Markets need to be defined so that the right buyers and competition are analyzed for a market to exist, there must be people with particular needs and wants and one or more products that can satisfy these needs. Also, the buyers must be both willing and able to purchase a product that satisfies their needs and wants.

Becoming a market-oriented company involves several interrelated requirements. These include information acquisition, inter functional assessment, shared diagnosis, and coordinated action.

Before work can start on marketing strategy, management's objectives and plans for the business must be clearly understood. The discussion in Chapter 2 considers these decision* and activities. An understanding of business purpose, scope, objectives, and strategy is essential to making strategic marketing decisions that are consistent with the corporate and business unit plan of action.

The chief marketing executive's business strategy responsibilities include (1) participating in strategy formulation and (2) developing marketing strategies that follow business strategy priorities. Since these two areas are closely interrelated, it is important to examine marketing's role and functions in both areas to gain more insight into marketing's responsibilities and contributions. Peter F. Ducker describes this role:

Marketing is so basic that it cannot be considered a separate function (i.e., a separate skill or work) within the business, on a par with others such as manufacturing or personnel. Marketing requires separate work, and a distinct group of activities.. But it is, first, a central dimension of the entire business. It is the whole business: seen from the point of view of its final result, that is, from the customer's point of view.17

Frederick E. Webster describes the role of the marketing manager: "At the corporate level, marketing managers have a critical role to play as advocates for the customer and for a set of values and beliefs that put the customer first in the firm's decision making, and to communicate the value proposition as part of that culture throughout the organisation, both internally and in its multiple relationships and alliances."'8 This role includes assessing market attractiveness in the markets available to the firm, providing a customer orientation, and communicating the firm's specific value advantages.

Suppose that you need to develop a plan for a new product to be introduced into the national market next year. The plan for the introduction should include the expected results (objectives), market targets, actions, responsibilities, schedules, and dates. The plan indicates details and deadlines, product plans, a market introduction program, advertising and sales promotion actions, employee training, and other information necessary to launching the product. The plan needs to answer a series of questions—what, when, where, who, how, and why—for each action targeted for completion during the planning period.

The marketing plan includes action guidelines for the activities to be implemented, who does what, the dates and location of implementation, and how implementation will be accomplished. Several factors contribute to implementation effectiveness, including the skills of the people involved, organisational design, incentives, and the effectiveness of communication within the organisation and externally.

Financial planning includes forecasting revenues and profits and estimating the costs necessary to carry out the marketing plan' see the Appendix to Chapter 1 for details). The people responsible for market target, product, geographical area, or other units may prepare the forecast. Comparative data on sales, profits, and expenses for prior years is a useful link of the plan to previous results

Companies obtain competitive" advantage by offering superior value to the customer through (!) lower prices than competitors for equivalent benefits and/or (2) unique benefits that more than offset a higher price.4 Several important considerations enter into achieving customer satisfaction and gaining competitive advantage.

1. The process should be customer-focused.

2. Analysis of needs/wants (requirements) should look at groups of buyers with similar preferences.

3. Opportunities for advantage occur when gaps exist between what customers want and competitors' efforts to satisfy them.

4. Opportunities are created by finding buyers' requirements which are not being satisfied.

5. Customer satisfaction analysis should look for the best opportunities for the organisation to create superior value. • '

SMH achieves its competitive advantage in the watch market using both value and cost strategies. Its expensive brands offer unique value derived from high quality and prestigious image. Meanwhile, management has lowered the costs of all brands by using automated production processes.6 For example, the Swatch watch Sells today at a price very similar to its price over a decade ago.

.Although several factors contribute to the effectiveness of an organisation, competitive advantage is a core requirement. "Chief executives must take the lead in moving their institutions toward strategic management by designing organisations and developing management systems that look forward and look out"7 Several elements are influencing change in organisation structure. The relationships among business functions such as manufacturing, marketing, research and development, finance, and human resources are becoming more integrated in many companies. Teams of people from different functions are working together to design new products and improve customer service. Causes of these changes include (I) a turbulent business environment that is global in scope and (2) the availability of an impressive array of information technology that can be used to improve the effectiveness of workers.

ORGANISATIONAL change occurred in a wide range of companies during the last decade. Many companies reduced the size of professional staff and the number of management levels. "Holding up the latest ideal in organisational design, the flat organisation, many companies have already cut the layers of management between the chief executive and front-line supervisors from a dozen to six or fewer."* Such changes drastically alter the span of control of managers and require new management and control systems. For example, information technology performs many of the functions traditionally handled by middle-level managers. The increased scope of management also requires executives to have a better understanding of work functions than in the past.

SMH's chief executive, Nicolas G. Hayek, implemented several actions to turn around the poor performance of Switzerland's two largest watchmakers (which were combined in 1983 to create SMH).9 He streamlined operations, replaced weak managers, strengthened marketing capabilities, and gained direct control of distribution. When the banks financing SMH wanted out of the watch business, insiders took over the company with support from investors. The inexpensive Swatch line was introduced and production costs reduced to facilitate a tow-price strategy. Efforts continue toward producing quality at the lower cost.

