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Strategic Market Management Summary (1-15)
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SummaryStrategic Market Management
Chapter 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, and 15
Maximiliaan Koene
,Table of contents
Chapter 1: An introduction and overview .......................................................................... 3
Key Learnings ....................................................................................................................................................................... 5
Chapter 2: External and customer analysis ......................................................................... 6
Key Learnings ....................................................................................................................................................................... 8
Chapter 3: Competitor analysis .......................................................................................... 9
Key Learnings ..................................................................................................................................................................... 12
Chapter 4: Market/Submarket analysis .............................................................................13
Key Learnings ..................................................................................................................................................................... 17
Chapter 5: Environmental analysis and strategic uncertainty ............................................18
Key Learnings ..................................................................................................................................................................... 20
Chapter 6: Internal analysis ..............................................................................................21
Key Learnings ..................................................................................................................................................................... 24
Chapter 7: Creating advantage, synergy, and commitment versus opportunism versus
adaptability ......................................................................................................................25
Key Learnings ..................................................................................................................................................................... 28
Chapter 8: Alternative value propositions .........................................................................29
Key Learnings ..................................................................................................................................................................... 31
Chapter 9: Building and managing brand equity ................................................................32
Key Learnings ..................................................................................................................................................................... 35
Chapter 10: Energizing the business ..................................................................................36
Key Learnings ..................................................................................................................................................................... 38
Chapter 11: Leveraging the business .................................................................................39
Key Learnings ..................................................................................................................................................................... 40
Chapter 12: Creating new businesses ................................................................................41
Key Learnings ..................................................................................................................................................................... 42
Chapter 13: Global strategies ............................................................................................43
Key Learnings ..................................................................................................................................................................... 46
Chapter 14: Setting priorities for business and brands – the exit, milk, and consolidate
options. ............................................................................................................................47
Key Learnings ..................................................................................................................................................................... 50
Chapter 15: From silos to synergy – harnessing the organization ......................................51
15.10 A recap of strategic market management ................................................................................................. 55
Key Learnings ..................................................................................................................................................................... 55
2
,Chapter 1: An introduction and overview
Strategists need to develop competencies around five management tasks:
1. Strategic analysis
2. Innovation
3. Multiple businesses
4. Creating sustainable competitive advantages (SCAs)
5. Developing growth platforms
1.1 What is a business strategy?
Business: An organizational unit that has (or
should have) a defined strategy and
a manager with sales and profit
responsibility.
-Vertical and horizontal business
units that relate to each other.
Business strategy:
1. The product market investment strategy
2. The customer value proposition
3. The assets and competencies
4. The Functional strategies and programmes
1. The product market investment strategy
• Invest to grow (or enter a product market)
• Invest only to maintain the existing position
• Milk the business by minimising investment
• Recover as many of the assets as possible by liquidating or divesting the business
Product growth market directions:
Present products New products
Present markets Market Product expansion
penetration
New markets Market expansion Diversification
2. The customer value proposition (what is relevant/meaningful for the customer)
• Good value (Aldi) • Product line breadth (Tesco)
• Excellence on an important product or • Innovative offerings (Logitech)
service attribute (El Bulli restaurant in • A shared passion for an activity or a product
Spain) (Ducati)
• The best overall quality (Krug Grande • Global connections and prestige (HSBC)
Cuvée)
3. Assets and competencies
Strategic Asset: A resource; i.e. brand name/customer base.
Strategic Competency: What a business unit does exceptionally well; i.e. customer
relationship program/promotion.
-Has strategic importance to the business
-Based on knowledge or a process
3
,4. Functional strategies and programmes
• Manufacturing strategy • Global strategy
• Distribution strategy • Segmentation strategy
• Brand-building strategy • Quality program
• Communication strategy • Customer relationship program
• Information technology strategy • Social technology strategy
• Sourcing strategy
1.2 Criteria to select business strategies
• Is the ROI – return on investment – attractive?
• Is there a SCA – sustainable competitive advantage?
• Will the strategy have success in the future?
