Harvard Business School

9-598-061
Rev. November 1, 2000

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Note on Marketing Strategy

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Long ago, Peter Drucker wrote that any business enterprise has only two basic functions: marketing and innovation.1 All else, he implied, was detail. The central role of marketing in the enterprise stems from the fact that marketing is the process via which a firm creates value for its chosen customers. Value is created by meeting customer needs. Thus, a firm needs to define itself not by the product it sells, but by the customer benefit provided.

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Having created the value for its customers, the firm is then entitled to capture a portion of it through pricing. To remain a viable concern, the firm must sustain this process of creating and capturing value over time. Within this framework, the plan by which value is created on a sustained basis is the firm’s Marketing Strategy. Marketing Strategy involves two major activities: (i) selecting a target market and determining the desired positioning of product in target customers’ minds and (ii) specifying the plan for the marketing activities to achieve the desired positioning. Figure A presents a schematic describing a general process of marketing strategy development. As shown, five major areas of analysis underlie marketing decision making. We begin with analysis of the 5 C’s— customers, company, competitors, collaborators, and context. We ask:

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What needs do we seek to satisfy?

Company Skills

What special competence do we possess to meet those needs?

Competition

Who competes with us in meeting those needs?

Collaborators

Who should we enlist to help us and how do we motivate them?

Context

What cultural, technological and legal factors limit what is possible?

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Customer Needs

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This leads first to specification of a target market and desired positioning and