GRAHAM HOOLEY • NIGEL F. PIERCY • BRIGETTE NICOULAUD 1 Market-led strategic management
Introduction • Marketing, centering on identifying and satisfying customer requirements at profit • In greyser terms, marketing “migrated” from being functional discipline to how business should be run • More than paying lip service to marketing
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)
Rational strategies • High short term performance through products cheaper than traditional competitors • Major innovations in technology, marketing methods or distribution channels • Amstrad in electronics, and personal computers (PCs), sock shop in specialty retailing
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
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
Value developing processes • Processes that create value throughout the value chain • Procurement strategy, vendor selection, strategic partnership with service providers etc.
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.
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.
Figure 1.1 Model of mutually beneficial exchanges Providers goals Survival Financial Social Spiritual Customers goals Solutions Benefits Well-being Offers Services, products… customers & providers satisfaction Responses Purchases, support
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
Market orientation • Philosophy of marketing into reality • Definition from Kohli and Jaworski (1990): • Market orientation are activities toward developing an understanding of customers current and future needs.
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
Figure 1.2 Components and context of market orientation Market-led organizational culture
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
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.
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.
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.
Figure 1.3 Marketing approaches Market needs Customer-led marketing Customer-led marketing Customer-led marketing Organizational capabilities
Figure 1.4 Organizational stakeholders Focal Organization
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
Figure 1.5 Marketing and performance outcomes Marketing resources Market performance Market-oriented culture Assets Financial performance Customer satisfaction & loyalty capabilities Sales volume & market share
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
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?
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?
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
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
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
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 and changes in technology (which is a continuous process)
Figure 1.6 Product and process improvement
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)
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
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
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
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;