Chapter 04 B2B

B2B
Business Market Management, 3rd edition

BOOKS
• James C. Anderson (2009).
Business Market management:
Understanding, Creating and
Delivering Value, 3rd edition.
Prentice Hall.
• Ten Deadly Marketing Sins:
Signs and Solutions. John Wiley
& Sons.
• Philip Kotler (2003). Marketing
insights from A to Z: 80
concepts every manager needs
to know. John Wiley & Sons,
Inc.
CHAPTER 4
CRAFTING MARKET STRATEGY

SECTION II
UNDERSTANDING
VALUE
Business Market
Chapter 4-4
Management, 3rd edition
CHAPTER 4: CRAFTING MARKET STRATEGY
Overview
I. Business Strategy as the Context for
Market Strategy
II. Planning Market Strategy in Business
Markets
III. Summary
ChapterBusiness
4-5 Market Management, 3rd edition
OVERVIEW
Crafting a Market Strategy:
• Studying how to exploit a business’s
resources to achieve short-term and
long-term marketplace success
• Deciding on a course of action
• Flexibly updating it as learning occurs
ChapterBusiness
CRAFTING MARKET STRATEGY
Recognizes real-world complexity and
interplay between deliberate and
emergent strategies
Deliberate strategy: Emergent strategy:

business decides on a marketplace activities
course of action to have a pattern; the
pursue business recognizes the
pattern and acts in a
coordinated way

Crafting Market Strategy
Business Strategy Update
Business
Resources Fundamental Value- Strategy
•Core Competencies Based Strategies Orderly Radical
•Product leadership
•Capabilities advance change
•Customer intimacy
•Partners’ resources •Operational excellence
Market Strategy
Update
Market
What do What do
How will
Strategy
we know? we want to Orderly Radical
we do it?
accomplish? advance change
ChapterBusiness
WHAT IS STRATEGY?
Strategy: the Strategic Positioning:

creation of a unique performing different
and valuable activities from rivals
position involving a or performing similar
different set of activities in different
activities ways
Chapter Business
STRATEGY
• Pursuing a course of action different from
competitors
• Providing superior value to particular market
segments
• Making choices of what the firm will do and
will not do
• Assembling activities that generate superior
value in complementary and synergistic
ways
Chapter Business
STRATEGY
Because a strategic position is a

fundamental course of action that
a firm commits itself to pursue, it
should provide a competitive
advantage for
at least 10 years.
--Michael E. Porter
Chapter 4-12 Business Market Management, 3rd

edition
BUSINESS STRATEGY Chapter 4-13
OVERARCHING STRATEGY
▪Specifies what the business should acquire from

Sourcing others
Strategy
▪What it will produce itself
Technolo
gy ▪The design knowledge and process know-how that
transforms inputs to outputs of greater value
Strategy
▪Provides the context for a dialogue among these
constituent strategies with the intent of harmonizing
Business
them
Strategy
▪Influences each strategy and the business
strategies likewise influenced by them
Business Market Management, 3rd
edition
STRATEGIES
The distinction between business
strategy, or simply strategy and
market strategy is blurred
“Deciding which target group of customers,

varieties, and needs the company should serve is
fundamental to developing a strategy.”
--Michael E. Porter
Chapter Business
A RESOURCE-BASED VIEW
• Companies are very different collections

of physical and intangible assets and
capabilities
• No two companies are alike
• Companies have different experiences
• Companies acquire different assets and skills
• Companies build unique organizational
cultures
Chapter Business
Resource-Based View
External
Internal
Perspective
Perspective
Five-Forces Framework
Core Competencies of Industry Analysis
and Capabilities and
Market-Based Assets

edition
RESOURCES: BUILDING BLOCKS FOR STRATEGY
Chapter 4-17
Five External Market Tests of a Resource’s Value

➢How difficult the resource is to copy
1. Inimitability
➢Length of time it will take competitor to replicate
➢How long a resource will last in providing value before
2. Durability being overtaken by innovation from within the industry or
outside it
➢Extent other firms or individuals can capture the value
3. Appropriability
that the resource creates
➢Ability of different resources to provide similar

4. Substitutability
functionality or performance at the same or lower cost
5. Competitive ➢A market assessment of how a resource compares to

