate to each product-market to meet
environmental opportunities and threats and to gain a competitive advantage).
Components of Strategy
• A well-developed strategy contains five components or sets of issues:

1. Scope - the breadth of its strategic domain—the number and types of

industries, product lines, and market segments it competes in or plans
to enter.
• Decisions about an organization’s strategic scope should reflect
management’s view of the firm’s purpose or mission.
• This common thread among its various activities and product-markets
defines the essential nature of what its business is and what it should
be.
Components of Strategy
2. Goals and objectives - Strategies also should detail desired
levels of accomplishment on one or more dimensions of
performance, such as
• volume growth,
• profit contribution,
• or return on investment (ROI) —over specified time periods for
each of those businesses and product-markets and for the
organization as a whole.
Components of Strategy
3. Resource deployments- Every organization has limited financial
and human resources.
• Formulating a strategy also involves deciding how those resources
are to be obtained and allocated across
i. businesses,
ii. product-markets, and
iii. functional departments and activities within each business or
product-market.
Components of Strategy
4. Identification of a sustainable competitive advantage
• One important part of any strategy is a specification of how the
organization will compete in each business and product market
within its domain.
• How can it position itself to develop and sustain a differential
advantage over current and potential competitors?
• To answer such questions, managers must examine the market
opportunities in each business and product-market and the
company’s distinctive competencies or strengths relative to its
competitors
Components of
Strategy
5. Synergy
• Synergy exists when the firm’s businesses,
product-markets, resource deployments,
and competencies complement and
reinforce one another.
• Synergy enables the total performance of
the related businesses to be greater than it
would otherwise be:
“The whole becomes greater than the sum of
its parts.””.
Escalating Challenges in Modern Markets
1. Radical Market Changes

• Rising demands for superior performance

• Ever-intensifying competition

• Blurring market and industry boundaries due to disruptive competition

Evolving Customer Demands

2. Customer Knowledge and Expectations

• Unprecedented demands for superior value

• Increasing customer knowledge and perception in value judgments

3. New Competitive Dynamics: Web 4.0 4. External Pressures on Businesses

Emergence of Web 4.0 Influence of Pressure Groups and

Ethical Scrutiny
• Introduction of new Internet business
models • Dramatic escalation of external
influences and lobbying
• Wholly new forms of competition
following the Web 1.0 dot-com • Heightened scrutiny on corporate
crashed responsibility and ethical standards

[Link]
web4-explained
5. Opportunities in a Complex Market
Environment
Scope for Success Amidst Risk and Uncertainty

• Increased risks, but also heightened rewards for value-driven strategies

• Innovative companies (e.g., Google, eBay) and conventional industries

(e.g., Arcelor Mittal Steel) as success examples
Market Driven Strategy
• Business strategy starts with understanding the market and its customers

• Market and customer needs are the foundation of strategic decisions

• Market-driven strategy mandates a company-wide perspective

• Focus on more effective integration of activities and processes impacting

customer value
Market Driven Strategy
Long-Term Focus of Market-Driven Strategy

• Developing a market-driven strategy requires long-term effort

• Building a market-driven culture and processes takes time

The Hierarchy of Strategies
The three major levels of strategy in most large, multiproduct
organizations are
i. Corporate strategy
ii. Business-level strategy
iii. Functional strategies focused on a particular product-market
entry.
A. Corporate Strategy Overview

Corporate Strategy Focus

• Coordination of activities across multiple business units or legal entities
(conglomerates)

• Decisions on organizational scope and resource allocation across

divisions

• Key questions:
• What business(es) are we in?
• What business(es) should we be in?
• How should we allocate resources to meet overall goals?
Case Example: IBM’s Strategic Shift
IBM’s Strategic Change

• Shifted focus from hardware to consulting services and software

• Corporate resources reallocated to new strategic direction:

• R&D expenditures
• Marketing and advertising budgets
• Customer service personnel
Developing Distinctive Competencies at the
Corporate Level
Key Focus Areas:

• Superior human, financial, and technological resources

• Designing effective organizational structures and processes

• Achieving synergy between business units

Importance of Synergy in Corporate Strategy
Synergy as a Competitive Advantage

Shared resources across related businesses:

• R&D investments

• Product or production technologies

• Distribution channels

• Common salesforce

• Promotional themes
 Key Components
Corporate Strategy • Long-term vision
• Objectives as milestones
Framework Overview • Resource allocation
• Business portfolio
• Organizational structure and systems
• Multimarket corporate advantage
1. Defining Corporate Vision
What is Corporate Vision?

