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Market- Driven Strategy
3 pages

Market- Driven Strategy

Market- Driven Strategy (MDS) is very essential in formulating business strategy.
Thisapproach used is always market-oriented and customer-oriented. Next,
understanding whatthe customers do, understanding the customers behaviors and
measuring the interactionamong customers. Therefore, the main point is always
orienting to the market and customersin every business activity performed.
Characteristics Market- Driven Strategy
Market driven strategy is considerably the most popular organizational approach in
runningthe business nowadays, as the strategy allows the company to obtain a
better understanding of the market, as well as their customers; thus, it allows
company to achieve competitiveadvantage, and develop a long-term relationship
with the customers.The fundamental logic of this strategy is that the market and the
customers that form themarket should be the starting point in business strategy
formulation; which therefore anunderstanding of the market and the customers that
form the market is essential.The characteristics of market driven strategies include:
B
ecoming market orientedDetermining distinctive capabilitiesFinding a match
between customer value and organizational capabilitiesObtaining superior
performance by providing superior customer value
A
lthough it is a highly promising strategy, yet it is argued that a long-term
commitment iscrucial in order to develop these strategies.
BecomingmarketorientatedDeterminingDistinctiveCapabilitiesCustomerValue/Capabi
litiesMatchAchievingsuperiorperformance
B
ecoming Market Oriented
A
market orientation is a business perspective that placed the customer as the center
of acompanys total operations. This concepts is basically holds the same idea as
the marketingconcept. However, for a business to achieve market orientation, it
involves the use of superior organizational skills in understanding and satisfying
customers.
A
market-oriented organization always gathers information about its customers,
competitors,and the markets; analyze it from a total business perspective, decides
how to deliver superior customer value, and finally takes actions to provide value to
customers.
(Characteristics of Market Orientation)
Customer focus
C
ustomer focus basically stands for understand the customer needs, wants, and
responsestowards the products delivered. The market-oriented organization
understands customers preferences and requirements and effectively deploys the
skills and resources of the entireorganization to satisfy customers.
B
ecoming customer oriented requires finding out whatvalues buyers want to help
them satisfy their purchasing objectives.
B
uyers decisions are based on the attributes and features of the product that offer
the best value for the buyers usesituation. The buyers experience in using the
product is compared to his or her expectationsto determine customer satisfaction.
Example:
Dell
C
omputers direct contact with its buyers is an important information sourcefor
guiding actions to provide superior customer value. The direct, built-to-order
process used by Dell avoids the stocking of computers that may not contain state-
of-the-art technology.
A
lso, each computer contains the specific features requested by the buyer.
C
ompetitors of Dell that market their computers through distributors and retailers
have higher costs because price reductions in purchased components (e.g., chips)
cannot be utilized for computers ininventory.
Competitor intelligence
A
market-oriented organization recognizes the importance of understanding its
competitionas well as the customer. Failure to identify and respond to competitive
threats can createserious consequences for a company.
Example:
Western Union did not define its competitive area as
telecommunications,concentrating instead on telegraph services, and eventually
the 100-year-old company wasoutflanked by fax technology. Had Western Union
been market oriented, its managementmight have better understood the changes
taking place, recognized the competitive threat, anddeveloped strategies to counter
that threat.
Cross-Functional Coordination
Market-oriented companies are effective in getting all business functions to work
together to provide superior customer value. These organizations are successful in
removing the walls between business functions-marketing talks with manufacturing
and finance.
C
ross-functional teamwork guides the entire organization toward providing superior
customer value.

P
erformance Implications
C
ompanies that are market oriented begin strategic analysis with a penetrating view
of themarket and the competition. Moreover, an expanding body of research
findings points to astrong relationship between market orientation and superior
performance.
C
ompanies that aremarket oriented display favorable organizational performance
compared with companies thatare not market oriented.
Distinctive Capabilities
Identifying an organizations distinctive capabilities is a crucial part of market-
drivenstrategy.
C
apabilities can be defined as complex bundles of skills and accumulatedknowledge,
exercised through organizational processes that enable firms to coordinateactivities
and make use of their assets.The Major components of distinctive capabilities
are:Organizational ProcessesSkills and
A
ccumulated Knowledge
C
oordination of
A
ctivities
A
ssets
Example:
Zaras new-product development process, which illustrates the retailersdistinctive
capabilities, where the new-product development applies the skills of their
designteam and benefits from the teams accumulated knowledge; the
coordination of activities across business functions during new-product development
is facilitated byinformation and technology. The asset is the strong brand image
possessed by Zara whichhelps the launching of the new product.
Creating Value for Customers
Customer Value
C
ustomer Value is the outcome of a process that begins with a business strategy
anchored ina deep understanding of customer needs. The creation of customer
value is an importantchallenge for the managers, since it is an ongoing competitive
challenge in maintainingsuccessful market-driven strategies.
B
eing able to overcome these challenge, the organizationis believed to be able to
successfully deliver the customer value; hence fulfilled their goals.
Superior customer value
Superior customer value occurs when the buyer has a very positive use experience
compared to his/her expectations as well as the value offerings of
competitors.Furthermore, the values could be product differentiation, lower prices
than competing brands,or a combination of lower cost and differentiation.
Conclusion
Through the deep understanding of this concept, ability to implement and manage
all theelements, as well as the constant management and updates of the strategy,
it is believed thatthe organization will able to achieve its goals.

