2 developing marketing strategies and plans

7/24/2019 2 Developing Marketing Strategies and Plans

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Chapter 22 Developing Marketing Strategies and Plans

Chapter Questions

How does marketing afect customer value?

How strategic planning is carried out at diferent levels o the

organization?

What does a marketing plan include?

This chapter begins b e!amining some o the strategic marketing

implications in creating customer value" We#ll look at several

perspectives on planning and describe how to draw up a ormal

marketing plan"

Through the chapter$ we#ll address the three %uestions listed in

the slide"

Phases of Value Creation and Delivery

We can divide the value creation and deliver se%uence into three

phases"2 &irst$ choosing the value represents the 'homework(

marketing must do beore an product e!ists" )arketers must

segment the market$ select the appropriate target$ and develop

the ofering#s value positioning" The ormula 'segmentation$

targeting$ positioning *+T,-( is the essence o strategic

marketing" The second phase is providing the value" )arketing

must determine speci.c product eatures$ prices$ and distribution"

The task in the third phase is communicating the value b

utilizing the sales orce$ /nternet$ advertising$ and an other

communication tools to announce and promote the product" The

value deliver process begins beore there is a product and

continues through development and ater launch"

What is the 0alue Chain?

The value chainis a tool or identiing was to create more

customer value because ever .rm is a snthesis o primary and

support activitiesperormed to design$ produce$ market$ deliver$

and support its product"

Harvard#s )ichael ,orter has proposed the value chain as a tool

or identiing was to create more customer value"1 ccording to

this model$ ever .rm is a snthesis o activities perormed to

design$ produce$ market$ deliver$ and support its product" The

value chain identi.es nine strategicall relevant activities3.ve

primar and our support activities3that create value and cost in

a speci.c business" The primar activities are

*4- inbound logistics$ or bringing materials into the business5

*2- operations$ or converting materials into .nal products5

*1- outbound logistics$ or shipping out .nal products5

Choosing the value

Providing the value

Communicating the value


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Chapter 2*6- marketing$ which includes sales5 and

*7- service" +pecialized departments handle the support activities

3

*4- procurement

$ *2- technolog development$

*1- human resource management$ and

*6- .rm inrastructure" */nrastructure covers the costs o general

management$ planning$ .nance$ accounting$ legal$ and

government afairs"-

Core 8usiness ,rocesses

)arket9sensing process

:ew9ofering realization process

Customer ac%uisition process

Customer relationship management process

&ul.llment management process

The .rm#s success depends not onl on how well each

department perorms its work$ but also on how well thecompan coordinates departmental activities to conduct

core business processes"

These processes include;

< The market9sensing process which reers to all the

activities in gathering and acting upon inormation about

the market"

< The new9ofering realization process which is all the

activities in researching$ developing$ and launching newhigh9%ualit oferings %uickl and within budget"

< The customer ac%uisition process which entails all the

activities in de.ning target markets and prospecting or

new customers"

< The customer relationship management process which

entails all the activities in building deeper understanding$

relationships$ and oferings to individual customers"

< The ul.llment management process which includes all

the activities in receiving and approving orders$ shipping

the goods on time$ and collecting pament"

&irm success depend on its business process that include;

9 )arket sensing = ll the activities related to >athering

and disseminating intelligent

9 :ew ofering realization process = ll activities that


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Chapter 2include research and development$ innovation$ lunching

etc"

9 Customer ac%uisition process = ll activities that include

segmentation$ targeting$ prospecting etc"

9 Customer relationship management process = ll the

activities that include building and maintaining long lasting

relationship"9 &ul.llment management process = all activities that

include receiving and processing customers# orders$

pament$ deliver$ handling complaints etc"

Characteristics o Core Competencies

source o competitive advantage

pplications in a wide variet o markets

i@cult to imitate

The ke$ then$ is to own and nurture the resources and

competencies that make up the essence o the business" )an

te!tile$ chemical$ and computerAelectronic product .rms do not

manuacture their own products because ofshore

manuacturers are more competent in this task" /nstead$ the

ocus on product design and development and marketing$ their

core competencies" core competenc has three

characteristics;

*4- /t is a source o competitive advantage and makes asigni.cant contribution to perceived customer bene.ts"

*2- /t has applications in a wide variet o markets"

*1- /t is di@cult or competitors to imitate"

)a!imizing Core Competencies

*Be-de.ne the business concept

*Be-shaping the business scope

*Be-positioning the compan#s brand identit

8usiness realignment ma be necessar to ma!imize core

competencies" /t has three steps; *4- *re-de.ning the businessconcept or 'big idea($ *2- *re-shaping the business scope$ and

*1- *re-positioning the compan#s brand identit" Consider

what odak is doing to realign its business b taking a look at

the case in the te!t"

What is Holistic )arketing?

