marketing strategy

(1)

(2)

(3)

(4)

McGraw-Hill/Irwin Series in Marketing

Alreck & Settle

The Survey Research Handbook Third Edition

Alsem & Wittink

Strategic Marketing: A Practical Approach First Edition

Anderson, Beveridge, Lawton & Scott Merlin: A Marketing Simulation First Edition

Areas

Contemporary Advertising Tenth Edition

Arnould, Price & Zinkhan Consumers

Second Edition

Bearden, Ingrain & LaForge Marketing: Principles & Perspectives Fourth Edition

Belch & Belch

Advertising & Promotion: An Integrated Marketing Communications Approach Sixth Edition

Bingham & Gomes Business Marketing Third Edition Cateora & Graham International Marketing Twe~/’th Edition Cole & Mishler

Consumer and Business Credit Management

Eleventtt Edition Cooper & Schindler Marketing Research Fitwt Edition Cravens & Piercy Strategic Marketing Eighth Edition

Cravens, Lamb & Crittenden Strategic Marketing Management Cases Seventh Edition

Crawford & Di Benedetto New Products Management Eighth Edition

Duncan

Principles of Advertising and IMC Second Edition

Dwyer & Tarmer Business Marketing

Third Edition Eisenmann

Internet Business Models: Text and Cases First Edition

Etzel, Walker & Stanton Marketing

Thirteenth Edition Forrest

Interact Marketing Intelligence First Edition

Futrell

ABC’s of Relationship Selling Eighth Edition

Futrell

Fundamentals of Selling Ninth Edition

Gourville, Quelch & Rangan Cases in Health Care Marketing First Edition

Hair, Bush & Ortinau Marketing Research Third Edition Hawkins, Best & Coney Consumer Behavior Ninth Edition Johansson Global Marketing Foto’th Edition Johnston & Marshall

Chm’chill/FordP¢&lker’s Sales Force Management

Eighth Edition Johnston & Marshall Relationship Selling and Sales Management

First Edition

Kerin, Hartley & Rudelius Marketing: The Core First Edition

Kerin, Berkowitz, Hartley & Rudelius Marketing

Eighth Edition Lehmann &Winer

Analysis for Marketing Planning Sixth Edition

Lehnamm &Winer Product Management Foorth Edition Levy & Weitz Retailing Management F(/lh Edition Mason & Perreault The Marketing Game! Third Edition McDonald

Direct Marketing: An Integrated Approach First Edition

Mohammeck Fisher, Jaworski & Paddison lnternet Marketing: Building Advantage in a Networked Economy

Second Edition Molinari

Marketing Research Project Manual First Edition

Monroe Pricing

Third Edition

Mullins, Walker, Boyd & Larrdch~ Marketing Management: A Strategic Decision-Making Approach F(fth Edition

Nentl & Miller SimSeries Simulations: SimSell SimSales Management SimMarketing SimMarketing Research SImCRM First Edition Perreault &/VlcCarthy

Basic Marketing: A Global Managerial Approach

F(/?eenth Edition Perreanlt & McCarthy

Essentials of Marketing: A Global Managerial Approach Tenth Edition Peter & Donnelly

A Preface to Marketing Management Tenth Edition

Peter & Donnelly

Marketing Management: Knmvledge and Skills

Seventh Edition Peter & Olson Consumer Behavior Seventh Edition Pnrvis & Burton Whicb Ad Pulled Best? Ninth Edition Quelch, Rangan & Lal

Marketing Management Text and Cases First Edition

Rayport & Jaworski Introduction to e-Commerce Second Edition

Rayport & Jaworski e-Commerce First Edition Rayport & Jaworski Cases in e-Commerce First Edition Richardson Internet Marketing First Edition Roberts

Internet Marketing: Integrating Online and Offline Strategies

First Edition Spiro, Stanton & Rich Management of a Sales Force Eleventh Edition

Stock & Lambert

Strategic Logistics Management Fourth Edition

Ulrich & Eppinger

Product Design and Development Third Edition

Walker, Mullins, Boyd & Larr~ch~ Marketing Strategy: A Decision-Focused Approach

Ffth Edition

Weitz, Castleberry & Tanner Selling: Building Partnerships F!fth Edition

Zeithaml & Bitner Services Marketing Fourth Edition

Marketing Strategy

A Decision-Focused Approach

Fifth Edition

Orville C. Walker, Jr.

James D. Watkins Professor of Marketing,

Emeritus

University of Minnesota

John W. Mullins

Associate Professor of Management Practice

London Business School

Harper W. Boyd, Jr.

Donaghey Distinguished Professor

of Marketing

University of Arkansas--Little Rock

Jean-Claude Larr~ch~

Alfred H. Heineken Professor of Marketing

European Institute of Business Administration

INSEAD

McGraw-Hill

Irwin

Boston Burr Ridge, IL Dubuque, IA Madison, Wl New York San Francisco St, Louis Bangkok Bogotg~ Caracas Kuala Lumpur Lisbon London Madrid Mexico City Milan Montreal New Delhi Santiago Seoul Singapore Sydney Taipei Toronto

(5)

McGraw-Hill/Irwin Series in Marketing

Alreck & Settle

The Survey Research Handbook Third Edition

Alsem & Wittink

Strategic Marketing: A Practical Approach First Edition

Anderson, Beveridge, Lawton & Scott Merlin: A Marketing Simulation First Edition

Areas

Contemporary Advertising Tenth Edition

Arnould, Price & Zinkhan Consumers

Second Edition

Bearden, Ingrain & LaForge Marketing: Principles & Perspectives Fourth Edition

Belch & Belch

Advertising & Promotion: An Integrated Marketing Communications Approach Sixth Edition

Bingham & Gomes Business Marketing Third Edition Cateora & Graham International Marketing Twe~/’th Edition Cole & Mishler

Consumer and Business Credit Management

Eleventtt Edition Cooper & Schindler Marketing Research Fitwt Edition Cravens & Piercy Strategic Marketing Eighth Edition

Cravens, Lamb & Crittenden Strategic Marketing Management Cases Seventh Edition

Crawford & Di Benedetto New Products Management Eighth Edition

Duncan

Principles of Advertising and IMC Second Edition

Dwyer & Tarmer Business Marketing Third Edition Eisenmann

Internet Business Models: Text and Cases First Edition

Etzel, Walker & Stanton Marketing

Thirteenth Edition Forrest

Interact Marketing Intelligence First Edition

Futrell

ABC’s of Relationship Selling Eighth Edition

Futrell

Fundamentals of Selling Ninth Edition

Gourville, Quelch & Rangan Cases in Health Care Marketing First Edition

Hair, Bush & Ortinau Marketing Research Third Edition Hawkins, Best & Coney Consumer Behavior Ninth Edition Johansson Global Marketing Foto’th Edition Johnston & Marshall

