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Market-Led Strategic Change

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Market-Led Strategic Change

Transforming the Process of Going to Market
Fourth edition Nigel F. Piercy
Professor of Marketing and Strategic Management Warwick Business School The University of Warwick

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AMSTERDAM BOSTON HEIDELBERG LONDON NEW YORK OXFORD PARIS SAN DIEGO SAN FRANCISCO SYDNEY TOKYO
Butterworth-Heinemann is an imprint of Elsevier

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Butterworth-Heinemann is an imprint of Elsevier Linacre House, Jordan Hill, Oxford OX2 8DP, UK 30 Corporate Drive, Suite 400, Burlington, MA 01803, USA First edition published by HarperCollins Publishers Ltd 1991 First published as a paperback edition by Elsevier Ltd 1992 Second edition 1997 Reissued with new cover 2000 Third edition 2002 Fourth edition 2009 Copyright 2009, Nigel Piercy. Published by Elsevier Ltd. All rights reserved The right of Nigel Piercy to be identied as the author of this work has been asserted in accordance with the Copyright, Designs and Patents Act 1988 No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher Permissions may be sought directly from Elseviers Science & Technology Buy this file from http://www.download-it.org/learning-resources.php?promoCode=&partnerID=&content=story&storyID=664 Rights Department in Oxford, UK: phone ( 44) (0) 1865 843830; fax ( 44) (0) 1865 853333; email: permissions@elsevier.com. Alternatively visit the Science and Technology Books website at www.elsevierdirect.com/rights Notice No responsibility is assumed by the publisher for any injury and/or damage to persons or property as a matter of products liability, negligence or otherwise, or from any use or operation of any methods, products, instructions or ideas contained in the material herein. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data A catalog record for this book is available from the Library of Congress ISBN: 978-1-85617-504-3 For information on all Butterworth-Heinemann publications visit our website at www.elsevierdirect.com Typeset by Charon Tec Ltd., A Macmillan Company. (www.macmillansolutions.com) Printed and bound in Italy 09 10 11 12 13 10 9 8 7 6 5 4 3 2 1

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To the memory of my mother, Helena G. Piercy (19112001)

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Contents
Preface to the fourth edition Acknowledgements About the author What readers said about market-led strategic change PART I THE IMPACT OF CUSTOMER VALUE IMPERATIVES New marketing: marketing is dead, long ix xiii xv xvii

Chapter 1 Chapter 2

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The customer is always right-handed: customer satisfaction, customer sophistication and market granularity Chapter 3 New marketing meets old marketing: new marketing wins! Chapter 4 Value-based marketing strategy End-of-part cases Case 1 Tata, But Denitely Not Goodbye Case 2 Strangling the Fat Lady at EMI? Case 3 The Clouds Raining on the Computer Business PART II Chapter 5 Chapter 6 DEVELOPING A VALUE-BASED MARKETING STRATEGY

31 81 109 147 147 155 162

169 171 219 267

Strategic thinking and thinking strategically Market sensing and learning strategy: competitive strength through knowing more Chapter 7 Strategic market choices and targets: where to compete and where not to Chapter 8 Customer value strategy and positioning: what have you got to offer, how does it make you different to the rest? Chapter 9 Strategic relationships and networks: building the infrastructure to deliver the strategy End-of-part cases Case 4 Big Blue Gets Transparent Case 5 Oh, the Tangled Web They Weave at BAA Case 6 The Wild, Wild Rover

309 343 377 377 388 402

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Contents

PART III

PROCESSES FOR MANAGING STRATEGIC TRANSFORMATION

413 415 431 467 517 517 526 532 539

Chapter 10 Strategic gaps: the difference between what we want and what we have got Chapter 11 Organization and processes for change: building the infrastructure to make it happen Chapter 12 Implementation process and internal marketing: making it happen End-of-part cases Case 7 Tesco Fresh & Queasy in the USA Case 8 When the Peddle Hits the Mittal Case 9 One-Laptop-Per-Child Stirs Up the Grown-Ups Index

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viii

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Preface to the fourth edition

