Strategic Market Management

By David A. Aaker Vice-Chairman, Prophet Professor Emeritus, University of California at Berkeley

Business Strategy: The Concept and Trends in Its Management

2005 John Wiley & Sons

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Part One
Introduction and Overview
2005 John Wiley & Sons

Copyright 2005 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Copyright Act without the express written permission of the copyright owner is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.

Business Strategy: The Concept and Trends in Its Management

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Chapter One

Business Strategy: The Concept and Trends in Its Management

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Business Strategy: The Concept and Trends in Its Management

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Business Strategy: The Concept and Trends in Its Management

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Plans are nothing, planning is everything. - Dwight D. Eisenhower

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Even if you are on the right track, youll get run over if you just sit there. - Will Rodgers
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Business Strategy: The Concept and Trends in Its Management

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Business Strategy: The Concept and Trends in Its Management

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Where absolute superiority is not attainable, you must produce a relative one at the decisive point by making skillful use of what you have. - Karl von Clausewitz, On War, 1832

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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

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A Business Strategy
Where to Compete
The product-market investment decision

A Business Strategy
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How to Compete
Value proposition Assets & competencies Function area strategies and programs
Figure 1.1 PPT 1-9

Business Strategy: The Concept and Trends in Its Management

The Product-Market Investment Strategy

Invest to grow (or enter a product market) Invest only to maintain the existing position

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Milk the business by minimizing investment

Recover as many of the assets as possible by liquidating or divesting the business

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The Customer Value Proposition

Perceived benefit to customer:
Functional Emotional
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Social

Self-Expressive

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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

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Assets and Competencies

Strategic Competency:
What a business unit does exceptionally well Has strategic importance to the business
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Based on knowledge or a process

Strategic Asset:
A resource

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Functional Strategies and Programs

Manufacturing strategy
Distribution strategy

Global strategy
Segmentation strategy

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Brand-building strategy
Communication strategy

Quality program
Customer relationship program

Information technology strategy

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Strategic Options
Quality Innovation Focus Product quality Product line breadth Corporate social responsibility

Being global
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Brand familiarity
Customer intimacy

Product attribute Product design

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Strategic Market Management: A Historical Perspective

Budgeting Long-Range Planning Strategic Planning
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Strategic Market Management

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Characteristics and Trends

External Market Orientation
Proactive Strategies Importance of Information Systems
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Entrepreneurial Thrust
Implementation Global Realities

Longer Time Horizon

Knowledge Management Empirical Research On-Line Analysis and Decision Making Interdisciplinary Developments

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Why Strategic Market Management?

Precipitate the consideration of strategic choices. 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. Help a business cope with change.
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Business Strategy: The Concept and Trends in Its Management

Key Learnings
A business strategy includes the determination of the productmarket 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. Available strategy options include quality, value, focus, innovation global, product attribute, product design, product line breadth, corporal social responsibility, brand familiarity, and customer intimacy. A business strategy involves the selection and integration of a set of strategic options.
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Strategic market management has evolved from and encompasses budgeting, long-range planning and strategy planning. Strategic market management is externally-oriented, proactive, timely, entrepreneurial, and globally supported by information systems and knowledge management programs.

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Ancillary Slides
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It isnt that they cant see the solution, its that they cant see the problem.
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- G. K. Chesterton

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Experience, to most men, is like the stern lights of a ship, which illuminate only the track it has passed.
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- Samuel Coleridge

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What is Strategy?
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Strategy is a framework which guides those choices that determine the nature and direction of an organization.
-Benjamin B. Tregoe & John W. Zimmerman Top Management Strategy

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Strategy is the creation of a unique and valuable position, involving a different set of activities.
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-Michael Porter What is Strategy? Harvard Business Review

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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, using its relative corporate strengths to better satisfy customer needs.
-Kenichi Ohmae The Mind of the Strategist
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Business Strategy: The Concept and Trends in Its Management

 2005 John Wiley & Sons

Four dimensions define a business strategy: the product-market investment strategy, the customer value proposition, assets and competencies, and functional strategies and programs. The first specifies where to compete, and the remaining three indicate how to compete to win.
-David Aaker Strategic Market Management

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Exercise Select a company

What business are they in?
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Who are the direct and indirect competitors?

Is this company proactive or reactive?

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