Superiority those of the firm’s competitors
RESOURCES
Chapter 4-18
• Resources are building

blocks for strategy
• Complementary building
blocks
• Core Competencies
• Capabilities
• Brands as a resource
• Reliance on outside
partners
for resources
CORE COMPETENCIES
• A complex harmonization of individual

technologies and production skills
• Determining the firm’s core
competencies:
1. Provide potential access to a wide
variety of markets
2. Make a significant contribution to the
perceived customer benefits of the
end-product
3. Difficult for competitors to imitate
Business Market Management, 3
Chapter 4-19 rd edition
DISTINCTIVE COMPETENCE
Core Competence Distinctive
Something a firm does
particularly well
Competence:
Something a firm does
better than its competitors

Chapter 4-20
edition
MEASURE & MANAGE
CORE COMPETENCIES
• A firm should carefully track its own
and competitors’ performances
• Look for unexpected successes or
unexpected poor performances
• Innovation is a core competency
• Firms should study the record of
innovation
in its entire field during a given period

Chapter 4-21
CAPABILITIES
• A set of business processes

strategically understood
• Broadly based
• Encompasses the entire value chain
• Visible to the customer

Chapter Business
DISTINCTIVE CAPABILITIES
“The most defensible test of the distinctiveness of a

capability is whether it makes a disproportionate
contribution to the provision of superior customer
value—as defined from the customer’s perspective—or
permits the business to deliver value to the customers in
an appreciably more cost-effective way.”
--George S. Day

edition
BRANDS AS RESOURCES
•Brands: a means of identifying a particular

supplier and its market offerings as well as
differentiating them from other suppliers and their
offerings
• Brands have no inherent meaning; instead, they
become endowed with meaning through:
• Performance of the supplier
• It’s market offering over time

Chapter 4-24 edition
BRANDS
• Brands draw on the • Brands serve as a
visual and verbal shorthand
element descriptor of the:
• name • technical,
• logo • economic,
• symbol • service, and
• design • social benefits
• packaging that an offering
• slogan delivers to targeted
• or combination market segments
and customer firms
Chapter Business
BRAND EQUITY
Chapter 4-26
• Capture the value of a

brand
• How customers regard
a brand relative to a
competitor’s offering

edition
BRAND EQUITY
• Preferential actions or responses of
present or prospective customers:
• Greater willingness to sample or try the offering
• Reduction in time to close the sale
• Greater likelihood of purchasing
• Willingness to award a larger share of purchase
requirement
• Willingness to pay a higher price
• Greater unwillingness to switch competitor offerings
after price increases
• Less willingness to sample or try competitors’ offerings
Chapter 4-27
edition
BRANDING STRATEGY
• Firm identifies which brand
elements a firm chooses to apply
across the various products it sells
Chapter Business
BRANDING HIERARCHY
• Summarizing the branding strategy by

displaying the number and nature of
common and distinctive brand elements
across the firm’s products, revealing the
explicit ordering of the brand elements
• Corporate brand
• Family brand
• Individual brand
Chapter Business
RELIANCE ON OUTSIDE
PARTNERS FOR RESOURCES
• Collaborative relationship allows firms access to
resources and to leverage their own resources
• Business relationships and networks form to focus
on specific market opportunities

Chapter 4-30 edition
RELIANCE ON OUTSIDE PARTNERS FOR RESOURCES
• Firms increasingly rely on resources of outside

logistics and transportation providers
• Firms with complementary product lines may

agree to co-market each other’s product line
• A firm may look to pool its resources with one

or more firms so all can pursue a strategy none
could achieve alone
Business Market
Chapter 4-31
FUNDAMENTAL VALUE-BASED STRATEGIES Chapter 4-32
Product Customer
Leadership Intimacy
Value-Based Strategies
•Mutually Exclusive
•Firms that surpass the
Operational competition in 2 areas have an
Excellence extraordinary advantage

PRODUCT LEADERSHIP
• Offering customers leading-edge products and

services
• Relentless pursuit of innovation
• Seeks external technologies to solve
or enhance its offering’s performance
• Seeks to obsolete its own product before
competition can
• Uses experience and learning to both speed up
new offering realization process and lower its cost
edition
CUSTOMER INTIMACY
• Segmenting and targeting markets and tailoring

offerings to match the demands of those niches
• Recognizes retaining customers over time tends to
gain more profits from them
• Maintaining close relationships with customers allows
firms to anticipate changes and preferences of
customers
• Supplier’s share of the customer's business is a critical
measure for gauging the success of customer
intimacy
edition
OPERATIONAL EXCELLENCE
• Providing customers with reliable products or

services at competitive prices and delivered
with minimal difficulty
• Creative in the design and implementation of
business processes
• Continually search for ways to eliminate
redundant activities
• Perform different activities from competitors
Chapter Business
STRATEGY MAKING
• Who makes strategy?
• Defining purpose…
• Strategy as orderly advances punctuated by
radical change!

