09 MM21c4

© Noel Capon, 2016. All rights reserved.
PRESENTATION 9 OF 26 / 1
Managing Markets Strategically

Professor Noel Capon
R.C. Kopf Professor of International Marketing
Columbia Business School
New York, NY
Managing Markets Strategically
© Noel Capon, 2016. All rights reserved. PRESENTATION 9 OF 26 / 2
Section I: Marketing and the Firm

Section II: Fundamental Insights for Strategic Marketing
Section III: Strategic Marketing
Chapter 7: Identifying and Choosing Opportunities
Chapter 8: Market Segmentation and Targeting
Chapter 9: Market Strategy – Integrating Firm Efforts
for Marketing Success
Chapter 10: Managing through the Life Cycle
Chapter 11: Managing Brands
Section IV: Implementing the Market Strategy
Section V: Special Marketing Topics
CHAPTER 9
Market Strategy:
Integrating Firm Efforts
OPENING CASE: MAYO CLINIC
The Fundamental Business Model
Shareholder Value
Organizational Survival and Growth
Current and Potential Profits

Competitor
s
Attract, Retain, and Grow Customers
Competitor
s
Customer Value
Company
Six Marketing Imperatives
• Imperative 1: Determine and recommend which markets to address

• Imperative 2: Identify and target market segments
• Imperative 3: Set strategic direction and positioning
• Imperative 4: Design the market offer
• Imperative 5: Secure support from other functions
• Imperative 6: Monitor and control
Chapter Roadmap
1. The Purpose of Market and

2. Elements of the Market-Segment Strategy 3. Performance Objectives
Market-Segment Strategies
Provide strategic direction in the market Strategic objectives
Secure differential advantage Operational objectives
Guide effective allocation of scarce resources Setting performance objectives
Achieve cross-functional integration
4. Strategic Focus 5. Positioning 6. Implementation Programs
Increase unit sales – Branch A Select customer targets Implementing the marketing mix
Improve margins and investment returns – Branch B Frame competitor targets Aligning cross-functional support
Choosing a strategic focus: Increase unit sales or Design the value proposition
improve margins and investment returns?
Articulate reasons to believe
Developing positioning statements
7. Managing Multisegment Strategies

Levels of Strategy
Corporate Strategy
• What business shall we be in?
Business Strategy
• In which product/markets shall we compete?
Market Strategy
• Which market segments shall we address?
Market Segment Strategy

• How shall we compete in the chosen market segment(s)?
Levels of Strategy
Illustration: GE
Corporate Strategy
• Financial services, healthcare, home appliances, jet engines, locomotives,
turbines…?
Business Strategy – home appliances
• Air conditioners, clothes washers and driers, dishwashers, ranges,
refrigerators, freezers…?
Market Strategy – refrigerators
• Home versus institutional; new building versus a replacement…?
Market Segment Strategy
• How shall we compete in the chosen market segment(s)…?
Market Strategy
Session Roadmap
• Purpose of a market strategy
• Market strategy: market segment strategies
• Performance objectives
• Core strategy
• Implementation programs
• Market strategy: multi-segment strategies
Market Strategy
Session Roadmap
• Core strategy
Purpose of a Market Strategy
Secure Differential Guide Effective Allocation

Advantage of Scare Resources
Market
Strategy
Provide Strategic Achieve Cross-Functional

Direction Integration
Securing Differential Advantage

• What competitors cannot do.
• What competitors will not do.
• What competitors will be at a disadvantage if they do.
• Both the firm and competitors will benefit.
Guide Effective Allocation

Secure Differential Advantage
of Scare Resources
Market
Strategy
Achieve Cross-Functional
Provide Strategic Direction
Integration
Guide Effective Allocation of

Secure Differential Advantage
Scare Resources
Market
Strategy
Achieve Cross-Functional
Provide Strategic Direction
Integration
Achieve Cross-Functional Integration

R&D
Sales Operations
Market
Strategy
Human
Legal
Resources
Finance
Class Discussion
What are the critical elements in Mayo Clinic’s market strategy?
Market Strategy
Session Roadmap
• Core strategy
Market Strategy: Market Segment Strategies
Marketing Imperative 2
Identify Market Segments Target Market Segments

selected for effort
Market segment strategy – fundamental market strategy unit

Market Segment Strategy: Central Concepts
Identify Market Segments Desired Results
Resource
Core Strategy Allocation: Broad
guidelines
Specific Required
Implementation Programs Actions: external,
internal
Market Strategy
Session Roadmap
• Core strategy
• Strategic
Performance Objectives
• Operational
Resource Allocation:
Core Strategy
Broad guidelines
Specific Required
internal
Performance Objectives: Strategic Objectives
Management must specify the trade-offs:
Growth and
Profits Cash Flow
Market Share
Evolution – Strategic objectives evolve over time

