Download Strategy - Noman Rafiq

GRAHAM HOOLEY • NIGEL F. PIERCY • BRIGETTE
NICOULAUD
1
Market-led strategic
management
Introduction
• Strategy
➡ Guides the organization in its relationship with its
environment
➡ Affects the internal structure and processes of the
organization
➡ Centrally affects the organization’s performance.
• Marketing, via its policies and programs relating to
the seven elements of the marketing mix, can provide
the means to facilitate the attainment of a strategy.
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Important Questions
1 Where are we now?
2 Where do we want to be?
3 How might we get there?
4 Which way is best?
5 How can we ensure arrival?
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Marketing
• Marketing, centering on identifying and
satisfying customer requirements at profit
• In Greyser’s term, marketing “migrated” from
being functional discipline to how business
should be run
• More than paying lip service to marketing
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Example -Pan-company marketing
was pioneered by British Airways
Customer champions
• In 1982 the pressure to prepare for
privatization was intense. A fundamental shift
in the way BA did business was needed.
• Lord Marshall – then Sir Colin – took charge of
transforming BA into a totally customer
focused organization.
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Insight
• Lord Marshall and his top team instituted
investigative techniques, mainly in-depth interviews
with staff, to uncover what they thought about
customers. An insight was generated: speed and
efficiency, although important, were of secondary
importance to the customer. They wanted to see
warm, personal and caring staff.
Innovation and improvement
• All existing business processes and operations were
disregarded. Only the customers and their needs
were used as the basis for redesigning the company.
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Customer culture
• Front-line staff were now rated as the company's main assets.
The ‘Putting People First’ program involved them in redefining
the tasks which win customers, based on teamwork. This
became the driver of business strategy.
• Engineers and pilots insisted that they too be involved in the
program. Customer First Teams were created to suggest
solutions to customer problems.
• Media advertising communicated ‘The World's Favorite Airline’
to staff as well as to customers. Motivation and incentives were
prioritized and company-wide performance-related pay was
instituted. Awards for Excellence were conferred by Lord
Marshall on 1–1.5% of staff annually.
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Measurement
• Everything pointed to the need for better metrics and
standards. A Market Place Performance Department,
reporting to the CEO, was set up. Mystery flyers were
created [Mystery shoppers/flyers are researchers who
are hired by organizations to pretend to be customers
and secretly evaluate the quality of the customer
service].
• A continuous upward trend in customer satisfaction
ratings was now registered right through into the late
1990s. Continuous improvements in market share,
passenger traffic and staff productivity were achieved.
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Profitability
• The direct result of adopting pan-company marketing
was a 30% increase in productivity and an increase in
market share of 2.4% in a highly competitive market
and the posting of improved profits when, for
example, from 1990–1994 the airline industry worldwide lost US$15 billion.
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The Three ‘Rs’ of Growth Strategies
DOYLE DISTINGUISHES BETWEEN
THE FOLLOWING
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Radical strategies
• Companies achieve spectacular growth in
sales and profits without building customer
value through superior products
– Acquisition based
– Marketing department based (High level of
advertising, proliferating product lines)
– Public relations based (media hype to attract
customers)
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Rational strategies
• High short term performance through
products cheaper than traditional competitors
– Major innovations in technology, marketing
methods or distribution channels
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Robust strategies
• Companies achieve steady performance over
long period by creating superior customer
value and building long-term customer
relationships.
– Superior customer value, long-term investments
in relations with suppliers, distributors and offer
long-term advantage. Examples include Toyota,
Johnson & Johnson
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Marketing…………….. CCDVTP
C = Creating
C = Communicating,
D = Delivering
V = Value
T = Target Audience
P = Profit.
WEBSTER PROPOSES MARKETING
AS A SET OF PROCESSES
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Value-defining processes
• Processes that enable the organization to
understand its environment in which it
operates better (understand resources and
capabilities)
– Such as market research, buying behavior, product
use and so on
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Value developing processes
• Processes that create value throughout the
value chain
– Procurement strategy, new product and service
development, design of distribution channels,
vendor selection, strategic partnership with
service providers etc., pricing strategy
development, and ultimately the development of
the value proposition for customers
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Value-delivery processes
• Processes that enable the delivery of value to
customers
– Service delivery, customer relationship
management, management of distribution and
logistics, communication processes (such as
advertising and sales promotion) and customer
support services etc.
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Evolving Definitions of Marketing
THE MARKETING CONCEPT AND
MARKET ORIENTATION
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Definition of marketing
Definition from Ferrell and Lucas (1987):
• Marketing is the process of planning and
executing the conception, pricing, planning
and distribution of ideas, goods and services
to create exchanges that satisfy individual and
organizational objectives.
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Figure 1.1
Model of mutually beneficial exchanges
Providers goals
Survival
Financial
Social
Spiritual
Ecological
Etc.
Offers
Services, products…
customers &
providers satisfaction
Responses
Purchases, support
Customers goals
Solutions
Benefits
Well-being
Altruism
Etc.