edition
WHO MAKES STRATEGY? Chapter 4-37
• Conventional view: top management

• Recent research: middle management plays
a critical role
Role of Middle Management is Strategy Making
Often has value-adding Far better than senior executives
entrepreneurial ideas that at leveraging the information
they are able and willing to networks resulting in
realize
substantive, lasting change
Can manage the tension between

Stays attuned to employees’ continuity and change. They
moods and emotional
needs, ensuring that the keep the organization from
change initiative’s falling into extreme inertia or
momentum is maintained extreme chaos.
Business Market
WHO MAKES STRATEGY?
• Iconoclastic view: Promote broader
involvement of managers throughout the firm
• Emergent view: Imaginative thinking exists in many

places as a result of
experience, mistakes, and learning
Business Market
Chapter 4-38
WHO MAKES STRATEGY? Chapter 4-39
• Democratic process
for strategy making:
• Senior management
actively seeks out
revolutionary
thinkers
• Youthful perspectives
• Geographic
periphery
of the firm
• Newcomers with
fresh perspectives
Business Market
DEFINING PURPOSE
• Mission or Vision Statement expresses a

strategic direction
• Strategic Intent expresses a desired leadership
position and establishes the criterion the
organization will use to chart progress
• Purpose of the firm engages employees to
develop, refine, and renew the organization’s
ambition

Chapter 4-40
edition
STRATEGY AS ORDERLY ADVANCES PUNCTUATED
BY RADICAL CHANGE
• “Strategy as Revolution”
• “Strategy as Stretch and Leverage”
• Concentrate resources
• Accumulate resources
• Complement resources
• Conserve resources
• Recover resources
Business Market
Chapter 4-41
“Clear periods of stability and change can
usually be distinguished in any organization:
while it is true that particular strategies may
always be changing marginally, it seems
equally true that major shifts in strategic
orientation occur only rarely.”
--Mintzberg, “Crafting Strategy,” Harvard Business Review
Business Market
Chapter 4-42
II. PLANNING MARKET STRATEGY
IN BUSINESS MARKETS
“Chance favors the

prepared mind.”
--Louis Pasteur
Business Market
Chapter 4-43
PLANNING MARKET STRATEGY IN
BUSINESS MARKETS
Planning is a mechanism for learning
• Market View: a mental model that simplifies
representations of the market and how it
works
• Institutional Learning: management teams
change the shared mental models of their
company, markets, and competitors
Business Market
Chapter 4-44
PLANNING MARKET STRATEGY IN
BUSINESS MARKETS
What do we know?
What do we want to accomplish?
How will we do it?
Business Market
Chapter 4-45
WHAT DO WE KNOW?
• To construct a market strategy, managers
must distinguish among:
“To be conscious
• what they know that you are ignorant
is a great step to
• what they believe
knowledge.”
• what they want to believe --Benjamin Disraeli
And must:
• willing to change what they think they
know
• ask themselves how they know
Chapter 4-46 Business Market Management, 3rd edition

ASSESSING WHAT DO WE KNOW
• Review recent performance
• Gather essential market information
• Construct scenarios under uncertainty
Business Market
Chapter 4-47
REVIEW RECENT PERFORMANCE
• Compare recent performance with plan’s
objectives
• Accurate explanation of past performance

requires managers to “think backward”
• Review of past performance connects planning

market strategy with performance review
Chapter Business
IMPROVING MANAGEMENT’S Chapter 4-49
BACKWARD THINKING ABILITIES

Experiment with several metaphors as explanations, each of which
Step 1 might add to their understanding
Step 2 Recognize that an event or outcome may have more than one cause
Because a defining characteristic of insights is that they take us by

Step 3 surprise, managers should go against what appear to be more
probable causes to consider their opposites
Assess candidate causal chains by the number and strength of their

Step 4 links; longer chains generally are less probable
Step 5 Generate and test alternative explanations rather than simply settling
on the first or seemingly most likely one

GATHER ESSENTIAL MARKET
INFORMATION
Market Information Essentials
for Strategic Market Planning in Business Markets
4. Estimates of the value of the
1. Alternative ways of segmenting
product offering and the value of
the market that give the firm
augmenting services for each
some leverage
market segment
5. Two or three strengths/

