Part 11.1Define Market Driven Strategy Market- Driven Strategy (MDS) is very essential in formulating business strategy. This approach used is always market-oriented and customer-oriented. Next, understanding what the customers do, understanding the customer‘s behaviors and measuring the interaction among customers. Therefore, the main point is always orienting to the market and customers in every business activity performed. By focusing on the consumer first, companies can gain great advantages that aid in the marketing and sales of their products or services. Developing a market-driven strategy involves aligning internal operations as well as external communications in order to affect every aspect of customer value, and therefore is not a short-term solution. However, when done correctly, a market-driven strategy can provide excellent results and even reduce long-term costs. Focus on benefits, not features. Features are relative to your product or service while benefits relate directly to your customers‘ experience. Think of cell phones as an example. The advertisers do not say the phone has a 1540 mAh capacity battery (feature), they say you get up to 480 minutes of talk time (benefit). 1.2.Characteristics of market-driven companies 1. Strategically selecting the market(s) and segments you serve 2. Understanding the problems, challenges and opportunities prospective buyers in your market are dealing with 3. Knowing the trends and future issues prospective buyers in your target market(s) will face in the next 1-3 years 4. Listening to and understanding what your customers are telling you about what‘s really going on in their business, not just what new feature/function enhancements they want 5. Using reliable fact-based research data and industry/market analysis amongst several inputs for making strategic go-to-market decisions 6. Making strategic decisions across all areas of the company for which market(s) you‘re going to serve and the key value propositions your company drives to market 1|Page Microsoft is a marketdriven company missing trends and failing to take risk which forces it to react after dramatic market shifts have already occurred. Understanding and responding to the buyer‘s process while sales retain control of moving the buyer to a decision 13. Marketing is the strategic leader in the company and central to the success of the business 1. one can predict the fate of Zune vs. Invariably. or understand the relative adoption of Windows mobile vs. Microsoft.Differences Between Market-driving and Market-driven Companies Market-driving companies rule the future – they push the envelope of possibility and consistently surprise customers by introducing unique value in exceptional brand new products and services. Apple is a market-driving company anticipating trends and taking risk to consistently amaze and surprise customers with delivered value. iTunes. 2|Page . A Current Example Consider Apple vs. All functional areas in the company are aligned around the same go-to-market strategy 12. Developing long-term customers who want to do business with your company 14. Developing a corporate mindset of being a trusted advisor for customers and prospects rather than just another vendor of stuff and/or services 11. Using a balanced scorecard approach to measure marketing performance across multiple dimensions 15. Focusing on where and how your company can excel in selected markets rather than just having a presence in many markets 10. Always using the ‗outside-in‘ perspective 8. Market driven companies are doomed to fall increasingly further behind as they react to customer needs that will surely change by the time they deliver the ultimately out of date product.3.7. It‘s not hard to see which approach is also more cost-effective. Your solutions genuinely create value for your customers 9. the iPhone. Disruptive 1. These companies also have a mission to build unique value networks and engage in a bigger business ecosystem through technology and business model innovation. Apple‘s iPod with iTunes is a good example of a value network in a business ecosystem.Approach Makes Them Different Market-driven companies perform exhaustive market research to fully understand an existing customer need. let‘s look at these key differentiators. They perform multiple validation cycles with heavy documentation of requirements and written detailed specifications of features and benefits.Agile 7. Innovative 2.5.4. Dynamic 3.Creative 9. unhampered by traditional thinking and industry norms for product development. For some. static well-defined market segments.Feature 9.Nine(9) Ways to Differentiate In pondering what it takes. 1.Decisive 5. Market-driving companies are poised to make discontinuous leaps in innovation in terms of customer value (not just incremental capability and technology). perhaps this approach can still work.Values 8.Confused 5.Rigid 8.Clear 4.Insignificant 3|Page .1.Static 4. is a good example of being driven by these static segments.Tentative 7. Procter and Gamble for many products.Incremental 2. A serially laborious process is then followed through multiple cycles of develop-and-test until a differentiated product or service is identified.Reactive 1. or how one can observe and more deeply characterize one type of company from another.Competitive 6.Unsure 6. Market-driving companies focus on a vision for the future. Market-driving Market-driven 1. Market-driven companies bring insignificant responses leaving customer questions unanswered. Market-driving companies create massive value to delight customers. Market-driving companies bring creative solutions to difficult customer challenges.Market Driven Vs Marketing Driving To get a better understanding of these criteria. Market-driving companies are disruptive to markets surprising customers with value. Market-driven companies are reactive to clear shifts that are late and underwhelming. Market-driving companies are agile in their ability to pivot both vision and strategy. Market-driven companies are rigid. 