Chm’chill/FordP¢&lker’s Sales Force Management

Eighth Edition Johnston & Marshall Relationship Selling and Sales Management

First Edition

Kerin, Hartley & Rudelius Marketing: The Core First Edition

Kerin, Berkowitz, Hartley & Rudelius Marketing

Eighth Edition Lehmann &Winer

Analysis for Marketing Planning Sixth Edition

Lehnamm &Winer Product Management Foorth Edition

Levy & Weitz Retailing Management F(/lh Edition Mason & Perreault The Marketing Game! Third Edition McDonald

Direct Marketing: An Integrated Approach First Edition

Mohammeck Fisher, Jaworski & Paddison lnternet Marketing: Building Advantage in a Networked Economy

Second Edition Molinari

Marketing Research Project Manual First Edition

Monroe Pricing Third Edition

Mullins, Walker, Boyd & Larrdch~ Marketing Management: A Strategic Decision-Making Approach F(fth Edition

Nentl & Miller SimSeries Simulations: SimSell SimSales Management SimMarketing SimMarketing Research SImCRM First Edition Perreault &/VlcCarthy

Basic Marketing: A Global Managerial Approach

F(/?eenth Edition Perreanlt & McCarthy

Essentials of Marketing: A Global Managerial Approach Tenth Edition Peter & Donnelly

A Preface to Marketing Management Tenth Edition

Peter & Donnelly

Marketing Management: Knmvledge and Skills

Seventh Edition Peter & Olson Consumer Behavior Seventh Edition Pnrvis & Burton Whicb Ad Pulled Best? Ninth Edition Quelch, Rangan & Lal

Marketing Management Text and Cases First Edition

Rayport & Jaworski Introduction to e-Commerce Second Edition

Rayport & Jaworski e-Commerce First Edition Rayport & Jaworski Cases in e-Commerce First Edition Richardson Internet Marketing First Edition Roberts

Internet Marketing: Integrating Online and Offline Strategies

First Edition Spiro, Stanton & Rich Management of a Sales Force Eleventh Edition

Stock & Lambert

Strategic Logistics Management Fourth Edition

Ulrich & Eppinger

Product Design and Development Third Edition

Walker, Mullins, Boyd & Larr~ch~ Marketing Strategy: A Decision-Focused Approach

Ffth Edition

Weitz, Castleberry & Tanner Selling: Building Partnerships F!fth Edition

Zeithaml & Bitner Services Marketing Fourth Edition

Marketing Strategy

A Decision-Focused Approach

Fifth Edition

Orville C. Walker, Jr.

James D. Watkins Professor of Marketing,

Emeritus

University of Minnesota

John W. Mullins

Associate Professor of Management Practice

London Business School

Harper W. Boyd, Jr.

Donaghey Distinguished Professor

of Marketing

University of Arkansas--Little Rock

Jean-Claude Larr~ch~

Alfred H. Heineken Professor of Marketing

European Institute of Business Administration

INSEAD

McGraw-Hill

Irwin

Boston Burr Ridge, IL Dubuque, IA Madison, Wl New York San Francisco St, Louis Bangkok Bogotg~ Caracas Kuala Lumpur Lisbon London Madrid Mexico City Milan Montreal New Delhi Santiago Seoul Singapore Sydney Taipei Toronto

(6)

About the Authors

McGraw-Hill

Irwin

MARKETING STRATEGY: A DECISION-FOCUSED APPROACH

Published by McGraw-Hill/frwin, a business unit of The McGraxv-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020. Copyright 2006, 2003, 1999, 1996, 1992 by The McGraw-Hill Companies, Inc. All rights reserved. No part of this publication may be reproduced o1" distributed in any form or by any means, or stored in a database or retrieval system, without the prior writteu consent of The McGraw-Hill Coln-panies, Inc., inclnding, but not limited to, in any network or other electronic storage or transmission, or broad-cast for distance learning.

Some ancillaries, including electronic and print components, may not be available to customers outside the United States.

This book is printed on acid-free paper. 34567890DOW/DOW0987

ISBN- 13:978-0-07-111674-9 ISBN-10:0-07-111674-5

Orville C. Walker, Jr.

Orville C. Walker, Jr. is Professor Emeritus in the University of Minnesota’s Carlson School of Management, where he served until recently as the James D. Watkins Professor of Marketing and Director of the PhD Program. He holds a Master’s degree in social psy-chology from the Ohio State University and a PhD in marketing from the University of Wisconsin-Madison.

Orville is the co-author of tin’co books and has published more than 50 research articles in scholarly and business journals. He has won several awards for his research, including the O’Dell award from the Journal qfiMarketing Research, the Maynard award from the Journal of Marketing, and a lifetime achievement award from the Sales Management

Inter-est Group of the American Marketing Association.

Orville has been a consultant to a number of business firms and not-for-profit organi-zations, and he has taught in executive development programs around the world, including programs in Poland, Switzerland, Scotland, and Hong Kong. Perhaps his biggest business challenge, however, is attempting to turn a profit as the owner-manager of a small vineyard in western Wisconsin.

John W. Mullins

John M,llins is Associate Professor of Management Practice at London Business School, where he heads the entrepreneurship group. He earned his MBA at the Stanford Graduate School of Business and, considerably later in life, his PhD in marketing from the Univer-sity of Minnesota. An award-winning teacher, Jotm brings to his teaching and research 20 years of executive experience in high-growth firms, including two ventures he founded, one of which he took public. Since becoming a business school professor in 1992, John has published more than 30 articles in a variety of outlets, including Ha~a,ard Business Review, the Journal of Product hmovation Management, and the Journal of Business Ven-turing. His research has won national and international awards fi’om the Marketing Science Institute, the American Marketing Association, and the Richard D. Irwin Foundation. He is also co-author of Marketing Management: A Strategic Decision-Making Approach, 5th edition. His recent trade book, The New Business Road Test: What Entrepreneurs and Executives Should Do Before Writing a Business Plan, is the definitive work on the assess-ment and shaping of market opportunities.

wwxv.mhhe.com

Harper W. Boyd Jr.

The late Harper W. Beyd Jr. was the Donaghey Distinguished Professor Emeritus of Mar-keting at the University of Arkansas at Little Rock. He was internationally known in the areas of marketing strategy and marketing research. He authored, co-authored, or edited more than 50 books and monographs and 100 articles, cases, and other teaching materials, and served as editor of the Journal of Marketing Research. He taught on the faculties of several prominent business schools around the world, including Stanford, Northwestern, Tulane, and 1NSEAD; and he received an honorary Doctorate of Letters from the Edin-burgh Business School in Scotland. He also consulted extensively with both consumer and industrial products companies around the world.

(7)

About the Authors

McGraw-Hill

Irwin

MARKETING STRATEGY: A DECISION-FOCUSED APPROACH

Published by McGraw-Hill/frwin, a business unit of The McGraxv-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020. Copyright 2006, 2003, 1999, 1996, 1992 by The McGraw-Hill Companies, Inc. All rights reserved. No part of this publication may be reproduced o1" distributed in any form or by any means, or stored in a database or retrieval system, without the prior writteu consent of The McGraw-Hill Coln-panies, Inc., inclnding, but not limited to, in any network or other electronic storage or transmission, or broad-cast for distance learning.