• Defines what the corporation is and what it does

• Provides guidelines for managing and improving the organization

Strategic Choices:
• Where the firm is headed in the future
• Based on capabilities, resources, opportunities, and challenges
Developing the Corporate Vision
Vision Development Process:
• Establishes a future direction aligned with strategic choices

• Involves continuous adjustments for sustainable competitive advantage

Key Actions:
• Strategy development

• Implementation and monitoring

• Adjustment to environmental changes

Monitoring the Environment
Role of Management in Vision:

• Ongoing market and competitive environment analysis

• Vision is reviewed and updated as shifts occur in strategic direction

Case Example: Amazon’s Radical Vision
Amazon’s Transformation Vision
• Initially aimed to revolutionize retail with online operations
• Jeff Bezos' expanded vision: Transform Amazon into a digital utility

Key Strategic Move

• Renting out resources (e.g., technology, logistics) to external businesses
• Opening Amazon’s pricing and product data to outside developers
2. Importance of Setting Objectives
Why Set Objectives?

• To measure the performance of the enterprise

• Guide strategy and decision-making across the organization

Areas for Corporate Objectives
Key Areas for Objectives:
• Marketing
• Innovation
• Resources
• Productivity
• Social responsibility
• Finance
Examples of Corporate Objectives
Examples of Specific Objectives:
• Growth and market share expectations
• Product quality improvements
• Employee training and development goals
• New-product development targets
• Return on invested capital
• Earnings growth rates
• Debt limits
• Energy reduction objectives
• Pollution and environmental standards
Levels and Time Frames of Objectives
Hierarchy of Objectives:
• Objectives set at multiple levels, starting with the enterprise's overall
goals

Time Frame for Strategic Change:

• Long-term objectives may exceed short-term financial reporting
• Use of both financial and non-financial measures to gauge success
2. Importance of Resources in Strategy

Strategic Focus on Resources

• Includes assets, skills, and capabilities
• Resources drive competitive advantage and shape strategy

Key Benefits of Resources

Strategic Value of Resources:
• Compete across different markets
• Provide value to end-user customers
• Create barriers to competitor duplication
Distinctive Capabilities
Role of Distinctive Capabilities:
• Essential in shaping the organization's strategy
• Match capabilities with market opportunities

Leverage Across Markets:

• Capabilities that work across different markets are highly valuable
Example: GoreTex Fabric
• GoreTex Case Example

• High-performance fabric with multiple applications

• Used in industries ranging from apparel to dental products (e.g., dental

floss)
3. Business Composition
Defining Business Composition:
• Provides direction for corporate and marketing strategy design
• Simple for single-product firms but complex for diversified companies
serving multiple markets

Business Segments, Groups, and Divisions

Grouping Business Areas for Strategy:
• Firms serving multiple markets often separate businesses into segments,
groups, or divisions
• Grouping similar products or services helps in decision-making and
planning
Business Composition
The Role of Strategic Business Units (SBUs)
• What is an SBU?
• A strategic unit with product and customer group similarities
• Responsible for specific business functions and has a dedicated strategy
• Examples of SBUs:
• A single product, a line of products, or a mix of related products targeting
common market needs

i. Business Composition: Essential for strategic planning and decision-making

ii. SBUs: Offer focus and flexibility within a larger corporate structure
iii. Strategic Coordination: Necessary between corporate management and
individual SBUs for success
4. Structure, Systems, and Processes
Key Components of Organizational Strategy:
• Structure: Defines the composition of the corporation
• Systems: Formal policies and procedures for operations
• Processes: Informal aspects of organizational activities

Role of Structure in Strategy

• Organizational Structure:
• Determines how business units and staff functions are controlled and
coordinated
• Impacts strategic decisions and operational effectiveness
4. Structure, Systems, and Processes
Systems: Formal Policies and Procedures
Systems Overview:
• Set the framework for how tasks are performed
• Provide consistency and efficiency across various departments and
business units

Processes: Informal Activities

Processes Overview:
• Focus on informal aspects of organizational operations
• Relate to how people and teams work together beyond formal systems
4. Structure, Systems, and Processes
Business Design (Business Model)

• What is a Business Design?

• The totality of how a company selects customers, differentiates offerings,
configures resources, and captures profit

• Elements of Business Design:

• Customer selection
• Defining and differentiating offerings
• Task performance (internal vs. outsourced)
• Going to market and creating utility for customers
4. Structure, Systems, and Processes
Focus Beyond Product and Technology
• Holistic Business Model:
• Business design focuses on processes and relationships, not just
product or technology
• Ensures alignment of operations with strategic goals

i. Structure, Systems, and Processes: Critical to control,

coordinate, and optimize business activities
ii. Business Design: Offers a comprehensive approach to
delivering value and profitability beyond the product itself
B. Business-Level Strategy Overview

Focus of Business-Level Strategy

• Competing effectively within a specific industry

• Key concern: Sustainable competitive advantage

i. What distinctive competencies can give the business unit a competitive

advantage?