4|Page . Market-driven companies are incremental in adding features to automate existing methods. Market-driven companies add expected features that fall short of customer expectation set by competition. Market-driving companies are discontinuously innovative introducing radical efficiency. let‘s explore them in more detail in the comparisons that follow. and unable to modify past decisions even for coursecorrecting good reason. decides how to deliver superior customer value. it involves the use of superior organizational skills in understanding and satisfying customers. for a business to achieve market orientation. However.Becoming Market Oriented A market orientation is a business perspective that placed the customer as the center of a company‘s total operations. competitors.1. by their late reactivity. This concepts is basically holds the same idea as the ³marketingconcept´. (Characteristics of Market Orientation) Customer focus 5|Page .2. How to become Market Driven 2. analyze it from a total business perspective. Marketdriven companies are unsure in researching and over-analyzing seemingly irrelevant risk. and the markets. Market-driving companies are clear in articulating new business model value to customers in simple terms. Market-driven companies are confused in their positioning and value messages to the market. A market-oriented organization always gathers information about its customers. Market-driven companies are static and can only serve existing often declining markets. and finally takes actions to provide value to customers. Market-driven companies are perceived as tentative. Market-driving companies are dynamic in regularly creating new and growing markets. PART 2 2. Market-driving companies are recognized as competitive by early activity. Market-driving companies are decisive in quantifying and taking measured risk. and developed strategies to counter that threat.Customer focus basically stands for understand the customer needs. Buyers‘ decisions are based on the attributes and features of the product that offer the best value for the buyers use situation.g. wants. Competitor intelligence A market-oriented organization recognizes the importance of understanding its competition as well as the customer. each computer contains the specific features requested by the buyer. Also. Example: Western Union did not define its competitive area as telecommunications. its management might have better understood the changes taking place. chips) cannot be utilized for computers in inventory. The direct. Example: Dell Computers direct contact with its buyers is an important information source for guiding actions to provide superior customer value. Cross-Functional Coordination: Market-oriented companies are effective in getting all business functions to work together to provide superior customer value. and eventually the 100-year-old company was outflanked by fax technology.. The market-oriented organization understands customers‘ preferences and requirements and effectively deploys the skills and resources of the entire organization to satisfy customers. Had Western Union been market oriented. and responses towards the products delivered. These 6|Page . Competitors of Dell that market their computers through distributors and retailers have higher costs because price reductions in purchased components (e. Failure to identify and respond to competitive threats can create serious consequences for a company. recognized the competitive threat. concentrating instead on telegraph services. Becoming customer oriented requires finding out what values buyers want to help them satisfy their purchasing objectives. built-to-order process used by Dell avoids the stocking of computers that may not contain state-of-the-art technology. The buyers experience in using the product is compared to his or her expectations to determine customer satisfaction. the organization is believed to be able to successfully deliver the customer value. Creating Value for Customers Customer Value is ―the outcome of a process that begins with a business strategy anchored in a deep understanding of customer needs‖ The creation of customer value is an important challenge for the managers. 2. hence fulfilled their goals. which illustrates the retailer‘s distinctive capabilities. Coordination of Activities 4. Cross-functional teamwork guides the entire organization toward providing superior customer value. since it is an ongoing competitive challenge in maintaining successful marketdriven strategies Being able to overcome these challenge. Superior customer value occurs when the buyer has a very positive use experience compared to his/her expectations as well as the value offerings of competitors. where the new-product development applies the skills of their design team and benefits from the team‘s accumulated knowledge. Organizational Processes 2.3. Distinctive Capabilities Identifying an organisation‘s distinctive capabilities is a crucial part of market-driven strategy. The asset is the strong brand image possessed by Zara which helps the launching of the new product. 