CH 01

Strategic Market Management
Global Perspectives
David A. Aaker and Damien McLoughlin

ISBN: 978-0-470-68975-2
www.wileyeurope.com/college/aaker
© Copyright 2010 John Wiley & Sons Ltd

1
Chapter One
Strategic Market Management:

An Introduction and Overview

2
“We don’t know where our first impressions come
from or precisely what they mean, so we don’t
always appreciate their fragility”.
Malcolm Gladwell

3
“Even if you are on the right track, you’ll get
run over if you just sit there.”
Will Rodgers

4
“If you don’t know where you’re going, you might end
up somewhere else.”
Casey Stengel

5
What is a Business Strategy?
 The Product-Market Investment Strategy –

Where to compete
 The Customer Value Proposition
 Assets and Competencies
 Functional Strategies and Programmes

6
A Business Strategy
Where to Compete
The product-market investment decision
A Business Strategy
How to Compete
Value Assets & Function area
proposition competencies strategies and programs
Figure 1.1
7
Figure 1.1
The Product-Market Investment
Strategy
 Invest to grow (or enter a product market)
 Invest only to maintain the existing position
 Milk the business by minimising investment
 Recover as many of the assets as possible by

liquidating or divesting the business
8
Customer Value Proposition
Examples
– Good value (Aldi)
– Excellence on an important product or service attribute (El Bulli restaurant

in Spain)
– The best overall quality (Krug Grande Cuvée)
– Product line breadth (Tesco
– innovative offerings (Logitech)
– A shared passion for an activity or a product (Ducati)
– Global connections and prestige (HSBC)

9
Assets and Competencies
 Strategic Competency:
– What a business unit does exceptionally well
– Has strategic importance to the business
– Based on knowledge or a process
 Strategic Asset:
– A resource

10
Functional Strategies and Programs
 Manufacturing strategy  Global strategy
 Distribution strategy  Segmentation strategy
 Brand-building strategy
 Quality program
 Communication strategy
 Customer relationship program
 Information technology strategy
 Social technology strategy
 Sourcing strategy

11
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?
 Does the strategy fit with the other strategies of the firm?
PPT 1-12
Overview of Strategic Market Management
External Analysis Internal Analysis

• Customer Analysis • Performance Analysis
• Competitor Analysis • Determinants of strategic options
• Market/submarket Analysis
• Environmental Analysis
Strategic Analysis Outputs
Creating, Adapting, and

Implementing Strategy
Figure 2.1 PPT 1-13
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.
 Provide a strategic management and control system.
 Provide both horizontal and vertical communication and coordination

systems.
PPT 1-14
Strategic Options
 Quality  Product quality
 Innovation  Product line breadth
 Focus
 Corporate social responsibility
 Being global
 Brand familiarity
 Product attribute
 Customer intimacy
 Product design

15
Strategic Market Management:
A Historical Perspective
 Budgeting
 Long-Range Planning
 Strategic Planning
 Strategic Market Management

16
Characteristics and Trends
 External Market Orientation  Entrepreneurial Thrust
 Proactive Strategies  Implementation
 Importance of Information Systems

 Globalisation
 Knowledge Management
 Longer Time Horizon
 On-Line Analysis and Decision
 Empirical Research
Making
 Interdisciplinary Developments

17
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.

18
Why Strategic Market
Management?
 Provide a strategic management and control
system.
 Provide both horizontal and vertical

communication and coordination systems.
 Help a business cope with change.

19
Key Learnings
 A business strategy includes the determination of the product-market
investment strategy, the customer value proposition, assets and
competencies, and functional area strategy.
 Strategy needs to be developed and executed in the context of a dynamic

market. To cope, it is important to develop competencies in strategic
analysis, innovation, managing mulitple businesses, and developing SCAs.
 Strategic market management is a system designed to help visions. A

strategic vision is a vision of a future strategy or sets of strategies.
Strategic market management includes a strategic analysis of the business
to identify existing or emerging opportunities, threats, trends, strategic
uncertainties, and strategic alternatives.
 The CMO role has grown over the years and is now often charged with
being a partner in developing strategies and a vehicle to deal with the
dysfunctions of the product market silos.
20
Ancillary Slides
David Aaker, Damien McLoughlin, Strategic Market Management European

Edition, 0470059869, © Copyright 2007 John Wiley & Sons Ltd 21
“It isn’t that they can’t see the solution, it’s that
they can’t see the problem.”
G. K. Chesterton

What is Strategy?

“Strategy is a framework which guides those choices
that determine the nature and direction of an
organisation.”
Benjamin B. Tregoe & John W. Zimmerman

“Top Management Strategy”

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

“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”

“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 and Damien McLoughlin

“Strategic Market Management”
Exercise
 Select a company
 What business are they in?
 Who are the direct and indirect competitors?
 Is this company proactive or reactive?


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Strategic Market Management

David A. Aaker and Damien McLoughlin

© Copyright 2010 John Wiley & Sons Ltd

Strategic Market Management:

© Copyright 2010 John Wiley & Sons Ltd

© Copyright 2010 John Wiley & Sons Ltd

© Copyright 2010 John Wiley & Sons Ltd

© Copyright 2010 John Wiley & Sons Ltd

 The Product-Market Investment Strategy –

 The Customer Value Proposition

 Assets and Competencies

 Functional Strategies and Programmes

© Copyright 2010 John Wiley & Sons Ltd

 Invest only to maintain the existing position

 Milk the business by minimising investment

 Recover as many of the assets as possible by

– Excellence on an important product or service attribute (El Bulli restaurant

– The best overall quality (Krug Grande Cuvée)

– Product line breadth (Tesco

– innovative offerings (Logitech)

– A shared passion for an activity or a product (Ducati)

– Global connections and prestige (HSBC)

© Copyright 2010 John Wiley & Sons Ltd

– What a business unit does exceptionally well

– Has strategic importance to the business

– Based on knowledge or a process

© Copyright 2010 John Wiley & Sons Ltd

 Manufacturing strategy  Global strategy

 Distribution strategy  Segmentation strategy

© Copyright 2010 John Wiley & Sons Ltd

 Is the ROI attractive?

 Will the strategy have success in the future?

 Is the strategy feasible?

External Analysis Internal Analysis

Strategic Analysis Outputs

Creating, Adapting, and

 Help a business cope with change.

 Force a long-range view.

 Make visible the resource allocation decision.

 Aid strategic analysis and decision making.

 Provide a strategic management and control system.

 Provide both horizontal and vertical communication and coordination

 Innovation  Product line breadth

© Copyright 2010 John Wiley & Sons Ltd

 Strategic Market Management

© Copyright 2010 John Wiley & Sons Ltd

 Proactive Strategies  Implementation

 Importance of Information Systems

© Copyright 2010 John Wiley & Sons Ltd

 Force a long-range view.

 Make visible the resource allocation decision.

 Aid strategic analysis and decision making.

© Copyright 2010 John Wiley & Sons Ltd

 Provide both horizontal and vertical

 Help a business cope with change.

© Copyright 2010 John Wiley & Sons Ltd

 Strategy needs to be developed and executed in the context of a dynamic

 Strategic market management is a system designed to help visions. A

David Aaker, Damien McLoughlin, Strategic Market Management European

David Aaker, Damien McLoughlin, Strategic Market Management European

David Aaker, Damien McLoughlin, Strategic Market Management European

Benjamin B. Tregoe & John W. Zimmerman

David Aaker, Damien McLoughlin, Strategic Market Management European