Market Driven Strategy: Processes for Creating Value

424 Pages·1990·29.773 MB·English

by  George S. Day

PROCESSES FOR
CREATING VALUE
GEORGE DAY
S.
Today, countless new niche and sp)ecialty market
opportunities are emerging as the era of mass
marketingcomesto anend. George S. Day argues
persuasivelythatoldwaysofcompeting andmuch
of the conventional wisdom about organizations
are being overturned by a convergence of forces:
mass markets are fragmenting into narrow seg-
ments that are themselves becoming global mar-
kets; information technologies are blurring the
boundaries between markets and organizations
while accelerating the pace of decisions; tech-
nological change continues to shrink product life
cycles whilecustomers aredemandingeverhigher
levels ofresponsiveness and quality. These forces
are also spawning new types of retailers, dis-
tributors, and linkages with customers.
Contending thattherateofchange inthe market
has clearly outstripped the speed at which a
conventionally managed company can respond.
Day makes a compelling case for first creating
customer value, without which there can be no
shareholder value. He presents a proven market-
driven approach to formulating and implementing
—
competitive strategy at the business-unit level
—
"in the trenches" based upon materials thathave
been empirically tested and critiqued in more than
200 internal executive programs and strategic
planning sessions at such companies as U.S.
West, General Motors, Marriott, Kodak, and
General Electric, where he is director of the
Product Planning Program.
Day introduces the five critical, interdependent
choices that managers must make to create a
market-driven organization in the 1990s. With
dozens ofexamples from companies such as Otis
Elevator, GE, H.J. Heinz, IKEA, Nestle, Acuson,
and 3M, he shows how forward-thinking com-
panies select their markets, differentiate their
prcxiucts, choose their communication and dis-
tribution channels, decide on the scale and scope
of their support activities, and select future areas
for growth.
Finally, Day f)ersuasively documents that at
thesewinningcompaniesthere isacommitmentto
thinking and planning pr(x:esses that harness the
power of bottom-up understanding of customers
(Continuedonhackflap)

Market Driven
Strategy
Processes for
Creating Value
George Day
S.
ip
THE FREE PRESS
A
Division ofMacmillan, Inc.
NEW YORK
Maxwell Macmillan Canada
TORONTO
Maxwell Macmillan International
NEW YORK OXFORD SINGAPORE SYDNEY
Copyright © 1990by George S. Day
All rights reserved. No panofthis book maybe reproduced
ortransmined inany formorbyany means,electronicor
mechanical, including photocopying, recording,orby any
information storage and retrievalsystem, withoutpermission
in writing fromthe Publisher.
The Free Press
A DivisionofMacmillan, Inc.
866Third Avenue, NewYork, N.Y. 10022
Maxwell Macmillan Canada, Inc.
1200 Eglinton Avenue East
Suite 200
Don MiUs, Ontario M3C 3N1
Macmillan, Inc. is partofthe Maxwell Communication
GroupofCompanies.
Printed inthe United StatesofAmerica
printingnumber
3456789
10
LibraryofCongressCataloging-in-PublicationData
Day,GeorgeS.
Marketdrivenstrategy: processesforcreatingvalue/GeorgeS.
Day.
p. cm.
ISBN0-02-907211-5
1. Marketing—Management. 2. Strategicplanning. I. Title.
HF5415.13.D368 1990
658.8'02-dc20 89-71473
CIP
.
Contents
Preface vii
PART
ONE
Strategic Choices in Competitive Markets
1 Managing in Turbulent Markets 3
• Choices and Challenges in Turbulent Markets 5
• Successful Market Management 14
• When Strategy Matters 19
2. Strategies for Competing 21
• Business Definition 25
• Strategic Thrust 28
• Performance Objectives 32
• Attributes ofa Sound Strategy 34
• The Payofffrom a Sound Strategy 41
PART
TWO
ProcessesforDevelopingMarket-Driven Strategies
3. Making Strategic Decisions 45
• Approaches to Strategy Development 46
• Adaptive Planning: Integrating the Approaches 55
• Plans That Can Be Implemented 60
4. Adaptive Planning 62
• Situation Assessment 65
in
iv Contents
• Real-Time Issues Management 75
• Negotiating Objectives and Resources 79
• Completing the Planning Process 85
PART
THREE
Assessing the Competitive Position
5. Understanding Competitive Markets:
Their Structure and Attractiveness 89
• Defining the Market 90
• Finding Attractive Segments 98
• Market Attractiveness 107
• Choosing the Market Arena and Target Segment 122
6. Assessing Advantages 124
• The Concept ofCompetitive Advantage 128
• Customer-Oriented Assessments 138
• Competitor-Centered Assessments 147
• Integrated Assessments ofCompetitive Advantage 157
PART
FOUR
Choosing Arenas and Advantages
7. Deciding How to Compete 163
• Strategies for Competing 164
• Strategies for Enhancing Customer Value 173
• Cost Competitive Strategies 184
• Changing the Competitive Strategy 191
8. Deciding Where to Compete: Focusing
and Sustaining the Advantage 193
• Segmentation Focus Strategies 196
• Choosing the Scope ofMarket Coverage 200
• Sustaining the Advantage 205
• Defending the Advantage 212
• Lessons for Strategy 217
Contents V
9. Gaining Access to Markets 219
• Channel Design Decisions 220
• The Turbulent Channel Environment 226
• Developing a Channel Strategy 239
• Navigating the Turbulent Channel Environment 252
10. Responding to Global Markets 253
• Assessing the Extent ofGlobalization 256
• Choosing Strategies for Competing Globally 264
• Deciding How to Participate 270
• Implementing Global Strategies 276
• Meeting the Global Challenge 282
PART
FIVE
Renewing the Strategy
11. ChartingNew Directions:
Conditions for Successful Renewal 287
• Staying Close to the Market 290
• Setting the Strategic Direction 292
• Sticking to the Knitting 295
• Innovating under Time Pressure 297
• Ensuring Organizational Support 299
• The Conditions for Success 302
12. Setting the Growth Direction 304
• Growth Objectives 307
• Strategic Purpose 309
• Growth Path 316
• Method ofParticipation 326
• Toward a Strategic Guidance System 328
PART
SIX
Issues inImplementingMarket-Driven Strategies
13. ChoosingMarket Strategies 333
• The Process ofValuing Market Strategies 334
• Why Value Analysis Is Not Strategy Analysis 342
Vt Contents
• Misleading Signals from Value Analysis 349
• Finding a Role for Value Analysis 353
14. Building a Market-Driven Organization:
The Key to Competing EfTectively 356
• Perspectives on Market-Driven Organizations 357
• Becoming Market-Driven 363
• Toward Market-Driven Strategies 374
Notes 377
Index 395