Yes I fear the terrible moment has arrived when Market-Led Strategic Change 4 is allowed to escape and wreak havoc on staid and conventional academic views of the world of customers and competitors, and to wallow in the glorious turbulence and disruptive change that characterize modern markets! Buy this file from http://www.download-it.org/learning-resources.php?promoCode=&partnerID=&content=story&storyID=664 My target readers remain people of practice whether managers, students and teachers of marketing and management, or analysts and planners rather than people of theory. I really have nothing particularly against academic theoreticians (thank goodness, my lie-mode chip appears to be effective), just their irritatingly superior attitudes, undeserved arrogance, stupidly smug expressions, wilfully closed minds and their inherent belief that the trouble with good practice is that you have to ask if it works in theory. Why do people with no interest in business get involved in teaching in business schools, when they usually arent any good at it? Such persons can best be described as murally challenged (cant read the writing on the wall). I really think some of these people need to take a bite from the reality sandwich. The world wants more from us than untested and pointless theorizing. Thoughts on the future of business schools
If stupidity got us into this mess, why cant it get us out? (Will Rogers)

Lets be honest, Market-Led Strategic Change remains a book with attitude, and I remain insincerely apologetic to those who do not like that attitude sorry, its the only one Ive got.

Changes in the Fourth Edition

Constant from the earlier editions of the book is our focus on the process of going to market rather than marketing, in the conventional sense of what people in marketing departments are assumed to do. This focus underlines the point that customers do not much care how we organize

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Preface to the fourth edition

ourselves inside the company, until and unless it affects the value they receive. How we perform in the market is a concern for everyone in the organization, not just an issue for the marketing department (if there still is one, which is actually increasingly unlikely). Going to market is a process, usually a cross-functional process, and often an inter-organizational process. The underlying goal of this book is to provide managers and management students with ideas, concepts, and tools for achieving superior performance in their markets. This means that my target reader is not just the marketing specialist, but all those who have to work with marketing processes, whatever their management specialisms. This audience embraces those who may never in their careers ever work in marketing or sales but who do need to understand what the really important questions are that they should demand to have answered by their marketing colleagues and consultants. For those who are marketing specialists you need to read it too, to know what the searching questions are you will be asked and how you should go about answering them! In fact, everyone in the world should read it (as long as they buy their own individual copies). The good news for some about the leaner organizations we are now Buy this file from http://www.download-it.org/learning-resources.php?promoCode=&partnerID=&content=story&storyID=664 developing is that you may have to spend less on specialist marketing functions. The bad news is that even if you are in operations, supply chain, nance, or human resource management, you now share in responsibility for the way we go to market, so you had better understand how it works! While the focus and goal of the book remain constant from the last edition, there have been substantial changes to the structure of the book. These changes reect the feedback from users of the last edition, and the changing realities which managers are now confronting. The rationale for the structure is explained in the rst chapter (A routemap for market-led strategic change). To streamline the material and to maintain clarity of purpose, the book has been divided into three parts with 12 chapters. Part I examines the imperatives for a focus on customer value. This part explains the approach we are taking and the requirements for value-based strategy. The major addition here is a chapter that contrasts the somewhat static conventional, 4Ps, programmed approach to marketing with the requirements of new marketing for new types of market. The logic for this change is that readers have suggested (somewhat unkindly, I thought) that to establish a basis for new marketing, it is helpful to rst clarify what is meant by old marketing, and I guess they have a point. Part II provides a detailed template for developing a value-based marketing strategy. The core material is concerned with market learning, market segmentation and positioning, value propositions and strategic relationships. A new chapter has been added to focus on the challenges of strategic thinking and thinking strategically about customers, competitors and markets. Part III addresses questions of implementation and change from a process perspective and looks at strategic gaps between intent and reality, organizational change and implementation process and internal marketing.

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Preface to the fourth edition

Opportunities to consider and examine the implications for practice are provided in the cases at the end of each part. These have all been newly produced for this new edition.

Supporting materials
I hope that many of the users of this book will be managers who simply pick it up from the bookstall or web pages as a potentially useful read from which they may gain some new insights and ideas. Indeed, if you are such a managerial reader could I just ask if you have considered buying copies for all your colleagues to enrich their lives as well as your own? However, I am equally aware that many users will be lecturers, teachers and trainers in marketing, who want to use the book as part of their marketing teaching and professional development programmes. To persuade as many of the latter group as possible that adopting the book for their students is a really, really good idea that will make them Buy this file from http://www.download-it.org/learning-resources.php?promoCode=&partnerID=&content=story&storyID=664 incredibly popular with their students and gain them unbelievably high teaching scores, there is an Instructors Manual available for adopters of the book. This may be found at http://textbooks.elsevier.com/ manualsprotected/9781856175043. While you will need a password from the publisher, the Instructors Manual contains suggested designs for different types of teaching programme, PowerPoint slides for each chapter, suggested frameworks for using the case studies in teaching, and copies of the case studies that were in earlier editions and not this one (in case you want to go on using them with the new edition). There are also photographs of my pathetic but very endearing three-legged cat, who will whimper and starve if you do not adopt the book and ensure that all course participants buy at least one copy (each). Indeed, there is much to be said for the view that people really need to buy three copies of this book one for home, one for the ofce, and one for traveling . . .