Some ancillaries, including electronic and print components, may not be available to customers outside the United States.

This book is printed on acid-free paper. 34567890DOW/DOW0987

ISBN- 13:978-0-07-111674-9 ISBN-10:0-07-111674-5

Orville C. Walker, Jr.

Orville C. Walker, Jr. is Professor Emeritus in the University of Minnesota’s Carlson School of Management, where he served until recently as the James D. Watkins Professor of Marketing and Director of the PhD Program. He holds a Master’s degree in social psy-chology from the Ohio State University and a PhD in marketing from the University of Wisconsin-Madison.

Orville is the co-author of tin’co books and has published more than 50 research articles in scholarly and business journals. He has won several awards for his research, including the O’Dell award from the Journal qfiMarketing Research, the Maynard award from the Journal of Marketing, and a lifetime achievement award from the Sales Management Inter-est Group of the American Marketing Association.

Orville has been a consultant to a number of business firms and not-for-profit organi-zations, and he has taught in executive development programs around the world, including programs in Poland, Switzerland, Scotland, and Hong Kong. Perhaps his biggest business challenge, however, is attempting to turn a profit as the owner-manager of a small vineyard in western Wisconsin.

John W. Mullins

John M,llins is Associate Professor of Management Practice at London Business School, where he heads the entrepreneurship group. He earned his MBA at the Stanford Graduate

School of Business and, considerably later in life, his PhD in marketing from the Univer-sity of Minnesota. An award-winning teacher, Jotm brings to his teaching and research 20 years of executive experience in high-growth firms, including two ventures he founded, one of which he took public. Since becoming a business school professor in 1992, John has published more than 30 articles in a variety of outlets, including Ha~a,ard Business Review, the Journal of Product hmovation Management, and the Journal of Business

Ven-turing. His research has won national and international awards fi’om the Marketing Science Institute, the American Marketing Association, and the Richard D. Irwin Foundation. He is also co-author of Marketing Management: A Strategic Decision-Making Approach, 5th edition. His recent trade book, The New Business Road Test: What Entrepreneurs and Executives Should Do Before Writing a Business Plan, is the definitive work on the

assess-ment and shaping of market opportunities.

wwxv.mhhe.com

Harper W. Boyd Jr.

The late Harper W. Beyd Jr. was the Donaghey Distinguished Professor Emeritus of Mar-keting at the University of Arkansas at Little Rock. He was internationally known in the areas of marketing strategy and marketing research. He authored, co-authored, or edited more than 50 books and monographs and 100 articles, cases, and other teaching materials, and served as editor of the Journal of Marketing Research. He taught on the faculties of several prominent business schools around the world, including Stanford, Northwestern, Tulane, and 1NSEAD; and he received an honorary Doctorate of Letters from the Edin-burgh Business School in Scotland. He also consulted extensively with both consumer and industrial products companies around the world.

(8)

vi About the Authors

Jean-Claude Larr6ch6

Jean-Claude Larr~ch~ is Alfred H. Heineken Professor of Marketing and Director of the

Competitiveness Fitness of Global Firms Initiative at the European Institute of Business Administration, INSEAD, in Fontainebleau, France. He holds an MBA from 1NSEAD and a PhD in marketing from the Stanford University Graduate School of Business. A

consultant to several major international firms, Jean-Claude has worked with top

manage-ment teams in

Europe, North America,

and Asia. He is chairman and founder of

StratX, a publisher of marketing

simulations and other tools for

strategic marketing.

An

award-winning teacher,

Jean-Claude is also a two-time winner of the overall

case competition

of

the

European Case Clearing

House. He is co-author

of Marketing Management:

A

SO’ate-gic Decision-Making Approach,

5th edition.

Brie( Contents

Preface xiii

SECTION ONE

Introduction to Strategy 1

1 Market-Oriented Perspectives Underlie

Successful Corporate, Business, and

Marketing Strategies 1

2 Corporate Strategy Decisions and Their

Marketing Implications 31

Business Strategies and Their Marketing

Implications 57

SECTION TWO

Opportunity Analysis

4

5

6

7

83 Understanding Market Opportunities

Measuring Market Opportunities:

Forecasting and Market Knowledge

Targeting Attractive Market

Segments 133

Differentiation and Positioning 153

85

111

9

10

11 SECTION THREE

Formulating Marketing Strategies 173

8 Marketing Strategies for New Market

Entries 175

Strategies for Growth Markets 203

Strategies for Mature and Declining

Markets 227

Marketing Strategies for the New

Economy 257

13 SECTION FOUR

Implementation and Control

12 Organizing and Planning for Effective

Implementation 287

Marketing Metrics for Marketing

Performance 313

285 Name Index 337

Subject Index 341

(9)

vi About the Authors

Jean-Claude Larr6ch6

Jean-Claude Larr~ch~ is Alfred H. Heineken Professor of Marketing and Director of the

Competitiveness Fitness of Global Firms Initiative at the European Institute of Business Administration, INSEAD, in Fontainebleau, France. He holds an MBA from 1NSEAD and a PhD in marketing from the Stanford University Graduate School of Business. A

consultant to several major international firms, Jean-Claude has worked with top

manage-ment teams in

Europe, North America,

and Asia. He is chairman and founder of

StratX, a publisher of marketing

simulations and other tools for

strategic marketing.

An

award-winning teacher,

Jean-Claude is also a two-time winner of the overall

case competition

of

the

European Case Clearing

House. He is co-author

of Marketing Management:

A

SO’ate-gic Decision-Making Approach,

5th edition.

Brie( Contents

Preface xiii

SECTION ONE

Introduction to Strategy 1

1 Market-Oriented Perspectives Underlie

Successful Corporate, Business, and

Marketing Strategies 1

2 Corporate Strategy Decisions and Their

Marketing Implications 31

Business Strategies and Their Marketing

Implications 57

SECTION TWO

Opportunity Analysis

4

5

6

7

83 Understanding Market Opportunities

Measuring Market Opportunities:

Forecasting and Market Knowledge

Targeting Attractive Market

Segments 133

Differentiation and Positioning 153

85

111

9

10

11 SECTION THREE

Formulating Marketing Strategies 173

8 Marketing Strategies for New Market

Entries 175

Strategies for Growth Markets 203

Strategies for Mature and Declining

Markets 227

Marketing Strategies for the New

Economy 257

13 SECTION FOUR

Implementation and Control

12 Organizing and Planning for Effective

Implementation 287

Marketing Metrics for Marketing

Performance 313

285 Name Index 337

Subject Index 341

(10)

Preface xiii

SECTION ONE

INTRODUCTION TO STRATEGY 1

Chapter 1 Market-Oriented Perspectives Underlie

Successful Corporate, Business, and

Marketing Strategies 3

Strategic Challenges Addressed in Chapter 1 6 Three Levels of Strategy: Similar Components but Different Issues 7

1. What Is a Strategy? 7 2. The Components qf Strategy 8 3. The Hierarchy of Strategies 8 4. Corporate Strategy 8 5. Business-Level Strategy 11