2. Estimates of the size and growth weaknesses where actionable
of each market segment improvements would significantly
presently and potentially served affect customer’s perceptions of
the firm’s performance
3. The distribution of estimates of

the firm’s share of customer's 6. Knowledge of the firm’s most- and
business for each market least-profitable products, and
segment most- and least-profitable
customer groups
Business Market
Chapter 4-50
MARKET STRATEGIES
• Defensive Market • Offensive Market Strategy
Strategy: • Aim to gain new
• Aim to retain present customers
customers • Focus on weaknesses
• Strengthen what are that have kept firms
already strengths from doing business with
them in the past
Alternative Strategy:
Craft a strategy that
represents a composite of both
Business Market
Chapter 4-51
DECISION MAKING
Slow Decision Makers: Fast Decision Makers:
• Rely on planning and • Look to real time
information
futuristic information
• Current operations and
• Spend time tracking current environment
the likely path of • Prefer indicators such as
technologies, bookings, backlog,
markets, and margins, engineering,
milestones, cash, scrap,
competitors’ actions,
and work-in-progress
and then develop a
plan
Business Market
Chapter 4-52
SITUATION ASSESSMENT
• Pulls together market information and internal
knowledge
• Market place
(customers and environment)
• Competitors
• Internal resources and capabilities
Situation assessment must be based on market

data and information,
not simply managers’ beliefs and opinions,
to be worthwhile
Business Market
Chapter 4-53
CONSTRUCT SCENARIOS
• Market uncertainty tool
• Scenario: a plausible representation of a firm’s possible
future
• Scenario analysis should cause managers to challenge
their market views
• Specify critical milestones or signposts, that signal
whether a given scenario likely will, or will not occur
• Scenario analysis to spur institutional learning: Use of
scenarios as written cases in management games,
where managers are challenged to explore: “What
will we do if this happens?”
Business Market
Chapter 4-54
WHAT DO WE WANT TO
ACCOMPLISH?
• Three- to five-year planning horizon
• Plan updated yearly
• Work through multiple alternatives
simultaneously
• Promotes faster decision making
• Sharpens preferences
• Builds confidence that superior
alternatives have not been
overlooked
• Provides better fallback position
Business Market
Chapter 4-55
HOW TEAMS ARGUE BUT STILL GET
ALONG
Tactic Strategy
▪Base discussion on current, factual
information Focus on issues,
▪Develop multiple alternatives to
not personalities
enrich the debate
▪Rally around goals Frame decision as

▪Inject humor into the decision-making collaborations aimed at
process
achieving the best possible
solutions for the company
▪Maintain a balanced power structure
▪Resolve issues without forcing Establish a sense of fairness
consensus and equity in the process
Business Market
Chapter 4-56
SETTING GOALS AND OBJECTIVES
• Goals: longer-term, strategic directions
• often imprecisely stated and qualitative
• Objectives: near-term, more
measurable standards
• milestones that enable the firm to chart its
progress in attaining its goals
• Balanced Scorecard: assesses customer,
financial, internal business process, as well as
learning & growth performance, as a
mechanism to accomplish this
Business Market
Chapter 4-57
POSITIONING IN BUSINESS MARKETS Chapter 4-58
Establishing and (sustaining) an intended meaning for

Positioning:
a market offering in the minds of targeted customers
Succinctly characterizes the specific type of customers

Target: for the market offering that are of most interest to the
supplier
Specifies the essential attributes of the market offering

Offering
for the selected target, out of the potentially larger set
Concept:
of attributes that an offering might possess

CUSTOMER VALUE PROPOSITIONS Chapter 4-59
Value Favorable
All
Proposition Resonating Focus
Benefits Points-of-Difference
:
Consist of: The one or two points-of-
difference (and, perhaps, a
All benefits All favorable points-of-
point-of-parity) whose
customers difference a market offering
improvement will deliver the
receive from a has relative to the next-best
greatest value to the
market offering alternative
customer for the
foreseeable future
Answers the “Why should “Why should our firm
“What is most worthwhile for
customer our firm purchase your offering
our firm to keep in mind
question: purchase your instead of your
about your offering?”
offering?” competitor’s?”
Requires: Knowledge of how own
Knowledge of Knowledge of own market market offering delivers
own market offering and next best superior value to customers,
offering alternative offering compared to next-best-
alterative offering
Has the
Benefit Requires customer value
potential
Business Market Management, 3
assertion
rd edition Value presumption
research
BUILDING BRANDS IN BUSINESS MARKETS
• How does the brand strategy support our business

strategy?
• What is our inspirational brand identity, and what do we

need to do to get there?
• What value proposition is most valuable to our

customers?
• How do I align my organization to make the

brand and value proposition a reality?
Business Market
Chapter 4-60
Building Brands in Business Markets
Chapter 4-61
1. Adopt a corporate or family branding strategy and create a

