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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
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MARKETING STRATEGY: A DECISION-FOCUSED APPROACH
Published by McGraw-Hill/frwin, a business unit of The McGraxv-Hill Companies, Inc., 1221 Avenue of the
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34567890DOW/DOW0987
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About the Authors

Orville C. Walker, Jr.
Orville C. Walker, Jr. is Professor Emeritus in the University of Minnesotas 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 Masters degree in social psychology from the Ohio State University and a PhD in marketing from the University of
Wisconsin-Madison.
Orville is the co-author of tinco books and has published more than 50 research articles
in scholarly and business journals. He has won several awards for his research, including
the ODell award from the Journal qfiMarketing Research, the Maynard award from the
Journal of Marketing, and a lifetime achievement award from the Sales Management Interest Group of the American Marketing Association.
Orville has been a consultant to a number of business firms and not-for-profit organizations, 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 University 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 Venturing. His research has won national and international awards fiom 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 assessment and shaping of market opportunities.
Harper W. Boyd Jr.

The late Harper W. Beyd Jr. was the Donaghey Distinguished Professor Emeritus of Marketing 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 Edinburgh Business School in Scotland. He also consulted extensively with both consumer and
industrial products companies around the world.
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 management 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 awardwinning 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 SOategic Decision-Making Approach, 5th edition.
Brie( Contents
Preface xiii
SECTION THREE
Formulating Marketing Strategies 173
8 Marketing Strategies for New Market
Entries 175
9 Strategies for Growth Markets 203
10 Strategies for Mature and Declining
Markets 227
11 Marketing Strategies for the New
Economy 257
SECTION ONE
of
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 FOUR
Implementation and Control 285
SECTION TWO
12 Organizing and Planning for Effective
Opportunity Analysis 83
Implementation 287
4 Understanding Market Opportunities85
13 Marketing Metrics for Marketing
5 Measuring Market Opportunities:
Performance 313
Forecasting and Market Knowledge 111
Name Index 337
6 Targeting Attractive Market
Subject Index 341
Segments 133
7 Differentiation and Positioning 153
vii
Preface xiii
Chapter 2
SECTION ONE
Corporate Strategy Decisions and Their

Marketing Implications 31
Strategic Challenges Addressed in Chapter 2 33
Corporate Scope Defining the Firms Mission 35
INTRODUCTION TO STRATEGY 1
Chapter 1
Market-Oriented Perspectives Underlie
Successful Corporate, Business, and
Marketing Strategies 3
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 Marketings 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 Marketings 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 Firms Other
Strategies and Resotoces 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
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 Productsfor Cmrent
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. Synergyfiom Shared Resources 53
Chapter 3
Business Strategies and Their Marketing
Implications 57
Strategic Decisions at the Business-Unit Level 59
Contents ix
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 SingleBusiness 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 Businesss Competitive
Strategy? 77
SECTION TWO
OPPORTUNITY ANALYSIS 83
Chapter 4
Understanding Market Opportunities 85
Markets and Industries: Whats 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
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 Industrys Critical
Success Factors 103
3. Its ~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 Forecasters 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
Firms 121
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
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 Customers 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

Analytical Tools for Positioning Decision
Making 169
169
SECTION THREE
FORMULATING MARKETING
STRATEGIES 173
Chapter 8
Marketing Strategies for New Market
Entries 175
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
Contents xi
Objectives of New Product and Market
Development 184
Market Entry Strategies: Is It Better to Be a Pioneer
Chapter 10
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
192
Strategic Marketing Programs for Pioneers
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
Strategic Challenges Addressed in Chapter 10
Chapter 9
Strategies for Growth Markets 203
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 ShareMaintenance Objectives 209
3. Fortress, or Position Defense, Strategy 211
4. Flanker Strategy 214
5. Col!fiontation 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 SOategy 220
5. Leapfrog Strategy 221
6. Flanking and Encirclement Strategies 222
7. Guerilla Attack 223
8. Supporting Evidence 223
Strategies for Mature and Declining

Markets 227
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. CustomersSatisfaction 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
Does Every Company Need a New-Economy
Strategy? 258
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
7. First-MoverAdvantage: Fact or Fiction? 266
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 DotCorn Markets of Tomorrow? 280
SECTION FOUR
IMPLEMENTATION AND CONTROL 285
Chapter 12
Organizing and Planning for Effective
Implementation 287
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
Designing Marketing Metrics Step by Step 315
1. Setting Standards of Performance 316
2. Speci~4ng and Obtaining Feedback Data
3. Evaluating Feedback Data 321
4. Taking Corrective Action 322
320
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 MeOics
Measure Up? 329
5. What Contingencies Should Be Plamwd for?
330
6. Global Marketing ConOol 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 capstone or other elective courses in marketing whose strategic perspective challenges students 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 marketing 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 venture. We have written this text to serve exactly these kinds of capstone and advanced elective courses.
WHY THIS BOOK?

Why did your instructor choose this book? Chances are, it was for one or more of the following reasons:
Among your instructors 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 books focus on decision making sets it
apart from other texts that place greater emphasis on description of marketing phenomena 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 concise fonndafion around which a broader set of materials, such as case studies or supplementary 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 behavior, 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 integrate 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 economy. 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 activities. Our goal--and probably that of your instructor, as well--is to make both the latest Web-based tools as well as time-tested 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, marketing 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 critical 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
xiv Preface
provides. Stockbrokers must attract new customers. Acconnting and consulting firms must
find ways to differentiate their services from other providers so their customers have reasons to give them their business. Software engineers developing the next great Internet or
other technology must understand how their technology can benefit the intended customer,
for without such benefits, customers will not buy. Thus, we have written this book to meet
the marketing needs of readers ~vho hope to make a difference in the long-term strategic
success of their organizations--whether their principal roles are in marketing or otherwise.
In this brief preface, we want to say a bit more about each of the four distinctive benefits--bulleted above--that this book offers its readers. We also point out the key changes
in this edition compared to previous ones; and we thank our many students, colleagues, and
others from whom we have learned so much, without whom this book would not have been
possible.
A FOCUS ON DECISION MAKING

This fifth edition of Marketing Strategy.A Decision-FocusedApproach retains the strategic perspectives that have marked the earlier editions, while providing, in each chapter,
specific tools and frameworks for making marketing decisions that take best advantage
of the conditions in which the firm finds itself--both internally, in terms of the firms ntission and competencies, and externally, in terms of the market and competitive context in
which it operates.
This decision-focused approach is important to students and executives who are our readers, because, in most advanced marketing management classes and executive courses, the
students or participants will be asked to make numerous decisions~ecisions in case studies about what the protagonist in the case should do; decisions in a course project, such as
those entailed in developing a marketing plan; or decisions in a marketing simulation game.
Our decision-focused approach is also important to employers, who tell us they want
todays graduates to be prepared to "hit the ground running" and contribute to the firms
decision making from day one. The ability to bring thoughtful and disciplined tools and
frameworks--as opposed to seat-of-the-pants hunches or blind intuition--to marketing
decision making is one of the key assets todays business school graduates offer their
employers. This book puts the tools in the toolbox to make this happen. In the end, employers want to know what their new hires can do, not just what they
A CONCISE STRATEGIC FOUNDATION

This fifth edition serves as a concise foundation for a capstone or advanced elective
course in marketing whose focus is on strategic issues. By combining this book with supplemental readings and!or cases, instructors can design a rich and varied course in which
students learn experientially, as they focus on the various strategic decisions that define
contemporary marketing theory and practice.
Because the book is concise, students learn the key strategic principles quickly, so they
can devote most of their reading and prep time to the application of those principles to cases
or a course project. The books concise strategic focus also helps instructors build specialized elective courses--in Strategic Brand Management or in Marketing in the New Economy, for example--that draw on supplemental readings to complete the thematic picture.
WEB-SAVVY INSIGHTS
Because this book has been written by authors who teach at Web-savvy institutions and
~vork with Web-savvy companies, it brings a realistic, informed, and Web-savvy perspective to an important question many students are asking: "Has the advent of the Internet
changed all the rules?" Our ans~ver is, "Well, yes and no." On one hand, the Internet has
Preface xv
made available a host of new marketing tools--from banner ads to e-mail marketing to
delivery of digital goods and services over the Internet--many of which are available to
companies in the so-called old and new economies alike. On the other hand, time-tested
marketing fundamentals--such as understanding ones customers and competitors and meeting customer needs in ways that are differentiated from the offerings of those competitors
have become even more important in the fast-moving, dot-corn world, as the many dot-com
failures a few years ago attest.
Thus, throughout the book, we integrate examples of new-economy companies--both
successful and otherwise--to show how both yesterdays and todays marketing tools and
decision frameworks can most effectively be applied. Because the advent of the Internet,
mobile telephony, and other new-economy technologies is so important in its own right,
however, we also devote Chapter 11 to new-economy strategies, in order to provide for
marketers in all kinds of companies a roadmap for decisions about where, when, and how
to deploy new-economy tools.
A REAL-WORLD, GLOBAL PERSPECTIVE

Theory is important, becanse it enhances our understanding of business phenomena and
helps managers think about what they should do. It is in the application of theory--the
world of marketing practice--where we believe this book excels. Our decision focus is all
about application. But we dont just bring an academic perspective to the party, important
as that perspective is.
Two of us on the author team, Jean-Claude Larr~chd and John Mullins, have started successful entrepreneurial companies. One of these firms has "gone public." Two of us,
Orville Walker and John, worked for many years in the United States, at the University of
Minnesota and University of Denver, respectively. Two, Jean-Claude and John, work in
Europe, Jean-Claude at 1NSEAD and John at the London Business School. All of us,
including Harper Boyd, who passed away in 1999 but whose legacy lives on in this edition,
have contributed the fruits of our research to the growing body of knowledge in the marketing management, marketing strategy, new products, and entrepreneurship arenas. The
result of our collective and varied experience and expertise is a book marked by its reap
world, global perspective. The books many examples of real people from around the
world making real strategic marketing decisions include examples of startups and highgrowth companies as well as examples of larger, more established firms.
WHATS NEW IN THIS EDITION?

Weve also made a few important changes in this edition worth noting to those familiar
with previous editions.
In the fourth edition of this book we brought forward, to Chapter 1, the material that
outlines what a marketing plan is and does, to better support students who are asked, as
part of the capstone or elective course in which this book is used, to develop marketing
plans for either real or hypothetical products, whether existing ones or new. In this edition we go one step further and suggest a set of marketing plan!consulting project exercises at the end of each chapter. Your instructor may assign, modify, or supplement these
exercises as a means of providing detailed direction for a course project, and of tying
elements of that project directly to each chapters concepts and tools.
We have combined chapters dealing with the market environment and industry and
competitive analysis into a single chapter called "Understanding Market Opportunities." By integrating material dealing with various aspects of the external environment,
this new chapter provides a more comprehensive framework for evaluating the attractiveness of industries and markets at both the macro and micro levels.
xvi Preface
Weve moved our overview of the product life cycle and its strategic implications to
the begilming of Section Three, where it serves as the foundation for Chapters 8, 9,
and 10, which discuss marketing strategies for product-markets in different stages of
development.
Weve added several Discussion Questions at the end of each chapter to facilitate your
review of the material and provide a possible focus for class discussion. However, the
books interactive Web site at www.mhhe.eom/walker06 continues to provide additional self-diagnostic questions for students--as well as answers for the discussion
questions~o enable you to test your understanding of the tools and decision frameworks covered in each chapter. For instructors, the Web site offers suggested activities
and assignments for each chapter, in order to aid instructors who seek to build interactive classroom environments. The Web site also suggests the "best of the best" decisionfocused cases including international ones, dot-corns, and companies in services and
manufacturing industries--and other supplemental readings to help instructors find
the best teaching materials to train graduates for the local economies in which they are
likely to work and to most effectively nail down the learning in each chapter.
In reality, though, no chapter has escaped untouched. All have been updated, although the
basic flow, sequence, and strategic focus of the book have remained unchanged.
THANKS!
Simply put, this book is not solely our work--far from it. Many of our students, colleagues,
and those with whom we work in industry have made contributions that have significantly
shaped our perspectives on marketing decision making. We are grateful to all of them.
We wish to give special thanks, though, to Barbara Jamieson of Edinburgh Business
School in Scotland and to Abi Murthy. Barbaras instructional expertise is reflected in the
Instructors Manual and the other teaching materials, which together comprise a standout
package of instructor support. Abis research skills, together with her extensive business
experience on three continents, have been instrumental in identifying many of the global
examples that bring the books real-world perspective to life.
We also thank a small army of talented people at McGraw-Hill/Irwin for their work that
has turned our rough manuscript into an attractive and readable book. In particular, our
editors, Barrett Koger and Jill OMalley, have been instrumental in giving birth to this edition. Without them, wed probably still be writing!
Finally, we thank Harper Boyd, without whom this book would not exist, and our parents, ~vithout whom, of course, none of us would be here. To all of you we extend our love,
our respect, and our gratitude for passing on to us your curiosity and your passion for
learning. We therefore dedicate this book to Harper Boyd, to Jeannette and Orville Walker
Sr., to Jack and Alice Mullins, and to Odette and Pierre Larrdch&
01a,ille C. Walker J~:
Jean-Claude Larr6ch6
Minneapolis, London, and Fontainebleau."
Spring 2005
Case Vignette
Marketing Strategies for the

New Economy
Chocolate Company Sweetens the Web"
These vignettes have been chosen to increase

the books global focus and international
perspective.
How Sweet Are the Rewards?
Yhorntons Goes Online
Strategic Issues
Highlight critical information and crucial
questions throughout each chapter.
xviii
Strategic Issue
The marketing objectives and st,ategy for a
particular productmarket entry nlust be
achievable with the
colnpanys available resources and capabilities
and consistent with the
direction and allocation
of resources inherent in
the firms corporate and
business-level slaategies.
stead, the
achievabl
dhection
strategies
elements
ponents ~
managee
Marke
A major
egy elem
Expansion by Increasin,
Product-Markets
One way for a company to expm
ically requires actions such as m
prices, or outspending competit(
combination of all these actions
Global Perspective and

