Marketing as strategy

By Niraj Dawar

In many industries today, upstream activities — such as sourcing, production and logistics — are being commoditised or outsourced, while downstream activities aimed at reducing customers’ costs and risks are emerging as the drivers of value creation and sources of competitive advantage…

Downstream activities — such as delivering a product for specific consumption circumstances — are increasingly the reason customers choose one brand over another and provide the basis for customer loyalty. They also now account for a large share of companies’ costs. The centre of gravity for most companies has tilted downstream…

The strategic question that drives business is, “What else can we do for our customers?” Customers and the market — not the factory or the product —now stand at the core of the business. This change demands a strategy rethink: first, the sources and locus of competitive advantage now lie outside the firm, and advantage is accumulative — rather than eroding over time as competitors catch up, it grows with experience and knowledge.

Second, the way you compete changes over time. Downstream, it’s no longer about having the better product: your focus is on the needs of customers and your position relative to their purchase criteria. Third, the pace and evolution of markets are now driven by customers’ shifting purchase criteria than by product or technology improvements.

From “When Marketing is Strategy”