Holistic marketingsees itsel as integrating the value

e!ploration$ value creation$ and value deliver activities with

the purpose o building long9term$ mutuall satising

relationships and co9prosperit among ke stakeholders"

Holistic marketers thus succeed b managing a superior value

chain that delivers a high level o product %ualit$ service$ and

speed" The achieve pro.table growth b e!panding customer

share$ building customer loalt$ and capturing customer

lietime value"

Questions to Address in Holistic Marketing

What value

opportunities are

How can we create

new value oferings


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Chapter 2

Holistic marketers address three ke management %uestions;

4" 0alue e!ploration3How a compan identi.es new value

opportunities

2" 0alue creation3How a compan e@cientl creates more

promising new value oferings

1" 0alue deliver3How a compan uses its capabilities and

inrastructure to deliver the new value oferings more e@cientl

igure 2!" #he Strategic Planning$ %mplementation$ and

Control Processes

To ensure the select and e!ecute the right activities$ marketers

must give priorit to strategic planning in three ke areas; *4-

managing a compan#s businesses as an investment portolio$ *2-

assessing each business#s strength b considering the market#s

growth rate and the compan#s position and .t in that market$

and *1- establishing a strateg" The compan must develop a

game plan or achieving each business#s long9run obDectives"

)ost large companies consist o our organizational levels; *4-

corporate$ *2- division$ *1- business unit$ and *6- product"

Corporate head%uarters is responsible or designing a corporate

strategic plan to guide the whole enterprise5 it makes decisions

on the amount o resources to allocate to each division$ as well as

on which businesses to start or eliminate" Each division

establishes a plan covering the allocation o unds to each

business unit within the division" Each business unit develops a

strategic plan to carr that business unit into a pro.table uture"

How can we deliverthe new oferings


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Chapter 2&inall$ each product level *product line$ brand- develops a

marketing plan or achieving its obDectives"

#a&le 2!" Master Marketers

Fnl a small group o companies stand out over time as master

marketers as shown in Table 2"4"

What is a )arketing ,lan?

marketing planis the central instrument or directing and

coordinating the marketing efort" /t operates at a strategic andtactical level"

The marketing plan is the central instrument or directing and

coordinating the marketing efort" /t operates at two levels;

strategic and tactical" The strategic marketing plan las out the

target markets and the .rm#s value proposition$ based on an

analsis o the best market opportunities" The tactical marketing

plan speci.es the marketing tactics$ including product eatures$

promotion$ merchandising$ pricing$ sales channels$ and service"

Gevels o a )arketing ,lan

+trategic

Target marketing decisions

0alue proposition

nalsis o marketing opportunities

Tactical

,roduct eatures

,romotion

)erchandising

,ricing

+ales channels

+ervice

The marketing plan is the central instrument or directing and

coordinating the marketing efort" /t operates at two levels;

strategic and tactical" The strategic marketing plan las out

the target markets and the .rm#s value proposition$ based onan analsis o the best market opportunities"

The tactical marketing plan speci.es the marketing tactics$

including product eatures$ promotion$ merchandising$ pricing$

sales channels$ and service"

Corporate Head%uarters# ,lanning ctivities


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Chapter 2 e.ne the corporate mission

Establish strategic business units *+8s-

ssign resources to each +8

ssess growth opportunities

+ome corporations give their business units reedom to set their

own sales and pro.t goals and strategies" Fthers set goals or

their business units but let them develop their own strategies"

+till others set the goals and participate in developing individual

business unit strategies"

ll corporate head%uarters undertake our planning activities

which are identi.ed in the slide" We#ll discuss each more as we

move orward"

Table 2"2

)aDor Competitive +pheres

/ndustr

,roducts

Competence

)arket segment

0ertical channels

>eographic

Product 'rientation vs! Market 'rientation

Company Product Market

)issouri9

,aci.c

Bailroad

We run a

railroad

We are a people9and9goods

mover

Iero! We make

coping

e%uipment

We improve o@ce productivit

+tandard Fil We sell

gasoline

We suppl energ

Columbia

,ictures

We make

movies

We entertain people

Companies oten de.ne themselves in terms o products; The

are in the 'auto business( or the 'clothing business"( )arket

de.nitions o a business$ however$ describe the business as a

customer satising process"