InterneE Icons
Identify global examples as well as
effective Internee marketing for both
new and economic marketers.
Latin America.:
While developing nations ret
infrastructure goods and service:
making them attractive potential
Even developed nations can repr
on newly elnerging teclmologies
of e-retailers such as Amazon.cc
Marketing Plan
Exercises
End-of-chapter exercises put
important concepts from each
chapter into action.
Marketing
Identil-y an appropriate marketing strategy consistent with the products stage in its 1)roduct life cycle
and the market and competitive conditions it laces, drawing on Chapters 8, 9, and/or 10 as appropriate. Identify the strategies key eolnpetitors are using, and develop a rationale for the strategy you
have chosen.
xix
Online Learning
Center
Favorite cases and supplementary
readings selected by the authors can be
found at www.mhhe.corrdwalker06.
Instructors Resource
CD-ROM
The instructor package provides everything a
new or experienced marketing strategy
instructor needs to hit the ground running.
Instructors Manual
Contents include PowerPoint slides and Web-based instructor support and materials.
Market-Oriented Perspectives
Underlie Successful Corporate,
Business, and Marketing
Strategies
IBM Switches Strategies
For decades International Business Machines focused most of its efforts on the hardware side of
the computer industry: first on large mainframe
computers, then on personal computers (PCs), and
then, as the Internet began to take off in the mid1990s, on servers and related equipment. Its target
customers for that hardware were typically organizations rather than individual consumers and usually large organizations that needed lots of dataprocessing capacity and had the financial resources
to afford it. The firm did not ignore consumers or
small businesses, but it relied on independent retailers, such as Circuit City, and value-added resellers to reach those segments while focusing
much of its own marketing and sales effort on
large organizations.
IBMs competitive strategy was also quite consistent over the years. Given that the firm was never
the lowest-cost producer in the industry, it did not
try to compete with low prices. Instead, the firm
pursued a quality differentiation strategy by offering superior products backed up by excellent technical service and selling them at premium prices.
To implement its strategy, the company tried to
ensure a steady stream of cutting-edge products by
allocating vast resources to R&D and product development. IBM also generally followed an "open
architecture" policy. In its PC business, for instance,

the firm licensed its PC-DOS operating system (developed in collaboration with Microsoft) to other
manufacturers and software developers. This helped
expand the number of PC-DOS users, thereby providing incentives for IBMs licensees to develop more
innovative applications software to run on PC-DOS
systems, which in turn enhanced the usefulness and
customer value of IBMs hardware.
On the marketing side, the firm maintained substantial advertising and promotion budgets to keep
potential customers informed about its constantly
evolving product lines and to burnish the identity
of the IBM brand. More important, though, were
the millions spent recruiting, training, and compensating one of the worlds largest and most
technically competent salesforces.
Technology Changes
and Competitor Actions
Require a Shift in Strategy
For decades IBMs corporate, business, and marketing strategies were all very successful. By the
mid-1990s, however, several of IBMs traditional
businesses were in trouble. The companys share of
Section One Introduction to Strategy
the worldwide PC market fell to about 8 percent in

1999, third behind Dell and Compaq. Worse, the
firms PC business was projected to lose $400 million, on top of a $1 billion loss in 1998. Similarly,
while server sales, made up mostly of UNIX-based
computers, were growing rapidly around the
world, IBM was able to capture only a small share
of that business. Its growth rate in the server market during the late 1990s was only about one-third
as fast as that of major competitors such as Sun
Microsystems. Even its venerable mainframe business, which had been a low-growth but highly
profitable market throughout the 1980s and early
1990s, suffered a profit squeeze due to falling
prices and declining demand.
IBMs performance problems can be traced to a
variety of factors, which all worked to make the
firms tried-and-true corporate, competitive, and
marketing strategies less effective than they once
were. For one thing, major technological changes
in the macroenvironment--such as the rapid increase in power of desktop PCs, the emergence of
the Internet, and the development of internal,
organizationwide computer networks (or intranets)--greatly contributed to the declining demand
for large mainframe computers and centralized
data-processing systems.
Also, IBMs quality differentiation strategy became less effective as some of its product-markets
began to mature and customers purchase criteria
changed. Technical and performance differences
among competing brands became less pronounced as the PC industry matured, for example,
and later buyers tended to be less technically sophisticated, more price-conscious, and more interested in buying equipment that was easy to use.
IBMs premium price position put it at a disadvantage in attracting such customers. Worse, a number of competitors, notably Dell, provided more
benefits at lower prices by offering customdesigned systems, convenient direct purchasing
over the Web, and user-friendly service and support programs.
Even IBMs traditional focus on large organizational customers contributed to the firms problems
in the newly emerging markets for servers and related equipment and software. It was slow to pursue
the many small start-up businesses at the forefront of
the dot-com revolution, leaving an open field for
Sun, Hewlett-Packard, and other competitors.
A New Corporate Strategy

When Lou Gerstner took over as IBMs
chief executive in 1994, he and a task
force of other executives, including many
from the marketing and sales ranks, reexamined all
the firms businesses, customer segments, competitors, and potential competitors. Their conclusion: The Internet would change everything. They
foresaw that "It]he real leadership in the [information technology] industry was moving away from
the creation of the technology to the application
of the technology," says Gerstner. "The explosive
growth is in services." Further, "[w]e concluded
that this [the Internet] was not an information
superhighway. This was all about business, doing
transactions, not looking up information."
Consequently, IBMs top executives began to refocus the corporate mission, de-emphasizing the
development and manufacture of high-tech hardware while increasing the emphasis on providing
customers with e-business engineering, design,
and outsourcing services. To leverage the firms existing competencies and its long-term relationships
with its traditional customers, many of the new
services the firm developed concentrate on helping
large, bricks-and-mortar firms (1) hook old corporate databases (often on mainframes) into new online systems, (2) integrate Web technology into
their internal business processes to improve efficiency, and (3) develop and run company Web
sites. For instance, Lego, the Danish toy manufacturer, pays IBM to run its entire Web operation, including contracting with the Danish post office to
handle shipping.
But the corporation also has expanded the
scope of both its new service and old hardware
businesses to embrace smaller customers. For example, in 2002 the firm released scaled-down
versions of its database, e-mail, and networkmanagement software that are easier to maintain
and up to 80 percent cheaper than the standard
versions. And IBM also appeals to such customers
with the promise of "e-business on demand;" a
menu of consulting services and software packages
that can be tailored to the unique needs of firms in
specific industries--such as banks and hospitals-to improve the effectiveness and efficiency of their
marketing, planning, procurement, and customer
service efforts. As a result, the companys revenues
Chapter One Market-Oriented Perspectives 5
from its small and medium business segment increased 14 percent in 2003.
New Business
and Marketing Strategies
IBMs new corporate emphasis on e-business services as its primary path toward future growth also
has forced some changes in the firms competitive
and marketing strategies. At the business level, the
firm still seeks to differentiate itself from competitors on the basis of superior quality and to charge
premium prices for that quality. But in its new service businesses, competitive superiority depends
on the knowledge, experience, and expertise of its
consultants--and their familiarity with a customers operations that comes from continuing
interaction--rather than the technical quality of its
products. Therefore, to implement its new servicebased differentiation strategy effectively, the company reorganized and reallocated many of its internal resources.
For example, the firm created a stand-alone
software division with its own salesforce organized
to focus on making and selling products tailored to
the most common business problems of companies in 12 different industry segments, such as financial services, life sciences, and consumer packaged goods. Similarly, about half of the companys
$5 billion R&D budget is now focused on solving
business problems rather than improving the technical performance of its hardware. And the company found that in order to understand and tailor
services and software to a customers specific business problems, a team approach was required.
Consequently, customer relationships are typically
managed by teams involving the sales executive in
charge of the account, a representative from the
services division, a person in the software unit, and
often someone from the research labs. As Samuel J.
Palmisano--the man who took over as CEO from
Mr. Gerstner in 2002--points out, "For us to deliver the value of e-business on demand, we had
to reintegrate IBM."
Given that the success of IBMs competitive
strategy depends heavily on the knowledge and
expertise of its personnel and their ability to forge
beneficial relationships with customers, the firms
salesforce is even more crucial than ever. Many
salespeople who used to spend a portion of their

time selling the companys hardware have been
given additional training and turned into full-time
e-business consultants. The company also acquired
PricewaterhouseCoopers Consulting, a move that
helped IBM focus more on executive-level business
problem solving instead of traditional technology
consulting, like managing data centers for corporate customers.
Of course, the superior expertise of IBMs people-and the firms new focus on satisfying the
e-commerce needs of companies in specific industries-had to be effectively communicated to
potential customers. Thus, a $500 million annual
advertising budget is dedicated to worldwide promotion of the "e-business on demand" program.
The Bottom Line

IBMs new corporate, business, and marketing
strategies did not enable the firm to totally avoid
the worldwide downturn that shook the information technology industry during the first years of
the new century, but they helped the company ride
out the storm in better shape than many competitors. And by the time of this writing, the financial
picture had brightened considerably. The firms revenues topped $89 billion in 2003, an increase of
more than 7 percent over the previous year. And
nearly two thirds of those revenues came from
global services and software sales, as shown in Exhibit 1.1, with the firms service businesses posting
more than a 17 percent sales gain and its software
division a 9 percent increase over 2002.
More importantly, IBM was gaining market share
against such major competitors as Oracle, Sun, and
BEA Systems in nearly every service and software
segment in which it competed. As a result, IBMs
earnings per share increased 41 percent to $4.34 in
2003, a year that was much less profitable for many
other information technology companies.
Changes in IBMs
Revenue from
Various Sources Due
to Its New Corporate
Strategy
Source: Steve Lohr, "Big Blues
Big Bet: Less Tech, More
Touch," Money & Business
Section, New }brk Times, Sunday, January 25, 2004, p. 10.
Used by permission.
Revenue as a
percentage of total
BM revenue
~20 billion
EXHIBIT 1.1
lOO%
--- Other --80
Software,
__
70
60
60
Global
services
50
80
40
- 40
30
20
- 20
10
0
1999 2000 2001 2002 2003
1999 2000 2001 2002 2003
STRATEGIC CHALLENGES ADDRESSED CHAPTER 1

IBMs experiences in the information technology industry illustrate some important points
about the nature of business strategy and the interrelationships among different levels of
strategy in an organization, points that will recur as major themes throughout this book.
They also demonstrate the importance of timely and accurate insights into customer desires, environmental trends, and competitors actions in formulating successful strategies
at every level.
Most firms, particularly larger corporations with multiple divisions or business units like
IBM, pursue a hierarchy of interdependent strategies. Each strategy is formulated at different levels in the organization and deals with different sets of issues. For example, IBMs
goals of becoming a leading e-business service provider and seeking future growth primarily tbaough the development of new e-commerce engineering, software, and consulting
services reflect its new corporate strategy. This level of strategy provides direction on the
companys mission, the kinds of businesses it should be in, and its gro~vth policies.
On the other hand, attempts to differentiate its offerings by providing superior quality
based on the expertise, experience, and customer knowledge of its huge contingent of consultants while avoiding cut-throat price competition reflect IBMs business-level strategy
in its Global Services division. This level of strategy primarily addresses how a business
will compete in its industry.
Finally, interrelated functional decisions about how to divide the market into segments,
which segments to target, what goods and services to offer each segment, what promotional tools and appeals to employ, and what prices to charge all reflect the marketing
strategies for each of IBMs various product-market entries.
Because a major part of the marketing managers job is to monitor and analyze the
needs and desires of potential customers, emerging challenges posed by competitors, and
opportunities and threats related to trends in the external environment, they often play a
crucial role in influencing strategies formulated at higher levels in the firm. While the need
for new corporate and competitive strategies at IBM became obvious because of stagnating sales and declining profits in some of the firms most venerable businesses, decisions
about the content of those new strategies were influenced by information and analyses supplied by the firms marketing and sales personnel. Marketing executives were key members
of the task force appointed by CEO Gerstner to analyze the firms strengths and
weaknesses and develop new directions for growth and profitability. Gerstner himself was
recruited, in part, because of his experience working for customer-oriented package goods
and financial services firms, and his successor Mr. Palmisano rose through the sales and
marketing ranks.
Some firms systematically incorporate such market and competitive analyses into their
planning processes. They also coordinate their activities around the primary goal of satisfying unmet customer needs. Such firms are market-oriented and follow a business philosophy commonly called the marketing concept. Market-oriented firms have been shown
to be among the more profitable and successful at maintaining strong competitive positions in their industries over time. As we shall see later in this chapter, however, companies
do not always embrace a market orientation--nor rely as heavily on inputs from their
marketing and sales perso~mel--in developing their strategies. Some firms strategies are
driven more by technology, production, or cost concerns.
Regardless of their participation or influence in formulating corporate and businesslevel strategies, marketing managers freedom of action is ultimately constrained by those
higher-level strategies. The objectives, strategies, and action plans for a specific productStrategic Issue
market are but one part of a hierarchy of strategies within the firm. Each level of strategy
Each level of strategy
must be consistent with--and therefore influenced and constrained by--higher levels
must be consistent
within the hierarchy. For example, not only the new services developed by IBM, but also
with and therefore influenced and constrained their advertising appeals, prices, and other aspects of the marketing plans, were shaped by
the shift in corporate strategy toward emphasizing e-business services as the primary avby--higher levels
within the hierarchy.
enue for future growth.
These interrelationships among the various levels of strategy raise several questions of
importance to marketing managers as well as managers in other functional areas and top executives. What do strategies consist of, and do they have similar or different components at
the corporate, business, and functional levels? While marketing managers clearly
bear the primary responsibility for developing strategic marketing plans for individual product offerings, what role do they play in formulating strategies at the corporate and divisional
or business unit level? Why do some organizations pay much more attention to customers
and competitors when formulating their strategies (i.e., why are some firms more marketoriented) than others, and does it make any difference in their performance? What specific
decisions and analytical processes underlie the formulation and implementation of effective
marketing strategies? These are the questions tackled in the rest of this chapter.
THREE LEVELS OF STRATEGY: SIMILAR COMPONENTS

