Market

Driven Strategy
Market Driven Strategy
 The Underlying logic of market driven strategy is
that from market should be the starting point in
business strategy formulation.
 Consider-able progress has been made in
identifying market-driven business, understanding
what they do and measuring the bottom-line
consequences of their orientation to their market.
 Importantly, market-driven strategy provides a
company-wide perspective, which mandates more
effective integration of all activities that impact on
customer value.
Characteristics of
Market- Driven Strategy
Becoming
market
orientation

Achieving Leveraging
Superior distinctive
Performance capabilities

Customer
value/
Capabilities
match
 A key advantage of becoming market oriented is
gaining an understanding of the market and how it
is likely to change in the future. This knowledge
provides the foundation for designing market-driven
strategies.

 Developing this vision about the market requires

obtaining information about customer, competitor
and market; viewing the information from a total
business perspective; deciding how to deliver
superior customer value and taking action to
provide value to customers.

 Importantly, there is support from research findings

and business practice indicating that market-driven
strategy enhance business performance
 Characteristic of
Market Orientation
 Customer Focus

 Competitor Intelligence

 Cross functional
Coordination

 Performance Implication
 Customer Focus
 There are many similarities between
the marketing concept and market
orientation, although the marketing
concept implies a functional
(marketing) emphasis.

 The important difference is the

marketing orientation is more than a
philosophy since it consists of a
process for delivering customer value.

 The marketing concept advocates

starting with customer need and
wants, deciding which need to meet,
and involving the entire organization
in the process of satisfying customers
Customer Focus
 The market-oriented organization understands customers’
preference and requirements and effectively deploys the skills
and resources of the entire organization to satisfy customer

 Becoming customer oriented requires finding out what value

buyers want to help them satisfy their purchasing objectives.

 Buyer’s decisions are based on the attributes and features of the

product that offer the best value for the buyer’s use situation.

 The buyer’s experience in using the product is compared to his or

her expectations to determine customer satisfaction.
Competitor Intelligence
A market-oriented organization
recognizes the importance of
understanding is competition as well as
the customer:

The key questions are which

competitors, and what technologies,
and whether target customers
perceive them as alternate satisfier.
Superior value requires that the seller
identify and understanding the
principal competitors’ short-term
strengths and weaknesses and long-
term capabilities and strategies
Cross-Functional Coordination

• Market-oriented companies are

effective in getting all business
functions to work together to provide
superior customer value.
• These organizations are successful in
removing the wall between business
function-marketing talks with
manufacturing and finance.
• Cross-functional teamwork guides the
entire organization toward providing
superior customer value
 Performance
Implication
 Companies that are market oriented begin
strategic analysis with a penetrating view of
the market and competition.

 Moreover, an expanding body research

finding points to a strong relationship
between market orientation and superior
performance.

 Companies that are market oriented display

favorable organizational performance
compared with companies that are not
market oriented.
Component of Market
Orientation
Information Interfunctional
acquisition assessment
Customer
Information Shared
diagnosis and
coordinated
action
Competitor Superior
Information customer
value

Other
market
Information
Identififying Distinctive
Capabilities
 Understanding the organization’s distinctive
capabilities and knowing how they relate to
customer’s value requirements are important
considerations in marketing strategy design.

 It is essential that management place a company’s

strategic focus on the company’s distinctive
capabilities.

 The capabilities may enable the organization to

compete in new markets, provide significant value to
customers, and create market-entry barriers to
potential competitor.
A Distinctive Capability:
1. Offers a
disproportionate
(higher)
contribution to
superior customer
value

2. Enable an
organization to
deliver value to
customers in a
substantially more
cost-effective
manner.
Illustrative Distinctive
Capabilities
 Singapore Airlines
Singapore Airlines performs many
commercial air transportation functions
well, but it is widely recognized as the
industry leader in customer service
delivery

 Wal-Mart
Wal-Mart has value-priced products and
convenitient retail locations, but its
efficient and responsive distribution
system is how it mapped the path to
competitiveness
 Desirable Capabilities

Desirable
Capability

Applicable to
Superior to the Multiple
competition Competitive
Situations

Difficult to
duplicate
This process view of capabilities highlights the
interrelated nature of organizational processes
and point to several important issues

 The market-driven organization has a clear external

focus
 Capabilities typically span several business
functions and involve teams of people
 Processes need to be clearly defined and have
identifiable owners
 Information should be shared with all process
participants
 Processes are interconnected to other processes,
and management need coordinate the linkages