Niraj Dawar argues in the article, "When Marketing is Strategy" that business strategy development and revisions are increasingly moving downstream towards customer centric activities. Dawar offers several illustrative examples of Zara (hyper fashion), Gillete, Coca Cola, among others in support.

Based on your learning of value chain, business strategy and product / market combinations do you share Dawar's arguments that marketing is indeed becoming strategy? Why?

How does you learning of marketing plans for fulfilling enterprise mission statement, setting marketing goals and developing marketing strategies (big M) and tactics (small m) fit into this point of view.

It`s no secret that in many industries today, up- stream activitiessuch as sourcing, production, and logisticsare being commoditized or out- sourced, while downstream activities aimed at reducing customers' costs and risks are emerg- ing as the drivers of value creation and sources of competitive advantage. Consider a consumer's pur- chase of a can of Coca-Cola. In a supermarket or ware- house club the consumer buys the drink as part of a 24-pack. The price is about 25 cents a can. The same consumer, finding herself in a park on a hot summer day, gladly pays two dollars for a chilled can of Coke sold at the point-of-thirst through a vending machine. That 700% price premium is attributable not to a bet- ter or different product but to a more convenient means of obtaining it. What the customer values is this: not having to remember to buy the 24-pack in advance, break out one can and find a place to store the rest, lug the can around all day, and figure out how to keep it chilled until she's thirsty.

Downstream activitiessuch as delivering a product for specific consumption circumstances are increasingly the reason customers choose one brand over another and provide the basis for cus- tomer loyalty. They also now account for a large share of companies' costs. To put it simply, the center of gravity for most companies has tilted downstream. Yet business strategy continues to be driven by the ghost of the Industrial Revolution, long after the factories that used to be the primary sources of competitive advantage have been shuttered and off- shored. Companies are still organized around their production and their products, success is measured in terms of units moved, and organizational hopes are pinned on product pipelines. Production-related activities are honed to maximize throughput, and managers who worship efficiency are promoted. Businesses know what it takes to make and move stuff. The problem is, so does everybody else. The strategic question that drives business today is not "What else can we make?" but "What else can we do for our customers?" Customers and the mar- ketnot the factory or the productnow stand at the core of the business. This new center of gravity demands a rethink of some long-standing pillars of strategy: First, the sources and locus of competitive advantage now lie outside the firm, and advantage is accumulativerather 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 cus- tomers and your position relative to their purchase criteria. You have a say in how the market perceives your offering and whom you compete with. Third, the pace and evolution of markets are now driven by customers' shifting purchase criteria rather than by improvements in products or technology. Let's consider more closely how companies can use downstream activities to upend traditional strategy. Must Competitive Advantage Be Internal to the Firm? In their quest for upstream competitive advan- tage, companies scramble to build unique assets or capabilities and then construct a wall to prevent them from leaking out to competitors. You can tell which of its activities a firm considers to be a source of competitive advantage by how well protected they are: If the company believes its edge lies in its production processes, then plant visits are strictly controlled. If it believes that R&D sets it apart, secu- rity around its research labs is airtight and armies of lawyers protect its patents. And if it prizes its talent, you'll find hip work spaces for employees, gourmet lunches, yoga studios, nap nooks, sabbaticals, and flexible work hours. Downstream competitive advantage, in contrast, resides outside the companyin the external link- ages with customers, channel partners , and comple- mentors. It is most often embedded in the processes for interacting with customers, in marketplace infor- mation, and in customer behavior. A classic thought experiment in the world of branding is to ask what would happen to Coca- Cola's ability to raise financing and launch opera- tions anew if all its physical assets around the world were to mysteriously go up in flames one night. The answer, most reasonable businesspeople conclude, is that the setback would cost the company time, effort, and moneybut Coca-Cola would have little difficulty raising the funds to get back on its feet. The brand would easily attract investors looking for future returns.