6. Marketing Strategy 11

What Is Marketing’s Role in Formulating and Implementing Strategies? 11

1. Market-Oriented Management 12

2. Do Customers Always Know What They ~l{mt? 13 3. Does Being Market-Oriented Pay? 14

4. Factors That Mediate Marketing’s Strategic Role 16

5. Recent Developments Affecting the Strategic Role of Marketing 18

6. The Future Role qf Marketing 21

Formulating and Implementing Marketing Strategy--An Overview of the Process 21

1. A Decision-Making Focus 21 2. Analysis Comes First 21

3. hltegrating Marketing Strategy with the Firm’s Other Strategies and Resoto’ces 22

4. Market OpportuniO~ Analysis 23

5. Formulati,g Marketing Strategies for Spec!fic Situations 24

6. hnplementation and Control qf the Marketing Strategy 24

7. The Marketing Plan--A Blueprint for Action 25

viii

Chapter 2

Corporate Strategy Decisions and Their Marketing Implications 31

Strategic Challenges Addressed in Chapter 2 33 Corporate Scope Defining the Firm’s Mission 35

1. Market h!fluences on the Corporate Mission 35 2. Criteria for De.fi, ing the Corporate

Mission 35

3. Social Values and Ethical Principles 36 4. Wto, Are Ethics Important? The Marketing hltplications of Ethical Standards 3 7

Corporate Objectives 37

1. Enhancing Shareholder 14thte: The Ultimate Ob.jective 38

2. The Marketing hnplications of Corporate Objectives 40

Gaining a Competitive Advantage 41 Corporate Growth Strategies 42

1. Expansion by hwreasing Penetration qfl Current Product-Markets 42

2. EaT)ansion by Developing New Products’for Cm’rent Cttstomers 43

3. Expansion by Selling Existing Products to New Segments o1" Countries 43

4. Expansion by Divers{~,ing 43

5. Expansio~t by Diversi~,ing through Organizational Relationships or Networks 44

Allocating Corporate Resources 44

1. Portfolio Models 45 2. Vahte-Based Planning 48 Sources of Synergy 51

1. Knowledge-Based Synergies 51

2. Corporate IdentiO, and the Corporate Brand as a Source of Synergy 51

3. Corporate Branding Strategy--When Does a Strong Corporate Brand Make Sense? 52

4. Synergyfi’om Shared Resources 53

Chapter 3 Business Strategies and Their Marketing

Implications 57

Strategic Challenges Addressed in Chapter 3 58

Strategic Decisions at the Business-Unit Level 59

1. How Should Strategic Business Units Be Designed? 60

2. Business-Unit Objectives 61

3. Allocating Resources within the Business Unit 61 How Do Businesses Compete? 62

1. Generic Business-Level Competitive Strategies 63 2. Do the Same Competitive Strategies Work for Single-Business Firms and Start-ups? 64

3. Do the Same Competitive Strategies Work for Service Busi,esses? 65

4. Do the Same Competitive Strategies Work for Global Competitors? 66

5. Will the htternet Change Evem.,thing? 67 How Do Competitive Strategies Differ from One

Another? 68

1. Differences in Scope 68

2. Diffbrences in Goals and Objectives 69 3. D!fferences in Resource Deployment 70 4. D!fferences in Sources qf Synergy 70

Deciding When a Strategy Is Appropriate: The Fit between Business Strategies and the

Environment 71

1. Appropriate Conditions.for a Prospector Strategy 71 2. Appropriate Comtitions for an Analyzer Strategy 71 3. Appropriate Conditions.for a Dgfender

Strateg~ 73

How Different Business Strategies Influence Marketing Decisions 74

1. Prodact Policies 75 2. Pricing Policies 76 3. Distribution Policies 76 4. Promotion Policies 77

What If the Best Marketing Program for a Product Does Not Fit the Business’s Competitive Strategy? 77

SECTION TWO

OPPORTUNITY ANALYSIS 83

Chapter 4 Understanding Market Opportunities 85

Strategic Challenges Addressed in Chapter 4 86 Markets and Industries: What’s the Difference? 87 Assessing Market and Industry Attractiveness 88

Macro Trend Analysis: A Framework for Assessing Market Attractiveness, Macro Level 88

1. The Demographic Em,iromnent 88 2. The Sociocultural Em,iromnent 91

Contents ix

3. The Economic Em,ironment 92 4. The Regulator3, Em&’omnent 92 5. The Technological Em~iromnent 93 6. The Natural Em,ironment 94

Your Market Is A~ractive: What About Your Industry? 95

1. Porter ~ Five Competitive Forces 95 2. A Five Forces Analysis qf the Celhdar Phone Sere,ice bMustW 98

Challenges in Macro-Level Market and Industry Analysis 99

1. b(ormation Sources for Macro-Level Analysis 99 Understanding Markets at the Micro-Level 100

Understanding Industries at the Micro-Level 102 The Team Domains: The Key to the Pursuit of A~ractive Opportunities 103

1. Mission, Aspirations, and Risk Propensity 103 2. Abili~ to Execute on the Industry’s Critical Success Factors 103

3. It’s ~to You ~ow, Not What You ~ow 104 Putting the Seven Domains to Work 104

Anticipating and Responding to Enviro~ental Change 105

Swiping Upstream or Downstream: An Important Strategic Choice 106

Chapter 5 Measuring Market Opportunities:

Forecasting and Market Knowledge 111

Every Forecast Is Wrong! 113

A Forecaster’s Toolkit: A Tool for Every Forecasting Setting 113

1. Statistical and Other Qaantitative Methods 114 2. Obsem,ation 115

3. Smweys or Focus Groups 116

4. Analogy 116 5. Judgment l l 7

6. Market Tests 118

7. Mathematics Entailed in Forecasting 118 Rate of Diffusion of Innovations: Another Perspective

on Forecasting 118

1. The Adoption Process 119 2. The Rate of Adoption 120 3. Adopter Categories 120

4. bnplications qf D{ffitsion qf bmovation Theow for Forecasting Sales qf New Products and New

(11)

Preface xiii

SECTION ONE

INTRODUCTION TO STRATEGY 1

Chapter 1 Market-Oriented Perspectives Underlie

Successful Corporate, Business, and

Marketing Strategies 3

Strategic Challenges Addressed in Chapter 1 6 Three Levels of Strategy: Similar Components but Different Issues 7

1. What Is a Strategy? 7 2. The Components qf Strategy 8 3. The Hierarchy of Strategies 8 4. Corporate Strategy 8

5. Business-Level Strategy 11 6. Marketing Strategy 11

What Is Marketing’s Role in Formulating and Implementing Strategies? 11

1. Market-Oriented Management 12

2. Do Customers Always Know What They ~l{mt? 13 3. Does Being Market-Oriented Pay? 14

4. Factors That Mediate Marketing’s Strategic Role 16

5. Recent Developments Affecting the Strategic Role of Marketing 18

6. The Future Role qf Marketing 21

Formulating and Implementing Marketing Strategy--An Overview of the Process 21

1. A Decision-Making Focus 21 2. Analysis Comes First 21

3. hltegrating Marketing Strategy with the Firm’s Other Strategies and Resoto’ces 22

