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 Strategy?

  Strategy is an action that managers take to

attain one or more of the organization's
goals. Strategy can also be defined as “A
general direction set for the company and its
various components to achieve a desired
state in the future.
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.
 It links the organization with the environment
and views marketing as a responsibility of
the entire business rather than a specialized
function (Craven & Piercy, 2009).
 Continue…

 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 2-6

Continue…

 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
 Marketing Strategic Application-
TESCO

 Tesco UK based store

 World’s fourth largest retailer
 UK market share in excess of 30% and annual profits of
approx. ₤2bn.
 Developed internationally over the past 10 years
 International expansion is a key element of Tesco’s strategic
development
Marketing Strategic Application-
TESCO

 In Feb 2006 Tesco planned to enter the retail

grocery market
 Planned to invest ₤ 220m over 5 year period
in its US venture
 The proposed market entry generated a
great deal of interest in US.
Marketing Strategic Application-
TESCO

 Tesco introduced a new brand name Fresh

and Easy
 The aim was to provide a classless retailer
Fresh and Easy was effected by economic
crisis
 The wrong entry strategy
 Market with fierce competition
Marketing Strategic Application-
TESCO

 The wrong entry strategy

 Markets with fierce competition
 Misunderstanding of cultures
 Lack of customer knowledge
Marketing Strategic Application-
TESCO
 Tesco planned to introduce the British model
 Own brand products are unusual in USA. In USA
brands dominate
 US small retail outlets are relatively unknown
 The company’s environmental claims have come
under scrutiny, along with its property strategy, its
non-unionization policy in a relatively strong
unionized sector of business and its refusal to sign a
community benefit agreement.
Marketing Strategic Application-
TESCO

 Tesco failed to establish a competitive retailer

due to poor preparation, failing to understand the
surprising difference between US and British
shoppers.
 Financial crisis also affected the company’s
growth
 Tesco opened its stores in wrong locations by
opening aspirational grocery stores in low
income areas.
PART 2

MARKET DRIVEN STRATEGY

WHAT IS MARKET-DRIVEN STRATEGY?

Market-driven is defined as: “Firm's policy

or strategy guided by market trends and
customer needs instead of the firm's
productive capacity or current products.” …
A market driven organization has a
customer focus, together with awareness of
competitors, and an understanding of
the market.
Continue..
 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 a Market Driven
Strategy
CHARACTERISTICS OF MARKET-
DRIVEN STRATEGY

 According to Craven and Piercy (2009),

following are main characteristics of market-
driven strategy:
1) Market oriented.
2) Customer Focus
3) Competitor Intelligence
4) Cross Functional Coordination
5) Performance Implications
CHARACTERISTICS OF MARKET-
DRIVEN STRATEGY

6) Determining Distinctive Capabilities

7) Classifying Capabilities
8) Creating Value for Customers
9) Customer Value
10) Providing Value to Customers
Classifying Capabilities
CHARACTERISTICS OF MARKET-
DRIVEN STRATEGY

 Becoming Customer Driven

I. Market Sensing Capabilities
II. Customer Linking Capabilities
III. Aligning Structure and Processes
WHAT IS MARKET ORIENTED FIRM OR
MARKET ORIENTATION?
Continue….

 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.
Continue..

 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)
Continue…
 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.
Continue..

- 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.
Continue…
 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.
Continue…

 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.
Distinctive Capabilities
Continue….

 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.
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.
PART 3

CORPORATE, BUSINESS AND MARKETING

STRATEGY
Corporate, Business and Marketing
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.
Components of Corporate Strategy
Components of Corporate Strategy

 Deciding Corporate Vision

 Objectives (Marketing, Innovation,
Resources, Productivity, Social
Responsibility and Finance)
 Resources
 Business Composition (SBU’s)
 Structure, System and Processes
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).
Continue…

 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.
Strategic Marketing

 Marketing Strategy consists of the analysis,

strategy development and implementation of
activities in developing a vision about the
markets of interest to the organization.
The Marketing Strategy Process
The Marketing Strategy Process

Situational Analysis
 Markets and Competitive Space
 Strategic Market Segmentation
 Strategic Customer Relationship
Management
 Capabilities for continuous learning about
Markets
Designing Market Driven Strategies

 Market Targeting and Strategic Positioning

 Strategic Relationships
 Innovation and New Product Strategy
Market Driven Program
Development

 Strategic Brand Management

 Value Chain Strategy
 Pricing Strategy
 Promotion Strategy
Implementing and Managing
Market Driven Strategy

 Designing Market Driven Organizations

 Marketing Strategy Implementation and
Control
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:
Continue…

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.)
Continue…

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
Continue…

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.
Continue…

 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.
Continue…

 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

External
Analysis

Market
Long term
Driven
Performance
Internal Strategy
And Vision
Analysis
END OF CHAPTER