BUT DIFFERENT ISSUES
What Is a Strategy?
Although so:ategy first became a popular business buzzword during the 1960s, it continues to be the subject of widely differing definitions and interpretations. The following definition, however, captures the essence of the term:
A strategy is a fundamental pattern of present and planned objectives, resource deployments, and interactions of an organization with markets, competitors, and other enviromnental factors.~
Our definition suggests that a strategy should specify (1) what (objectives to be accomplished), (2) where (on which industries and product-markets to focus), and (3) how (which
resources and activities to allocate to each product-market to meet environmental opportunities and threats and to gain a competitive advantage).
Section One
Introduction to Strategy
The Components of Strategy

A well-developed strategy contains five components, or sets of issues:
1. Scope. The scope of an organization refers to the breadth of its strategic domain--the
nulnber and types of industries, product lines, and market segments it competes in or
plans to enter. Decisions about an organizations strategic scope should reflect managements view of the firms purpose or mission. This conmaon thread among its various activities and product-markets defines the essential nature of what its business is and what
it should be.
2. Goals a~d objectives. Strategies also should detail desired levels of accomplishment on
one or more dimensions of performance--such as volume growth, profit contribution,
or return on investment--over specified time periods for each of those businesses and
product-markets and for the organization as a whole.
3. Resource deployments. Every organization has limited financial and human resources.
Formulating a strategy also involves deciding how those resources are to be obtained
and allocated, across businesses, product-markets, functional departments, and activities within each business or product-market.
4. Identification of a sustainable competitive advantage. One important part of any strategy
is a specification of how the organization will compete in each business and productmarket within its domain. How can it position itself to develop and sustain a differential
advantage over current and potential competitors.) To answer such questions, managers
must examine the market opportunities in each business and product-market and the
companys distinctive competencies or strengths relative to its competitors.
5. Synergy. Synergy exists when the firms businesses, product-lnarkets, resource deployments, and competencies complement and reinforce one another. Synergy enables the
total perforlnance of the related businesses to be greater than it would otherwise be: The
whole becomes greater than the sum of its parts.
The Hierarchy of Strategies
Explicitly or implicitly, these five basic dimensions are part of all strategies. However, rather
than a single comprehensive strategy, most organizations have a hierarchy of interrelated
strategies, each formulated at a different level of the firm. The three major levels of snategy
in most large, multiproduct organizations are (1) corporate strategy, (2) business-level
strategy, and (3) functional strategies focused on a particular product-market entry.
These three levels of strategy are diagrmmned in Exhibit 1.2. In small single-product-line
companies or entrepreneurial start-ups, however, corporate and business-level strategic issues merge.
Our primary focus is on the development of marketing strategies and programs for individual product-market entries, but other functional deparnnents--such as R&D and operations--also have strategies and plans for each of the fn-ms product-markets. Throughout this
book, therefore, we examine the inteffunctional implications of product-market strategies,
conflicts across functional areas, and the mechanisms that firms use to resolve those conflicts.
Strategies at all three levels contain the five components mentioned earlier, but because
each strategy serves a different purpose within the organization, each emphasizes a different set of issues. Exhibit 1.3 summarizes the specific focus and issues dealt with at each
level of strategy; we discuss them in the next sections.
Corporate Strategy
At the corporate level, managers must coordinate the activities of multiple business units
and, in the case of conglomerates, even separate legal business entities. Decisions about
the organizations scope and resource deployments across its divisions or businesses
Chapter One
Market-Oriented Perspectives
EXHIBIT 1.2 The Hierarchy of Strategies

Environmental
factors
Corporate
mission
Corporate
strategy
Corporate
goals and
objectives
I
Corporate
development
strategy
Deployment
of
resources
I
SBU 2
SBU n
f
Strategic
business
unit 1
I
Business
strategy
Business
units
objectives
Competitive
strategy
Deployment of
resources across
product-markets
and functions
I
Marketing
strategy
for product
market entry X
R&D
strategy
and plans
Human
resources
strategy
and plans
Operations
strategy
and plans
Functional
strategy
Tactical
marketing plan
for product
market entry X
are the primary focus of corporate strategy. The essential questions at this level include,
What business(es) are we in? What business(es) should we be in? and What portion of
our total resources should we devote to each of these businesses to achieve the organizations overall goals and objectives? Thus, top-level managers at IBM decided to pursue future growth primarily through the development of Web-based services and software rather
than computer hardware. They shifted substantial corporate resources--including R&D
expenditures, marketing and advertising budgets, and vast numbers of salespeople--into
the corporations service and software businesses to support the new strategic
direction.
Attempts to develop and maintain distinctive competencies at the corporate level focus
on generating superior human, financial, and technological resources; designing effective
organizational structures and processes; and seeking synergy among the firms various
businesses. Synergy can provide a major competitive advantage for firms where related
businesses share R&D investments, product or production technologies, distribution channels, a common salesforce, and/or promotional themes--as in the case of IBM.3
10
EXHIBIT 1.3 Key Components of Corporate, Business, and

Strategy Components
Scope
Goals and objectives
Allocation of resources
Sources of competitive
advantage
Sources of synergy
Corporate Strategy
Corporate domain-"Which businesses
should we be in?"
Corporate development
strategy
Conglomerate
diversification
(expansion into
unrelated
businesses)
Vertical integration
Acquisition and
divestiture policies
Overall corporate
objectives aggregated
across businesses
Revenue growth
Profitability
ROI (return on
investment)
Earnings per share
Contributions to
other stakeholders
Allocation among
businesses in the
corporate portfolio
Allocation across
functions shared by
multiple businesses
(corporate R&D, MIS)
Primarily through
superior corporate
financial or human
resources; more
corporate R&D; better
organizational processes
or synergies relative to
competitors across all
industries in which the
firm operates
Shared resources,
technologies, or
functional competencies
across businesses within
the firm
Marketing Strategies
Business Strategy
Business domain-"Which productmarkets should we be
in within this business
or industry?
Business development
strategy
Concentric
diversification (new
products for
existing customers
or new customers
for existing
products)
Constrained by
corporate goals
Objectives aggregated
across product-market
entries in the business
unit
Sales growth
New product or
market growth
Profitability
ROI
Cash flow
Strengthening bases
of competitive
advantage
Allocation among
product-market entries
in the business unit
Allocation across
functional departments
within the business unit
Primarily through
competitive strategy;
business units
competencies relative to
competitors in its
industry
Shared resources
(including favorable
customer image) or
functional competencies
across product-markets
within an industry
Marketing Strategy
Target market
definition
Product-line depth and
breadth
Branding policies
Product-market
development plan
Line extension and
product elimination
plans
Constrained by
corporate and business
goals
Objectives for a specific
product-market entry
Sales
Market share
Contribution margin
Customer
satisfaction
Allocation across
components of the
marketing plan
(elements of the
marketing mix) for a
specific product-market
entry
Primarily through
effective product
positioning; superiority
on one or more
components of the
marketing mix relative
to competitors within a
specific product-market
Shared marketing
resources,
competencies, or
activities across productmarket entries
Business-Level Strategy
How a business unit competes ~vithin its industry is the critical focus of business-level
strategy. A major issue in a business strategy is that of sustainable competitive advantage.
What distinctive competencies can give the business unit a competitive advantage? Aa3d
which of those competencies best match the needs and wants of the customers in the businesss target segment(s)? For example, a business with low-cost sources of supply and efficient, modern plants might adopt a low-cost competitive strategy. One with a strong marketing department and a competent salesforce may compete by offering superior customer
service.4
Another important issue a business-level strategy must address is appropriate scope:
how many and which market segments to compete in, and the overall breadth of product
offerings and marketing programs to appeal to these segments. Finally, synergy should be
sought across product-markets and across functional departments within the business.
Marketing Strategy
The primary focus of marketing strategy is to effectively allocate and coordinate marketing resources and activities to accomplish the firms objectives within a specific productmarket. Therefore, the critical issue concerning the scope of a marketing strategy is specifying the target market(s) for a particular product or product line. Next, firms seek
competitive advantage and synergy through a well-integrated program of marketing mix
elements (primarily the 4 Ps of product, price, place, promotion) tailored to the needs and
wants of potential customers in that target market.
WHAT IS MARKETINGS ROLE IN FORMULATING

AND IMPLEMENTING STRATEGIES?
The essence of strategic planning at all levels is identifying threats to avoid and opportunities to pursue. The primary strategic responsibility of any manager is to look outward
continuously to keep the firm or business in step with changes in the environment. Because
they occupy positions at the boundary between the firm and its customers, distributors, and
competitors, marketing managers are usually most familiar with conditions and trends in
the market environment. Consequently, they not only are responsible for developing strategic plans for their own product-market entries, but also are often primary participants and
contributors to the planning process at the business and corporate levels as well.
The wide-ranging influence of marketing managers on higher-level strategic decisions
is clearly shown in a recent survey of managers in 280 U.S. and 234 German business units
of firms in the electrical equipment, mechanical machinery, and consumer package goods
industries? The study examined perceptions of marketing managers influence relative to
managers from sales, R&D, operations, and finance on a variety of strategic and tactical
decisions within their businesses. Exhibit 1.4 summarizes the results.
The study found that, on average, marketing and sales executives exerted significantly
more influence than managers flom other functions on strategic decisions concerning traditional marketing activities, such as advertising messages, pricing, distribution, customer
service and support, and measurement and improvement of customer satisfaction. Interestingly, though, the influence of sales executives was perceived to be even greater than
that of marketing managers on some of these decisions. One reason--particularly in the
industrial goods firms selling electronic equipment and machinery--may be that sales
managers have more detailed information about customer needs and desires because they
have direct and continuing contact with existing and potential buyers.
12
Section One ~oduc~on to ~gy
EXHIBIT 1.4 Influence of FuncfionM Uni~ over Various Busine~ DedsMns

Ma~ing
Sales
R&D
Ope~Oo~
Finance
Business strategy ded~ons

Strateg~ direc~on of the business
Expansion into new geographic marke~
Choices of strategk pa~ne~
New product dev~opment
M~or capital expenditures
38
39
33
32
13
29**
45**
38*
23**
11"*
11 **
3**
7**
29**
13
9**
3**
9**
9**
29**
14"*
10"*
12"*
Ma~e~ng strategy ded~ons

Adve~ng me~ages
Cu~omer sa~sfac~on me~u~ment
Cu~omer ~a~ion imp~vement
Dktdbu~on strategy
C~tom~ ~e and suppo~
Pdcing
65
48
40
34
31
30
29**
35**
37*
52**
47**
41"*
3**
5**
7**
1"*
5**
4**
1"*
8**
10"*
6**
10"*
9**
2**
4**
6**
6**
7**
16"*
Ded~ons
7**
35**
The numb~ ~ ea~ c~ is the mean of~e amoum ofpNms g~ ~ ~&ng m~e~ to each Nn~om ~g a c~stant-suln ~ale ~ 100. A ~e~ was ~rfo~ m
compa~ cMumn 2 (nr~n ~ive ~ ~m~g) w~h ~u 3 ~mugh 6 (~l~Ne ~ ~ R&~ ~e~i~ ~d financeh StatisticN~ fignificant ~
~n~s win maNet~g a~ inN~md by a~eri~ wh~e: * p < .05; **p < .01.
~urce: Cl~stian Homburg, John R Workm~ ~ and Harl~ Krohmer. ~\,larketin~s influence Within the Firm." Journal Q3~keting 63 (April 1999L p. 9. Reprinted by
~r~ ~ the American Marketing Associ~on.
More surprisingly, m~kN~g managers also were p~ceNed m wield figNficam~ mo~
~fluence ~an managers ~om ~her fun~nN areas on cros~functional, bu~nessqevd
str~e~c decisions. While ~e views of finance and oper~ns executNes carry more
weight ~ appro~ng m~or capRal expenNm~s, mark~ing and sa~s manages exert more
~fluence on deNfions concerNng the ~r~eNc Nm~n of the business unR, expan~on
~to new geograpNc m~k~s, the se~ction of s~e~c business p~tn~s, and new produ~
deve~pment.
Might the relative ~fluence of the Nffe~nt functions become more ~m~ar as firms
adopt more integratNe orgaNz~nN forms, such as ~oss-fun~nN work ~ams? The
~udyN resuRs sugge~ nm. M~ketingN influence was not significant~ reduced ~ comp~
Nes th~ had ~itumd cross-functional ~mcmms and processes.
But marking manages may not play as pervasNe a ~m~c role in o~er c~mms as
they do ~ the Unimd States. The ~udy found th~ mark~ers ~fluence on bo~ mcticM and
~r~e~c issues was ~gnificantly lower in German firms. As one of the smdy~ a~hors
poi~s out, "Germany has ~ad~ionaHy ~ressed mclmo~gy and operat~ns more ~an the
so~eg cu~ome~oriented aspects cemml to m~keting. So even when the env~onment
changes, a signal to topqevel German managers th~ marking should be play~g a greater
ro~, they are ~cm~ to ~ve it that role?~
Market-Oriented Management
Even w~n the U~d St~es, howeve~ marketing manages do not play an equM~ ex~nsNe str~eg~ role in every firm because not all firms are equal~ m~ket-oriemed. Not
surpri~n~ m~kem~ tend to have a gre~ influence on all levels of ~m~gy in o~aNzations ~ embrace a marke~orien~d philosophy of bu~ness. More critically, manages
in other fu~mtional areas of m~ke~oriemed firms ~corpor~e more cu~om~ and comp~Ror ~rm~n into Nek deNfiommaNng processes as well.
M~k~rie~ed organ~ns tend to opem~ accor~ng to the business pNlosophy
known as ~e marketing concept. As ofig~al~ ~amd by GenerN E~ctric five decades ago,
the marketing concept holds ~ ~e ~am~g and coord~n of N1 company a~N~s
around the primly goal of satis~ing cu~om~ needs is ~e mo~ effe~ive means to attain
and su~Nn a comp~RNe advamage and acNeve company oNectives over time.
Chapt~ One MarkebOrien~d Perspec~ves 13
1.
2.
3.
4.
5.
6.
7.
8.
C~ate cu~omer focus th~ughout the bu~nes~

Listen to the cu~omen
Define and nurture your distingue comp~enc~
Define ma~e~ng as market ~t~Egenc~
Target c~tom~s p~d~
Manage for p~fl~lity, not ~s v~um~
Make cu~om~ value the guying ~an
Let the c~tom~ define qualff~
9. Measure and manage cu~omer expe~a~ons.