4. Market OpportuniO~ Analysis 23

5. Formulati,g Marketing Strategies for Spec!fic Situations 24

6. hnplementation and Control qf the Marketing Strategy 24

7. The Marketing Plan--A Blueprint for Action 25

viii

Chapter 2

Corporate Strategy Decisions and Their Marketing Implications 31

Strategic Challenges Addressed in Chapter 2 33 Corporate Scope Defining the Firm’s Mission 35

1. Market h!fluences on the Corporate Mission 35 2. Criteria for De.fi, ing the Corporate

Mission 35

3. Social Values and Ethical Principles 36 4. Wto, Are Ethics Important? The Marketing hltplications of Ethical Standards 3 7

Corporate Objectives 37

1. Enhancing Shareholder 14thte: The Ultimate Ob.jective 38

2. The Marketing hnplications of Corporate Objectives 40

Gaining a Competitive Advantage 41 Corporate Growth Strategies 42

1. Expansion by hwreasing Penetration qfl Current Product-Markets 42

2. EaT)ansion by Developing New Products’for Cm’rent Cttstomers 43

3. Expansion by Selling Existing Products to New Segments o1" Countries 43

4. Expansion by Divers{~,ing 43

5. Expansio~t by Diversi~,ing through Organizational Relationships or Networks 44

Allocating Corporate Resources 44

1. Portfolio Models 45 2. Vahte-Based Planning 48 Sources of Synergy 51

1. Knowledge-Based Synergies 51

2. Corporate IdentiO, and the Corporate Brand as a Source of Synergy 51

3. Corporate Branding Strategy--When Does a Strong Corporate Brand Make Sense? 52

4. Synergyfi’om Shared Resources 53

Chapter 3 Business Strategies and Their Marketing

Implications 57

Strategic Decisions at the Business-Unit Level 59

1. How Should Strategic Business Units Be Designed? 60

2. Business-Unit Objectives 61

3. Allocating Resources within the Business Unit 61 How Do Businesses Compete? 62

1. Generic Business-Level Competitive Strategies 63 2. Do the Same Competitive Strategies Work for Single-Business Firms and Start-ups? 64

3. Do the Same Competitive Strategies Work for Service Busi,esses? 65

4. Do the Same Competitive Strategies Work for Global Competitors? 66

5. Will the htternet Change Evem.,thing? 67 How Do Competitive Strategies Differ from One

Another? 68

1. Differences in Scope 68

2. Diffbrences in Goals and Objectives 69 3. D!fferences in Resource Deployment 70 4. D!fferences in Sources qf Synergy 70

Deciding When a Strategy Is Appropriate: The Fit between Business Strategies and the Environment 71

1. Appropriate Conditions.for a Prospector Strategy 71 2. Appropriate Comtitions for an Analyzer Strategy 71 3. Appropriate Conditions.for a Dgfender

Strateg~ 73

How Different Business Strategies Influence Marketing Decisions 74

1. Prodact Policies 75 2. Pricing Policies 76 3. Distribution Policies 76 4. Promotion Policies 77

What If the Best Marketing Program for a Product Does Not Fit the Business’s Competitive Strategy? 77

SECTION TWO

OPPORTUNITY ANALYSIS 83

Chapter 4 Understanding Market Opportunities 85

Strategic Challenges Addressed in Chapter 4 86 Markets and Industries: What’s the Difference? 87 Assessing Market and Industry Attractiveness 88 Macro Trend Analysis: A Framework for Assessing Market Attractiveness, Macro Level 88

1. The Demographic Em,iromnent 88 2. The Sociocultural Em,iromnent 91

Contents ix

3. The Economic Em,ironment 92 4. The Regulator3, Em&’omnent 92 5. The Technological Em~iromnent 93 6. The Natural Em,ironment 94

Your Market Is A~ractive: What About Your Industry? 95

1. Porter ~ Five Competitive Forces 95 2. A Five Forces Analysis qf the Celhdar Phone Sere,ice bMustW 98

Challenges in Macro-Level Market and Industry Analysis 99

1. b(ormation Sources for Macro-Level Analysis 99 Understanding Markets at the Micro-Level 100 Understanding Industries at the Micro-Level 102 The Team Domains: The Key to the Pursuit of A~ractive Opportunities 103

1. Mission, Aspirations, and Risk Propensity 103 2. Abili~ to Execute on the Industry’s Critical Success Factors 103

3. It’s ~to You ~ow, Not What You ~ow 104 Putting the Seven Domains to Work 104

Anticipating and Responding to Enviro~ental Change 105

Swiping Upstream or Downstream: An Important Strategic Choice 106

Chapter 5 Measuring Market Opportunities:

Forecasting and Market Knowledge 111

Every Forecast Is Wrong! 113

A Forecaster’s Toolkit: A Tool for Every Forecasting Setting 113

1. Statistical and Other Qaantitative Methods 114 2. Obsem,ation 115

3. Smweys or Focus Groups 116

4. Analogy 116 5. Judgment l l 7 6. Market Tests 118

7. Mathematics Entailed in Forecasting 118 Rate of Diffusion of Innovations: Another Perspective on Forecasting 118

1. The Adoption Process 119 2. The Rate of Adoption 120 3. Adopter Categories 120

4. bnplications qf D{ffitsion qf bmovation Theow for Forecasting Sales qf New Products and New

(12)

x Contents

Cautions and Caveats in Forecasting 122

1. Keys to Good Forecasting 122

2. Common Sources of Error in Forecasting 123

Why Data? Why Marketing Knowledge? 123 Market Knowledge Systems: Charting a Path toward Competitive Advantage 124

1. Internal Records ~stems 124 2. Marketing Databases 125

3. Competitive Intelligence Systems 127 4. Client Contact and SalesJbrce Automation Systems 127

Marketing Research: A Foundation for Strategic Decision Making 129

What Users of Marketing Research Should Ask 129

Chapter 6

Targeting Attractive Market Segments 133

Why Do Market Segmentation and Target Marketing

Make Sense? 135

1. Most Markets Are Heterogeneous 135 2. Today "s Market Realities Qften Make Segmentation hnperative 136

How Are Market Segments Best Defined? 137

1. Who They Are." Demographic Descriptors 137 2. Where The), Are. Geographic Descriptors 138 3. Geodemographic Descriptors 139

4. How They Behave: Behavioral Descriptors 140 5. hmovative Segmentation: A Key to Marketing Breakthroagks 142

Choosing Attractive Market Segments: A Five-Step Process 143

1. Step 1." Select Market-Attractiveness and Competitive-Position Factors 144 2. Step 2. Weight Each Factor 146

3. Step 3: Rate Segments on Eack Factor; Plot Results on Matrices 146

4. Step 4: Project Futare Position for Each Segment 147

5. Step 5. Choose Segments to Target, Allocate Resources 148

Different Targeting Strategies Suit Different Opportunities 148

1. Niche-Market Strategy 149 2. Mass-Market Strategy 149 3. Growth-Market Strategy 150

Global Market Segmentation 150

Chapter 7

Differentiation and Positioning 153

Strategic Challenges Addressed in Chapter 7 154 Differentiation: One Key to Customer Preference and Competitive Advantage 154