The second part of the experiment is to ask what might happen if, instead, 7 billion consumers around the world were to wake up one morning with partial amnesia, such that they could not remember the brand name Coca-Cola or any of its associations. Long-standing habits would be broken, and custom- ers would no longer reach for a Coke when thirsty. In this scenario, most businesspeople agree that even though Coca-Cola's physical assets remained in- tact, the company would find it difficult to scare up the funds to restart operations. It turns out that the loss of downstream competitive advantagethat is, consumers' connection with the brandwould be a more severe blow than the loss of all upstream assets. Establishing and nurturing linkages in the mar- ketplace creates stickinessthat is, customers' (or complementors') unwillingness or inability to switch to a competitor when it offers equivalent or better value. Millions or billions of individual choices to remain loyal to a brand or a company add up to real competitive advantage. Must You Listen to Your Customers? A company is market-oriented, according to the technical definition, if it has mastered the art of lis- tening to customers, understanding their needs, and developing products and services that meet those needs. Believing that this process yields competitive advantage, companies spend billions of dollars on focus groups, surveys, and social media. The "voice of the customer" reigns supreme, driving decisions related to products, prices, packaging, store place- ment, promotions, and positioning. But the reality is that companies are increasingly finding success not by being responsive to custom- ers' stated preferences but by defining what custom- ers are looking for and shaping their "criteria of pur- chase." When asked about the market research that went into the development of the iPad, Steve Jobs famously replied, "None. It's not the consumers' job to know what they want." And even when consum- ers do know what they want, asking them may not be the best way to find out. Zara, the fast-fashion retailer, places only a small number of products on the shelf for relatively short periods of timehun- dreds of units per month compared with a typical retailer's thousands per season. The company is set up to respond to actual customer purchase behavior, rapidly making thousands more of the products that fly off the shelf and culling those that don't. Indeed, market leaders today are those that define what performance means in their respec- tive categories: Volvo sets the bar on safety, shap- ing customers' expectations for features from seat belts to airbags to side-impact protection systems and active pedestrian detection; Febreze redefined the way customers perceive a clean house; Nike made customers believe in themselves. Buyers in- creasingly use company-defined criteria not just to choose a brand but to make sense of and connect with the marketplace. (See the sidebar "How Cialis Beat Viagra.") Those criteria are also becoming the basis on which companies segment markets, target and po- sition their brands, and develop strategic market positions as sources of competitive advantage. The strategic objective for the downstream business, therefore, is to influence how consumers perceive the relative importance of various purchase criteria and to introduce new, favorable criteria. Must Competitive Advantage Erode over Time? The traditional upstream view is that as rival com- panies catch up, competitive advantage erodes. But for companies competing downstream, advantage grows over time or with the number of customers servedin other words, it is accumulative. For example, you won't find Facebook's competi- tive advantage locked up somewhere in its sparkling offices in Menlo Park, or even roaming free on the premises. The employees are smart and very pro- ductive, but they're not the key to the company's success. Rather, it's the one billion people who have accounts on the website that represent the most valuable downstream asset. For Facebook, it's all about network effects: People who want to connect want to be where everybody else is hanging out. Facebook does everything possible to keep its posi- tion as the preeminent village square on the internet: The data that users post on Facebook is not portable to any other site; the time lines, events, games, and apps all create stickiness. The more users stay on Facebook, the more likely their friends are to stay. Network effects constitute a classic downstream competitive advantage: They reside in the market- place, they are distributed (you can't point to them, paint them, or lock them up), and they are hard to replicate. Brands, too, carry network effects. BMW and Mercedes advertise on television and other mass media, even though fewer than 10% of view- ers may be in their target market, because the more people are awed by these brands, the more those in the target market are willing to pay for them. Indeed, the very nature of network effects is that they are accumulative. But other downstream ad- vantagesparticularly those related to amassing and deploying dataare accumulative as well. Consider Orica, an explosives company mired in a commod- ity business in Australia. The primary concern of its customersquarries that blast rock for use in land- scaping and constructionwas to meet well-defined specifications while minimizing costs. Because the products on the market were virtually indistinguish- able, the quarries saw no reason to pay a premium for Orica's or any other company's explosives. At the same time, Orica knew