10. Build cu~omer relationships and Ioya~
11. Define the business as a service bu~nes~
12. Commff to con~nuous improvement and innova~on.
13. Manage culture along with strategy and structure,
14. Grow with pa~ne~ and alliance~
15. Destroy marketing bureauc~c~
Somve: Frederick ~ \Ve~ter ~, "Executing the New Marketing Concept," Marketing Management 3, no. I ( 1994L p. I 0. ReprinWd by p~mission of ~e American M~keb
ing A~od~n.
Thus, market-orienmd fums are characterized by a confident focus by personnel in all

depa~ments and at N1 levels on cu~omers needs and competitive ckcumsmnces in the
malk~ environment. They also are w~ng and able to quicldy adapt products and functionN programs to fit changes in that environment. Such firms pay a great deal of attention
to cu~omer research bqfotw produ~s are designed and produced. They embrace the concept of mark~ segmentation by adapting produ~ offerings and marketing programs to the
special needs of Nffemnt target mark,s.
MarkeToriented firms also adopt a varify of olganiz~nN procedures and structures
to improve the ~sponsNeness of thek deci~on makin~ inclu~ng u~ng more d~N~d environmentN scarming and continuous, teN-time ~formation sys~ms; seeking ~equent
~edback from and coordin~ing plans with key cu~ome~ and m~or suppfiers; decentralizing ~r~egic ded~ons; encouraging entrepreneurial thi~fldng ~nong lower-level managers; and using interfunctional management teams to ana~ze issues and inifiam s~a~c
actions outside the formN planning process? For example, IBM formed a high-~vel cros~
funcfionN task force to reevalu~e ~s mark~ environment, develop a new ~r~eNc focus,
and map new avenues toward future growtt~ The company also has formed Nhances wRh
enterprise so,ware developers, such as PeopleSo~ and Great Plains Software, to improve
its aNfity to he~ customers integrate Web technology into their business processes. These
and other actions recommended to make an orgamzation more mark~-driven and responsive to environmental changes are summarized in ExhN~ 1.5.
Do Customers Always Know What They Want?

Some manage~ particularly ~ high~ech firms~uestion whe~er a s~ong focus on customer needs and wants is always a good thug. They argue th~ cu~omers cmmot Nways
articulate ~dr needs and wauts, ~ pa~ because ~ey do not knmv wh~ Nnds of produ~s
o1" services are technical~ possiNe. As ANo Morita, ~e late !Money CEO of Son~ once
said:
Our Nan is to lead the pubhc wi6 new pmdu~s rather than ask ~em what kind of produc~
6ey wa~. The puN~ does not know wh~ is pos~N~ but we do. So in.cad of do~g a ~t
of markN~g msea~N we refine our thinking on a produ~ and its use and ~y to create a
m~k~ for it by educing and commuNcating with ~e puNb.~
Othe~ have pNmed out that some very successN1 new produc~, such as the Chrys~r
minNan and CompaqS pioneering PC network serves were developed ~vith 1Rile or no
mark~ research. On the other han some ~mous duds, like Ford~ Eds~, New Coke, and
McDonNd~ McLean lo~v-fat hamburger, were developed ~vith a gre~ deal of cu~omer
~p~.9
The laws ofprobaNfi~ Nctate that some new pmduc~ will succeed and more will Nil
mg~Ness of how much is spem on marking research. But the critics ofa ~rong cugomer
14
Section One
~troducdon to St~tegy
focus argue that paying too much a~ention to cu~omer needs and wants can stifle innovation and lead firms to produce nothing but marginN imwovements or line exten~ons of
produ~s and services that akeady exisL How do marlce~rs respond to this charge?
While many consumers may lack the mchnical sophistication necessary to articulate
thek needs or wants for cutting-edge mchn~M innovations, the same is not true for industrial purchasers. About half of aB manufactured goods in most count6es are sold to other
organizations rather than individuN consumers. Many high-tech industrial products are
initiated at the urging of one or more mNor cu~omers, developed with thek cooperation
(perhaps in the form of an a~iance or partnership), and refined at cu~omer b~a sRes.
As for consumer markets, one way to resolve the conflict beaveen the views of technologies and mark~els is to consider the two components of R&D. Fkst there is basic
research and then there is development the conversion of ~chn~N concepts into actual
sNable produ~s or services. Most consumers have 1Rile lcnowledge of scientific advancements and emerging mchnologies. Therefore, they usuNly dont--and probably shouldnt-play a role in influencing how firms allocate thek ba~c research do~ars.
However, a cu~omer focus is crit~N to development. Someone wRhin the organiz~ion
must have either the in~ght and market experience or the sub~anfiN cu~omer input necessary to deNde what produ~ to develop ~om a new technolog~ what benefits R wi~ offer
to cu~omers, and whether cu~omers will value those benefits snffiNently to make the
product a commercial success. Iomega~ experiences in developing the Zip drive into a
cormnerNally successful product--as described in ExhibR 1.6--~lustrate this point.
O~en, as was the case with the Zip drive, a new technology must be developed into a
concrete product concept before consumers can react to ~ and Rs commerNN potentiN can
be assessed. In other cases, consumers can express the~ needs or wants for specific benefits even though they do not know what is technicNly feasible. They can mB you wh~ problems they are having with current products and services and what additional benefits they
would like ~om new ones. For in~ance, before Sony introduced the Walkman, few consumers would have asked for such a product because they were unfam~r with the poss~
bilities of miniaturization in the ~ectronics indu~rL But if they had been asked whether
they would buy a battery-driven produ~ small enough to hook on thNr beR th~ could produce sound nearly as good as the full-~zed stereo sys~m in their home, many probably
would have sai& "Sure!"
A s~ong cu~omer focus is not inconN~ent w~h the development of ~chn~Nly
innovative produc~, nor does R condemn a fnm to concentrate on satisfying only
cu~ent, a~icul~ed cu~omer wants. More impo~ant, while titans can som~imes succeed in
the sho~ mn even though they ignore customer deske~ a s~ong customer focus
usuNly pays big dividends in terms of market share and profit over the long haul. As Iomega~
CEO points out, ~ don~ know how else you can sell in a consumer marketpNce wRhout understanding produ~ design and usage. You have to know wh~ the end user wants?,
Does Being Market-OHented Pay?
Since an organ~ation~ success over time hinges on ~s ab~ky to provide benefits of value
to Rs customers--and to do th~ better than its competitors--it seems likely that marke~
oriented firms should perform be~er than others. By paying careful a~ention to cu~omer
needs and competitive threats--and by focusing activit~s across all fun~ional departments on meeting those needs and thie~s effectively~rganizations should be able to enhance, acce~r~e, and reduce the vol~Ry and vulnerability of the~ cash flows.1 And that
should enhance their econom~ performance and shareholder valne. Indee& Wofitab~ity is
the thkd leg, together ~vith a cu~omer focus and cros~functionN coordination, of the
three-legged stool known as the mark~ing concept.
Chapter One Market-Orien~d Perspec~ves 15
EXHIBIT !.6 Iomega ~ Zip Drive--Helping Custome~w Stot~ The#" "Stuff"

In the late 1980s Iomega Corporat~n pbnee~d a ni~y
techn~o~cal innova~on. The Bernoulli Box was a
po~aM< add-on ~o~ge unit for peBonal compute~
(PCg. ResemMing a gray shoebox with a hole in the
front, it could hold 150 megabytes of data on one disk-the equ~a~nt of 107 floppy disks.
But by late 1993 the produG was in trouble. Its $600
unit price and $100 disk price had proven too high to attract many indMduM PC users, the 52-page user~ manual was ha~ for cu~omers to decipheg and a competitor had al~ady introduced a cheapeg faster a~erna~ve.
Consequentl~ the firm ~po~ed an $18 million loss for
the year and its stock price was at an all-time low.
The struggl~g company brought in a new CEO
whose fiBt priodty was to conve~ the Bernoulli Box
techn~ogy into a produG line that would succeed in the
ma~etplace. He app~nted a cros~functional development team with ~presentatNes from engineering, marketing, operationg and other areas. The team, together
with designers from Fitch PLC, an industriM design firm,
~aRed by conducting exhaus~ve inte~iews with over
1,000 people who used computers in large companies,
in small organ~ationg or at home. Based on the info~
mation gathe~d, they c~ated seve~l generatbns of
proto~pe produGs that were subsequent~ fu~her refined in ~sponse to ~ac~ons from add~onN samples of
poten~al cu~omeG.
Based on the extenNve cu~omer feedback mceNed,
the dev~opment team greatly ~mam%ed the old
Berno~H Box, ~ducing its weight to about a pound so it
could fit in a briefcase. To appeal to different segmen~
Strategic Issue
A market orientation
has a significant positive effect on various
dimenMons of performance, including
return on assets, sales
growth, and new product success.
of mdMdual and business users, they designed throe diffeint models with different ~o~ge capad~es and diffeint prices. All thee were given bright colo~ to make
them stand out from their en~ronment and to signal
that they were different from the "gray" competition.
The most basic model--the Zip drive--held 100
megabytes and was NNaI~ priced at $200 per unit and
$20 per disk (prices that fell substantiN~ late~ to appeal
to ~dMdual PC owne~ for their pe~onal use. Finallg a
promotional campaign was ~afled around the theme
that Zip could help people organize their "~uff" to
make it more acces~ble and poRab~.
Within thee yea~ of its introduction, mo~ than thee
mill~n Np drives were sold. Consequentlg bmega; sha~
price soa~d, and the firm made it into the top 50 of Fo~
tune~ list of fastest-growing companies.
Unfo~unate~ the Zip drive also pro~des an exc~nt
Hlus~a~on of how advandng techn~ogy can sho~en
the lifecyde of even the hottest product. W~hin five
yeam of its introduG~n a vadety of read/write CD--and
eventual~ DVD--NayeG were being offered either as external add-ons or bui~-in components by the PC makeB.
Given that CDs offend more functionNity and much
greater storage capacity at a substantiN~ lower price,
the market for Zip ddves quickly dried up.
Source: "The Nght ~uff," Journg of Bus~ess and Desert 2 (Fall
199N, pp. 6-11; "America~ Fa~est Growing Companies," Fo~
tun~ OGober 14, 1996, pp. 90-104; and Paul Eng, "What to Do
When You Need Mo~ Space," BusinessWeek, November ~ 1996,
p. 126.
Sometimes ~e mark~ conceN is ~el"weted as a pN~sop~ of ~ng to s~sfy N1

cu~omers needs regardless of the cost. Th~ would be a prescription ~r financial disaste~
Nsma< the marking concept is consistent w~h the notion of ~cus~g on oNy ~ose segments of the cu~omer ~l~on that the firm can s~sfy both e~vdy a~ wo~abl~
Firms ~gN o~r less e~ensNe or cos@ goods and ser~ces to unwo~ se~ents or
avon ~em. For examNe, the Buena ~sta Wine~ Web s~e ~ww.buenav~aMnerNcom)
does not acceN orders of less than a half case because ~ey are too cosily to process and
s~p.
Substantial evNence s~rts the idea th~ berg marke~oriented pays N~dends, at
lea~ in a high~ developed economy such as the U~ed States. A number of stu~es ~vo~ng more than 500 firms or bu~ness uN~ across a varify of indu~ries ~Nc~e ~at a
m~k~ orientation has a ~g~fica~ pos~ve e~ on various ~men~ons ofper~rmance,
~c~ng return on assNs, sales gro~h, and new produ~ succesK~ Even entrepreneurial
smrt-~s appear to benefit ~om a s~ong cu~om~ orientation. One recent study of startups in Japan and the UNted States ~und ~at new firms that ~cused on maN~ first,
m~er ~an lowering costs or advancing mchno~g~ were less l~e~ to be ~ougN down by
compN~ors as ~eir produc~mark~s deve~ped.~
Section One
~oduc~on to Strategy
Factors That Mediate Marketings Strategic Role