• Is the strategy feasible?
-Should be within the financial and HR of the organization.
• Does the strategy fit with the other strategies of the firm?
1.3 Strategic market management
Strategic vision: A projection of a
future strategy or sets of strategies.
The tasks with the right business strategy:
• Continuously challenge the strategy
in order to make sure that it remains
relevant to the changing marketplace
and responsive to emerging
opportunities.
• Ensure that the organization
develops and retains the necessary
skills and competencies to make the
strategy succeed.
• Implement the strategy with energy and focus; the best strategy badly implemented will
be a failure (or worse, jeopardize the firm)
Strategic market management – The objectives:
• Precipitate the consideration of strategic choices.
• Help a business cope with change.
• Force a long-range view.
• Make visible the resource allocation decision.
• Aid strategic analysis and decision-making.
• Provide a strategic management and control system.
• Provide both horizontal and vertical communication and coordination systems.
The planning cycle; a strategy process should:
• Start with the issues
• Bring together the right people
• Adapt planning cycles to the businesses
• Implement a strategy performance system
4
,Strategic options:
• Quality • Product quality
• Innovation • Product line breadth
• Focus • Corporate social responsibility
• Being global • Brand familiarity
• Product attribute • Customer intimacy
• Product design
A historical perspective:
• Budgeting
• Long-Range Planning
• Strategic Planning
• Strategic Market Management
Characteristics and trends:
• External Market Orientation • Entrepreneurial Thrust
• Proactive Strategies • Implementation
• Importance of Information Systems • Globalisation
• Knowledge Management • Longer Time Horizon
• On-Line Analysis and Decision • Empirical Research
Making • Interdisciplinary Developments
Why strategic market management?
• Precipitate the consideration of strategic choices.
• Force a long-range view.
• Make visible the resource allocation decision.
• Aid strategic analysis and decision-making.
• Provide a strategic management and control system.
• Provide both horizontal and vertical communication and coordination systems.
• Help a business cope with change
Key Learnings
• A business strategy includes the determination of the product-market investment
strategy, the customer value proposition, assets and competencies, and functional area
strategy.
• Strategy needs to be developed and executed in the context of a dynamic market. To
cope, it is important to develop competencies in strategic analysis, innovation, managing
multiple businesses, and developing SCAs.
• Strategic market management is a system designed to help visions. A strategic vision is a
vision of a future strategy or sets of strategies. Strategic market management includes a
strategic analysis of the business to identify existing or emerging opportunities, threats,
trends, strategic uncertainties, and strategic alternatives.
• The CMO role has grown over the years and is now often charged with being a partner in
developing strategies and a vehicle to deal with the dysfunctions of the product market
silos.
5
,Chapter 2: External and customer analysis
2.1 External analysis
The role of external analysis:
It should address the following questions:
o Should existing business areas be liquidated, milked, maintained, or a target for
investment?
o Should new business areas be entered?
o What are the value propositions? What should they be?
o What assets and competencies should be created, enhanced, or maintained?
o What strategies and programmes should be implemented in functional areas? What
should be the positioning, segmentation, distribution, brand-building, and
manufacturing strategies?
Additional analysis objectives: (that can contribute to strategy directly by identifying)
o Significant trends and future events.
o Threats and opportunities
o Strategic uncertainties that could affect strategy outcomes.
Strategic uncertainties: Focus on specific unknown elements that will affect the outcome
of strategic decisions.
Strategic uncertainties: Strategic decisions:
• Will a major firm enter? Ø Investment in a product market
• Will a tofu-based dessert product be Ø Investment in a tofu-based product
accepted? Ø Investment in a technology
• Will a technology be replaced? Ø Commitment to off-shore
• Will the Euro strengthen against other manufacturing
currencies? Ø Investment in a new system
• Will computer-based operations be Ø A strategy of maintaining price parity
feasible with current technology?
• How sensitive is the market to price?
Strategic uncertainties: Second-level strategic uncertainties:
• What will be the future demand? Ø Performance improvements?