Performance Objectives: Set Performance Objectives
When evaluating performance objectives, management must specify the

trade-offs between three objective types:
Growth and
Profits Cash Flow
Market Share
• Provide numbers to support strategic objectives

• Specify, quantitatively, how much and by when
Strategic Operational
…from 18% to 21%

Increase market share Primary
by end 20XY
While holding …at the current 20%

Secondary
margins on sales level
Market Strategy
Session Roadmap
• Core strategy
• Strategic
• Operational
• Strategic focus
Core Strategy
• Positioning
Specific Required
internal
Core Strategy: Strategic Focus
Improve Profits and ROI
Improve Margins &

Increase Unit Sales Volume Investment Returns
Current
New Revenue
Revenue Base
Threats
Increase Attract
customer customers from
retention Opportunities competitors
Increase Secure new

customer use business
The firm must make choices among the various branches

Core Strategy: Strategic Focus
Improve Profits and ROI
Improve Margins &

Increase Unit Sales Volume
Investment Returns
Current Increase Reduce Costs

New Revenue
Revenue Base Revenues & Assets
Increase Attract
Raise Reduce
customer customers from
prices operating costs
retention competitors
Increase Secure new Improve the Improve asset

customer use business sales mix utilization
Growth Cash Flow

Core Strategy: Positioning
Positioning comprises four key decisions:

• Select customer targets
• Customers to target for effort
• Frame competitor targets
• Reference for customer targets to assess our offer
• Design the value proposition
• Benefits/values we emphasize in communications with customer targets
• Articulate reasons to believe
• Why customer targets should believe we can deliver on the value
proposition
Customer Targets
• Relationship to firm
• direct customers
• indirect customers
• Customer level
• Customer evolution
• Considerations
Customer Targets
Subcomponent Subcomponent
Manufacturer Manufacturer
Component Component
Finished-Goods Finished-Goods
Distributor Distributor
Retailer Retailer
Final Consumer Final Consumer

Flow of Goods
Customer Targets
Push Pull
Subcomponent Subcomponent
Component Component
Finished-Goods Finished-Goods
Distributor Distributor
Retailer Retailer
Final Consumer Final Consumer

Flow of Goods
Customer Targets
• Relationship to firm
• Customer level
• macro customers
• micro customers – function, position, role, individual
• Customer evolution
• current customers
• potential customers
• Considerations
• reachability
• obvious versus creative
• influentials
• personally benefits but does not pay
A customer is any person or organization, in the chain of distribution or decision,
who can identify your offer by company or brand name
Competitor Targets
Suppliers
Current Direct
New Direct Indirect
The Firm
Entrants Competitors
Competitors
Buyers
Framing Competitor Targets: Illustrations

• “Pepsi Cola is better than Coca Cola”
• “Pepsi Cola is the best cola”
• “Pepsi Cola is the best soft drink”
• “If you’re thirsty, drink Pepsi Cola”
Value Proposition
• The heart of positioning
• Defines how the firm secures customers and defeats competitors
Psychological
Functional Economic
Positioning elements are interrelated. Supply Chain

Competitors
Indirect Indirect
Direct Customers Direct Customers
Customers Customers
Competitor
Customer Targets
Targets
Positioning
Value Proposition
Psychological
Functional Value Economic Value
Value
Reasons to believe:
• Supporting evidence
• Why customer targets should believe we can deliver on the value proposition
Competitor
Customer Targets
Targets
Positioning
Value Proposition
Class Recap
Question Answer
Who to Convince? customer targets
In the context of other alternatives? competitor targets
They will receive those benefits/values? value proposition
Because we have these capabilities? reasons to believe
Illustration: Cemex
Customer targets Site managers
Project investors
Competitor targets Traditional cement producers
Value proposition Site managers: consistent delivery within 30 minutes of CEMEX
receiving an order (versus the 3-hour standard)
Project investors: project completed 3 months sooner: additional
rental revenues earned = $20 million; profits = $5 million
Reason to believe A global positioning satellite system on each truck and computer
software that combines truck positions with plant output and
customer orders to calculate optimal destinations and make en route
redirections
Market Strategy
Session Roadmap
• Core strategy
• Strategic
• Operational
• Strategic focus
Core Strategy
• Positioning
• Marketing mix
Implementation Programs
• Functional support
Implementation Programs: Marketing Mix
Develop detailed implications for all marketing activities
Price Advertising
Sales Distribution
Service Promotion
Market Research Product