Desp~e the evidence ~aat a market-orientation boo~s performance, many companies
around the world are not very focused on thek cugomers or competitors. Among the reasons firms are not always in close touch with the~ market envkonments are fl~ese:
Competitive conditions may enable a company to be successful in the short run wRhout
being part~ularly sens~ive to cu~omer desires.
Different levels of economic dev~opment across industries or countries may favor di~
ferent business philosophies.
Firms can suffer ~om strategic inertia--the autom~ continuation of s~egies successful in the pa~, even though current market conditions are changing.
Competitive Factors Affecting a Firm ~ Market OrientaKon
The competitive conditions some firms face enable them to be successful in the short term
without paying much a~ention to the~ cu~omers, suppliers, di~ributols, or other organizations in their market env~omnent. Early entrants into newly emerging indu~ries, pa~icularly indu~ries based on new technologies, are especially likely to be intern~ly focused
and not very marke~oriented. This is because there are likely to be relatively fe~v ~rong
competitors during dae formative years of a new industr~ customer demand for the new
product is likely to grow rapidly and out,rip av~ble supply, and production problems
and resource constraints tend to represent more immediate threats to the survival of such
new bu~nesses.
Businesses facing such mark~ and competitive conditions are o~en produc~ofiented
or producfion-or~nted. They focus mo~ of their a~ention and resources on such functions
as product and process engineering, production, and finance in order to acquire and manage
the resources necessary to keep pace with growing demand. The business is primarily concerned w~h produ~ng more of ~vhat R wants to make, and mark~ing gener~ly plays a secondary role in formulating and implementing s~ateg~ Other fim~ion~ differences between
production-oriented and marke~oriented firms are sununarized in Exhib~ 1.7.
Differences b~ween Production-Orien~d and Marke~Oden~d Organizations
Business Activ~y or Function
Marketing Odentation
Production Odentation
Product offering
Company sells what it can make;

primary focus on func~onal
performance and cost.
Company makes what it can sell;

prima~ focus on cu~omer~ needs
and manet oppo~un~es.
Product line
Narrow.
Broad.
Pdcing
Based on produ~n and

dNtHbution costs.
Based on pe~ved benefits

~o~de~
Research
Technical resea~ focus on

product improvement and cost
cutting in the production process.
Market resea~ focus on

ident~ng new oppo~un~es and
applying new technology to satiny
cu~omer needs.
Packaging
Protection for the product;

minimize costs.
Des~ned for cu~omer

convenienc~ a promo~onal tool.
Cred~
A necessary evil; minimize bad debt

losses.
A cu~omer servic~ a tool to attract

cu~omer~
Promotion
Emphasis on produ~ ~u~

qualff~ and price.
Emphasis on produ~ benefffs and

abil~y to sa~y customer~ needs
or solve problems.
Chapter One Ma~ebO~en~d Perspectives 17
As indus~ies grow, they become more competitive. New entrants are attracted and existing producers a~empt to Nfferentiam themselves through improved products and moreefficient produ~n processes. As a resuk, indus~y capacky o~en grows faster than demand and the enviromnent shi~s ~om a seller~ mark~ to a buyer~ mark~. Firms o~en
respond to such changes with aggressNe promotionN activities--such as hiring more
sa~speople, increasing adve~N~g budgets, or offering ~equent price promotions--to
maintain mark~ share and hold down unit costs.
Unfortunately, this Nnd of sNes-oHen~d response to increasing comp~ition still focuses on selling what the firm wants to make r~her than on customer needs. Worse, competitors can easi~ match such aggressNe sa~s tactics. Simp~ spending more on selling
efforts usually does not create a su~a~able comp~itive advantage.
As indu~ries mature, sales vNume levels off and ~chnNo~c~ ~fferences among
brands tend to Nsappear as manufacture~ copy the be~ features of each other~ produc~.
ConsequentlL a firm must seek new mark~ segments or steal share ~om competitors by
offering lower price~ superior service~ or intanNNe benefi~ other firms cannot m~ch. At
this stage, managers can most reaNly appreciate the benefits of a mark~ orientat~m and
marke~ are o~en Nven a bigger ro~ in dev~oping competitive s~egies.~ It is not surpriNng, then, th~ many of America~ most mark~-ofiented fums and those working
hardest to become marke~orienmd--are wellmstablished competito~ in relative~ mature
industries. Of cou~ a gNen indu~ryN characmrisfics may make some components of a
mark~ orientation more crit~N for good performance than others. For example, in an indusWy dominated by large, dynamic competitors--as in mass merchan~se reviling ~ the
United States (Wa~Ma~ Target, Sears, etc.) bNng responsNe to comp~kor actions may
be even more impo~ant than a sWong cu~omer focus?~ But the bosom l~e is that an orientation reward the m~ket--competitors, cu~omers, and po~ntN1 cu~omersN usually
crucial for continued success in global mark,s.
The Influence of Different Stages of Development across Industries
and Global Markets
The previous discussion suggests that the degree of adoption of a market orientation varies
not only across firms but also across entire indu~fies. Industries that are in earl~r ~ages
of the~ life cycles, or that benefit ~om barriers to entry or other factors reducing the intens~y of competition, are likely to have relatively fewer market-oriented firms. For instance, in pa~ because of governmental regulations that re,riced competition, many service industries--including banks, ~rlines, phy~dans, lawyers, accountants, and insurance
companies--were slow to adopt the marketing concep~ But w~h the trend toward deregulation and the increasingly intense glob~ competition in such indu~ries, many service organ~ations are working much harder to under~and and satisfy the~ cu~omers.
Given that entire economies are in different s~ges of development around the worl< the
popularity--and even the appropriateness---of different business philosophies also may
vary across countries. A production ofentation was the dominant business philosophy in
the Uni~d St~es, for in~ance, during the indu~riafizafion that occurred ~om the mid1800s through World War I. Similarl~ a primary focus on devdoping product and production technology may still be appropriate in developing nations that are in the midst of
industri~izafion.
Intern~ion~ differences in business philosophies can cause some problems for the
globalization ofa firm~ strategic marketing programs, but it can create some opportunit~s
as wall, especially for alliances or joint ventures. Conside~ for example, General Ele~fic~
joint venture with the Mexican appl~nce manufacturer Organization Mabe. The arrangement benefi~ GE by providing direct access to Mexico~ rapidly growing market for household apphances and ~s low-co~ supply of labo~ But it also benefits Mabe--and the
Section One
~tmduction ~ ~gy
Mexican economy--by g~Ng the firm access to cutting-edge R&D and produ~n technology and the capitol necessary to rake advantage of hs newfound know-how?7
In some cases, a firm that acNeved success by beNg N tune w~h i~ envkonment loses
touch wi~ ~s mark~ because manages become ~ant to romper wi~ ~r~eNes and
m~kefing progrmns that worked N ~e pa~. They begin to b~ieve ~e is one be~ way to
s~isfy their cusmm~s. Such s~a~c inertia is dangerous because cu~om~s needs and
compe~Ne offerings change over time. IBM~ ~a~tionN ~cus on la~e organ~ationN
cu~om~s, ~r in~anc~ caused file company to devon too l~le effo~ ~ the much N~e~
growing seNnent of small technology start-ups. And ~s emph~N on comp~ ~chnNogy
and h~dwa~ made it s~w m respond ~ ~e exNosNe growth N demand ~r Web-based
applications and ~r~ces. Thus, in environments where such changes happen frequently,
e ~r~eNc ~anning process needs to be ongoing and adaptive. AH ~e partic~ants,
wh~h~ ~om m~kefing or ~h~ ~n~ionN d~pa~ments, need m p~y constant a~ent~n m
wh~ is happenNg wRh ~eir cu~om~s and competitors.
Recent Developments Affec~ng the Strategic Role
of Marketing
In the furore, str~e~c Nertia wi~ be even more dangerous N many indu~ries because they
are ~cNg Ncreasing magNmdes and rates of change N thek environments. These changes
are mpid~ aRefing the con~xt N wNch marking ~m~es are p~nned and carried out
and the Nform~ion and tools th~ m~kem~ have ~ thNr NsposM. These dev~opments inc~de (1) the in,eased ~obN~n of m~k~s and competition, (2) the growth of the
s~v~e sector of the economy and the importance of ser~ce N maintaNNg customer s~~N~n and ~yalty, (3) the rapid development of new Nform~ion and cormnunications
mchnNoNes, and (4) the growNg impo~ance of ~lationships for improved coor~n~ion
and Ncreased effiNency of m~k~Ng programs and for capturing a larger portion of customers fi~time va~e. Some recent impa~s of these four dev~opments on marketing
management are briefly summarized below and will be continuing themes tfiroughout this
book. We will also specnl~e ~om time to time about how these ongoNg ~ends may reshape the tasks, tools, and mchniques of marketing N the future. It is impossiNe to
pm~ exacHy how these ~ends will play out. Consequently, new busNess school graduates who bo~ undergand the m~kNNg management process and are savvy with respect
to one or more of these ongoNg developments can play an important role--and gaN a potential comp~itive advantage--within even the Nrge~ firms. Such new~ minted manages
can bring ~esh perspectives and va~aNe N~ghts concemNg how lhese emerging ~ends
~e like~ to impa~ ~eir organ~ations cu~omers, competim~, and m~keting Nr~eNes.
GNba6za#on
International m~k~s account ~r a la~e and glowNg p~fion of ~e sales of many orgaNzations. Bm wt~e global malke~ mpm~nt pmm~Ng oppwmnities ~r adNfionN sales
growth and profits, ~ffemnces N m~k~ and comp~itive conditions across country
boundaries can ~quire firms m adept ~ek comp~Nve s~a~es and m~k~Ng pm~ams
m be sn~sful. Even when simH~ maN~Ng ~r~eNes ~e appropriate ~r mult~ countries, Nmrn~nM Nffe~nces in N~as~uctu~, cultu~, legal sy~ems, and ~e l~e o~en
mean ~at one w morn ~ements of ~e m~k~Ng program--such as product ~atums,
pmmotionN appeals, w ~ribution channeN--must be mHomd m local condit~ns ~r ~e
~r~egy to be effe~Ne.
Chapter One Marke~Ofiented Pe~pec~ves 19
Inoeased Impo~ance of Service

A service can be defined as "any actNi~ or benefit that one pa~y can offer another ~ is
e~ential~ intang~ and ~mt does not reset N ~e owne~h~ of anything. Rs production
may or may n~ be tied m a phys~al product?~ Ser!ce bu~ne~es such as NflNes, h~s,
~aurant~ and consuhNg firms account for rougNy two-thirds of N1 economic a~N~y in
the Un~ed States, and services are the Ns~st-growNg sector of mo~ other developed
econom~s around ~e wo~d. WN~ many of the deNs~ns and activities invoNed N ma~
ketNg services are es~ntiN~ the same as those ~r marketing phy~cal good~ the intanNble nature of many services can create unique chN~nges for m~ke~. We will discuss
these chM~nges--and the tools and ~chniques firms have developed to den wRh them-throughout this book.
As the definit~n sugge~s, services such as financing, del~er~ N~MI~ user ~aining and as~anc~ and mNntenance often are provided N co,unction w~h a physical
product. Such ancillary services have become more criticN to firms contNued sales and
financN1 success in many produc~mark~s. As m~k~s have become ~owded with global
competitors offering ~milar produ~s ~ ever-lower prices, ~e creative des~n and effective
delNery of supplemental ser~ces have become crucial means by which a company may
Nffe~ntiate ~s offe6ng and gentle adNfionM benefi~ and vane for cu~omel"s. Those
adNtionN benefits, N turn, can justify Ngh~ prices and m~gNs in the sho~ ~rm and he~
improve cu~om~ satis~ction, r~ent~ and loyahy over the ~ng ~rm.l~ This is particularly Wue N Ol"gaNzationN mark,s. Office Depm was able to wN many of the purchases
th~ MIT had p~ous~ spread over 20,000 sep~e vendo~ by offering superior service
in the form of computerized ordering and time~ d~Nery ~rect to the purchaser~ desk.
btfotwtation Technology
The comp~ ~volut~n and ~l~ed ~chn~o~c+ dev+opments ~e changNg +e na~
of m~k~Ng management in two important w+ys. ~r~, new ~chno~ ~e ma~ng ~
possible ~r frms ~ cofle~ and ana~+e mo~ d~++d N~rmation abo~ po~nti~ cus+m~s and the~ needs, p~nces, and bu~ng habit. Thus, m~rmafion ~chn~ogy is
ma~ng it possi~e ~r many frms ~ ~enfi~ and t~g+ small~ and mo~ precisely defined
m~k~ ~gments--sometimes ~gments cons~ting of on~ one +r a ~w custom~s and
+ cus~m~e ~roduct ~u~s, prom~n+ appe~s, prices, and financNg ~mngements ~
fit such ~gments.+
A second impact of Nfurmation ~chn+ogy has been to open new channels ~r commu+cafions and Wansactions between supp~e~ and cu~om~s. As Exhib~ 1.8 sugge~s,
one simple way of ca~gorizNg these new charnels is based on whe+~ the supplie~ and
cu~om~s Nvo~ed are orga+zations or N+~du+ consumes.
Global sales over +e Internet are growNg so ~ +~ solid ~fim~es of ~e~ vo~me
are hard to come b~ but $3 txSfl~n in 2003 seems a ~asonab~ guess.+ Roug~y 80 percent of those sales were busNes+~u+n~s ~ansactions, such as +ose N ~e upper-~
quadrant of Exhib~ 1.8. Many ~g~ch firms such as O~e Corp. and Cisco Sys~ms,
and even some ~w-~ch compa~ such as Genial M~or~ conduct all or a large portion
of the~ purchasing activit~s over the Web. And many firms re~ on the~ Web si~s to
cormmmicate produ~ N~rm~n to p~enti+ cu~om~s, make sales, and deal with cus~m~ pro~ems.
P~haps even mo~ impo~ant, +ough, new N~rmation and commu~cations ~chnologies ~e ena~Ng firms ~ forge more cooperative and effi+ent relations~ps wi+ +e~ suppliers and di~ribution charm+ pa~ne~. For examp~, Proc~r & Gam~e and 3M have
~rmed all~nc~ wi+ m~or retailers~uch as Kroger and Wal-Mart to develop automatic ~s~c~ng sys~ms. Sales N~rm~n ~om the ~t+~r~ checkout scanne~ is sent
+~cdy ~ +e supp~ compnt~s, w~ch figme out a~omatical~ when ~ ~e~sh each
20 Se~ion One ~troduction to St~tegy
EXHIBIT 1.8 Ca~goHes of E-Commerce