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Marketing concept
• Marketing involves the following:
– organisational culture: set of values and beliefs for
the organisation to serve customers needs
– strategy: develop effective responses to changing
market environments by defining market
segments, and developing and positioning product
offerings for targets
– tactics: concerned activities of product
management,
pricing,
distribution
and
communications such as advertising, personal
selling, publicity and sales promotion
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Market orientation
• Definition from Kohli and Jaworski (1990):
– Market orientation are activities toward
developing an understanding of customers current
and future needs.
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Components and context of market
orientation are proposed:
• Customer orientation
– Understanding costumers to create superior value
• Competitor orientation
– Awareness of the short-long term competitor’s capabilities
• Interfunctional co-ordination
– Using all resources to create value for customers
• Organizational culture
– Linking employee and managerial behavior to customer
satisfaction
• Long-term profit focus
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Figure 1.2
Components and context of market
orientation
Customer
orientation
Competitor
orientation
Market-led
organizational
culture
Interfunctional
cordination
Focus on the
long term
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Resource based view of marketing
• Focus on ‘core competencies’
• Performance is driven by the resource profile
of the organization
• Possession and deployment of distinctive,
hard to imitate or protected resources
• Three alternative approaches are apparent
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Product push marketing
• Activities on existing products and services
and look for ways to encourage, or persuade
customers to buy.
• The key is to make customer want what we
are good at.
• This is the myopic interpretation of resource
based view.
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Customer-led marketing
• Under this approach organisations chase their
customers at all costs.
• The retailers react by giving customers more
choice, heavy promotions and deals to
stimulate purchases, and aggressive sales
force targets.
• Customers get confused because of the over
complex promotions.
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Resource based marketing
• Companies base their marketing strategies on
equal consideration of the requirements of
the market and their abilities to serve it.
• Resource based marketing seeks a long term
fit between the requirements of the markets
and the abilities of the organisation to
compete in it.
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Figure 1.3
Marketing approaches
Market needs
Customer-led
marketing
Resource based
marketing
Product push
marketing
Organizational capabilities
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How market orientation and
market resources impact on
organizational performance?
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Figure 1.4
Organizational stakeholders
Customers
Shareholdrs
Distributors
Focal
Organization
Managers
Suppliers
Employees
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Contribution of marketing to
stakeholders objectives
• Firms that do well in marketplace also do well
financially
• Adding value of firm for shareholders
• Firm adopting market-oriented culture
perform better financially than those that do
not
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Figure 1.5
Marketing and performance outcomes
Marketing
resources
Market
performance
Assets
Customer
satisfaction
& loyalty
Market-oriented
culture
capabilities
Financial
performance
Sales
volume &
market
share
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Marketing fundamentals
• Set of basic and pragmatic marketing
principles that guide marketing thought and
action
• Follow logic of value-based processes
described by webster
• Their applications can revolutionize how
organizations respond to, interact with, their
customers
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Principle 1: Focus on the customer
• High degree of customer focus-But not blind
focus!
• Market-led approach
– What business are we in?
– What business could we be in?
– What business do we want to be in?
– What must we do to get into or consolidate in that
business?
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Principle 2: Only compete in
markets where you can establish a
competitive advantage
• Choosing where to compete and where to
commit its resources
• How attractive the market appears
• Do we have the competencies and skills to
compete here?
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Principle 3: Customers do not buy
products
• Customers do not buy products , they buy
what the product can do for them – the
problem it solves
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Principle 4: Marketing is too
important to leave to the
marketing department (even if
there still is one)
• Marketing is everyone’s job in the organisation
• Doing marketing is marketing department job,
becoming and being marketing minded is
everybody’s job.
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Principle 5: Markets are
heterogeneous
• Different customers, sub-markets and
segments; buy a car for cheap transport from
a to b or for comfortable or save travel;
different benefits requirements
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Principle 6: Markets and customers
are constantly changing
• Markets are dynamic and products have a
limited life; need product and service
improvement; customer expectations change
• Two main processes of improvement;
- Innovation ( a relatively large step is taken at
one point in time)and changes in technology
- Second step is a continuous process where
smaller changes are made but on an insistent
basis.
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Figure 1.6
Product and process improvement
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The role of marketing in leading
strategic management
• The role of marketing in the organisation can
be in a way shown in figure 1.7. (that role is
threefold)
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Figure 1.7
The role of marketing in the organization
Identify and communicate customer wants and needs
throughout the organization
Determine the competitive positioning to match the needs
of the customers with company capabilities
Marshal all relevent organisational resources to deliver
customer satisfaction
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Identification of customer
requirements
• Identity and communicate customers want
and need throughout the organisation
• Identify the requirements of customers and
communicate them effectively; who the
customers are and what will give them
satisfaction or create “customer delight”
• Customers expectations, wants and need must
be understood and communicated
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Deciding on the competitive
positioning to be adopted
• Which target markets or markets the
organisation will seek to serve
• Two main set of factors;
– First, how attractive the alternative potential
targets are
– Second, how well the company can hope to serve
potential target relative to the competition
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Implementing the marketing
strategy
• Marshal all relevant organisational resources
to deliver customer satisfaction
• Implementing the marketing strategy; no gaps
between offer, design, production and
delivery;
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