well-defined brand hierarchy
2. Link non-product-related imagery associations
3. Employ a full range of marketing communication options
4. Leverage equity of other companies that are customers
5. Segment markets carefully and develop tailored branding

and marketing programs
Source: Keller, Strategic Brand Management

HOW WILL WE DO IT?
Develop an Action Plan
Develop a Sales and Marketing Program
Take Stock of Implementation Skills
Learn and Adapt
Business Market
Chapter 4-62
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
Business Market
Chapter 4-63
MARKETING AND SALES PROGRAMS
• A set of connected activities that consumes resources to
produce results in pursuit of some objective
• External
• Objectives or related objectives
• Measure of feedback
• Internal
• Actions to be taken
• Responsibilities defined
• Timing
• Budget
Business Market
Chapter 4-64
TAKE STOCK OF IMPLEMENTATION SKILLS
Chapter 4-65
A manager’s behavioral style of relating to others inside

Interaction and outside the firm. Captures how a manager works
Skills together with others, uses influence strategies, and
negotiates.
Allocation A manager’s expertise in budgeting time, people, and

Skills money.
Monitoring Manager’s ability to stay informed about what matters and

Skills to recognize when to intervene in ongoing activities.
Organizing Captures manager’s proficiency at drawing upon or

Skills circumventing the formal organizational structure to bring
together the resources to accomplish a market task.
LEARNING AND ADAPTING
• Gain early feedback before or just after
implementing parts of the market strategy
• Customer Advisory Board
• Pilot programs: learning by doing
• Disseminate what was learned throughout
the organization
• Best Practices
• Support a culture that values systematic
market experiments
Business Market
Chapter 4-66
IV. SUMMARY
Business Market
Chapter 4-67
SUMMARY
• Crafting market strategy is the process of studying how to exploit a
business’s resources to achieve short-term and long-term marketplace
success
• Crafting market strategy requires significant participation from many

functional areas
• Crafting market strategy recognizes real-world complexity and the

interplay between deliberate strategy and emergent strategy
• Business strategy provides the context for market strategy
• Through planning market strategy, members of the management team

compare, revise, and update their individual market views
• To construct a market plan, managers must distinguish between what they

know, what they believe, and what they want to believe
Business Market
Chapter 4-68
EXERCISES

Chapter 04 B2B

Uploaded by

Copyright:

Available Formats

Chapter 04 B2B

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Chapter 04 B2B

Uploaded by

Copyright:

Available Formats

B2B

Business Market Management, 3rd edition

CRAFTING MARKET STRATEGY

Business Market Management, 3rd edition

Deliberate strategy: Emergent strategy:

Business Market Management, 3rd edition

Strategy: the Strategic Positioning:

Because a strategic position is a

Chapter 4-12 Business Market Management, 3rd

▪Specifies what the business should acquire from

“Deciding which target group of customers,

• Companies are very different collections

Chapter 4-16 Business Market Management, 3rd

Five External Market Tests of a Resource’s Value

➢Ability of different resources to provide similar

5. Competitive ➢A market assessment of how a resource compares to

• Resources are building

• A complex harmonization of individual

Business Market Management, 3rd

Business Market Management, 3rd edition

• A set of business processes

• Encompasses the entire value chain

• Visible to the customer

“The most defensible test of the distinctiveness of a

Business Market Management, 3rd

•Brands: a means of identifying a particular

Business Market Management, 3rd

• Capture the value of a

Business Market Management, 3rd

• Summarizing the branding strategy by

• Collaborative relationship allows firms access to

resources and to leverage their own resources

• Business relationships and networks form to focus

on specific market opportunities

Business Market Management, 3rd

• Firms increasingly rely on resources of outside

• Firms with complementary product lines may

• A firm may look to pool its resources with one

Business Market Management, 3rd edition

• Offering customers leading-edge products and

• Segmenting and targeting markets and tailoring

• Providing customers with reliable products or

• Strategy as orderly advances punctuated by

Chapter 4-36 Business Market Management, 3rd

• Conventional view: top management

Can manage the tension between

• Emergent view: Imaginative thinking exists in many

• Mission or Vision Statement expresses a

Business Market Management, 3rd

“Chance favors the

What do we want to accomplish?

How will we do it?

Chapter 4-46 Business Market Management, 3rd edition

• Review recent performance

• Gather essential market information

• Construct scenarios under uncertainty

• Accurate explanation of past performance

• Review of past performance connects planning

BACKWARD THINKING ABILITIES

Because a defining characteristic of insights is that they take us by