Consumer
Business
Bu~ness-to-Bu~ness (B2~
Business
Consumer
Exam~es:
Pu~hasing s~es of Ford, Oracl~ Cisco
Supply chain networ~ linking produce~
and d~tHbu~on channel member, such as
3M and WaI-Ma~
Exam~e~
~tailers, such as E*~ad~ Amazon,
RedEnvelope
Producer~ direct sales site~ such as Dell,
American Alines
Web s~es of ~ad~on~ retailers, such as
Sears, Land~ End
Co~ume~B~s ~2B)
Consume~to-Consumer (C2C)
Exam~e~
Sites that enable consume~ to bid on
unsold aiHMe ~cke~ and other goods and
servke~ such as PHce~ne
Au~ion site~ such as eBa~ QXL
wodu~ and schedule delNefies dke~ to each of the retN~r~ ~ores. Such papefless exchanges reduce mi~akes and bil~acks, minimize inventory levels, imwove cash flow, and
~crease customer satisfaction and loyalty.
In contrast, Internet sNes from buMnesses to consumers (the uppe~fight quadrant in
Exhib~ 1.8) accounted for ~ than $55 billion m the U.S. mark~ in 2003. Howeveg sales
vo~mes of firms such as AmazoK Dell Computeg and RedEnvebpe are expanOng rapidly, and many ~adRionN mmile~ a~ expand~g their marketing effo~s on the Web as
well. Inform~n avaiNNe over the Internet is affe~g consumer purchase pa~erns even
when the purchases are made in ~aditionN retail outlets. For in~ance, while only a small
percentage of new car purchases in the UNted States are made over the Intern~, a m~o~
ity of buyers now go onhne to compare prices or g~her ~formafion about brands.
C~a~L the Web is wesent~g markem~ with new ~r~egic options as well as new
competitive threes and opportunities--regardless of what or to whom they are seH~g.
Therefore, we will devom all of Chapter 11 lo markNing ~mmNes for ~commerce. Howeveg the changes being wrought by these new mclmo~Nes are so extensNe and profound
we will Nscu~ specific examples and thek implications in every chap~
Relationships aovss Ftmctions and Firms
New infomaation techno~gies and the ongo~g search for gre~er marketing effidency and
customer value in the face of ~crea~ng comp~ifion are changing the nature of exchange
between companies. Insmad of engag~g in a discrNe series of arms-~ngth, adversafial exchanges with cu~omers, channel members, and suppl~ on the open markN, more firms
are ~ying to develop and nurture brig-term mNtionships and allNnces, such as the one between 3M and WagMart. Such cooper~Ne rel~nships are thought to improve each partner~ abifity m adapt quic~y m environmentN changes or tbxe~s, to gain gre~er benefits ~
lower co~s from i~ exchange~ and to increase ~e lifetime vane of Rs cu~omers.~
Similar ~nds of cooperative relationsh~s are emerNng inside compaNes as firms seek
mechaNsms for more effemNe~ and effident~ coordinating across functionN deparb
ments the various actMties necessary to identify, a~rac~ service, and satisfy cu~omers. In
many fums, the pNnning and execution th~ used to be the responsibility of a product or
marketing manager are now coor~n~ed and carried out by cro~-fun~nN mares.
Chapter One IVlarkebOHented Perspectives 21
The Future Role of Marketing

In lig~ of such changes, it is ~pp~e~ ~at firms ~ most, if n~ all, ~dustries will have ~
be market-orieme~ tightly ~cu~d on cu~om~ needs and deskes, and higNy adaptive to
succeed and prosper in ~e N~re. In turn, this sugge~s that the effective p~rmance of
m~keting activities--pa~iculafly ~ose ~sociated wi~ VacNn~ ana~Nng, and safisfy~g
cu~om~s needs--wffi become even mere cfiticN ~r ~e succ~sN1 formulation and imp~memation of str~eg~s ~ aH oNan~ationN ~vds.
R is impo~am to nine, howeve~ ~ such m~kefing activities may not always be ca~
ried out by m~kefing manages ~c~ed in separ~e NncfionM depa~mems.~ As more
firms embr~e the use of m~fiNn~ionN mares or network ~rucmms, ~e boundaries between Nn~ns am INe~ m b~r end ~e p~rmance of m~keting tasks ~vill become
ev~ybody~ bus~s. Simi~fl~ as orgaNz~ns become more ~cu~d and specialized ~
developing uNque core compemnd~, ~ey will rdy more heavily on supp~e~, ~ribm
mrs, dealers, and other pa~ne~ to p~rm activities--including m~k~g and sales
msks--~ ~11 omsNe those areas of comp~ence. All of this sugge~s th~ the ab~ty to
cm~e, manage, and su~Nn exchange relationsNps with cu~om~s, vendors, Nstribmors,
and o~s will become a key str~eg~ compemnce ~r firms ~ ~e ~mm--and ~at is wh~
m~k~g is all abom.
FO~fftUL~F~NG AHD ~MPLEMENT~NG MARKETING STRATEGY~

OVERVIEW
THE PROCESS
This book examines ~e deve~pmem and imp~mentation of m~keting strategies ~r inNvidual produc~m~k~ emfies, whNh~ goods or ~r~ces. ExNbR 1.9 briefly ~agrams ~e
actNNes and dec~ns invNved ~ this process, and R also serves as ~e orgaNzationN
~amew~k ~r ~e ~ of ~is book. F~ ~m m~o~ ~ is importam m no~ ~e basic ~cus
of tNs framewo& and the sequence of even~ witNn R.
A Ded~on-Making Focus
The framew~k has a ~stinct deci~o~ma~ng ~cus. ~an~ng and executing a m~k~g
s~egy involves many int~related deds~ns about what to do, when to do R, and how.
Those decisions are the primly ~cus of ~is book. Every chapmr d~ails ~ ~e decisions to be made and actions token when d~Nng and imNemem~g strme~ ~r various m~k~ Mmations, or ~e analyt~N runs and frameworks you will need to make those
decisions intell~em~
Analysis Comes First

Exh~ 1.9 suggests th~ a substantial amount of ana~s of cu~omer~ competitors, and
the company itself should occur befo~ des~ning a marketing s~megg This refle~s our
view th~ successful s~meNc dedMons usuaHy re~ on an oNective, demi~& and evidencebased understanding of the mark~ and the envkonmentN con~xk Of coupe, mo~ ma~
keting ~m~gies never g~ implemented ~ quite the same way as they were drawn on
pape~ A~u~ments are made and new activities unde~aken in response to rapid changes
in cu~omer demands, compline a~ns, and shifting economic conNfions. But a tho~
ough and ongoing ana~Ms of the mark~ and the broader env~onment enables managers
to make such a~u~ments in a wall-reasoned and consistent way rather than by the seat of
their pants.
The ana~Ms necessary to provide the foundm~n for a good swamgic mark~ing plan
should focus on four e~ments of the overall envkonment thin may influence ~s appropriateness and ~timam success: (1) the co.~ ~rnN resources, capabfl~ies, and
22 Section One
EXHIBIT 1.9
~oduc~on to Strategy
The Process of Formulating and Implementing Marketing Stra~gy
Busines~level o~e~es and ~rategy

(Cha~er ~
Market oppo~unRy ana~sis

Understan~ng ma~ oppo~unff~s
(Cha~er ~
Fo~casting and m~ket knowledge
(Cha~er ~
Cu~omer an~ys~, segme~ation, and
~ing deds#ns (Cha~er 6)
Positioning ded~ons (Cha~er 7)
Form~ating ~rategies ~r specific market ~tu~ns

~rategies ~r new market e~des
(Cha~er 8)
~rategies br g~wth maA~s
~ha~ ~
Strategies for matu~ and denning maAe~
(Cha~er 1 O)
~rategies br ~e new economy
(Cha~er 11 )
lmp~mentingco~rollingImp~ment~n andm~ketingbUSineSs(Cha~er(Chap~r~rategiesandl 3)
~r~egies; (2) the envffonmentM context such as broad social, economic, and ~chnology
trends--in which the firm ~vi~ comp~e; (3) the relative ~rengths and weaknesses of competit~ and ~ends in the compline env~onlnent; and (4) the needs, wants, and characteristics of current and potenthl ct~mm~ Markem~ rear to these dements as the 4Cs.
They are the focus ofa m~ oppo~7~miO, anaO~ and are ~scu~ed in more devil below.
Integrating Marketing Strategy with the Firm% Other

Strategies and Resources
A m~or part of ~e marketing manager~ job is to mon~or and ana~ze cus~mers needs
and wa~s and the em~g~g opportunities and threats posed by competitors and ~ends ~
e e~ernM environment. There~re, because M1 levels of str~egy must consider such ~cmrs, napkins oRen play a m~or ro~ ~ pro~ng mpms to--and ~fluendng the developmem of-~zorporate and bus~ess str~eg~s. Conversely, gen~M managers and seMor
managers ~ o~er Nn~Mns need a sNid under~andMg of m~k~g in order to cra~ e~
~ctive o~aMzationM ~r~eNes.
Chapter One MarkebOHented Perspectives 23
Strategk Issue
The marketing oNectNes and ~rategy for a
particular produc~
mark~ entry must be
achievable with the
company~ avMhble resources and capabilities
and consi~ent w~h the
dffecfion and a~ocafion
of resources inherent in
the firm~ corpor~e and
business4evd s~egies.
Marketing managers also bear the primary ~spons~il~y for formul~ing and imp~menting s~a~Nc marketing plans for indivMual produ~-mark~ entries or product l~es.
But as we have seen, such stramNc marking programs are not crewed in a vacuum. Insma& the marking o~ecfives and s~egy for a pagicular woduct-mark~ entry mu~ be
achievable w~h the company~ avMhble resources and capabilities and conM~ent with the
dffection and a~oc~Mn of resources inherent in the firm~ corporam and business-~vel
s~eNes. In other words, there should be a good fit--or in~rnM con~stency--among the
dements of all three levels of ~r~egg Chapm~ 2 and 3 describe in more detail the components of corporate and bushaess s~egies and the roles mark~ers and other funcfionM
managers phy in shaping the s~e~c direction of thdr organiz~Mns and business un~s.
Market Opportunity Analysis

A mNor factor in the success of failure of ~rategies at M1 three levels is whether the strategy e~ments are conN~ent with the reMities of the firm~ external environment and its own
capabilities and resources. Thus, the first stop in developing a ~rategic marketing plan-for a new venture, a new produc~ or an exi~ing product or product line is to unde~ake
an analy~s of the 4Cs, so that the nature and a~ractiveness of the market opportunity is
well underwood. Marketing managers in various line or staff positions--or entrepreneurs
themselves, in start-up se~ings--typically carry out this responsibilRg
Understanding Market Opportunities
Understanding the nature and attractiveness of any opportunity requires conducting an examination of the external environment, including the markets served and the indu~ry of
which the finn is a pa~. In turn, this examination involves a look at broad macro issues
like envkonmentN ~ends that are driving or con~raining market demand and the swuctural
chara~efistics of the induswy as a whole, as well as specific aspec~ of the ~rget cu~omers
and thek needs and of the pa~ular firm and wh~ k brings to the party. It~ also necessary
to examine the management team th~ will be charged with imp~menting whamver strategy is developed in order to dete~nine if they have what ~ ~kes to get the job done. Chapter 4 provides a ~amework for examining these issues, and &am~es how different the
a~m~iveness of one~ market and one~ indu~ry can be, an insight th~ is easily (and
ofte!!) overlooked.
giesandl 3)12)maAeting ~rategiesCntrland ping.ms
Measuring Market Opportunities

Understanding the overall a~ractiveness of a market opportunity is one thing. Preparing an
evidence-based forecast of the sales that can be achieved over the short and intermediate
term is quite anotheg and is a particularly difficult task for new produc~, espec~y those
of the new4o4he-wodd variet~ In Chapter 5, we outline several approaches to evidencebased forecasting, and we examine the factors that drive the pace at which innovations
are adopted over time. We also briefly explore where to obtain the market knowledge
required--the data to fill in the holes in one~ understanding of any market opportunity-including sources both inside and out,de the firm.
Market Segmentation, Targeting, and Positioning Decisions
Not all customers wRh ~milar needs seek the same products or services to satisfy those
needs. Their purchase ded~ons may be influenced by individuN preferences, pe~onal
characmfi~s, social ckculn~ances, and so forth. On the other han~ customers ~vho do
purchase the same product may be motivamd by different needs, seek different benefits
~om the product, rely on different sources of information about products, and obtain the
product from different distribution charmds. Thus, one of the lnanager~ mo~ Cluc~l tasks
24
Section One
is to divide cu~omers into market segment--distinct subsets of peopM with Nmilar

needs, drcum~ance~ and charac~ristics th~ lead them to respond in a similar way to a
particuNr product or service offering or to a particuNr strateg~ markNing program. Chapter 6 examines dimen~ons for measurement and analyt~al techniques that can help managers identify and define market segments in both consumer and organizational marke~.
After defining market segments and exploring cu~omer needs and the firm~ competb
tire s~engths and weaknesses wffhin segments, the manager mu~ decide which segments
represem a~ractive and viable opportunities for the company, that is, on which segments
to focus a s~ategic marketing program. Iomega, for in~ance, targemd two mark~ segments with its new line of data storage drives. The Zip drive was aimed at individuM PC
owne~ for thek personal use, while larger capacity and more expensive drives were Mined
at organiz~ional buyer. Chapter 6 discusses some of the con~derations in se~cting a ta~
get segmenL
Finally, the manager must decide how to portion the product or service offering w~hin
a target segment, that is, to design the product and its marketing program so as to emphasize a~ributes and benefits that appeal to cu~omers in the target segment and at once distinguish the company~ offering from those of competitors. Issues and analyt~ techniques involved in marketing portioning decisions are discussed in Chapter 7.
Formulating Marketing Strategies for Specific SRua~ons

