Chapter Two

Chapter Two

"Business and Market Driven Strategies"

I. Corporate Strategy

Corporate strategy consists of the decisions made by top management and the resulting actions taken to achieve the objectives set for the business. Note: See Exhibit 2-1 for the components of corporate strategy. It is defined as the way a company creates value through the configuration and coordination of its multimarket activities.

See the PowerPoint Overview, Slide #2, for further information concerning characteristics of corporate strategy

A) Organizational Change

Organizational change moves through the following three phases:

Vertical Disaggregation: The size of the organization is reduced by eliminating jobs and layers of middle managers

Internal Redesign: The new design involves change of processes and products to meet customer needs

Network Formation: This involves the formation of relationships with other organizations and the use of processes as the basic organizing concept

B) Components of Strategy

Vision: The vision defines what the corporation is and what it does and provides important guidelines for managing and improving the corporation

Objectives: Need to be set so that the performance of the organization can be gauged.

Capabilities: Strategic focus must be placed on an organization's distinctive capabilities. These capabilities may offer the company the potential to compete in different markets, provide value to end user customers and create barriers to competition

Business Composition: Defining the composition of the business provides direction for both corporate and marketing strategy design.

Structure, Systems and Processes: This aspect of business considers how the organization controls and coordinates the activities of its various business units and staff functions.

Corporate Competitive Strategy: This part of corporate strategy looks at whether the strategy components create value through multimarket activity.

II. Business and Marketing Strategy

A strategic plan indicates the action agenda for the business Note: See Exhibit 2-3

A) Strategic Marketing

Marketing Strategy consists of the analysis, strategy development and implementation activities in developing a vision about markets, selecting marketing strategies, setting objectives, and developing and implementing the marketing program to meet the value requirements of the customers in each target market.

III. Marketing Strategy Process

See the PowerPoint Overview, Slide #4, for a diagram of the Marketing Strategy Process

A) Market Vision, Structure, and Analysis

Markets need to be defined so that buyers and competition can be analyzed. There must be people with particular needs and wants and buyers must be willing and able to purchase a product

B) Segmenting Markets

Market segmentation looks at the nature and extent of diversity of buyers' needs and wants in a market

C) Continuous Learning About Markets

Companies need to continuously understand the ever changing markets and competition

See the PowerPoint Overview, Slide #5, for further information concerning a Marketing Situation Analysis

D) Designing Market-Driven Strategies

Market advantage is influenced by several situational factors, including industry characteristics, type of firm, extent of differentiation in buyer needs and specific competitive advantages.

Market targeting strategy: The purpose of market targeting strategy is to select the people/business customers that management wishes to serve.

Marketing program positioning strategy: Is the combination of product, value chain, price, and promotion strategies a firm uses to position itself against its key competitors in meeting the needs of its target market.

See the PowerPoint Overview, Slide #6, for further information concerning Positioning Strategy

E) Market-Focused Program Development

Marketing targeting and positioning strategies for new and existing products guide the choice of strategies for the marketing program components.

Product strategies include:

Developing plans for new products

Managing programs for successful products

Deciding what to do about successful products

Value chain, price and promotion strategies: One of the major issues in managing the marketing program is deciding how to integrate the components of the marketing mix -- product, place, price, and promotion. If the activities of these programs are not coordinated, the actions may conflict and resources may be wasted.

Strategy implementation and control consists of : Preparing the marketing plan and budget, implementing the plan, and using the plan in managing and controlling the strategy

IV. Internet Strategy

The internet era provides a new way of developing relationships between end-user customers, value chain members, and alliance partners

(A) Strategic Initiatives

Formation of a separate business model

Creation of a separate value chain channel

Using the Internet as an information source

Using the web for advertising and sales promotion activities

V. Preparing the Marketing Plan

See Exhibit 2-7 for an outline

Next Steps: Please review the PowerPoint Overview slides (1-6) for this chapter. Then proceed to the Lecture Notes for chapter three.

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	Vision: The vision defines what the corporation is and what it does and provides important guidelines for managing and improving the corporation
	Objectives: Need to be set so that the performance of the organization can be gauged.
	Capabilities: Strategic focus must be placed on an organization's distinctive capabilities. These capabilities may offer the company the potential to compete in different markets, provide value to end user customers and create barriers to competition
	Business Composition: Defining the composition of the business provides direction for both corporate and marketing strategy design.
	Structure, Systems and Processes: This aspect of business considers how the organization controls and coordinates the activities of its various business units and staff functions.
	Corporate Competitive Strategy: This part of corporate strategy looks at whether the strategy components create value through multimarket activity.

	Market advantage is influenced by several situational factors, including industry characteristics, type of firm, extent of differentiation in buyer needs and specific competitive advantages.
	Market targeting strategy: The purpose of market targeting strategy is to select the people/business customers that management wishes to serve.
	Marketing program positioning strategy: Is the combination of product, value chain, price, and promotion strategies a firm uses to position itself against its key competitors in meeting the needs of its target market.

	Marketing targeting and positioning strategies for new and existing products guide the choice of strategies for the marketing program components.
	Product strategies include: Developing plans for new products Managing programs for successful products Deciding what to do about successful products
	Value chain, price and promotion strategies: One of the major issues in managing the marketing program is deciding how to integrate the components of the marketing mix -- product, place, price, and promotion. If the activities of these programs are not coordinated, the actions may conflict and resources may be wasted.
	Strategy implementation and control consists of : Preparing the marketing plan and budget, implementing the plan, and using the plan in managing and controlling the strategy

	Formation of a separate business model
	Creation of a separate value chain channel
	Using the Internet as an information source
	Using the web for advertising and sales promotion activities