B2B Strategy Making and Planning

B2B Strategy Making and Planning

Overview

Overview

•  Developing market strategy – is the process of studying how to exploit a firm’s resources to achieve short-term and long-term marketplace success, deciding on what course of action to pursue, and flexibility updating it as learning occurs during implementation.

Crafting Market Strategy

Resources: Fundamental Value Based Strategies

# Core competencies # Product leadership

# Capabilities # Customer intimacy

# Partners resource # Operational excellence

Business Strategy

Market Strategy

What do we know?

What do we want to accomplish?

How will we do it?

Orderly advance

Radical advance

Update Market Strategy

Update Business Strategy

Orderly advance

Radical advance

Knowledge

• Deliberate

• Emergent

Anderson, James, James Narus and Das Narayandas (2009), Business Market Management: Understanding, Creating, and Delivering Value, Third Edition, Prentice Hall.

Business Strategy the Cornerstone for Market Strategy

•  Strategy is written more than any other topic in management practice

•  What is strategy? Porter contends that firms fail to distinguish between Operational effectiveness – “means performing similar activities better than rivals perform them”

•  Porter says Strategy “is the creation of a unique and valuable position, involving a different set of activities.

Business Strategy the Cornerstone for Market Strategy

A Resource Based View of the Firm •  The resourced based view “sees companies

as very different collections of physical and intangible assets and capabilities”.

•  No two companies are alike. •  Resources are the building blocks for

strategy.

Business Strategy the Cornerstone for Market Strategy

•  Core Competencies – A core competence is “ a complex

harmonisation of individual technologies and production skills”

– As an example 3M Company has core competencies in substrates, coatings, and adhesives that it has brought together in distinct ways to create a number of successful businesses.

Business Strategy the Cornerstone for Market Strategy

•  Capabilities – A capability is “a set of business processes

strategically understood” –  i.e. Woolworth's / Walmart – are examples of

company’s with a capability, which closely coordinates business processes with its strategic suppliers to provide superior inventory turns.

B2B Brands as Resources

Overview

Definition of a Power Brand

A power brand identifies a company, product or service and has high awareness and recall with customers and is associated with a very successful global company’s.

Advantages of Power Brands

•  Improved perceptions of product performance

•  Greater loyalty •  Less vulnerability to

competitive marketing actions

•  Less vulnerability to crises

•  Larger margins •  More inelastic consumer

response •  Greater trade cooperation •  Increased marketing

communications effectiveness

•  Possible licensing opportunities

DuPont Company

•  Dacron® •  Teflon® •  Lycra® •  Kevlar®

IBM Company

•  IBM integrates hardware, software, business consulting and IT services into business solutions to meet your goals. IBM also has strong alliances with partners to deliver business solutions.

3M Company

•  3M is the industry leader in fire stopping. 3M dedicated to stringent testing and code developments help make buildings safer today than they were even 10 years ago. The product is backed by a brand as powerful as 3M, you get proven reliability and outstanding service.

Top Brands 2010

Nine ways to manage your brand as an asset

1.  Formally link business and brand strategy

2.  Create a unique and relevant Brand Identity

3.  Create a clear and distinct Positioning

4.  Extend your brand strategically

5.  Build a strategic Brand Architecture

6.  Evaluate and align touch points

7.  Consistently deliver on your Brand Contract

8.  Practice effective global brand management

9.  Set the organization up for success

Business Strategy As the Cornerstone For Market Strategy

•  Reliance On Outside Partners For Resources – Firms use collaborative relationships with other

firms to gain access to resources and to leverage their own resources.

–  In a rapidly changing, technology drive markets, no one firm will possess all of the resources needed to create innovative products.

Business Strategy the Cornerstone for Market Strategy

Fundamental Value-Based Strategies •  At the core of every successful strategy is

understanding what targeted market segments that firms regard as superior value and how to provide it to them.

•  Three value based strategies product leadership, customer intimacy and operational excellence.

Dimensions of Business Value

Crafting Market Strategy

Resources: Fundamental Value Based Strategies

# Core competencies # Product leadership

# Capabilities # Customer intimacy

# Partners resource # Operational excellence

Business Strategy

Market Strategy

What do we know?

What do we want to accomplish?

How will we do it?

Orderly advance

Radical advance

Update Market Strategy

Update Business Strategy

Orderly advance

Radical advance

Knowledge

• Deliberate

• Emergent

Anderson, James, James Narus and Das Narayandas (2009), Business Market Management: Understanding, Creating, and Delivering Value, Third Edition, Prentice Hall.

Business Strategy the Cornerstone for Market Strategy

•  Product Leadership – Leading edge products and services that

consistently enhance the customer’s use or application of the product, thereby making rivals obsolete.

– Company pursues innovation relentlessly – Variety based positioning

Core Marketing Strategies: Product Leadership

Strategic Direction Ideas to Products Skillful marketing

Systems Rewards innovation New product success

Organization Ad hoc, Organic

Flexible, Changes

Corporate Culture Experimental

Out of box thinking

Business Strategy the Cornerstone for Market Strategy

•  Customer Intimacy – Customer Intimacy “means segmenting and

targeting markets precisely and then tailoring offerings to match exactly the demand of those niches”.

