Strategic Market Management

1. Strategic Market Management By David A. Aaker Vice-Chairman, Prophet Professor Emeritus, University of California at Berkeley

2. Chapter One Strategic Market Management--Introduction and Overview Copyright © 2010John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Copyright Act without the express written permission of the copyright owner is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.

3. “Plans are nothing,planning is everything.”- Dwight D. Eisenhower

4. “Even if you are on the right track, you’ll get run over if you just sit there.”- Will Rodgers

5. “If you don’t know where you are going, you might end up somewhere else.” - CaseyStengel

6. Management Tasks • Strategic Analysis • Innovation • Multiple Business—Strategies and Issues • Creating SCAs • Developing Growth Platforms

7. What is a Business Strategy? • The Product-Market Investment Strategy – where to compete • The Customer Value Proposition • Assets and Competencies • Functional Strategies and Programs

8. A Business Strategy – Figure 1.1 Page 5 Where to Compete The product-market investment decision A Business Strategy How to Compete Value Assets & Function area proposition competencies strategies and programs Figure 1.1

9. The Product-Market Investment Strategy • Invest to grow (or enter a product market) • Invest only to maintain the existing position • Milk the business by minimizing investment • Recover as many of the assets as possible by liquidating or divesting the business

10. New Products Present Products Present Markets New Markets Product-Market Growth Directions Market Penetration Product Expansion Market Expansion Diversification Figure 2.4

11. The Customer Value Proposition Perceived benefit to customer: • Functional • Emotional • Social • Self-Expressive

12. Customer Value Proposition Examples: • A good value • Excellence on an important product or service attribute • The best overall quality • Product line breadth • Innovative offerings • A shared passion for an activity or a product • Global connections and prestige

13. Assets and Competencies Strategic Competency: • What a business unit does exceptionally well • Has strategic importance to the business • Based on knowledge or a process Strategic Asset: • A resource

14. Manufacturing strategy Distribution strategy Brand-building strategy Communication strategy Information technology strategy Sourcing Strategy Functional Strategies and Programs • Global strategy • Logistical strategy • Quality program • Customer relationship program • Social technology strategy

15. Criteria to Select Business Strategies • Is the ROI attractive? • Is there a SCA? • Will the strategy have success in the future? • Is the strategy feasible? • Does the strategy fit with the other strategies of the firm?

16. External Analysis Customer Analysis Competitor Analysis Market/submarket Analysis Environmental Analysis Internal Analysis Performance Analysis Determinants of strategic options Overview of Strategic Market Management Strategic Analysis Outputs Creating, Adapting, and Implementing Strategy Figure 2.1

17. Why Strategic Market Management? • 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.

18. Marketing and Strategy

19. Key Learnings • Strategy needs to succeed in a dynamic market. • A business strategy includes the determination of the product-market scope and its dynamics (as reflected in the intensity of the business investment), the customer value proposition, assets and competencies, and functional strategies and programs. • External analysis includes analyses of customers, competitors, markets, and the environment. Internal analysis includes a performance appraisal and an examination of organizational strengths, weaknesses, problems, constraints, and strategic options. • The role of these analyses is to identify existing or emerging opportunities, threats, trends, strategic uncertainties, and strategic options. • The marketing team needs to be a partner in strategy and by involved in overcoming silo barriers.

20. Ancillary Slides

21. “It isn’t that they can’t see the solution, it’s that they can’t see the problem.” - G. K. Chesterton

22. “Experience, to most men, is like the stern lights of a ship, which illuminate only the track it has passed.” - Samuel Coleridge

23. “Strategy is a framework which guides those choices that determine the nature and direction of an organization.” -Benjamin B. Tregoe & John W. Zimmerman “Top Management Strategy”

24. “In terms of the three key players (competitors, customers, company) strategy is defined as the way in which a corporation endeavors to differentiate itself positively from its competitors, using its relative corporate strengths to better satisfy customer needs.” -Kenichi Ohmae “The Mind of the Strategist”

25. “Business has only two basic functions - marketing and innovation.” - Peter Drucker