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Figure [15] Marketing system
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[12] Strategic Marketing
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defensible, pro table and valued by the market, then it may earn high rates of return even though the industry structure may be unfavourable and the average pro tability of the industry modest A long-term marketing orientation draws together suppliers, customers, competitors and partners in the business system to create value in the marketing system It is the business system as a whole that creates value The marketing system consists of ve major participant groups: customers competitors partners suppliers the organization itself Viewing the value in the business system as the result of a network of important relationships highlights two important factors First, decisions made by one organization affect and are affected by decisions by other organizations Second, organizations often make decisions that are normally associated with those of other actors in the system Thus, the organization makes important decisions which affect suppliers, just as suppliers make important decisions which are normally thought of as in the purview of the organization Because so many decisions are part of a network in which a decision in one organization directly or indirectly in uences decisions in other organizations, major decisions must be consistent with the goals of the participants in the network and their products Herein lies the importance of the contribution of the leading organization the organization making the key contribution to the establishment and growth of the business system (Moore 1993) This key contributor of value or the business system leader emerges in the early stage of the evolution of the business system to begin the process of continuous improvement which draws the entire business system towards an improved future A fundamental service provided by the business system leader is to encourage and persuade other organizations in the business system to complete the full value mix for customers by attracting follower or imitator organizations and thereby prevent them from developing other emerging business systems The multitude of decisions in the business system must complement each other to maximize their overall positive impact on value Within this framework the organization must decide its overall product market business system strategy which has two elements decisions on product market segments and decisions on positions to adopt within the business system itself
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Scope of strategic marketing [13]
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Product market and business system strategies
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Product market segments Segment 1 Segment n Concentrate on key market segments
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Business system Production/operations Distribution Sales Concentrate on key business stages Service Customer
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Figure [16] Generic product market and business system strategies
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(Figure 16) The organization s resource base enables it to decide the appropriate positions on which to focus in the business system Decisions regarding the relevant product market segment to serve are discussed in 3 while decisions regarding the appropriate position in the business system to select are examined in 6
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Sources of marketing advantage
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Sources of marketing advantage are reputation, brands, tangible assets, knowledge, customer service and people To be worthwhile the marketing advantage must be sustainable It must, therefore, be tangible, measurable and capable of providing competitive protection for some time An illusory marketing advantage is one that is easily matched by competitors The organization s marketing advantage depends on how well it chooses its strategy: Concentrating on selected market segments Offering differentiated products Using alternative distribution channels Using different manufacturing processes to allow higher quality at lower prices Superior skills and resources, taken together, represent the ability of the organization to do more and better than its competitors Superior skills are the distinctive capabilities of people in the organization that distinguish
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[14] Strategic Marketing
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them from people in competing organizations, eg superior marketing skills that lead to fewer product failures in the marketplace or superior selling and distribution skills which lead to fewer returns of unwanted products and improved customer satisfaction
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Organizational resources and marketing capabilities
Organizations are endowed with different amounts and types of resources and capabilities, which allow them to compete in different ways Organizations which are better endowed have lower average costs than competitors and can provide products and services at lower cost or provide greater customer value These resources are dif cult to transfer among organizations because of transaction costs and because the assets may contain tacit knowledge (Teece et al 1996, p 15) Such resources and core capabilities of the organization, particularly those which involve collective learning and are knowledge based, are enhanced as they are applied (Prahalad and Hamel 1990) Resources and capabilities which are distinctive and superior, relative to those of rivals, may become the basis for competitive advantage if they are matched appropriately to market opportunities (Thompson Jr and Strickland 1996, pp 94 5) These resources may, therefore, provide both the basis and direction for the growth of the organization itself, ie there may be a natural trajectory embedded in a organization s knowledge base (Peteraf 1993, p 182) Hence, the importance of studying the organization itself when attempting to predict its likely performance Resources and capabilities determine the organization s long-run strategy and are the primary source of pro t In an environment which is changing rapidly and where consumer tastes and preferences are volatile and myriad, a de nition of the business in terms of what the organization is capable of doing may offer a more durable basis for strategy than a traditional de nition, based solely on needs and wants of consumers De ning markets too broadly is of little help to the organization that cannot easily develop the capabilities to serve such a broad market The organization s ability to earn pro ts depends on two factors: the success of the organization in establishing competitive advantage over rivals; and the attractiveness of the industry in which the organization competes As was seen above, the two sources of competitive advantage are: the ability of the organization to reduce costs; and its ability to differentiate itself in ways that are important to customers The ability to establish a cost advantage requires the possession of scaleef cient plants, access to low-cost raw materials or labour and superior
Scope of strategic marketing [15]