1. D(fferentiation in Business Strategies 155 2. Diffbrentiation among Goods" and Se~a,ices ₁₅₅

Physical Positioning 156

1. Limitations qf Ph),sical Positioning 156

Perceptual Positioning 157

Levers Marketers Can Use to Establish Positioning 157

Preparing the Foundation for Marketing Strategies: The Positioning Process 158

1. Step 1: Ident(]j, a Relevant Set qf Competitive Products 159

2. Step 2: ldent([j, Determinant Attributes 160 3. Step 3: Collect Data about Customer’s Perceptions for Products in the Competitive Set 161

4. Step 4: Analyze the Current Positions qf Products in the Competitive Set 161

5. Step 5: Determine Customers ’Most Preferred Combination of Attributes 164

6. Step 6. Consider Fit of Possible Positions

witk Custonwr Needs and Segment Attractiveness 165 Z Step 7." Write Positioning Statement of Valae Proposition to Guide Development of Marketing Strategy 166

Some Caveats in Positioning Decision Making 169

Analytical Tools for Positioning Decision Making 169

SECTION THREE

FORMULATING MARKETING

STRATEGIES 173

Chapter 8 Marketing Strategies for New Market

Entries 175

Strategic Challenges Addressed in Chapter 8 176 Sustaining Competitive Advantage over the Product Life Cycle 177

1. Market and Competitive hnplications of Product Life Cycle Stages 178

2. Strategic Implications of the Product Life Cycle 182 3. Limitations of the Product Life Cycle

Framework 183

New Market Entries--How New Is New? 183

Objectives of New Product and Market Development 184

Market Entry Strategies: Is It Better to Be a Pioneer

or a Follower? 186 1. Pioneer Strategy 186

2. Not All Pioneers Capitalize on Their Potential Advantages 188

3. Follower Strategy 189

4. Determinants of Success for Pioneers and Followers 190

Strategic Marketing Programs for Pioneers 192

1. Mass-Market Penetration 192 2. Niche Penetration 192

3. Ski"mining and Early Withdrawal 194

4. Marketing Program Components.for a Mass-Market Penetration Strategy 194

5. Marketing Program Components for a Niche Penetration Strategy 199

6. Marketing Program Conlponents for a Skinuning Strategy 199

Chapter 9 Strategies for Growth Markets 203

Strategic Challenges Addressed in Chapter 9 204 Opportunities and Risks in Growth Markets 205

1. Gaining Sllare Is Easier 205 2. Share Gains Are Worth More 207 3. Price Competition Is Likely to Be Less Intense 207

4. Early Ento, Is Necessaiy to Maintain Technical Expertise 208

Growth-Market Strategies for Market Leaders 209 1. Marketing Objectives for Share Leaders 209 2. Marketing Actions and Strategies to Achieve Share-Maintenance Objectives 209

3. Fortress, or Position Defense, Strategy 211 4. Flanker Strategy 214

5. Col!fi’ontation Strategy 214 6. Market Expansion Strategy 215

7. Contraction, or Strategic Withdrawal, Strategy 216

Share-Growth Strategies for Followers 216

1. Marketing Objectives for Followers 216 2. ivIarketing Actions and Strategies to Achieve Share Growth 216

3. Deciding Wkom to Attack 218 4. Frontal Attack SO’ategy 220 5. Leapfrog Strategy 221

6. Flanking and Encirclement Strategies 222 7. Guerilla Attack 223

8. Supporting Evidence 223

Contents xi

Chapter 10 Strategies for Mature and Declining

Markets 227

Strategic Challenges Addressed in Chapter 10 228

1. Challenges in Mature Markets 228 2. Challenges #1 Declining Markets 229

Shakeout: The Transition from Market Growth to Maturity 229

1. Characteristics of the Transition Period 229 2. Strategic Traps during the Transition 229

Strategic Choices in Mature Markets 230

1. Strategies for Maintaining Competitive Advantage 231

2. Methods of D~ferentiation 232 3. Methods of Maintaining a Low-Cost Position 237

4. Customers’Satisfaction and LoyalO~ Are Crucial for Maximizing Their Lifetinle Value 238 Marketing Strategies for Mature Markets 241

1. Strategies for Maintaining Cttrrent Market Share 241

2. Strategies for Extending Volume Growth 242 Strategies for Declining Markets 248

1. Relative Attractiveness of Declining Markets 248 2. Divestment or Liquidation 251

3. Marketing Strategies for Remaining Competitors 251

Chapter 11

Marketing Strategies for the New

Economy 257

Strategic Challenges Addressed in Chapter 11 258 Does Every Company Need a New-Economy

Strategy? 258

Threats or Opportunities? The Inherent Advantages and Disadvantages of the New Economy

for Marketers 261

1. The Syndication of h!formation 261 2. Increasing Returns to Scale o~f Network Products 262

3. The Ability to Efficiently Personalize and Customize Market Offerings 262

4. Disintermediation and Restructlwing of Distribution Channels 263

5. Global Reach, 24X7 Access, and hlstantaneous Delively 264

6. Are These New-Economy Attributes Opportunities o1" Threats? 264

(13)

x Contents

Cautions and Caveats in Forecasting 122

1. Keys to Good Forecasting 122

2. Common Sources of Error in Forecasting 123

Why Data? Why Marketing Knowledge? 123 Market Knowledge Systems: Charting a Path toward Competitive Advantage 124

1. Internal Records ~stems 124 2. Marketing Databases 125

3. Competitive Intelligence Systems 127 4. Client Contact and SalesJbrce Automation Systems 127

Marketing Research: A Foundation for Strategic Decision Making 129

What Users of Marketing Research Should Ask 129

Chapter 6

Targeting Attractive Market Segments 133

Why Do Market Segmentation and Target Marketing

Make Sense? 135

1. Most Markets Are Heterogeneous 135 2. Today "s Market Realities Qften Make Segmentation hnperative 136

How Are Market Segments Best Defined? 137

1. Who They Are." Demographic Descriptors 137 2. Where The), Are. Geographic Descriptors 138 3. Geodemographic Descriptors 139

4. How They Behave: Behavioral Descriptors 140 5. hmovative Segmentation: A Key to Marketing Breakthroagks 142

Choosing Attractive Market Segments: A Five-Step Process 143

1. Step 1." Select Market-Attractiveness and Competitive-Position Factors 144 2. Step 2. Weight Each Factor 146

3. Step 3: Rate Segments on Eack Factor; Plot Results on Matrices 146

4. Step 4: Project Futare Position for Each Segment 147

5. Step 5. Choose Segments to Target, Allocate Resources 148

Different Targeting Strategies Suit Different Opportunities 148

1. Niche-Market Strategy 149 2. Mass-Market Strategy 149 3. Growth-Market Strategy 150

Global Market Segmentation 150

Chapter 7

Differentiation and Positioning 153

Strategic Challenges Addressed in Chapter 7 154 Differentiation: One Key to Customer Preference and Competitive Advantage 154