7|Page . the coordination of activities across business functions during new-product development is facilitated by information and technology (the product designs take into account the manufacturing requirements as well as offering high fashion products). that enable firms to coordinate activities and make use of their assets‖ The Major components of distinctive capabilities are: 1. Capabilities can be defined as ―complex bundles of skills and accumulated knowledge. Skills and Accumulated Knowledge 3. exercised through organizational processes.organizations are successful in removing the walls between business functions-marketing talks with manufacturing and finance. Assets For example: Zara‘s new-product development process. branding strategy.Furthermore.Capabilities:Market driven organizations actively evaluate their technologies and capabilities in light of changing market conditions. public relations. it is believed that the organization will able to achieve it goals. or a combination of lower cost and differentiation. 8|Page . thinking and actions begin with an understanding of customer market segments. There are significant contrasts between a market driven company and an inside out approach to business. Many business and agency managers are internally focused and could achieve a better understanding of their customers and markets by implementing the "Six C's" approach. it was stated that the values could be product differentiation. applying the "Six C's" of market driven companies is a key to the success of programs for all business to business companies. services and performance of their competitors to determine their strengths and weaknesses 3. They quickly adapt (before their competitors) products and services to meet the needs of the target market segments. lower prices than competing brands. 2. as well as the constant management and updates of the strategy. Through the deep understanding of this concept.Competition: Market driven B2B companies study the products. Advertising. both by the business and the agency.Market –Driven companies focuses on Six C’s When developing marketing and communications plans and tactics. ability to implement and manage all the elements.4. and unmet and emerging needs. their requirements. and internet marketing strategies will be more effective if the needs of the customer and market segment are researched and understood. This knowledge drives the creation and implementation of the most successful marketing programs. 1. much as there are contrasts between an agency that is market driven (external focus) or creatively driven (internal focus). email marketing. trade shows.Customer Segment: To be market driven. 2. driven strategies Market.Cross-Functional Teams: Utilizing cross functional teams with responsibility to implement business plans leads to better decisions. RBL consider the following things: RBL‘s business objectives are driven by customer satisfaction. 9|Page . Their strategy for competitive advantage is based on understanding of customer needs.Real life example of Rahimafrooz Batteries Limited (RBL) initiating Market. productivity and also their own profitability 6.driven strategies plays a pivotal role in determining the success of organizational performance.4. market driven companies improve customer value. response.1. RBL responds to competitive actions that threaten them. RBL monitor their level of commitment and orientation to serve customers‘ needs. In context market orientation. response time.Cost: To be market driven companies must constantly strive to improve costs and efficiency and increase value to their customers and shareholders 5. and service to the target markets Part 3 3.Continual Improvement: By constantly learning and seeking to improve in all operational areas. RBL measure customer satisfaction systematically and frequently. systems. profit. They communicate information about their successful and unsuccessful customer experiences across all business functions. intra-functional. Rahimafrooz Batteries Limited (RBL) pursues a model which drives them to be market-driven. We understand 10 | P a g e . organizational infrastructure. distributor and environmental orientation. All of RBL business functions are integrated in serving the needs of their target markets. This model is illustrated below: Rahimafrooz Batteries Limited (RBL) put organization-wide intelligence management and responsiveness to it at the heat of the construct and form of specific culture which includes distinctive management practices. The top management of RBL regularly discusses competitors‘ strengths and strategies. or can develop a competitive advantage. Market orientation is specifically often understood as the all-encompassing strategic orientation that raises the probability of market performance of RBL which encompass customer. All of their managers understand how everyone in the company can contribute to creating customer value. RBL target customers and customer groups where they have. competitor. human resources and