Strategic Market Management

By
David A. Aaker
© 2005 John Wiley & Sons

Vice-Chairman, Prophet
Professor Emeritus, University of California at Berkeley

PPT 1-1
 Chapter One

Introduction and Overview

© 2005 John Wiley & Sons

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PPT 1-2
 “Plans are nothing,
planning is everything.”
- Dwight D. Eisenhower
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PPT 1-3
 “Even if you are on the right track, you’ll get
run over if you just sit there.”
- Will Rodgers
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PPT 1-4
 “If you don’t know where you are
going, you might end up
somewhere else.”
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- Casey Stengel

PPT 1-5
 Management Tasks
• Strategic Analysis
• Innovation
• Multiple Business—Strategies and Issues
• Creating SCAs
• Developing Growth Platforms
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PPT 1-6
 What is a Business Strategy?

• The Product-Market Investment Strategy –

where to compete

• The Customer Value Proposition

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• Assets and Competencies

• Functional Strategies and Programs

PPT 1-7
 A Business Strategy

Where to Compete
The product-market investment decision

A Business
A Business Strategy
Strategy
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How to Compete
Value Assets & Function area
proposition competencies strategies and programs

Figure 1.1 PPT 1-8

 The Product-Market Investment
Strategy

• Invest to grow (or enter a product market)

• Invest only to maintain the existing position

• Milk the business by minimizing investment

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• Recover as many of the assets as possible by

liquidating or divesting the business

PPT 1-9
 Product-Market Growth Directions

Present
Present New
New
Products
Products Products
Products

Present
Present Market
Market Product
Product
Markets
Markets Penetration
Penetration Expansion
Expansion

Market
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New
New Market Diversification
Markets Expansion Diversification
Markets Expansion

Vertical
Vertical Integration
Integration
Source: H. Igor Ansoff, “Strategic Diversification”, Harvard Business
Review, September-October 1957, pp.113-24
Figure 2.4 PPT 1-10
 The Customer Value Proposition

Perceived benefit to customer:

• Functional

• Emotional
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• Social

• Self-Expressive

PPT 1-11
 Customer Value Proposition
Examples

• A good value

• Excellence on an important product or service attribute

• The best overall quality

• Product line breadth

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• Innovative offerings

• A shared passion for an activity or a product

• Global connections and prestige

PPT 1-12
 Assets and Competencies

Strategic Competency:

– What a business unit does exceptionally well

– Has strategic importance to the business

– Based on knowledge or a process

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Strategic Asset:

– A resource

PPT 1-13
 Functional Strategies and
Programs

• Manufacturing strategy • Global strategy

• Distribution strategy • Segmentation strategy

• Brand-building strategy • Quality program

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• Communication strategy
• Customer relationship program
• Information technology
strategy

PPT 1-14
 Criteria to Select Business Strategies

• Is the ROI attractive?

• Is there a SCA?

• Will the strategy have success in the future?

• Is the strategy feasible?

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• Does the strategy fit with the other strategies of the firm?

PPT 1-15
 Overview of Strategic Market Management

External Analysis Internal Analysis

• Customer Analysis • Performance Analysis
• Competitor Analysis • Determinants of strategic options
• Market/submarket Analysis
• Environmental Analysis
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Strategic
Strategic Analysis
Analysis Outputs
Outputs

Strategy
Strategy Identification,
Identification, Selection,
Selection,
and
and Implementation
Implementation
Figure 2.1 PPT 1-16
 Why Strategic Market Management?

• Precipitate the consideration of strategic choices.

• Help a business cope with change.

• Force a long-range view.

• Make visible the resource allocation decision.

• Aid strategic analysis and decision making.

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• Provide a strategic management and control system.

• Provide both horizontal and vertical communication and

coordination systems.

PPT 1-17
 Marketing and Strategy
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PPT 1-18
 Key Learnings
• Strategy needs to succeed in a dynamic market.

• A business strategy includes the determination of the product-market

scope and its dynamics (as reflected in the intensity of the business
investment), the customer value proposition, assets and competencies,
and functional strategies and programs.

• External analysis includes analyses of customers, competitors, markets,

and the environment. Internal analysis includes a performance appraisal
and an examination of organizational strengths, weaknesses, problems,
constraints, and strategic options.
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• The role of these analyses is to identify existing or emerging

opportunities, threats, trends, strategic uncertainties, and strategic
options.

• Marketing has a key role in strategy.

PPT 1-19
 Ancillary Slides
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PPT 1-21
 “It isn’t that they can’t see the
solution, it’s that they can’t see the
problem.”
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- G. K. Chesterton

PPT 1-22
 “Experience, to most men, is like the
stern lights of a ship, which illuminate
only the track it has passed.”
- Samuel Coleridge
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PPT 1-23
 “Strategy is a framework which
guides those choices that determine
the nature and direction of an
organization.”
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-Benjamin B. Tregoe &

John W. Zimmerman
“Top Management Strategy”

PPT 1-24
 “In terms of the three key players
(competitors, customers, company)
strategy is defined as the way in which a
corporation endeavors to differentiate
itself positively from its competitors,
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using its relative corporate strengths to

better satisfy customer needs.”
-Kenichi Ohmae
“The Mind of the Strategist”
PPT 1-25
 “Business has only two basic
functions - marketing and innovation.”
- Peter Drucker
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PPT 1-26