Transportation is a need; the horse and carriage$ automobile$

railroad$ airline$ ship$ and truck are products that meet that need"


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Chapter 20iewing businesses in terms o customer needs can suggest

additional growth opportunities" Table 2"1 lists companies that

have moved rom a product to a market de.nition o their

business" /t highlights the diference between a target market

de.nition and a strategic market de.nition"

Dimensions De(ne a )usiness

business can de.ne itsel in terms o three dimensions;

customer groups$ customer needs$ and technolog" Consider a

small compan that de.nes its business as designing

incandescent lighting sstems or television studios" /ts customer

group is television studios5 the customer need is lighting5 the

technolog is incandescent lighting" The compan might want to

e!pand to make lighting or homes$ actories$ and o@ces$ or it

could suppl other services television studios need$ such as

heating$ ventilation$ or air conditioning"

Characteristics o +8s

/t is a single business or collection o related businesses

/t has its own set o competitors

/t has a leader responsible or strategic planning and

pro.tabilit

Garge companies normall manage %uite diferent businesses$each re%uiring its own strateg" t one time$ >eneral Electric

classi.ed its businesses into 6J strategic business units *+8s-"

n +8 has three characteristics$ as listed in the slide"

igure 2!2 #he Strategic Planning *ap

ssessing growth opportunities includes planning new businesses$

downsizing$ and terminating older businesses" / there is a gap

between uture desired sales and proDected sales$ corporate

management will need to develop or ac%uire new businesses to

.ll it"


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Chapter 2&igure 2"2 illustrates this strategic9planning gap or a maDor

manuacturer o blank compact disks called )usicale *name

disguised-" The lowest curve proDects the e!pected sales over the

ne!t .ve ears rom the current business portolio" The highest

describes desired sales over the same period" Evidentl$ the

compan wants to grow much aster than its current businesses

will permit"

How can it .ll the strategic9planning gap? The .rst option is to

identi opportunities or growth within current businesses

*intensive opportunities-" The second is to identi opportunities

to build or ac%uire businesses related to current businesses

*integrative opportunities-" The third is to identi opportunities to

add attractive unrelated businesses *diversi.cation

opportunities-"

What is Corporate Culture?

Corporate culture is the shared e!periences$ stories$ belies$

and norms that characterize an organization"

+trategic planning happens within the conte!t o the organization"

compan#s

Frganization consists o its structures$ policies$ and corporate

culture$ all o which can become dsunctional in a rapidl

changing business environment" Whereas managers can change

structures and policies *though with di@cult-$ the compan#s

culture is ver hard to change" Ket adapting the culture is oten

the ke to successull implementing a new strateg"

What e!actl is a corporate culture? +ome de.ne it as 'the shared

e!periences$ stories$ belies$ and norms that characterize an

organization"( Walk into an compan and the .rst thing that

strikes ou is the corporate culture3the wa people dress$ talk to

one another$ and greet customers"

igure 2!+ #he )usiness ,nit Strategic Planning Process

The business unit strategic9planning process consists o the steps

shown in &igure 2"1"" Each business unit needs to de.ne its

speci.c mission within the broader compan mission" The overall

evaluation o a compan#s strengths$ weaknesses$ opportunities$

and threats is called +WFT analsis" /t#s a wa o monitoring the

e!ternal and internal marketing environment" Fnce the compan

has perormed a +WFT analsis$ it can proceed to goal

ormulation$ developing speci.c goals or the planning period"

>oals are obDectives that are speci.c with respect to magnitude

and time" >oals indicate what a business unit wants to achieve5strateg is a game plan or getting there" Ever business must

design a strateg or achieving its goals$ consisting o a

marketing strateg and a compatible technolog strateg and

sourcing strateg" Even a great marketing strateg can be

sabotaged b poor implementation" / the unit has decided to

attain technological leadership$ it must strengthen its BL

department$ gather technological intelligence$ develop leading9


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Chapter 2edge products$ train its technical sales orce$ and communicate

its technological leadership" Fnce the have ormulated

marketing programs$ marketers must estimate their costs"

S-'# Analysis

The overall evaluation o a compan#s strengths$ weaknesses$

opportunities$ and threats is called +WFT analsis" /t#s a wa omonitoring the e!ternal and internal marketing environment"

)arket Fpportunit nalsis *)F-

Can the bene.ts involved in the opportunit be articulated

convincingl to a de.ned target market?