technology support as organizational entities (leverages) enabling implementation. As the fourth dimension of the model. market orientation should be manifested as a visible senior management commitment. providing and continuously improving perceived value. The fifth distinctive dimension of the model is customer interface design. Internal integration leverage is implemented in RBL through activities leading to efficient and satisfied employees such as training. Under this dimension. The third dimension of the model is market knowledge management. AS a market oriented organization. RBL considers strategic deployment as a first leverage. as alignment with business strategy and as provision of adequate resources.They believes that the importance of the 11 | P a g e . Through this leverage. disseminating) and additional activities like interpretation and use of marketing knowledge. motivating. different organizational elements and systems such as organizational structure. The second dimension of the model is internal integration leverage. rewarding. internal communications. centralization. as the presence of it in the RBL‘s mission. empowering. generating. but also through internal quality management and efficient inter-departmental cooperation. quality and satisfaction within a long-term time horizon with a view to achieving superior market performance.customer focus as a focus on customer needs. RBL more focused on learning as a form of information generating where all important information for marketing decisions and also balanced metrics of market performance. RBL focus focus on internal environment and intra-functional coordination. but is reflected in all organizational leverages. an organizational infrastructur. RBL coordinated utilization of company (capital and human) resources and full departmental alignment and balancing internal orientation with external. The first dimension of the model is strategic deployment. In RBL. information technology and communication systemsm play important factors of market orientation. Discrete strategic leverage is important organization-wide orientation of RBL because it concerns top management factors (barriers). RBL emphasis on information handling (analysis. the strategy building process and necessary resources. RBL follows a model consists of six dimensions representing key organizational leverages through which customer focus is implemented. Market (customer) orientation is therefore not a separate dimension. RBL always close contacts with customers. Finally. etc on the products. customer interface design should therefore be one of its key leverages. technological and environmental elements of interaction. views. Listening to what customers say in a continual systematic way is a key tool to comprehend their needs and requirements and to satisfy them achieving excellence in their products and services accordingly. ―Total commitment to customer satisfaction‖ is one of their values. and use those needs to target markets where the business can achieve a sustainable and significant competitive advantage in this field.To be Market-driven. 12 | P a g e . fulfillment of expectations. other customers and organizational systems.2. RBL understands customers‘ preferences and requirement and offering superior value products. complaints. and dealings of the company. Customer orientation as a set of beliefs which puts customer interests first. All individuals of Rahimafrooz Group interact with customers and members of the public everyday and do hear. relationship impacting activities. and intangible elements. social. A systematic and organized way of managing these feedbacks and queries will surely strengthen their total commitment to customer satisfaction. frontline communication and interaction points with customers should be managed as a coherent whole. 3. RBL develops a centralized Customer Feedback & Query (CFQ) CELL.CUSTOMER FOCUS RBL are focusing on customers. organizational culture is the sixth dimension of the success of RBL.1. or learn about their comments. RBL focuses greatly on customer needs information which are more deeply rooted values and beliefs that are likely to support customer focus and permeate the RBL. Customer interface is a relatively independent organizational entity and it requires distinctive management emphasis and operationalized as the extent of customization.interaction with the customers also lies in the fact that a customer‘s value is largely produced during their interaction with employees. but also through long term.2. Therefore. management of emotional. Getting closer to the customer. such as values. retailers and also buyers to know what drives customer satisfaction. services. Organizational culture is an important factor of driving RBL as an market-driven organization in this field which encompasses tangible elements such as behaviours and artifacts. RBL has to be market oriented 3. As market orientation is concerned with sources of customer value. identify customer needs. receive. beliefs and norms. Rahimafrooz associates directly with distributors. 3.2. Gaining these- RBL is gathering proactive information and analysis and they have a wealth of information is available in company records. and end users. And also for improving customer satisfaction include the product/service delivery system. employees' level of performance. and the use of mutually informed managers‘ visions about the current market and how it is likely to change in the future. For this. and products and services. 