Market-driving strategies: game changing innovation

IT USED to be that company executives adopted a sales-driven market orientation--focus was on bringing in more sales so the factory had to churn out enough units to meet market demand. Then came the market-driven market orientation in the 80s. The customer is key in a market-driven orientation. The marketing objective is to retain customers and be better. This was followed by the customer-driven market orientation wherein customization is the key to reach niche markets. And now there is the market-driving market orientation, which Dr. Philip Kotler, the father of modern marketing, identifies as the fourth major market orientation. It focuses on playing a different game, of breaking the rules, rather than just being better. It was first brought up by Prof. Greg Carpenter of Kellogg Graduate School of Business in the ‘90s. “Market-driving strategies define how a firm will embrace innovative changes in the industry logic and business system to grow its profit and industry’s demand from marginal and non-customers,” explains Josiah L. Go, chairman and chief marketing strategist of Mansmith and Fielders, Inc., in his seminar called “Market-Driving Strategies: Executive Workout 1.0” held earlier this month at the Renaissance Hotel in Makati. Simply put, market-driving strategies are “game-changing innovation to create and conquer new market space while reinventing the business system.” Go adds that Blue Ocean strategy is a subset of market-driving strategies. Go further says that whereas market-driven strategies go for customer retention and loyalty, market-driving strategies pursue customer acquisition. Whereas the former’s performance is gauged on market shares gained, the latter’s performance is gauged on market penetration and acceptance. The target market of a market-driven market orientation is the customer or served market, while that of the market-driving market orientation are the non-customers and marginal customers—the unserved market. According to Go, market-driving strategies have three levels: first, those that involve changing the value proposition (the reason consumers buy your product or service); second, those that involve changing the business system; and third, those that involve changing both the value proposition and the business system. You first gauge where you are now, assess where you want to be, and plot how to get there using marketing analytical tools such as those developed by Mansmith and Fielders. One of the interesting case studies presented by Go to illustrate market-driving strategies is the case of Belle de Jour Power Planner. The idea of making a planner for women came to then 24-year-old Darlyn Ty who could not find a nice planner geared toward fashion-conscious women who also need to organize their schedules. Belle de Jour changed its value proposition by offering more than just a ho-hum planner: discount coupons, special women’s pages, time management tools and helpful tips in a visually appealing planner that does not look boring at all. It was also treated as a book instead of a magazine, thus giving higher trade margins to retailers. Because of this market-driving strategy, Belle de Jour planners have always been sold out since 2006 and total volume went up from 1,500 copies in 2006 to 50,000 copies in 2008. What is the impact of market-driving strategies on industries and economies? Go cites four: 1. Lots of efforts will be created in satisfying needs not yet satisfied 2. Better profits for companies instead of cutthroat competition 3. Better opportunities for employees to grow 4. All simplistic branding strategies will be red-flagged “Market-driving strategies can be applied to all businesses except when you are in a business where you have nothing to supply anymore—for instance, if a manufacturing facility is full or there is a lack of raw materials,” says Go. He also says these can be applied to small businesses but not to sari-sari stores in terms of the discipline in using analytical tools—in that case, one just has to look around and see what it needs to offer. "Market-driving strategies address the challenges of tomorrow's business," says Go.