Define Market Driven Strategy

3 pages available for preview

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Part 1 1.1Define Market Driven Strategy
Market- Driven Strategy (MDS) is very essential in formulating business strategy.
This approach used is always market-oriented and customer-oriented. Next,
understanding what the customers do, understanding the
customers behaviors and measuring the interaction among customers.
Therefore, the main point is always orienting to the market and customers in every
business activity performed. By focusing on the consumer first, companies can gain
great advantages that aid in the marketing and sales of their products or services.
Developing a market-driven strategy involves aligning internal operations as well as
external communications in order to affect every aspect of customer value, and
therefore is not a short-term solution. However, when done correctly, a market-
driven strategy can provide excellent results and even reduce long-term costs.
Focus on benefits, not features. Features are relative to your product or service
while benefits relate directly to your custome
rs experience. Think of cell phones as an example. The
advertisers do not say the phone has a 1540 mAh capacity battery (feature), they
say you get up to 480 minutes of talk time (benefit).
1.2.Characteristics of market-driven companies
1.

Strategically selecting the market(s) and segments you serve 2.

Understanding the problems, challenges and opportunities prospective buyers in
your market are dealing with 3.

Knowing the trends and future issues prospective buyers in your target market(s)
will face in the next 1-3 years 4.

Listening to and understanding what your customers are telling you about whats
really
going on in their business, not just what new feature/function enhancements they
want 5.

Using reliable fact-based research data and industry/market analysis amongst

several inputs for making strategic go-to-market decisions 6.

Making strategic decisions across all areas of the company for which market(s)
youre
going to serve and the key value propositions your company drives to market

2 | Page
7.

Always using the outside

-
in per
spective 8.

Your solutions genuinely create value for your customers 9.

Focusing on where and how your company can excel in selected markets rather
than just having a presence in many markets 10.
Developing a corporate mindset of being a trusted advisor for customers and
prospects rather than just another vendor of stuff and/or services 11.

All functional areas in the company are aligned around the same go-to-market
strategy 12.

Understanding and responding to the buyers process while sales retain control of
moving
the buyer to a decision 13.

Developing long-term customers who want to do business with your company 14.

Using a balanced scorecard approach to measure marketing performance across

multiple dimensions 15.

Marketing is the strategic leader in the company and central to the success of the
business
1.3.Differences Between Market-driving and Market-driven Companies
Market-driving companies rule the future

they push the envelope of possibility and consistently surprise customers by

introducing unique value in exceptional brand new products and services. Market
driven companies are doomed to fall increasingly further behind as they react to
customer needs that will surely change by the time they deliver the ultimately out
of date product.
A Current Example
Consider Apple vs. Microsoft. Apple is a market-driving company anticipating trends
and taking risk to consistently amaze and surprise customers with delivered value.
Microsoft is a market-driven company missing trends and failing to take risk which
forces it to react after dramatic market shifts have already occurred. Invariably, one
can predict the fate of Zune vs. iTunes, or
understand the relative adoption of Windows mobile vs. the iPhone. Its not hard to
see which
approach is also more cost-effective.
3 | Page
1.4.Approach Makes Them Different
Market-driven companies perform exhaustive market research to fully understand
an existing customer need. They perform multiple validation cycles with heavy
documentation of requirements and written detailed specifications of features and
benefits. A serially laborious process is then followed through multiple cycles of
develop-and-test until a differentiated product or service is identified. For some,
static well-defined market segments, perhaps this approach can still work. Procter
and Gamble for many products, is a good example of being driven by these static
segments. Market-driving companies focus on a vision for the future, unhampered
by traditional thinking and industry norms for product development. Market-driving
companies are poised to make discontinuous leaps in innovation in terms of
customer value (not just incremental capability and technology). These companies
also have a mission to build unique value networks and engage in a bigger business
ecosystem through technology and bu
siness model innovation. Apples iPod
with iTunes is a good example of a value network in a business ecosystem.
1.5.Nine(9) Ways to Differentiate
In pondering what it takes, or how one can observe and more deeply characterize
one type of company from
another, lets look at these key differentiators.

Market-driving Market-driven
1.

Disruptive 1.Reactive 1.

Innovative 2.Incremental 2.

Dynamic 3.Static 4.Clear 4.Confused 5.Decisive 5.Unsure 6.Competitive 6.Tentative

7.Agile 7.Rigid 8.Values 8.Feature 9.Creative 9.Insignificant