Value
Operations
Proposition
Purchasing
R&D
Finance
Technical Services Human Resources Legal
Logistics
Steubenware
apak
Royal Selangor Pewter

Develop detailed implications for all functional activities
Price Advertising
Sales Distribution
Service Promotion
Market Research Product

Value
Operations
Proposition
Purchasing
R&D
Finance
Technical Services Human Resources Legal
Logistics
• Strategic
• Operational
• Strategic focus
Core Strategy
• Positioning
• Marketing mix
Implementation Programs
• Functional support
Tests of Market Strategy: A Baker’s Dozen
1. Clarity Is it clear what we are going to do and what we are not going to do?
2. External consistency Are our offers consistent with the best insight about the market,
customers, competitors, and complementers?
3. Value Do our offers deliver significant value to customers?
4. Advantage Do our offers promise greater customer value than the competitors’
offers?
5. Flexibility Do our choices allow us to address expected evolution in the market,
customers, competitors, and complementers, and the environment in
general?
6. Financial consistency Are our choices consistent with our financial goals?
7. Focus Are our offers consistent with our capabilities and strengths?
8. Internal consistency Are our choices internally consistent?
9. Focus Are our employees able to prioritize their work to deliver our offers?
10. Learning Does the strategy development process build our intellectual capital?
11. Functionally integrated Is the market strategy well integrated with other functional strategies?
12. Cross-market integrated Is the market strategy well integrated with our other market strategies?
13. Robustness Are our choices able to withstand external shocks?

Market Strategy
Session Roadmap
• Core strategy
Market Strategy: Multi-Segment Strategies
Firms often target multiple segments simultaneously
Relationship among market segment strategies

• Independence – approach each segment independently
• Positive synergies – firm effectiveness improves with additional segments
2+2=5
• Negative synergies – firm effectiveness reduced with additional segments
2+2=3
Market Strategy: Multi-Segment Strategies
Marketing Mix Element Potential Problem Possible Solution

Product Increased production costs, increased Modular design, just-in-time (JIT)
inventory costs, assembly
delivery delays
Service Alienate customers not receiving Try to ensure perceived equity,
premium service package and maintain physical separation
where possible
Advertising Exposure to different appeals Ensure that appeals do not conflict
and that messages across segments
are consistent; use specialized media
Sales force Salespeople ineffective with multiple Extra training or develop
products and/or in multiple segments specialized sales forces
Distribution Alienate intermediaries Secure financial-service package for
selected intermediaries; consider
different brands and packages
Pricing Trains-shipment – diversion from Manage price differentials,
one segment to another differentiate elements like brand
and package
Market Strategy
Session Roadmap
• Core strategy
Market Strategy
Class Discussion
• Local taxi services have suffered as Uber, Lyft, and other P2P services
have expanded. What advice can you give local taxi companies after
studying this chapter?
CHAPTER 9
Market Strategy:
Integrating Firm Efforts

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© Noel Capon, 2016. All rights reserved.

Managing Markets Strategically

Section I: Marketing and the Firm

Organizational Survival and Growth

Current and Potential Profits

• Imperative 1: Determine and recommend which markets to address

1. The Purpose of Market and

4. Strategic Focus 5. Positioning 6. Implementation Programs

7. Managing Multisegment Strategies

Market Segment Strategy

Secure Differential Guide Effective Allocation

Provide Strategic Achieve Cross-Functional

Securing Differential Advantage

Guide Effective Allocation

Guide Effective Allocation of

Achieve Cross-Functional Integration

Identify Market Segments Target Market Segments

Market segment strategy – fundamental market strategy unit

Identify Market Segments Desired Results

Management must specify the trade-offs:

Evolution – Strategic objectives evolve over time

When evaluating performance objectives, management must specify the

• Provide numbers to support strategic objectives

…from 18% to 21%

While holding …at the current 20%

Improve Profits and ROI

Improve Margins &

Increase Secure new

The firm must make choices among the various branches

Improve Profits and ROI

Improve Margins &

Current Increase Reduce Costs

Increase Secure new Improve the Improve asset

Growth Cash Flow

Positioning comprises four key decisions:

Final Consumer Final Consumer

Final Consumer Final Consumer

Framing Competitor Targets: Illustrations

Positioning elements are interrelated. Supply Chain

Develop detailed implications for all marketing activities

Market Research Product

Royal Selangor Pewter

Develop detailed implications for all functional activities

Market Research Product

13. Robustness Are our choices able to withstand external shocks?

Firms often target multiple segments simultaneously

Relationship among market segment strategies

Marketing Mix Element Potential Problem Possible Solution

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