What is market driven strategy? Discuss the characteristics of market-driven strategy.

Answer: Market-Driven strategy is the long term planning of a business to provide the maximum value or advantages to the customers. The main target of the market driven strategy is to provide maximum value to the customers.

According to David W. Cravens & Nigel F. Piercy: “Marketing-driven strategy provides a companywide perspective which mandates more effective integration of a activities and processes that impact customer value.”

“Market-driven strategy consists of activities and processes that create and provide superior customer value.”


Characteristics of MDS:

The fundamental logic of this strategy is that the market and the customers that form the market should be the starting point in business strategy formulation; which therefore an understanding of the market and the customers that form the market is essential (Cravens & Piercy, 2006).

According to Cravens & Piercy (2006), the characteristics of market driven strategies include:

1.     Becoming market oriented.

2.     Determining distinctive capabilities.

3.     Finding a match between customer value and organizational capabilities.

4.     Obtaining superior performance by providing superior customer value.

Although it is a highly promising strategy, yet it is argued that a long-term commitment is crucial in order to develop these strategies.


1.     Becoming Market Oriented:

A market orientation is a business perspective that placed the customer as the center of a company’s total operations (Cravens & Piercy, 2006).  This concepts is basically holds the same idea as the “marketing concept” that is being discussed before in “what is marketing”. Moreover, Slater & Narver, (1994) argues that a business is market-oriented when “its culture is systematically and entirely committed to the continuous creation of superior customer value”.

However, for a business to achieve market orientation, it involves the use of superior organizational skills in understanding and satisfying customers (Day, 1990).

A market-oriented organization always gathers information about its customers, competitors, and the markets; analyze it from a total business perspective, decides how to deliver superior customer value, and finally takes actions to provide value to customers (Slater & Narver, 1994).

Moreover, Cravens & Piercy, (2006) suggest the requirements for the organisations to become market-oriented:

  • Customer focus (understand the customer needs, wants, and responses towards the products delivered).
  • Competitor intelligence (Understand the competitor just like the customer).
  • Cross-functional cooperation and involvement (abilities to get all business functions to work together in providing superior customer value).

 2.     Distinctive Capabilities:

Identifying an organization’s distinctive capabilities is a crucial part of market-driven strategy.  Capabilities can be defined as “complex bundles of skills and accumulated knowledge, exercised through organizational processes, that enable firms to coordinate activities and make use of their assets” (Day, 1994).

According to Cravens & Piercy, (2006), The Major components of distinctive capabilities are:

  • Organizational Processes.
  • Skills and Accumulated Knowledge.
  • Coordination of Activities.
  • Assets.

For example: Zara’s new-product development process, which illustrates the retailer’s distinctive capabilities, where the new-product development applies the skills of their design team and benefits from the team’s accumulated knowledge; the coordination of activities across business functions during new-product development is facilitated by information and technology (the product designs take into account the manufacturing requirements as well as offering high fashion products).  The asset is the strong brand image possessed by Zara which helps the launching of the new product.

(CNN, 2001)

3.     Creating Value for Customers:

Customer Value is “the outcome of a process that begins with a business strategy anchored in a deep understanding of customer needs” (Troy, 1996). The creation of customer value is an important challenge for the managers, since it is an ongoing competitive challenge in maintaining successful market-driven strategies (Cravens & Piercy, 2006).  Being able to overcome these challenge, the organization is believed to be able to successfully deliver the customer value; hence fulfilled their goals.

Superior customer value occurs when the buyer has a very positive use experience compared to his/her expectations as well as the value offerings of competitors (Cravens & Piercy, 2006).

Furthermore, Cravens & Piercy (2006) also stated that the values could be product differentiation, lower prices than competing brands, or a combination of lower cost and differentiation.

Through the deep understanding of this concept, ability to implement and manage all the elements, as well as the constant management and updates of the strategy, it is believed that the organization will able to achieve its goals.