13 | P a g e . RBL is measuring of customer satisfaction regularly to know buyer needs or preferences and identifying whether changing or not. and employees. A key objective is identifying the product/service attributes that influence customer satisfaction. customers' perceived price-value relationship of the product/service. Rahimafrooz Batteries Limited successfully competed with others global competitors in Asia by designing durable and quality batteries to meet specific users' requirements. Understanding customer satisfaction Rahimafrooz engage in accurate tracking of the needs and wants of all participants in the entire distribution chain. performance of the product/service. Within the organization.Customer Satisfaction and RBL Rahimafrooz Batteries Limited is customer-driven firms who are constantly monitoring and analyzing customer satisfaction. to provide them key learning on how to further strengthen their customer service. marketing professionals of Rahimafrooz are evaluating the changing requirements of end users and channel members. Rahimafrooz has commissioned a third party research firm to survey Rahimafrooz customers of all SBUs. All members of the Rahimafrooz‘s distribution network is striving to satisfy the individual or organization that ultimately consumes the product or service. They make a GITC team who are working tirelessly to put in place a Customer Relationship Management (CRM) system to help them get closer to their customers for both acquisition and retention programs. 3. middlemen.INFORMATION ACQUISITION We consider RBL as a market-oriented company because it completely understands its markets and the people buy its products or services.2. The company is very service oriented and quick to respond to customer needs. Teamwork is playing the significant in Rahimafrooz to meeting buyers' needs. information systems. and study of competitors' advantages and weaknesses.3. the image of the company/product/brand. including suppliers. Rahimafrooz targets specific customer groups. manufacturers. RBL is learning from experience where they encourage open-minded inquiry. widespread information dissemination. For these they involve all personnel in contact with customers to evaluate activities.2. A key part of information acquisition. An important part of the monitoring task is identifying buyers' future needs. 2.Core Competence Core competencies are the most significant value-creating skills within the corporation and key areas of expertise which are distinctive to the company and critical to the company's long term growth. This is expected to coordinate and bring continuous improvement and alignment between sales. and whether target customers perceive them as alternate satisfiers. RBL can choose to build up a Rahimafrooz Group wide community of like-minded marketing individuals. The key questions of RBL management are which competitors. 3. best practices. 3.2.4. they could work within the group and gradually built it up. 3. They are successful in removing the walls between business functions—marketing talks with manufacturing and finance. RBL believe superior value requires that the seller identify and understand the principal competitors‘ short-term strengths and weaknesses and long term capabilities and strategies which make the RBL market leader in the market. solutions.7. financial planning. and what technologies. The opportunity for Rahimafrooz to sustain its competitive advantage is determined by its capabilities of two kinds – distinctive capabilities and 14 | P a g e . manufacturing.2. It is an advantage that enables business to survive against its competition over a long period of time. marketing.Sustainable Competitive Advantage Sustainable competitive advantage allows the maintenance and improvement of the enterprise's competitive position in the market. and HR planning.6.3.CROSS-FUNCTIONAL COORDINATION RBL is getting all business functions effectively to work together to provide superior customer value. forecasting. RBL are focusing on improving internal efficiencies. RBL has set in motion the process of assessing their current business processes using an "Integrated Business Planning" model called MRPII. RBL's core competencies are they are offering better quality and durable batteries than competitors in the Bangladesh and also other countries like India. RBL create a group of intensely committed and steadfast marketers. RBL pursues an approach named THE DEEP DIVING APPROACH which continually swimming around looking for new clients.5. By continually benchmarking and evaluating themselves. RBL build a Cross-functional teamwork guides the entire organization toward providing superior customer value. business planning. customers.COMPETITOR INTELLIGENCE A market-oriented organization RBL recognizes the importance of understanding its competition as well as the customer.2. They have set in motion the process of assessing their current business processes using an "Integrated Business Planning" model called MRPII. they introduced the Balanced Scorecard to measure financial performance and ascertain optimal mechanisms for a group procurement policy.reproducible capabilities . For this. greater teamwork is working among the concerned SBUs and the dealers/distributors which