xi

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Acknowledgements
It is always the case with work like this that those who deserve thanks are too numerous to mention, and trying to do so would require me to be a much nicer person than I actually am. Many colleagues, business people, research collaborators, and students have played a part in reshaping Market-Led Strategic Change (though admittedly often an unwitting and reluctant part). Nonetheless, I would like to express particular gratitude to Professor David W. Cravens of Texas Christian University, from whom I have learned enormously in our research and writing collaborations. Dave Buy this file from http://www.download-it.org/learning-resources.php?promoCode=&partnerID=&content=story&storyID=664 is genuinely inspirational. I would also like to draw attention to Professor Malcolm McDonald, Emeritus Professor at Craneld School of Management, who has had a profound inuence on my thinking about marketing. Sheila Frost, Departmental Secretary for the Marketing and Strategic Management Group at Warwick Business School, deserves special thanks for numerous kindnesses and supporting activities in getting the book produced and delivered. I suppose I should also thank my proofreaders: Dr Carolyn Strong (University of Bath), Dr Nikala Lane (University of Warwick) and Dr Niall Piercy (University of Bath). It would have been nice if they could have restricted their comments to the typing errors they were actually asked to nd. But, what can I say everyones a critic . . . just in some cases not very well-informed critics. I dont think they got my underlying premise that if I want your opinion, Ill give it to you. (If that line survives it is absolute proof they did not check the Preface, and are therefore idle as well as picky.) Clearly, the shortcomings and limitations of this book (in the unlikely event they were to exist), and any errors contained, remain the responsibility of the author (until such time as he can nd someone else to blame, which usually does not take very long). Nigel Piercy Warwick Business School September 2008

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About the author

Professor Nigel F. Piercy BA, MA, PhD, DLitt is one of the best-known business school academics in marketing and strategy in the UK. He is Professor of Marketing and Strategic Management at Warwick Business School, having previously held a chair in strategic marketing at Craneld School of Management, where he was head of the marketing group, and having earlier held the Sir Julian Hodge Chair in Marketing and Strategy at Cardiff University. In addition to UK business school experience, he has been a visiting professor at: Texas Christian University; the University of California, Berkeley; Columbia Business Buy this file from http://www.download-it.org/learning-resources.php?promoCode=&partnerID=&content=story&storyID=664 School, New York; the Fuqua School of Business, Duke University, North Carolina; Athens Laboratory of Business Administration; and the Vienna University of Business and Economics. He has presented seminars and workshops at business schools throughout the world. He has managerial experience in retailing, and was in business planning with Nycomed Amersham plc (now part of GE Healthcare). He has extensive experience as a consultant and management workshop speaker with many organizations in different parts of the world; he has worked with managers and management students in the UK, the USA, Europe, the Far East, South Africa and Zimbabwe. He focuses on issues of market strategy development, planning and implementation, and recent company work includes: TNT, EMC, EON, Amey plc, British Telecom, Allied Dunbar, Ford Cellular, AT&T, Honeywell, AIB Group, ICL, Yellow Pages, as well as other smaller organizations. He has presented and chaired management development programmes for: the Chartered Institute of Marketing, the Academy of Marketing, the Institute of Management, the Institute of Directors, the Tavistock Institute and Henley Management College. His research interests are in strategic marketing and strategy implementation, recently emphasizing the sales/marketing interface and the impact of strategic customers on buyerseller relationships. Professor Piercy has published 18 books and written around 300 articles and papers appearing in the management literature throughout the world. Recent books include: Marketing Strategy & Competitive Positioning 4th edn (with Graham Hooley and Brigitte Nicoulaud) (Hemel Hempstead: FT/Prentice-Hall, 2008) and Strategic Marketing, 9th edn (with David W. Cravens) (Burr Ridge IL: McGraw-Hill/Irwin, 2009). He is also author with Nikala Lane of Strategic Customer Management: Strategizing the Sales Organization (Oxford: Oxford University Press, 2009). Among other awards and prizes, he was the UK Marketing

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About the author

Author of the Year for three years. He has published academic papers in the Journal of Marketing, the Journal of the Academy of Marketing Science; the Journal of World Business and the Journal of Business Research, and has written on management and marketing issues in The Sunday Times and The Independent newspapers.

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xvi

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Chapter extract

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