ii. Which of those competencies best match the needs and wants of the
customers in the business’s target segment(s)?
Competitive Advantage and Distinctive
Competencies
Defining Competitive Advantage
• Identify distinctive competencies that offer a competitive edge
• Align competencies with customer needs and target segments

Example Strategies:
• Low-cost strategy: Low-cost supply sources, efficient production
• Differentiation strategy: Strong marketing and superior customer service
Market Scope and Segmentation
Defining Appropriate Scope

• Determining how many market segments to target

• Choosing the breadth of product offerings and marketing programs

• Tailoring strategies to appeal to target segments

Synergy at the Business-Level
Achieving Synergy

• Leveraging synergy across product markets

• Promoting collaboration across functional departments for strategic

advantage
C. Introduction to Marketing Strategy
Primary Focus of Marketing Strategy:
• Allocate and coordinate marketing resources
• Achieve firm’s objectives within specific product-markets

Scope of Marketing Strategy

• Defining the Target Market:
• Identify specific product or product line’s target market(s)
• Tailor marketing strategy to meet the needs of potential customers in
those markets
Marketing Strategy
Competitive Advantage and Synergy
• Pursuing Competitive Advantage:
• Develop a well-integrated marketing program to stand out from
competitors
• Seek synergy across marketing efforts to maximize impact
Business and Marketing Strategy Relationships
• Importance of Integration:
• Understanding business purpose, scope, objectives, resources, and strategy is
essential for designing consistent marketing strategies
• Marketing must align with corporate and business unit plans of action

Marketing Executive’s Role in Business Strategy

Key Responsibilities:

• 1. Participation in Strategy Formulation: Contribute to business strategy

development
• 2. Developing Marketing Strategies: Ensure marketing is aligned with business
priorities and other functions
Central Role of Marketing (Peter F. Drucker’s
View)
Marketing’s Integration into Business:
• Not just a separate function but a central dimension of the entire
business
• Customer-Centric Perspective: Business must be viewed from the
customer’s point of view
Marketing Manager’s Role (Frederick E.
Webster’s View)
• Advocating for the Customer:
• Marketing managers champion customer-first decision-making in
corporate strategy
• They also communicate the firm’s value proposition internally and
externally
Strategic Marketing Overview
Key Activities in Strategic Marketing:
• Market Vision Development: Analyze markets of interest
• Target Market Selection: Choose strategies for specific market
segments
• Objective Setting: Define measurable goals for performance
• Marketing Program Management: Implement and position marketing
strategies to meet customer value requirements
Strategic Marketing as a Market-Driven
Process
Adapting to a Changing Environment:
• Marketing strategy evolves with a dynamic business landscape
• Focus is on delivering superior customer value rather than just
increasing sales

The Role of Strategic Marketing

Performance-Oriented Focus:
• Links the organization with its environment
• Ensures marketing is viewed as a responsibility of the entire business
rather than a specialized function
Introduction to the Marketing Strategy
Process
• Overview of Stages:
• Analysis, Planning, Implementation, and Management
• Designed to address customer value and market-driven strategies
Elements of the Marketing Strategy Process

[Link], Segments, and Customer Value

[Link] Market-Driven Strategy
[Link]-Driven Program Development
[Link] and Managing Market-Driven Strategies
Markets, Segments, and Customer Value
Market and Competitor Analysis:
• Define the product-market and understand buyer preferences
• Evaluate competitors’ strategies, strengths, and limitations

Strategic Market Segmentation:

• Identify subgroups within the market based on different needs and
preferences
• Focus on segments where organizational capabilities match buyer value
requirements
Strategic Market Segmentation
• Objective:
• Examine differences in needs and wants across customer subgroups
• Approach:
• Segment based on characteristics like purchase behavior, industry type,
and brand preferences
• Outcome:
• Better targeting of capabilities to meet buyer demands
Strategic Customer Relationship
Management (CRM)
Personalizing Customer Interaction:
• Deliver superior customer value through personalized engagement
• Integrate complex organizational capabilities around customer needs

CRM Role in Strategy:

• Vital for market targeting, positioning strategies, and retaining customers
Continuous Learning About Markets
Understanding Markets and Competition:
• Sensing current market trends and anticipating future changes
• Seizing opportunities and countering threats beyond traditional industry
boundaries

Market Sensing Methods:

• Use data-driven methods to guide information collection and analysis for
future planning
Designing Market-Driven Strategy
• Customer Targeting and Positioning:
• Tailoring strategies to reach and serve the most valuable customer
segments

• Marketing Relationship Strategies:

• Build long-term relationships through trust and value creation

• Innovation and New Product Strategy:

• Focus on creating new products that align with market demand
Market-Driven Program Development
Developing Strategies for:

Branding: Establish strong brand equity

Value Chain: Optimize supply chain and delivery to customers

Pricing and Promotion: Set competitive prices and create effective

promotional campaigns

Sales Strategies: Drive growth by meeting the value expectations of buyers

Implementing and Managing Strategies
• Organizational Design and Control:
• Structure the organization to support the marketing strategy
• Monitor performance and adjust as needed for success

The Marketing Strategy Process

• Holistic Approach:
• Market analysis, CRM, and continuous learning drive successful
strategies
• Integration of customer value at every stage ensures competitive
advantage
Designing Market-Driven Strategies
Purpose:
• Identify market opportunities

• Define market segments

• Assess competition

• Evaluate the organization's strengths and weaknesses

Market Sensing and Information Gathering
• Market Sensing Information:

• Critical for understanding customer needs, market dynamics, and

competition

• Provides foundation for strategy decisions in targeting, positioning, and

relationship-building
Market Targeting and Strategic Positioning

• When, where, and how to compete based on the firm’s market and
competitive environment

• Market targeting strategy: Identifying the customers or organizations to

serve in a product-market

• Positioning strategy: Setting the product, price, promotion, and value

chain strategies to meet segment needs effectively
Market Targeting Strategy
• Select segments with the best match between the value requirements
of customers and the firm’s distinctive capabilities

• Identify and prioritize segments based on importance to the firm

• Develop targeting strategy to match each segment with the organization's
strengths
Strategic Positioning Process
Product positioning: Differentiating the product to meet specific segment
needs

Competitive positioning: Establishing how the product compares to

competitors

Desired outcomes: Sales growth, customer retention, market share, and

profit contributions
Marketing Mix: Tactics for Positioning
Product Strategy:
• Design products/services that resonate with targeted segments

Value Chain Strategy:

• Ensure efficient and effective delivery of value

Pricing Strategy:
• Set prices that reflect both value to the customer and market conditions

Promotion Strategy:
• Tailor communication efforts to build brand awareness and position effectively
against competitors
Positioning for Long-Term Success
Sustaining Competitive Advantage:

• Continuous evaluation and adjustment of positioning strategy based on

market feedback and competitive shifts

• Use of market sensing for future strategies and product development

Strategic Relationships in Marketing
• Key marketing relationships with end-users, channel members, suppliers,
competitor alliances, and internal teams
• Collaboration enhances customer satisfaction and adaptability in a dynamic
environment

Types of Strategic Marketing Relationships

End-User Customers:
• Direct relationships through customer engagement, loyalty programs, and
personalized marketing strategies
Marketing Channel Members:
• Collaboration with distributors, retailers, and wholesalers to streamline product
flow and meet customer demand
Types of Strategic Marketing Relationships

Suppliers:
• Strong partnerships to ensure quality, reduce costs, and drive innovation in
product development

Competitor Alliances:
• Strategic alliances for co-creation, joint ventures, or industry-wide
collaborations to capitalize on mutual strengths

Internal Teams:
• Cross-functional collaboration between marketing, R&D, and operations to
align goals and deliver value efficiently
Importance of Building Long-Term
Relationships
Superior customer value: Enhanced service quality and product offerings
through sustained collaboration

Adaptability: Partnerships enable firms to adjust swiftly to changes in the

business landscape

Shared resources: Pooling expertise, technology, and other assets to

boost innovation and efficiency
Strategic Partnering in Action
• Outsourcing Manufacturing:
• Example: Many global companies outsource manufacturing (e.g., Apple,
Nike) while maintaining strong relationships with suppliers to ensure
product quality and brand consistency
• Co-Branding and Collaborations:
• Example: Strategic collaborations between brands (e.g., Red Bull and
GoPro) enhance customer reach and value
Strategic Partnering in Action
Outsourcing Manufacturing:
• Example: Many global companies outsource manufacturing (e.g., Apple,
Nike) while maintaining strong relationships with suppliers to ensure
product quality and brand consistency

Co-Branding and Collaborations:

• Example: Strategic collaborations between brands (e.g., Red Bull and
GoPro) enhance customer reach and value
Role of Strategic Partnerships in Success
Enhancing Brand Value:
Strategic partnerships help brands innovate, expand reach, and improve
efficiency

Mutual Growth:
Both the company and its partners benefit from shared success, leading to
stronger market positioning

Customer-Centric Approach:
Partnerships help in staying closer to customer needs and delivering value
more effectively
Managing and Sustaining Strategic
Relationships
Communication:
Regular, open communication to align on objectives and performance

Trust and Commitment:

Building trust over time through consistent quality, reliability, and shared
goals

Monitoring Performance:
Continuously evaluating the effectiveness of partnerships and making
adjustments as needed