The s~a~c marketing program for a produ~ should refle~ mark~ demand and the competitNe situation within the target markN. But demand and comp~itive condit~ns change
over time as a produ~ moves through ~s li~ cycle. Therefore, different ~r~eg~s are typ~ more appropri~e and successful for different mark~ conditions and at ~fferent li~
cycle stages. Chap~r 8 examines some mark~ing s~eNes for introducing new goods or
services to the mark~. Chapter 9 ~scu~es ~ra~es appropriMe for builNng or mainmining a produ~N share of a growing mark~ in the face of increasing competition. Chapter 10 considers s~e~es a manager mi#a adopt in mature or defining mark,s. And
Chapter 11 expires how all of the above ~la~gies might be influenced or mo~fied by the
rapiNy evolv~g conditions being created by ~commerce and the new econom~
Implementation and Control of the Marketing Strategy

A final critical determinant of a s~ategy~ success is the firm~ ability to imp~ment ~ e~
fectively. And this depends on whether the ~rategy is consNtent w~h the resources, the organizationM s~ucture, the coordin~ion and control symems, and the skills and experience
of company personnel.~ Manage~ nm~ design a ~rategy to fit the companyN exi~ing resources, compemnc~ and procedures--or ~y to construct new ~ructures and sy~ems to
fit the chosen ~rmegg For exampM, IomegaN attempt to develop a new generation of d~a
storage products would not have been so successful wRhout Rs substantiM inve~ments in
R&D and marketing research and team s~ucture that encouraged communication and cooperation across functional areas throughout the dev~opment process. Chapter 12 discusses the mructural variables, planning and coordination processe~ and personnel and
corporate culture characmri~s related to the successful implementation of various marketing strategies.
The final tasks in the marketing management process are determining whether the
~rategic marketing program is meeting objectives and a~usting the program when performance is disappointing. This evaluation and control process provides feedback to managers and serves as a basis for a market oppo~unity analy~s in the next pNnning period.
Chapmr 13 examines ways to evaluate marketing performance and develop contingency
plans when things go wrong.
Chapter One MarkebOden~d Pe~pec~ves ~!~
The Marketing Plan~A Blueprint for Action

The resu~s of the various ana~ses and marketing program deacons ~scussed above
should be summarized perioNcM~ in a demiMd formM mark~ing plan."
A marketing plan is a wfi~en document detailing the current Mmation with respect to customers, competitors, and the external enviro~maent and providing guidelines for objectives,
marketing actions, and resource allocations over the planning period for ekher an existing or
a proposed product or serv~e.
While some firms~articularly smaller ones--do not bother to write thek marketing
plans, most organizations believe that Mnless all the key eMments of a plan are wfi~en
down.., there wfil always be loopholes for ambiguity or misunde~tanding of s~amgies
and objective~ or of assigned responsibilities for raking action?~ This sugge~s that even
small organizations with hm~ed resources can benefit from preparing a written pNn, however brie Written plans also provide a concrete hi~ory of a product~ str~eg~s and pe~
formance over time, which aids institutional memory and helps educate new managers assigned to the product. Wfi~en plans are necessary in most larger organiz~ions because a
marketing manager~ Woposals usuNly must be reviewed and approved at higher levels of
management and because the approved plan provides the benchmark against Milch the
manager~ performance will be judged. Finally, the discipline involved in producing a formal plan helps ensure that the proposed objective~ s~egL and marketing a~ions are
based on rigorous analysis of the 4Cs and sound reasoning.
Because a wri~en marketing plan is such an important tool for conmmnicating and coordinating expectations and responsibilities throughout the firm, we will say more about ~
in Chapter 12 when we discuss the implementation of marketing programs in detaO. But
because the written plan a~empts to summarize and communicam an overview of the may
keting management process we have been examining, it is wo~hwhiM to briefly examine
the contents of such pNns here.
Marketing plans vary in timing, content, and organization across companies. In general,
marketing plans are developed ammally, though planning periods for some big-t~ket
indu~riM products such as commercN1 Mrcraff may be longeL and in some highly volat~e
indu~ries such as ~lecommunications or e-commerce they can be sho~e~ Plans typica~y
follow a format similar to that outhned in Exhibff 1.10.
There are three m6or pa~s to the plan. Fkst, the mark~ing manager detNls his or her
assessment of the current situation. This is the homework portion of the plan where the
manager summarizes the results of his or her analy~s of cu~ent and potentiM cumomers,
the company~ relative s~engths and weaknesses, the competitive s~u~ion, the m6or
trends in the broader envkonment that may affect the product an~ for existing product&
past performance outcomes. This section typicMly also includes foreca~ e~imates of
sales point,l, and other assumptions underlying the pNn, which are especiMly important
for proposed new produc~ or services. Based on these analyses, the manager also may call
aRention to several key issues m~or opportunities or threats that should be dealt w~h
during the pNnning period.
The second pa~ of the pNn details the s~a~gy for the coming period. This pa~ usually
starts by d~Mling the objectives (e.g., sales volume, market share, profits, customer satisfa~ion levels, era.) to be achieved by the product or service during the planning period. It
then outlines the overall marketing s~eg~ the actions asso~ated with each of the 4 Ps
Ohe product, price, promotion, and ~Nc~ or distribution) necessary to implement the
s~eg~ and the timing and locus of responsib~Ry for each action.
Finally, the plan detNls the financial and resource implications of the s~ategy and the
controls to be employed to monRor the plan~ impMmentation and progress over the
26 Se~ion One ~oducffon to S~ategy
EXHIBIT 1.10 Con~n~ of a M~keting Plan

Sec~on
Content
I, Execu~ve summary
Presen~ a sho~ ove~iew of the ~sue~ o~e~Ne~ ~rateg~ and ac~ons incorpo~ted
in the plan and their expe~ed ou~omes for quick management review.
II. Current ~tua~on

and trends
SummaHz~ relevant backg~und inform~n on the markeb compe~on and the

mac~envi~nmen~ and trends therein, indud~g size and growth rates for the overall
mark~ and key ~gme~
III. Pe~ormance ~ew

~or an e~ing
produ~ or service
only)
I~ Key issues
Examines the past performance of the product and the ~ements of i~ marke~ng
program (e.g., dNtribu~on, promotion~ etc.).
~ O~e~Nes
~en~fies the main opportunities and threats to the product that the plan mu~ deal
with in the coming yea and the relative strengths and weaknesses of the product
and business unit that must be taken into account in facing those issues.
Specifies the goals to be accompl~hed in terms of sales volum~ market share, and
prof,.
Vl. Marketing ~tegy
Summarizes the overall strategk approach that will be used to meet the plan~
o~ec~ve
VII. Ac~on plans
This is the mo~ ~cal section of the annual plan for helping to ensure effe~Ne
implementa~on and coordina~on of a~M~es across func~onal depa~ments. It
specifies
The target market to be pursued.
What spec~c a~ions are to be taken with respe~ to each of the 4 Ps.
Who is responsible for each action.
When the a~ion will be engaged in.
How much will be budgeted for each ac~on.
VIII. Projected profitandqoss statement
Presents the expe~ed finandal payoff from the plan.
IX. Controls
D~cu~es how the plan~ progre~ will be mon~ore~ may present con~ngency plans
to be used if performance falls be~w expectat~ns or the ~tuaUon changes.
X. Con~ngency plans
Describes ac~ons to be taken if specific threa~ or oppo~unities mateHal~e during

the planning period.
period. Some plans also ~ify ~me contingencies: how ~e plan will be moOfied if c~rain changes occur ~ the mmket, competitive, or em~nM envkonmen~.
Marke~ng
Plan Exercise
A common approach many ~m~s take in d~n~g a course ~ ma~efing managemem is to