– Retaining customers over time – Needs based positioning –  Your share of the customers business

Core Marketing Strategies: Customer Intimacy

Strategic Direction Provide solutions

Improve customer’s business

Systems Measures cost of service

Customer loyalty

Organization Empowerment

Close to customer

Corporate Culture Flexible

Have it your way

Customer Service Indicators

Business Strategy the Cornerstone for Market Strategy

•  Operational Excellence – Operational Excellence means “ providing

customers with reliable products or services at competitive prices and delivered with minimal difficulty or inconvenience.

– Dell is an example of a company that has pursued operational excellence.

Core Marketing Strategies: Operational Excellence

Strategic Direction Distribution

No-hassle service

Systems Standard operating

procedure

Organization Central authority

Finite empowerment

Corporate Culture Predictable

One-size-fits-all

Value Innovation

•  Value innovation – instead of focusing on beating the competition you focus on making the competition irrelevant by creating a leap in value for buyers and your company

Strategy Canvas of NetJets

The Four Action Framework

Business Strategy the Cornerstone for Market Strategy

Strategy Making •  How firms develop strategy is a topic of

keen interest. •  Who Makes Strategy? •  Defining Purpose. •  Implementing change if needed.

Business Strategy the Cornerstone for Market Strategy

•  Who Makes Strategy? – Conventional view is that top management

make strategy – Top down Vs Bottom up – Need to promote broader involvement of

managers across the firm is preferable. – This requires a more democratic process of

strategy making.

Business Strategy the Cornerstone for Market Strategy

•  Defining Purpose – Cornerstone of strategy making is defining

purpose in a mission or vision statement. – Purpose can also be defined as strategic intent

(Hamal and Prahalad 1992)

Planning Market Strategy

“Chance favours the prepared mind”

Quote- Louis Pasteur

Planning Market Strategy In Business Markets

What Do we Know? •  It is important to emphasize the

word know •  It is important to distinguish

between what they know, what we believe, and what we want to believe.

•  We must be willing to challenge what they think we know.

Box 4.2 Market Information essentials for Strategic Planning in Business Markets

Planning Market Strategy In Business Markets

What Do We Want to Accomplish? •  Management team attempts to reach a shared

agreement. •  Marketing strategy begins with targeting

segments and customer firms. •  Setting Goals and Objectives •  Positioning •  Building Brands

Positioning: Establishing and (sustaining) an intended meaning for a market offering in the minds of targeted customers

Target: Succinctly characterizes the specific type of customer for the market offering that are of the most interest to the supplier

Offering Concept:

Component specifies the essential attributes of the market offering for the selected target, out of the potentially larger set of attributes that an offering might possess

Positioning in Business Markets

Customer Value Propositions Value

Proposition: All Benefits Favorable

Points-of-Difference Resonating Focus

Consist of: All benefits customers receive from a market offering

All favorable points-of-difference a market offering has relative to the next-best alternative

The one or two points-of-difference (and, perhaps, a point-of-parity) whose improvement will deliver the greatest value to the customer for the foreseeable future

Answers the customer question:

“Why should our firm purchase your offering?”

“Why should our firm purchase your offering instead of your competitor’s?”

“What is most worthwhile for our firm to keep in mind about your offering?”

Requires: Knowledge of own market offering

Knowledge of own market offering and next best alternative offering

Knowledge of how own market offering delivers superior value to customers, compared to next-best-alterative offering

Has the potential pitfall:

Benefit assertion Value presumption Requires customer value research

Planning Market Strategy In Business Markets

How Will We Do It? •  The question is about thinking

through implementation of the market strategy.

•  Firms can propose the most wonderful sounding market strategies, but if they lack the requisite knowledge, skills, and abilities to put them into play, little will be accomplished.

Develop an Action Plan

•  Translates the market strategy into the coordinated activities and specific resources the firm will use to attain what it wants to accomplish –  Gain input from each functional area

–  Each objective or set of objectives is associated with a program or programs

–  Coordinate various market activities

Take Stock of Implementation Skills

Interaction Skills

A manager’s behavioral style of relating to others inside and outside the firm. Captures how a manager works together with others, uses influence strategies, and negotiates.

Allocation Skills

A manager’s expertise in budgeting time, people, and money.

Monitoring Skills

Manager’s ability to stay informed about what matters and to recognize when to intervene in ongoing activities.

Organizing Skills

Captures manager’s proficiency at drawing upon or circumventing the formal organizational structure to bring together the resources to accomplish a market task.

Competitive Position Tactics

Summary

•  Crafting market strategy is the process of studying how to exploit a firm’s resources to achieve short term and long term success.

•  It requires significant participation from many functional areas.

•  Business Strategy involves a resource based view, product leadership or customer intimacy view of the firm.

Summary

•  Radical change versus orderly advance. •  Through planning market strategy members

of a management team can compare, revise and update individual market views, so as to devise alternative courses of action

•  We need to ask fundamental questions such as

–  What do we know? –  What do we want to accomplish? –  How we will do it?

You are welcome to contact Nigel Bairstow at B2B Whiteboard your source of B2B Asia / Pacific marketing advice http://www.linkedin.com/pub/nigel-bairstow/6/41b/726

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