Can the target market be located and reached with cost9

efective media and trade channels?

oes the compan possess or have access to the criticalcapabilities and resources needed to deliver the customer

bene.ts?

)arket Fpportunit nalsis *)F-

Can the compan deliver the bene.ts better than an

actual or potential competitors?

Will the .nancial rate o return meet or e!ceed the

compan#s re%uired threshold or investment?

igure 2!.

'pportunity and #hreat Matrices8 using the +WFT analsis and market opportunit analsis$ we

can create opportunit and threat matrices"

/n the opportunit matri! in &igure 2"6 *a-$ the best marketing

opportunities acing the T09lighting9e%uipment compan appear

in the upper9let cell *M4-" The opportunities in the lower9right cell

*M6- are too minor to consider" The opportunities in the upper9


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Chapter 2right cell *M2- and the lower9let cell *M1- are worth monitoring in

the event that an improve in attractiveness and potential"

>oal &ormulation and )8F

nit#s obDectives must be hierarchical

FbDectives should be %uantitative

>oals should be realistic

FbDectives must be consistent

)ost business units pursue a mi! o obDectives$ including

pro.tabilit$ sales growth$ market share improvement$ risk

containment$ innovation$ and reputation" The business unit

sets these obDectives and then manages b obDectives *)8F-"

&or an )8F sstem to work$ the unit#s obDectives must meet

our criteria as shown in the slide"

Porter/s *eneric Strategies

)ichael ,orter has proposed three generic strategies that provide

a good starting point or strategic thinking; overall cost

leadership$ diferentiation$ and ocus"

With overall cost leadership$ .rms work to achieve the lowest

production and distribution costs so the can underprice

competitors and win market share"

With diferentiation$ the business concentrates on achieving

superior perormance in an important customer bene.t area

valued b a large part o the market"

With ocus$ the business ocuses on one or more narrow market

segments, gets to know them intimatel$ and pursues either cost

leadership or diferentiation within the target segment"

Fverall cost

iferentiation

&ocus


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Chapter 2

Categories o )arketing lliances

,roduct or service alliance

,romotional alliance

Gogistics alliances

,ricing collaborations

Even giant companies oten cannot achieve leadership$ either

nationall or globall$ without orming alliances with domestic or

multinational companies that complement or leverage their

capabilities and resources"

)an strategic alliances take the orm o marketing alliances"

These all into our maDor categories"

4" ,roduct or service alliances3Fne compan licenses

another to produce its product$ or two companies Dointl

market their complementar products or a new product"

2" ,romotional alliances3Fne compan agrees to carr a

promotion or another compan#s product or service"

1" Gogistics alliances3Fne compan ofers logistical services

or another compan#s product"

6" ,ricing collaborations3Fne or more companies Doin in a

special pricing collaboration"

Mc0insey/s 1lements of Success


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Chapter 2

ccording to )cinse L Compan$ strateg is onl one o seven

elements3all o which start with the letter s3in successul

business practice"64 The .rst three3strateg$ structure$ and

sstems3are considered the 'hardware( o success" The ne!t

our3stle$ skills$ staf$ and shared values3are the 'sotware"(

The .rst 'sot( element$ stle$ means compan emploees share

a common wa o thinking and behaving" The second$ skills$

means emploees have the skills needed to carr out the

compan#s strateg" +ta@ng means the compan has hired able

people$ trained them well$ and assigned them to the right Dobs"

The ourth element$ shared values$ means emploees share the

same guiding values" When these elements are present$

companies are usuall more successul at strateg

implementation"

Marketing Plan Contents

Although the eact length and layout varies from companyto company$ most marketing plans cover one year in

any3here from 4 to 45 pages! Smaller &usinesses may

create shorter or less formal marketing plans$ 3hereas

corporations generally re6uire highly structured

documents!

A marketing plan usually contains the sections listed in

the slide!

1valuating a Marketing Plan

+kills

+taf

+hared

+t le + ste

+truct

+trate

Executive summary

Table of contents

Situation analysis

Marketing strategy

Financial projections

mplementation controls

s the plan simple!

s the plan specific!

s the plan realistic!

s the plan complete!


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Chapter 2

&or Beview

How does marketing afect customer value?

How strategic planning is carried out at diferent levels o

the organization?

What does a marketing plan include?

2 developing marketing strategies and plans

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