1. D(fferentiation in Business Strategies 155 2. Diffbrentiation among Goods" and Se~a,ices ₁₅₅

Physical Positioning 156

1. Limitations qf Ph),sical Positioning 156

Perceptual Positioning 157

Levers Marketers Can Use to Establish Positioning 157

Preparing the Foundation for Marketing Strategies: The Positioning Process 158

1. Step 1: Ident(]j, a Relevant Set qf Competitive Products 159

2. Step 2: ldent([j, Determinant Attributes 160 3. Step 3: Collect Data about Customer’s Perceptions for Products in the Competitive Set 161

4. Step 4: Analyze the Current Positions qf Products in the Competitive Set 161

5. Step 5: Determine Customers ’Most Preferred Combination of Attributes 164

6. Step 6. Consider Fit of Possible Positions

witk Custonwr Needs and Segment Attractiveness 165 Z Step 7." Write Positioning Statement of Valae Proposition to Guide Development of Marketing Strategy 166

Some Caveats in Positioning Decision Making 169

Analytical Tools for Positioning Decision Making 169

SECTION THREE

FORMULATING MARKETING

STRATEGIES 173

Chapter 8 Marketing Strategies for New Market

Entries 175

Strategic Challenges Addressed in Chapter 8 176 Sustaining Competitive Advantage over the Product Life Cycle 177

1. Market and Competitive hnplications of Product Life Cycle Stages 178

2. Strategic Implications of the Product Life Cycle 182 3. Limitations of the Product Life Cycle

Framework 183

New Market Entries--How New Is New? 183

Objectives of New Product and Market Development 184

Market Entry Strategies: Is It Better to Be a Pioneer

or a Follower? 186 1. Pioneer Strategy 186

2. Not All Pioneers Capitalize on Their Potential Advantages 188

3. Follower Strategy 189

4. Determinants of Success for Pioneers and Followers 190

Strategic Marketing Programs for Pioneers 192

1. Mass-Market Penetration 192 2. Niche Penetration 192

3. Ski"mining and Early Withdrawal 194

4. Marketing Program Components.for a Mass-Market Penetration Strategy 194

5. Marketing Program Components for a Niche Penetration Strategy 199

6. Marketing Program Conlponents for a Skinuning Strategy 199

Chapter 9 Strategies for Growth Markets 203

Strategic Challenges Addressed in Chapter 9 204 Opportunities and Risks in Growth Markets 205

1. Gaining Sllare Is Easier 205 2. Share Gains Are Worth More 207 3. Price Competition Is Likely to Be Less Intense 207

4. Early Ento, Is Necessaiy to Maintain Technical Expertise 208

Growth-Market Strategies for Market Leaders 209 1. Marketing Objectives for Share Leaders 209 2. Marketing Actions and Strategies to Achieve Share-Maintenance Objectives 209

3. Fortress, or Position Defense, Strategy 211 4. Flanker Strategy 214

5. Col!fi’ontation Strategy 214 6. Market Expansion Strategy 215

7. Contraction, or Strategic Withdrawal, Strategy 216

Share-Growth Strategies for Followers 216

1. Marketing Objectives for Followers 216 2. ivIarketing Actions and Strategies to Achieve Share Growth 216

3. Deciding Wkom to Attack 218 4. Frontal Attack SO’ategy 220 5. Leapfrog Strategy 221

6. Flanking and Encirclement Strategies 222 7. Guerilla Attack 223

8. Supporting Evidence 223

Contents xi

Chapter 10 Strategies for Mature and Declining

Markets 227

Strategic Challenges Addressed in Chapter 10 228

1. Challenges in Mature Markets 228 2. Challenges #1 Declining Markets 229

Shakeout: The Transition from Market Growth to Maturity 229

1. Characteristics of the Transition Period 229 2. Strategic Traps during the Transition 229

Strategic Choices in Mature Markets 230

1. Strategies for Maintaining Competitive Advantage 231

2. Methods of D~ferentiation 232 3. Methods of Maintaining a Low-Cost Position 237

4. Customers’Satisfaction and LoyalO~ Are Crucial for Maximizing Their Lifetinle Value 238 Marketing Strategies for Mature Markets 241

1. Strategies for Maintaining Cttrrent Market Share 241

2. Strategies for Extending Volume Growth 242 Strategies for Declining Markets 248

1. Relative Attractiveness of Declining Markets 248 2. Divestment or Liquidation 251

3. Marketing Strategies for Remaining Competitors 251

Chapter 11

Marketing Strategies for the New

Economy 257

Strategic Challenges Addressed in Chapter 11 258 Does Every Company Need a New-Economy Strategy? 258

Threats or Opportunities? The Inherent Advantages and Disadvantages of the New Economy

for Marketers 261

1. The Syndication of h!formation 261 2. Increasing Returns to Scale o~f Network Products 262

3. The Ability to Efficiently Personalize and Customize Market Offerings 262

4. Disintermediation and Restructlwing of Distribution Channels 263

5. Global Reach, 24X7 Access, and hlstantaneous Delively 264

6. Are These New-Economy Attributes Opportunities o1" Threats? 264

(14)

xii Contents

Developing a New-Economy Strategy: A Decision Framework 267

1. Marketing Applications for New-EcononO, Tools 267 2. Developing New-Econono, Marketing Strategies: The Critical Questions 275

Developing Strategies to Serve New-Economy Markets 279

1. What Lessons Can We Learn from the Dot-Corn Crash? 279

2. What htdustries Will Be Next to Get the Dot-Corn Treatment? 279

3. What Are the Key Success Factors in Serving the Dot-Corn Markets of Tomorrow? 280

SECTION FOUR

IMPLEMENTATION AND CONTROL 285

Chapter 12

Organizing and Planning for Effective Implementation 287

Strategic Challenges Addressed in Chapter 12 289 Designing Appropriate Administrative Relationships for the Implementation of Different Competitive Strategies 290

1. Business- Unit Autonomy 291

2. Shared Programs and Facilities 292

3. Evaluation and Reward Systems 293

Designing Appropriate Organizational Structures and Processes for Implementing Different Strategies 293

1. Functional Competencies and Resource Allocation 293

2. Additional Considerations for Se~a,ice Organizations 295

3. Organizational Structures 295

4. Recent Trends in Organizational Design 300 5. Organizational Adjustments as Firms Grow and Markets Change 300

6. Organizational Designs for Selling in Global Markets 301

Marketing Plans: The Foundation for Implementing Marketing Actions 303

1. The Situation Analysis 306 2. Key Issues 308

3. Objectives 308 4. Marketing Strategy 308 5. Action Platts 308

6. Projected Profit-and-Loss Statement 309 7. Contingency Plans 309

Chapter 13

Marketing Metrics for Marketing Performance 313

Strategic Challenges Addressed in Chapter 13 314 Designing Marketing Metrics Step by Step 315

1. Setting Standards of Performance 316 2. Speci~4ng and Obtaining Feedback Data ₃₂₀ 3. Evaluating Feedback Data 321

4. Taking Corrective Action 322

Design Decisions for Strategic Monitoring Systems 322

1. Ident!/j~ing Key Variables 323

2. Tracking and Monitoring 323 3. Strategy Reassessment 323

Design Decisions for Marketing Metrics 324

1. Who Needs What It!formation? 324 2. ~lqwn and How Often Is the Information

Needed? 328

3. In What Media and in What Format(s)

or Levels qfiAggregation Should the Information Be Provided? 329

4. Does Your System of Marketing MeO’ics Measure Up? 329

5. What Contingencies Should Be Plamwd for? ₃₃₀ 6. Global Marketing ConO’ol 332

A Tool for Periodic Assessment of Marketing Performance: The Marketing Audit 333

1. ~,pes qflAudits 333 Name Index 337 Subject Index 341

WHY THIS COURSE?