Ø Competitive technological developments?
Ø Financial capacity of healthcare industry?
(these three are connected with ‘what will be the
future demand?’)
6
,2.2 The scope of customer analysis (3)
1. Segmentation: Identification of customer groups that respond differently from other
groups to competitive offerings.
-The key to develop a sustainable competitive advantage.
• Who are the biggest customers? The most profitable? The most attractive potential
customers? Do the customers fall into any logical groups based on needs, motivations, or
characteristics?
• How could the market be segmented into groups that would require a unique business
strategy?
2. Customer motivations:
• What elements of the product/service do customers value most?
• What are the customers’ objectives? What are they really buying?
• How do segments differ in their motivation priorities?
• What changes are occurring in customer motivation? In customer priorities?
3. Unmet needs:
• Why are some customers dissatisfied? Why are some changing brands or suppliers?
• What are the severity and incidence of consumer problems?
• What are the unmet needs that customers can identify? Are there some of which
consumers are unaware?
• Do these unmet needs represent leverage points for competitors?
Customer characteristics (7) For example:
1. Geographic Ø Small communities as markets for discount stores
Ø Computer needs of restaurants versus manufacturing firms versus banks
2. Type of organisation versus retailers
3. Size of firm Ø Large hospital versus medium versus small
4. Lifestyle Ø Jaguar buyers tend to be more adventurous, less conservative than buyers of
Mercedes-Benz and BMW
5. Sex Ø Mothers of young children versus adults
6. Age Ø The paper copier needs of lawyers versus bankers versus dentists
7. Occupation
Product-related approaches (7) For example:
1. User type Ø Applieance buyer – home builder, remodeller, homeowner
Ø Concert – season ticket holders, occasional patrons, non-users
2. Usage Ø Dessert eaters – those who are calorie conscious versus those who are
3. Benefits sought more concerned with convenience
4. Price sensitivity Ø Price-sensitive Hyundai buyer versus the luxury Mercedes-Benz buyer
Ø Users of competing products
5. Competitor Ø Professional users of chain saws versus homeowners
6. Application Ø Those committed to Heinz Ketchup versus price buyers
7. Brand loyalty
How should segments be defined?
o Benefits (segmentation)
o Price Sensitivity
o Loyalty
o Applications
o Multiple Segments
versus Focus Strategy
The brand loyalty matrix: ->
7
, 2.3 Customer motivations
Internet retailers have learned that there are distinct shopper segments, and each has a very different set of driving motivations:
o Newbie shoppers; need a simple interface, as well as a lot of hand-holding and reassurance.
o Reluctant shoppers; need information, reassurance, and access to live customers support.
o Frugal shoppers; need to be convinced that the price is good and they do not have to search elsewhere.
o Strategic shoppers; need access to the opinions of peers of experts, and choices in configuring the products they buy.
o Enthusiastic shoppers; need community tools to share their experiences, as well as engaging tools to view the merchandise
and personalized recommendations.
o Convenience shoppers; (the largest group) want efficient navigation, a lot of information from customers and experts, and
superior customer service.
Customer motivation analysis/Determining motivations:
Assign
Group and Assess
Identify strategic
structure motivation
motivations roles to
motivations importance
motivations
‘Some motivations will help to define strategy’
The customer as active partner: (managers should…)
• Encourage Active Dialogue
• Mobilize Customer Communities
• Manage Customer Diversity
• Co-creating Personalised Experiences
Key Learnings
• External analysis should influence strategy by identifying opportunities, threats, trends,
and strategic uncertainties. The ultimate goal is to improve strategic choices – decisions
as to where and how to compete.
• Segmentation (identifying customer groups that can support different competitive
strategies) can be based on a variety of customer characteristics, such as benefits sought,
customer loyalty, and applications.
• Customer motivation analysis can provide insights into what assets and competencies
are needed to compete, as well as indicate possible SCAs.
• Unmet needs that represent opportunities (or threats) can be identified by projecting
technologies, by accessing lead users, by ethnographic research, and by interacting with
customers.
8
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