~cus ~e cour~ around an apNic~io>ofiemed proem, o~en done by smNI ~ams of s~dems. Such
a project a~ows smdeNs m a~uN~ apply wh~ ~ey ~n, it adds a consN~aNe amou~ of Nn m
e course, and it gNes ~ude~s some mng~ ompm ~ey can show pm~e~Ne emNoye~ when
ey em~ ~e job m~k~. P~haps ~e most common such marketing managemem proje~ is ~e devdopme~ of a maNm~g Nan, eider ~r a real company wi~ real goods or services, or ~r some ing entrep~neuriN or hypo~etical ~ ~e ~udems ~em~N~ conce~
From a smde~ pe~pecfiv~ such a projem prepares marking gmdu~ m NR ~e ground runNng" when ~ey enmr ~e job m~km, and it he~s ~uden~ who ~ke nonm~k~g jobs be~er unde~mnd and apprecN~ m~keting p~ectNes. When used ~ co,unction w~h deci~omoriemed
cases, such an approach ~ves ~udems two Nps ~ound ~e ~k ~r each demem of~e court: once
when ~e coupe mamriN ~ a given chapter is applied m a c~e, and a ~cond time when it is aphid
to the course pr~e~.
Chapter One MarkebOHen~d Pe~pecdves 27
"But, xve~e on~ at Chapmr 1!" you migN sag "How do I go abom dNng wlr~ necessary so
at, by ~he end of the course, I can ddN~ a compmem~ pmpaed market~g plal~?" or some similar as~gnmem.
We briefly ~u~ed ~e co~eNs of a ~p~N mark~ing plan ~r an existing produ~ or produm
line ~ ~e end of Chap~r 1. Here, we look ~ markN~g ~ans for new pmdu~s, wh~e ~e ~e some
ex~a chal~nges due to the lack of any N~ory and the need to make lms of ded~ons from square
one.
Thus, wh~ fol~ws is a mrre demi~d s~ of g~dd~es for wh~ each ~n of a good m~keting plan entNls. As youH see, much of what youH find here ap~s m marketing ~ans for existing
bu~nesses or product lines as well. You migN ~ink of this m~N1 as a road map for ~e proje~
wink youll do ~ ~e course, ffyour course ~vN~es preparing a m~km~g plan or some~ing similar. The ~ct ~ this ouO~e looks ~htl> kut not fundamentNly, Nffemm from ~e one in Exh~
1.10 should be a clue to you th~ ~ere~ no single "rigN answeF m how a m~keting plan should be
a~emNed. Given ~e setting in which your project is to be carried ore, we sugge~ you develop your
own outline that best serves your context.
As you proceed through the book, youH find at ~e end of every chapt~ an exemise th~ identb
ties how that chap~rN ~ning comributes to the devdopment of your marketing plan. If you do
these exercises as you go a~ng, youH find ~a much of ~e work your marketing Nan entNN w~l
gN done as a msulk
Outline: New Product Marketing Plan
1. Exec~Ne Summary
Summa6ze the pmdum idea, Rs target m~k~, and the resN~ you ~mca~ (sales, gross
m~Nn, and profit contribut~N, in nm m~e ~an two pages.
2. The Pmdu~ (Good or S~!cO or Bus~s Idea
Identi~ ~e mi~n and SMART o~fiv~ (~ec~ me~u~Ne, a~naNe, m~vam m
your missio~ and time~oun~ of the bu~nes~
Briefly de~ribe ~e pmdum or service and hs targ~ maN~.
St~e your vane proposNon or a posNon~g ~emem ~ omhn~ ~e benefits your pro&
uct, ~r~ce, or bus~s will provide to ~e target customer, in order to ~ffemntiate your
offering from cu~e~ avNNNe ones.
3. M~ket Ana~s
~Oc~e who constimt~ your ov~all mark~ and ~e ~gme~ you will ~Nal~ t~get (defined according m one or mwe of~e ~l~w~g Mnds of N~o~: demograpNc, geogmpNc,
and/or behavioral variant).
Fw ~is m~k~ ov~a~, and ~r your target ~gme~:
--~d~ate their size and current and am~ed grow~ rate (measured if po~ibl< ~
um~, doll,s, and nmnb~ of p~emiN cu~om~O.
Nenti~ any unmet or poorly served needs ~at your new produ~ or ~r!ce will
address.
Identify m~va~ ~ends in any of ~e six macro ~end c~egories that suppo~ or de,act from ~e demand ~r your new wodum or s~!ce.
Nenti~ ~e wants and needs your woduct serves. Wh~ benefits wi~ you o~}g and wh*
woduct ~a~ms ~viH ddN~ ~em?
4. Competitw Assessment
Define the indus~y m wNch you wi~ compem.
A~e~ ~e ~dustly~ fi~e comp~RNe ~es.
~enti~ its cfific~ success ~s.
What dke~ and indirect comp~s c~mntly ~tis~ the needs of your propo~d m~N~
What comp~RNe advamag~ and ~dva~ages w~l specNc competitors have? WiR you
have?
What competitive responds ~ your emW am 1Ne~?
28 Section One
5. M~k~ing Swamgy
Wh~ are your marketing objectives (SMART)?
Wh~ is your overM1 m~k~ing str~egy?
How will your offering be pos~ioned?
Product decisions: ~, augmemed product, brand
PrYing dedMons: pric~g s~eg~ pfic~g ~cs
Di~rib~inn dedMons: channd s~ucmm, push or pNl s~egy
PmmmionM s~egy: inte~ated m~km~g commuNcations oNectives and plan, copy
N~rm, meNa ~an, ~ade and con~m~ pmm~n plan, pe~onN ~Hing pN~ punic relations plan
6. Foreca~ and Budg~
Pmv~e ore w mwe @ma&he~s ~ de~H yo~ ~s and gross m~gin ~m~ and ma~
ket~g budget and ~e ~tNNes ~at will comprise R ~r 3-5 ye~s, mo~h~ ~r ~e fi~t
yea~ ~Ncam, by c~egory of ~tiviV, all planned maNeting &enNng ~r the execution of
yo~ maNefing s~eg~ ~oken down imo as many of~e ~lMw~g ~mg~s as app,:
Advert~ing ~m~ive and media expens~
--Dim~ maNeting (direct mail an~or ~kmaNefing expense)
--Intem~ maNeting (Web site, banners, ~c.,)
--Con~m~ pmmm~n (~oums, ~mNes, ccupcns, mb~, co~, era.)
--Trade promotion (alMwan~s/discounts m your ~stribution channeN)
~ales~rce expenses (salary and fringes, sal~ m~erials, commission, travel)
--Publ~ ml~ns (nonpaid me~a)
Customer servke (inbound order mMng, cu~om~ suppo~, era.)
--O~ (~onso~h~s, evems, ~c.)
~c~ using apwowi~e m~ms, ~e level of effectiveness and effic~ncy you expect
~om each ~ti!W ~each, ~equenc~ CPM, response ram, numb~ of sal~ calls p~ week
close ~m, d~n of s~es cy~ ~c.,). Pin,de appmwi~e ev~ce in a ~u~n ~
suppo~s yo~ comemMn ~ yo~ planned m~kNing budget is ~ffic~ m drive ~e sa~s
you ~ca~.
7. Imp~memm~n and Comml Plan
Prov~e an o~aNzm~nM ~aa~ ~r m~kNing people and Nncfions.
Provide mm~ams of s~am~c an~or operationN comml "dashboard2 ~r key m~k~ing
manageme~ ~nctions.
8. Contingency Plan
Identi~ what is Hkely m change ~ go wmn~ and what shoNd be done ffand when it does.
1. How are ~e basic bus~s pN~pN~ or orientations of a mNor co~mn~ pmdu~s firm such
as General Mills and a smN1 ent~pmneuriN s~rt-up in a fast-~o~ving, bigh-tech industry 1Ne~
~ ~ffe~ What are the implications of~ phil~ophicM ~ffemnc~ for the role ofmarkem~ ~
e str~ pNnning pm~s~s of ~e two finns?
2. As ~e small entrepmneuriN firm de~ribed in que~on 1 ~ows l~ge~ its ma~ matures, and
its ~dustry b~om~ mo~ comp~N~, how ~ould ~s busin~s philo~phy ~ oriem~n
change? Why?
3. WNch m~ should m~kefing manages pl~ in helping to ~rm~me buMn~vd (SBU) strate~es in a la~e d~fied ~m ~ch as Gene~l M~ W~t ~n~ of in~rmation ~e m~ketels
be~ aNe to provide as a basis ~r plamfing? Which issues ~ demems of busin~vel swmegy
can such ~rmation hdp to m~Ne?
Sel~Nagno~ que~inns to m~ your aNh~ m apNy fl~ ~ncepts in this chapmr can be ~und ~ tiffs
book~ Web site ~ ww~mhhe.com/wNke~
Chapter One MarkebOden~d Pe~pecNves 29
1.TNs opeinng examp~ is based on m~eriM found in Stove Lohr, "Big B~e~ B~ Bet: Le~ Tech,
More Touch," New 1~ Time& Money & Bush~ss Section, Sunday, January 25, 2004, pp. 1,10;
Spencer E. Ame, "The New Blue? Business[l~ek, March 17, 2003, pp. 80 88; Spencer E. Ante,
"For Big Blue, The Big EncNNda," Businessll~ek, O~ob~ 2~ 2002, pp. 58-59; ka SageL ~nside IBM: In~rnet Business Mach~es? Businessl, I~ek, E-BIZ section, December 13, 1999,
pp. EB20 38; m~d ~e compaw~ Web s~e at www.ibm.com.
2.For a summ~y of ~e definitions offered by a nmnb~ of mher autlm~, see Roger Kerin, VOay
Mah~an, and R R~an Vamd~an, Contemporary Perspectives ~ Stmteg~ Mark~ Plannh~g
(Boron: Alan and Bacon, 1990), pp. 8-9. Our definit~n diffe~ from some o~ers, howeve~ ~
at we ~ew ~e setting of oNecfives as an iutegral pa~ of stramgy form~ation, whereas they see
o~e~Ne seRing as a sep~e proce~. Because a firm~ oNectives are influenced and con~rNned
by many of flae same envkonme~N and competitive N~o~ as ~e otb~ ~mnents of m~mg~
howeve~ it seems ~NcN m ~eat bmh the de~rm~ion of oNectNes and the resource allocations
aimed at macNng ~ose oNectives as two parts of the same s~ateg~ planning process.
3.Hmveve~ wN~ such corpor~vel synergies o~en are used m justify m~gers, acquisitions, and
forays into new businesses, ~ey som~imes prove elusive. For examp~, see Laura Landro, "Giants Talk Synergy but Fexv Make H Work~ The fl~tH Street JomT~al, Sepmmber 25, 1995, p. B1.
4.C.K. PrahNad and G~y Ham~, "The Core Compe~nce of ~e Corporat~n] Ha~v~ff Bt~htess
Revimv 68 (May-June 1990), pp. 79-91; and George S. Day and Prakash Nedungadi~Managerim Repmsentafious of C~np~RNe Advantage~ JomTml qfl Marke~tg 58 (April 1994),
pp. 31-44.
5. Chri~n Hombur~ Jotm R Wor~nan J~, and Harley Kxohmet; "MarketingN Influence within the
Nnn] JomTtal ofMarke~N 63 (April 1999), pp. 1-17.
6.Quo~d ~ Ka~erine Z. Andrews, "Still a M~or Player: M~keting~ Ro~ in Today~ Firm~ h~sigh~fivm MSI. W~mr 1999, p. 2.
7.Frederick E. Websmr J~, "Exec~g ~e New Marketing Concept," MarketNg Mcmagem~tt 3
(1994), pp. 9-16; and George S. Day, "CreWing a Superior Custome~R~ating CapaNli~," Repo~7 # 03-101 (Cambridge, MA: M~keting Science lnstitut~ 2003).
8. Qumed in G~y Hamel and C. K. PmhaN~ Compe~gJbr Ne F~mo~ (Cambridge, MA: H~vard
Busiuess School Press, 1994).
9.Just~ Martin, ~gnore Your Cusmmeff Fo~Ttm~ May 1, 1995, pp. 121 26.
10."The Right Smff,"JomT~al qfBt~Ness andDesign 2 (Fall 1996), p. 11.
11.R~endm K. Sriva~ava, Ta~dduq A. Sheavani, and Liam Fahe~ "Malketin~ Business Processes,
and Sh~ehoNer Va~e: An OrgaNzationM~ Embedded View of M~keting Acfi~fies and the
DNc~line of M~ket~g," Jotmml of Marketing 63 (SpeNN Issue 1999), pp. 168~9; and Thomas
S. Gruca and Lopo L. Rego, Cusmm~ SatisNction, Cash Floxv, and Shareholder Va~e7 Repo~
#03-106 (Cambridge, MA: M~kN~g Sconce In~imm, 2003).
12.For examp~, see John C. N~v~ and Stanley E SlamL "The Effect of a Market OrieN~n
on Business Profitab~i~," Jomwal of Marketing 54 (April 1990), pp. 1 18; Bernard J. Jaworski
and Ajay KoNi, "M~ket Orientation: Antecedents and Consequences] JomTtal qfMarke~tg
57 (July 1993); Stoney E Sl~er and Jolm C. Narvec "M~ket Orie~afiom Performance, and
the ModeratNg Influence of C~np~R~e Env~onmem~ Jowwal qf Marke~g 58 Oanuary
1994), pp. 46 55; and Subin Im and JoN~ E Workma~ "Market Orientation, C~atM~, and New
Product Perfo~nance in High-Technology Firms7 Jotmml of Marketing 68 (April 2004),
pp. 114-32.
13. RohR Deshpande, EI~ O~ and Sang-Hoon Kim, "P~empting Competitive Risk Via Cu~omer
Focus: EntrepmnenriN Finns in Japan and the U.SY Repm7 #03-114 (Cambridg~ MA: MarkNing Science Institut~ 2003).
14. S~n~y E Sl~er and Jolm C. Narver, "Mark~ Orientation, P~formance, and ~e Moderating Influence of Comp~itive Euviromnent2 JomTud of Marketing 58 Oanuary 1994), pp. 46 55; and
Jolm E Workman Jr., "When Marketing Shoed FN~w ~smad of Lea~" MarketitN Management
2 (1993), pp. 8-19.
15.Charles H. Nob~, R~ K. Sinha, and Aji~ Kuma~ "Mark~ Orientation and ARern~Ne
30 Sec~on One ~oducUon to Strategy
S~eg~ Ofie~afions: A Lon~mOnN A~smem of P~rmance Implications; Jol~1~ of

Marketing 66 (O~ob~ 2002), pp. 25-39.
16.E. ~mme McCarthy and W~liam D. Perreau~ J~, Bas~ Marke~w A G~bal Mcmagerial Applvac~ 1 lth ed. (Bu~ Ridge, IL: Rich~d D. hxv~, 1993L chap. 2.
17."GE~ Brave New World BusinessWeek, Novemb~ 8, 1993, pp. 6~70.
I8. P~fip Kofl~ and G~y Arms~on~ ~inc~les of Marketing (En~ewood Chffs, N J: Prentice Hall,
1989), p. 575.
19.For examp~ see Te~y G. Vavra, Afie~v~arketing (Burr Ridge, IL: Rich~d D. ~wi~ 1995).
20.For examp~s, see Faith Keenan, ~a~ey H~mes, Jay G~en~ and Rog~ O. Crocke~, ~ Mass
M~ket of One; ~tsinessWeek, Decemb~ 2, 2002, pp. 68-72.
21.Pa~ Mar~Hie, "A Pmfe~ M~ke~ A Survey of E-Comm~ce~ The Econom~ M~rch 15, 2004,
pp. 3-20; and Timothy L Mullane~ ~-B~ S~es AgMn~ B~sI~elc, May 10, 2004,
pp. 80-90.
22.Ra~ S. Achrol and Ph~ Kofler, "Marketing in ~e Netw~k Economy," Journ~ ~fMarke~ 63
(Special Issue 1999L pp. 146-63.
23.Ge~ge S. Da~ "C~ating a Superior Customer-Relating Capabili~."
24. C. K. Prahalad and Gary Hm~el, "The Core Comp~ence o the Corp~n," Ha~a,~ Business
R~4~ 68 (May-June 1990~ pp. 79-91; and George S. Day, "The Capa~liti~ of Market-Driven
O~aMz~ns~ Jom~ qfMarke~ng 58 (O~ob~ 199~, pp. 37 52.
25.For a m~e getai~d N~ussion of ~rmM marketing Nans, see Donald K Lehmann and Russell S.
Wine~ Analysis for Marketing PlannNg 4th ed. (Ne~v York: Irwi~McGraw-H~l, 1997).
26.DavM S. Hopk~s, The Markethg Plan (New York: The ConStance Boar~ 1981), p. 2.

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McGraw-Hill/Irwin Series in Marketing

Alreck & Settle

Gourville, Quelch & Rangan

Orville C. Walker, Jr.

Harper W. Boyd, Jr.

About the Authors

Harper W. Boyd Jr.

vi About the Authors

Corporate Strategy Decisions and Their

1. Market h!fluences on the Corporate Mission 35

3. The Economic Em,ironment 92

Your Market Is A~ractive: What About Your

Challenges in Macro-Level Market and Industry

1. b(ormation Sources for Macro-Level Analysis 99

Understanding Markets at the Micro-Level 100

Rate of Diffusion of Innovations: Another Perspective

Cautions and Caveats in Forecasting 122

Some Caveats in Positioning Decision Making

Strategic Challenges Addressed in Chapter 10

Growth-Market Strategies for Market Leaders 209

Strategies for Mature and Declining

1. Challenges in Mature Markets 228

Marketing Strategies for Mature Markets 241

Strategies for Declining Markets 248

Threats or Opportunities? The Inherent Advantages

Developing a New-Economy Strategy: A Decision

2. Shared Programs and Facilities 292

Designing Appropriate Organizational

Marketing Plans: The Foundation for Implementing

Design Decisions for Strategic Monitoring

2. Tracking and Monitoring 323

Name Index 337

WHY THIS COURSE?

WHY THIS BOOK?

A FOCUS ON DECISION MAKING

A CONCISE STRATEGIC FOUNDATION

A REAL-WORLD, GLOBAL PERSPECTIVE

WHATS NEW IN THIS EDITION?

Marketing Strategies for the

These vignettes have been chosen to increase

How Sweet Are the Rewards?

Yhorntons Goes Online

Global Perspective and

architecture" policy. In its PC business, for instance,

Section One Introduction to Strategy

the worldwide PC market fell to about 8 percent in

A New Corporate Strategy

Chapter One Market-Oriented Perspectives 5

salespeople who used to spend a portion of their

The Bottom Line

Section One Introduction to Strategy

--- Other --80

1999 2000 2001 2002 2003

1999 2000 2001 2002 2003

STRATEGIC CHALLENGES ADDRESSED CHAPTER 1

Chapter One Market-Oriented Perspectives 7

THREE LEVELS OF STRATEGY: SIMILAR COMPONENTS

The Components of Strategy

EXHIBIT 1.2 The Hierarchy of Strategies

Section One Introduction to Strategy

EXHIBIT 1.3 Key Components of Corporate, Business, and

Goals and objectives

Chapter One Market-Oriented Perspectives 11