The best of the leading business schools and other executive education programs offer cap-stone or other elective courses in marketing whose strategic perspective challenges stu-dents to "pull it all together" and integrate what they have learned in earlier courses--including those in marketing and other disciplines--in making strategic marketing decisions. Whether called Marketing Strategy, Strategic Market Planning, Strategic Brand Management, Marketing in the New Economy, or something else, such courses typically ask students to apply what they learn to decision making in cases that bring alive real mar-keting situations. Many also ask students to complete a term-long project of some kind, such as the development of a marketing plan for a new or existing product or a new ven-ture. We have written this text to serve exactly these kinds of capstone and advanced elec-tive courses.

WHY THIS BOOK?

Why did your instructor choose this book? Chances are, it was for one or more of the fol-lowing reasons:

¯ Among your instructor’s objectives is to give you the necessary tools and frameworks to enable you to be an effective contributor to marketing decision making, whether as an entrepreneur or in an established firm. This book’s focus on decision making sets it apart from other texts that place greater emphasis on description of marketing phe-nomena than on the strategic and tactical marketing decisions that marketing managers and entrepreneurs must make each and every day.

¯ Your instructor prefers a tightly written text whose strategic perspectives serve as a

con-cise fonndafion around which a broader set of materials, such as case studies or

sup-plementary readings that fit the specific theme of the course, are assembled. This text assumes student familiarity with--and thus does not repeat--the basics of buyer behav-ior, the four Ps, and other marketing fundamentals typically covered in earlier courses. ¯ Your instructor wants to use the most current and Web-savvy book available. We

inte-grate the latest new-economy developments into each chapter, and we devote an entire chapter~hapter 11--to the development of marketing strategies for the new econ-omy. In addition, we supplement the book with an interactive Web site to help you learn and to help your instructor choose the best case and other materials and in-class activ-ities. Our goal--and probably that of your instructor, as well--is to make both the lat-est Web-based tools as well as time-tlat-ested marketing principles relevant to those of you who will work in either old- or new-economy companies.

¯ Your instructor appreciates and believes you ~vill benefit from the real-world, global

perspectives offered by the authors of this book. Our combined entrepreneurial,

mar-keting management, and consulting experience spans a broad variety of manufacturing, service, software, and distribution industries and has taken us--and thereby you, the reader--around the world many times over.

As the reader will see from the outset in Chapter 1, marketing decision making is a criti-cal activity in every firm, including start-ups--not just in big companies with traditional marketing departments. Further, it is not just marketing managers who make marketing decisions. People in nearly every role in every company can have a powerful influence on how happy its customers are--or are not~with the goods and services the company

(15)

xii Contents

Developing a New-Economy Strategy: A Decision Framework 267

1. Marketing Applications for New-EcononO, Tools 267 2. Developing New-Econono, Marketing Strategies: The Critical Questions 275

Developing Strategies to Serve New-Economy Markets 279

1. What Lessons Can We Learn from the Dot-Corn Crash? 279

2. What htdustries Will Be Next to Get the Dot-Corn Treatment? 279

3. What Are the Key Success Factors in Serving the Dot-Corn Markets of Tomorrow? 280

SECTION FOUR

IMPLEMENTATION AND CONTROL 285

Chapter 12

Organizing and Planning for Effective Implementation 287

Strategic Challenges Addressed in Chapter 12 289 Designing Appropriate Administrative Relationships for the Implementation of Different Competitive Strategies 290

1. Business- Unit Autonomy 291

2. Shared Programs and Facilities 292

3. Evaluation and Reward Systems 293

Designing Appropriate Organizational Structures and Processes for Implementing Different Strategies 293

1. Functional Competencies and Resource Allocation 293

2. Additional Considerations for Se~a,ice Organizations 295

3. Organizational Structures 295

4. Recent Trends in Organizational Design 300 5. Organizational Adjustments as Firms Grow and Markets Change 300

6. Organizational Designs for Selling in Global Markets 301

Marketing Plans: The Foundation for Implementing Marketing Actions 303

1. The Situation Analysis 306 2. Key Issues 308

3. Objectives 308 4. Marketing Strategy 308 5. Action Platts 308

6. Projected Profit-and-Loss Statement 309 7. Contingency Plans 309

Chapter 13

Marketing Metrics for Marketing Performance 313

Strategic Challenges Addressed in Chapter 13 314 Designing Marketing Metrics Step by Step 315

1. Setting Standards of Performance 316 2. Speci~4ng and Obtaining Feedback Data ₃₂₀ 3. Evaluating Feedback Data 321

4. Taking Corrective Action 322

Design Decisions for Strategic Monitoring Systems 322

1. Ident!/j~ing Key Variables 323

2. Tracking and Monitoring 323 3. Strategy Reassessment 323

Design Decisions for Marketing Metrics 324

1. Who Needs What It!formation? 324 2. ~lqwn and How Often Is the Information

Needed? 328

3. In What Media and in What Format(s)

or Levels qfiAggregation Should the Information Be Provided? 329

4. Does Your System of Marketing MeO’ics Measure Up? 329

5. What Contingencies Should Be Plamwd for? ₃₃₀ 6. Global Marketing ConO’ol 332

A Tool for Periodic Assessment of Marketing Performance: The Marketing Audit 333

1. ~,pes qflAudits 333 Name Index 337 Subject Index 341

WHY THIS COURSE?

The best of the leading business schools and other executive education programs offer cap-stone or other elective courses in marketing whose strategic perspective challenges stu-dents to "pull it all together" and integrate what they have learned in earlier courses--including those in marketing and other disciplines--in making strategic marketing

decisions. Whether called Marketing Strategy, Strategic Market Planning, Strategic Brand Management, Marketing in the New Economy, or something else, such courses typically ask students to apply what they learn to decision making in cases that bring alive real mar-keting situations. Many also ask students to complete a term-long project of some kind, such as the development of a marketing plan for a new or existing product or a new ven-ture. We have written this text to serve exactly these kinds of capstone and advanced elec-tive courses.