Marketing strategy is an ongoing process of making decisions, implementing them, arid gauging their effectiveness over time. In terms of its time requirements, strategic evaluation is far more demanding than planning. Evaluation and control are concerned with tracking performance and. when necessary; altering plans to keep performance on track. Evaluation also includes looking for new opportunities and potential threats in the future. It is the connecting link in the strategic marketing .planning process shown in Exhibit 1-3. By scurrying as both the last stage and the first stage (evaluation before taking action) in the planning process, strategic evaluation assures that strategy is an ongoing activity.

Rubbermaid Inc. offers an interesting insight into evaluation and control. After more than a decade of superior performance, the company experienced problems in 1995.27 •Sales slowed do<Ph and profits declined. Increases in the costs of resin used in plastic products triggered price increases to retailers. This irritated retailers, who reduced Rubbermaid's shelf space. The already slow consumer demand for house wares was further impacted by higher retail prices Rubbermaid's management implemented cost reductions, speed ed up new-product introductions, and increased promotions to consumers to move results closer to expectations.

One of the major issues in managing the marketing mix is deciding how to blend together the components of the mix. Product, distribution, price, and promotion strategies are shaped into a coordinated plea of action. Each component helps to influence buyers in their positioning of products. If the activities of these mix components are not coordinated, the actions may conflict and resources may be wasted. For example, if the advertising messages for a company's brand stress quality and performance, but salespeople emphasize low price, buyers will be confined and brand image may be affected

Market target buyers may be contacted on a direct basis using the firm's sales force or, instead, through a distribution channel of marketing intermediaries (e.g., wholesalers, retailers, or dealers). Distribution channels are often used un linking producers with end-user household and business marker, Decisions that are made include the type of channel organizations to use, the extent of channel management performed- by the' firm, and the intensity of distribution appropriate for the product or service. The choice of distribution channels influences buyers' positioning of the brand, for example, expensive watches like SMH's Omega brand are available from a limited number of retailers with prestigious images. Such retailers help to reinforce the brand's image.

The situation analysis identifies market opportunities, defines market segments, evaluates competition, and assesses the organization's strengths and weaknesses. This information plays a key role in designing marketing strategy, which includes market targeting and positioning analysis, building marketing relationships, and developing and introducing new products. The Strategy Feature describes the market targeting and positioning strategies employed for the successful soap brand, Lever

A description of each market target, size and growth rate, End-users' characteristics, positioning strategy guidelines, and other available information Useful in planning and implementation are essential parts of the plan. When two or more Targets are involved; management should indicate priorities to aid in resource allocation

Switzerland’s SMH Group (SMH) is an interesting example of how an executive's vision for reviving the Swiss watch making industry enabled it to compete with Hattori Seiko for the title of the world's No. 1 watchmaker. The initial strategy was to launch the Swatch watch in 1983. SMH's brands now include Blanc pain, Omega, Longings, Radon, Toss pot, Certain, Midol, Hamilton, Bal main, Swatch, Flick Flak, and Endure.

We cite SMK's strategy for regaining competitive advantage in the global watch industry throughout this discussion of deciding how to compete. We examine the critical responsibility of management vision in selecting a competitive strategy and discuss how companies gain competitive advantage

The marketing concept was first articulated by a General Electric executive in the 1950s. There are many similarities between the marketing concept and market orientation. The marketing concept advocates starting with customer needs/wants, deciding which needs to meet, and involving everyone in the process of satisfying customers. The important difference is that market orientation is more than a philosophy since it provides a process for delivering customer value. The market-oriented organisation understands customers' preferences and requirements and effectively combines and directs the skills and resources of the entire organisation to satisfy customers. Becoming cutesier-oriented requires finding out what values buyers want to help them meet their purchasing objectives. Buyers' buying decisions are guided by the attributes and features of the brand that offers the best value for the buyers' use situation. The buyer's experience in using theft &rand is compared to expectations to determine customer satisfaction.

What is Competitive Intelligence?

Market orientation recognises the importance of understanding competition as well as the customer the key questions are which competitors, and what technologies, and whether target customers perceive them as alternate satisfied. Superior value requires that^ fee seller sac, buy and Understand the principal competitors' short-term strengths and weaknesses and long-term capabilities and strategies. Failure to identify and respond to competitive threats can create serious consequences for a company. - For example, Western Union failed to define its competitive area as telecommunications, concentrating instead on its telegraph services, and eventually was outflanked by fax technology. Had Western Union been a market-oriented company its management might have better understood the changes taking place, seen the competitive threat, and developed strategies to counter the threat.

One of the major realities of achieving business success today is') he necessity of understanding markets and competition. Sensing what is happening and is likely to occur in the future is complicated by competitive threats beyond traditional industry boundaries. For example, microwave dinners compete with McDonald's, CD-ROMs compete with books, and-fax transmission competes with overnight letter delivery.

Our objective is to learn how market-driven firms are able to sense what is happening in their markets, to develop business and marketing strategies to seize opportunities and counter threats, and to anticipate what the market will be like in the future.22 As illustrated by Intuit, everyone in the organisation must be wired into customers and competition. There are several market-sensing methods available to guide the collection and analysis of information.