give a competitive advantage. ‗Capabilities‘ have been defined as: complex bundles of skills and collective learning. financial planning. Distinctive capabilities are the basis of company‘s competitive advantage. They are focusing on strengthening our core business. RBL are focusing on improving internal efficiencies. forecasting. RBL is investing in expansion of its nationwide distribution network. business planning. sustainable competitive advantage is achieved by continuously developing existing and creating new resources and capabilities in response to rapidly changing market conditions. exercised through organizational processes that ensure superior coordination of functional activities.and their unique combination to create superior customer value. Distinctive capabilities of RBL are: 15 | P a g e .2. potentially leading to centralized procurement. marketing. This is expected to coordinate and bring continuous improvement and alignment between sales. According to the new resource-based view of the company. Recently. To make UBC (used battery collection) a success. RBL kicked off the group-wide QMS process to build process focus both at RBL and at all SBUs. The Rahimafrooz Financial Leadership Team (FLT) is attempting to cut operating costs by 20% against budget with the same top line target by eliminating unnecessary expenses.DISTINCTIVE CAPABILITIES The ‗resource-based view of the firm‘ has seen an increased emphasis on competing on ‗capabilities‘. Various IT system enhancements are being planned by GITC. manufacturing. both tangible and intangible.8. knowledge represents the most important value-creating asset. New investments in core businesses include RBL's expansion of capacity. and HR planning. RBL are focusing on improving financial management. Among these resources and capabilities. 3. Part 4 4. the costs of recruiting. but the indirect costs of lower productivity as replacements learn their jobs and broken relationships are repaired. and understands the pay-off from its marketing investments. Although managers have been exhorted to ‗stay close to customers. Now. selecting.1. Employee satisfaction: Satisfied employees are both a cause and consequence of customer satisfaction. Revenue growth: Here the evidence is not so conclusive. but we expect that a superior ability to anticipate changing market requirements and target innovation efforts more effectively should have topline benefits. 16 | P a g e . The cost of employee turnover is also lower – not only the direct costs of hiring the replacement. A market-driven firm is better able to identify and keep its profitable accounts. Price premium: A market orientation contributes to a more powerful value proposition. and loyal customers are considerably more profitable than others. They are also more committed and enthusiastic about the firm. more productive. clues from other sources indicate the benefits of a market orientation are the result of: Superior cost and investment efficiency: Not all customers are equally attractive. and training are lower.The Payoff for being market-driven Why is it important to be market-driven? The superior abilities of the market driven firm lead to bottom-line benefits from improved performance. this advice had to be taken on faith until recently. a growing body of research has found that market driven firms usually are more profitable than their rivals. and because they are more loyal. Although these studies have not been able to trace the precise reasons why a market orientation enhances profitability.‘ and ‗put the customer at the top of the organization chart‘ for at least 40 years. which translates into greater value that usually is rewarded with a price premium. a conclusion that has been sustained with a variety of measures and methods. 17 | P a g e . These could be psychological (the customer is comfortable in the relationship and resists changing) or economic (there is a large perceived cost or risk to making a switch). anticipating competitor‘s moves and making fact-based decisions. These bottom-line benefits are derived from a set of inherent advantages market-driven firms have over more internally focused rivals. The market-driven organization is better able understand markets by sensing emerging opportunities. These advantages.Competitive preemption: With highly satisfied customers. the firm has erected switching barriers that competitors cannot easily breach. Constant Improvement A market orientation helps drive constant improvement in company processes and systems because it promotes a "culture of experimentation. are drawn from a superior ability to understand markets and a superior ability to attract and retain customers. encouraging loyalty and leveraging its market investments." Company leaders and functional departments perpetually explore opportunities to improve upon product and service offerings to adapt to current and future needs of customers. It is also better able to keep customers by delivering superior value. html 18 | P a g e .iibd.com/2008/11/market-driven-strategy-market-driven.blogspot. http://www.infocat.com/Media/From-market-driven-to-market-driving http://marketing.Reference 1. 2. 4.net/raju07a/imperatives-for-market-driven-strategy http://www. 3.adityabirla.com/2009/02/marketing-in-market-driven-company.slideshare.html http://www.com/news/?action=viewone&newsid=19 http://marleymarketing. 5.