that blasting rock is not as straightforward as it may appear. Many factors affect the performance of a blast: the profile of the rock face; the location, depth, and diameter of the bored holes; even the weather. Mess up the complex formula for laying the explosives often enough and your profits crumble into dust and get blown away by the wind. Orica realized that customers harbored much unspoken anxiety about handling the explosives without accidents, not to mention transporting and storing them safely. If it could systematically reduce even some of those costs and risks, it would be pro- viding significant new value for the quarriesfar in excess of any price reduction that competitors could offer. So Orica's engineers set to work gathering data on hundreds of blasts across a wide range of quarries and found surprising patterns that led them to un- derstand the factors that determine blast outcomes. Using empirical models and experimentation, Orica developed strategies and procedures that greatly reduced the uncertainty that, until then, had gone hand in hand with blasting rock. It could now pre- dict and control the size of the rock that would result from a blast and could offer customers something its competitors could not: guaranteed outcomes within specified tolerances for blasts. Quarries soon shifted to Orica, despite lower prices from competitors. Not only had the company developed an edge over rivals, b ut the advantage was accumulative: As Orica amassed more data, it further improved the accuracy of its blast predictions and increased its advantage relative to its competitors. Can You Choose Your Competitors? Conventional wisdom holds that firms are largely stuck with the competitors they have or that emerge independent of their efforts. But when advantage moves downstream, three critical decisions can determine, or at least influence, whom you play against: how you position your offering in the mind of the customer, how you place yourself vis--vis your competitive set within the distribution chan- nel, and your pricing. If you're in the beverage business and you've developed a rehydrating drink, you have a choice of how to position it: as a convalescence drink for di- gestive ailments, as a half-time drink for athletes, or as a hangover reliever, for example. In each instance, the customer perceives the benefits differently, and is likely to compare the product to a different set of competing products. In choosing how to position products, managers have tended to pay attention to the size and growth of the market and overlook the intensity and identity of the competition. Downstream, you can actively place yourself within a competitive set or away from it. Brita filters compete against other filters when they are placed in the kitchen appliances section at big-box stores, for instance. But Brita changes both its comparison set and the economics of the consumer decision when the filters are placed in the bottled-water aisle at supermarkets. Here Brita filters have a competitive cost advantage, delivering several more gallons of clean water per dollar than bottled water. Of course, not all buyers of bottled wa- ter are buying solely for the criterion of cost (some are buying for portability, for example), but for those who are, Brita is an attractive choice. If you would prefer not to be compared with any other brands, then you're better off market- ing, distributing, and packaging your products in ways that avoid familiar cues to customers. A trip to the grocery store or a glance at online catalogs shows how similar many products' packaging is: Most yogurts are sold in exactly the same pack size and format, and their communications are often so indistinguishable that consumers cannot recall the brand after having seen an advertisement. The lack of differentiation encourages competition, when many of these brands would be better off avoiding it. Finally, pricing has a strong influence on whom you compete with. When Infiniti launched its come- back car, the G35, in 2002, it was hailed as a BMW- beater. The car, loosely based on the legendary Nissan Skyline, rivaled the BMW 5 series in terms of interior space and engine power, but it would have struggled to compete for a couple of reasons: The 5 series is aimed at experienced BMW buyers or at least buyers who have previously owned a lux- ury automobile. Also, the 5 series is very expensive, and when customers are shelling out that kind of money, they're not looking for valuethey're look- ing for an established brand and value proposition. Infiniti chose to position the G35 against the BMW 3 series instead. The right pricing accomplished that objective: Many consumers, especially car buyers, use price as a key criterion in forming their consid- eration set. Although choosing to avoid competitors may minimize head-on competition, there is no guaran- tee that you won't still have to contend with compet- itors you didn't want or ask for. But if you've done your homework and established dominance on your criterion of purchase, me-too competitors will be putting themselves in an unfavorable position if they choose to follow you. Surprisingly, you have more say in determining who your competitors are if you're a later entrant in a marketplace than if you break new ground. A later entrant can choose to compete directly with an in- cumbent or to differentiate, whereas an incumbent is subject to the decisions of later entrants. But an incumbent is not helpless: It can stay ahead of com- petitors by continually redefining the market and introducing new criteria of purchase.