Chapter 2

Strategic Market Management: An Overview PPT 2-1

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Strategic Market Management:An Overview

Chapter Two

Copyright © 2005 John 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.


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“Chance favors the prepared mind.”

- Louis Pasteur


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“Far better an approximate answer to the right question, which is often

vague, than an exact answer to the wrong question, which can always be

made precise.”- John Tukey,

Statistician


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“If you don’t know where you are going, you might end up

somewhere else.”

- Casey Stengel


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Overview of Strategic Market Management

External Analysis• Customer Analysis• Competitor Analysis• Market/submarket Analysis• Environmental Analysis

Internal Analysis• Performance Analysis• Determinants of strategic options

Strategic Analysis OutputsStrategic Analysis Outputs

Figure 2.1

Strategy Identification, Selection, and Implementation

Strategy Identification, Selection, and Implementation


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Determinants of Strategic Options

• Strategy Review

– milking, maintenance or growth

– value proposition

– target segments

– assets and competencies as the basis for SCA

• Strategic Problems

• Organizational Capabilities and Constraints

• Financial Resources and Constraints

• Strengths and Weaknesses Based on Assets and Competencies

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BHAGsBHAGs

CorePurpose

CorePurpose

CoreValueCoreValue

The Business Vision

BusinessVision

BusinessVision

Figure 2.2


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Selecting Strategic Alternatives

Identification of Strategic Alternatives

• Product-market investment strategies

– Product-market scope

– Vertical Integration

– Growth directions

– Investment strategies

• Customer value proposition

• Bases of competitive advantage – assets, competencies, synergies

• Functional area strategies

Figure 2.3


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Vertical IntegrationVertical Integration

Product-Market Growth Directions

MarketPenetration

MarketPenetration

Product ExpansionProduct

Expansion

DiversificationDiversification

Source: H. Igor Ansoff, “Strategic Diversification”, Harvard Business Review, September-October 1957, pp.113-24

MarketExpansion

MarketExpansion

PresentMarketsPresentMarkets

NewProducts

NewProducts

PresentProducts

PresentProducts

NewMarkets

NewMarkets

Figure 2.4


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Criteria for Strategy Selections

• Consider scenarios suggested by strategic uncertainties and environmental opportunities/threats

• Generate an attractive ROI

• Pursue a sustainable competitive advantage

– Exploit organizational strengths or competitor weaknesses

– Neutralize organizational weaknesses or competitors strengths

Figure 2.3


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Criteria for Strategy Selections

• Be consistent with organizational vision/objectives

– Achieve a long-term return on investment

– Be compatible with vision/objectives

• Be feasible

– Resources are available

– Be compatible with the internal organization

• Consider the relationship to other strategies within the firm

– Foster product portfolio balance (i.e., balance the sources and uses of cash flow)

– Consider flexibility

– Exploit synergy

Figure 2.3


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Key Learnings

• External analysis includes analyses of customers, competitors, markets, and the environment. The role of these analyses is to identify existing or emerging opportunities, threats, trends, strategic uncertainties, and strategic options.

• Internal analysis includes a performance appraisal and an examination of organizational strengths, weaknesses, problems, constraints, and strategic options.

• Business vision should specify the core values (timeless guiding principles) core purpose (reason for being), and BHAGs (big, hairy, audacious goals).

• A business strategy specification includes the product-market scope and the selection of a set of strategic options that include the value proposition, assets and competencies, and strategies for functional areas.

• Strategy selection should consider scenarios, ROI prospects, SCAs, the organization’s vision, strategy feasibility, and other firm strategies.


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Ancillary Slides


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

- Peter Drucker


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Strategy Decision Areas

Product

Objectives Physical Good

Service Features/Benefits

Quality Level Accessories

Installations Instructions

Warranty Product lines

Packaging Branding

Sample/Trial


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Objectives Channel Type

Market Exposure Click & Mortar

Middlemen Brick & Mortar

Locations Transportation

Storing Service levels

Recruiting Managing channels

Internet

Place


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Objectives Promotion blend

Salespeople Advertising

Publicity Sales promotion

Internet ??????

Promotion


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Objectives

Flexibility

Changes over product life cycle

Geographic/International terms

Discounts/Promotions

Internet

Price

Chapter 2

Documents

Transcript of Chapter 2