irwin/mcgraw-hill & dr. chen 3-1 jason c. h. chen, ph.d. professor school of business...
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Irwin/McGraw-Hill & Dr. Chen 3-2 After studying this chapter, you should be able to: Discuss the three basic levels in an organization and the types of strategic plans developed at each level. Understand the organizational strategic planning process and the role of marketing in this process. Describe the key decisions in the development of corporate strategy.TRANSCRIPT
Irwin/McGraw-Hill & Dr. Chen3-1
Jason C. H. Chen, Ph.D.Professor
School of Business AdministrationGonzaga UniversitySpokane, WA 99223
Chapter 3Chapter 3 Marketing’s Strategic Role Marketing’s Strategic Role
in the Organizationin the Organization
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After studying this chapter, you should be able to:
Discuss the three basic levels in an organization and the types of strategic plans developed at each level.
Understand the organizational strategic planning process and the role of marketing in this process.
Describe the key decisions in the development of corporate strategy.
Irwin/McGraw-Hill & Dr. Chen3-3
Understand the different general business strategies and their relationship to business marketing, product marketing, and international marketing strategies.
Realize the importance of relationships and teamwork in executing strategic plans.
After studying this chapter, you should be able to:
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OPENING VIGNETTE
WWW.DISNEY. COM1. What are the four business segments of
Disney?2. What are the long run objectives of Disney’s?3. Can the development of a marketing strategy
help Disney? How?
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Planning is everything ...
Products,Services
Customers,market,
competition
Vision
guide
Strategy
create
develop
Tactic
N
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IT Planning: The Relationship Between Business, IS,and IT Strategies
Business Strategy• Business Decisions • Objectives and Direction• Change
Supportsbusiness
Direction for business
IS Strategy• Business Based• Demand Orientated• Application Focused
IT Strategy• Activity Based• Supply Orientated• Technology Focused
Where is the business going andwhy
What is required
How it can be delivered
Needs andpriorities
InfrastructureAnd services
ITImpact and potential
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Opportunities to be turned Intomarketing strategies and plans
Develop product marketScreening criteria
Focusing marketingStrategy
S.W.O.TAnalysis
Defining genericmarkets and
product-markets
Targeting and
Segmentation
Positioningand
Differentiation
Company mission,
objectives,resources
Competitoranalysis
Trends in externalenvironment:
Technological,Economic,
Political & LegalCultural & Social
Evaluating Opportunities
Focusing Marketing Strategy and Evaluating Market Opportunities
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Organizational Levels
The Corporate Level is the highest level in any organization.
The Business Level consists of units within the overall organization that are generally managed
as self-contained businesses.
The Functional Level includes all the various functional areas within a business unit.
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I. Organizational Strategic Planning
Lower-level plans are developed
to execute higher-level plans.
Higher organizational level strategic
plans provide direction for strategic plans at lower levels.
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Competitive Advantage
• Competitive advantage: the firm has a marketing mix that the target market sees as better than a competitor's mix– A better marketing mix offers target customers
better customer value– Note: customers who are not in the target market
may not see the marketing mix as offering better value
• Requires that the firm:– understand current competitors' offerings– anticipate competitors' likely plans– monitor effects of changes in competition– REALLY understand the target customers' needs
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Shout and Crème Saver ads
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STRATEGYSTRATEGY How to cope with a dynamic environment, capitalizing on opportunities and handling threat … How to adopt an integrated system orientation … How to be a market driven organization = STRATEGIC PLANNING.
Company-Wide LevelMission Statement
(Marketing Concept Orientation)
Objectives and Goals
Grand Strategy
Marketing Strategy and Tactics
Target Market(Segments, Position)
Marketing Mix
P P P P
Offering to the Market
--------Feedback of Results---------
Impact of Competitionand otherEnvironmentalItems
PlaceProduct
Price Promotion
C
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Types of Strategic Plans (Exhibit 3-1; p.49)
Organizational Level Type of Strategic Plan Key Strategic Decisions
Corporate Corporate strategic Corporate visionplan Objectives & resource
allocationGrowth strategies
Business Business strategic Market scopeplan Competitive advantage
Marketing Marketing strategic Target marketplan Marketing mix
Product marketing Specific target marketplan Specific marketing mix
Execution action plan
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Marketing Strategy Planning Process
• Narrowing down from broad market opportunities that a firm might pursue to a specific strategy– Marketing strategy specifies a specific target market and a
specific marketing mix– Not just “some” strategy, but one that will offer target
customers superior value• Segmentation helps pinpoint a specific target market• Differentiation helps pinpoint a marketing mix that is different
from and better than what is available from a competitor• Screening criteria make it clear why you select a specific
strategy (and why others are “screened out”)• S.W.O.T. analysis identifies and lists a firm’s strengths and
weaknesses and its opportunities and threats– S.W.O.T helps identify relevant screening criteria (what is
needed to get a competitive advantage)
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A Marketing Strategy
C
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Marketing Strategy
Marketing strategy can be defined as the firm’s identification of desirable market segments and the development of appropriate marketing mixes to appeal to these segments.
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A Marketing Strategy – showing the 4 P’s of aMarketing Mix
PlaceProduct
Price Promotion
C
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Overview of Marketing Strategy Planning Process
PlaceProduct
Price Promotion
C
External Market EnvironmentTechnologies Political and Legal Cultural and Social Economic
Narrowing down to focused strategy with quantitative and qualitative screening criteria
CustomersNeeds and other
SegmentingDimensions
CompanyObjectives
&Resources
CompetitorsCurrent
&Prospective
Segmentation &Positioning
Segmentation &TargetingS.
W.O.T.
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Japanese McDonalds photo
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Select target
marketing approach
Single target
marketing approach
Multiple target
marketing approach
Combined target
marketing approach
Allcustomer
needs
Somegenericmarket
Onebroad-productmarket
Homogenous(narrow)product-markets
Segmenting into possible
target markets Narrowing down to
specific product-market
Narrowing Down to Target Markets
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The Strategic Role of Brand Loyalty
Generating Market Share
Developing a Strong Customer Base
Customer Equity
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The Learning Process
Drive
Cues
Response
Reinforcement
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The Strategic Planning Process
Exhibit 3-2 General Strategic Planning
See also Appendix A (p. 501)
Examinecurrent
situation
Identifypotentialthreats &
opportunities
Set objectives
Developstrategies
Execute
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IT Planning: Basic four-stage model
Dr. Chen, The Trends of the Information Systems Technology TM -24
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The Role of Marketing
1. Strategic Marketing: Marketing activities that affect corporate,
business, and marketing strategic plans.
See also Exhibit 3-3 (p.52)
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The Role of Marketing (Activities)
Marketers orient everyone in the organization toward markets and customers.
Marketers analyze the current situation, identify trends in the marketing environment,
and assess the potential impact of these trends.
Marketers development corporate, business, and marketing strategic plans.
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The Role of Marketing (cont.)
2. Marketing Management: Relates to specific
product marketing strategies.
Develop and execute product marketing plans
3. Networks: Comprise strategic
alliances among suppliers, distributors, and the marketing firm.
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Marketing Strategy and the Internet
After the failure of many dot com companies Rewrite the rules of business Lessons firms should learn
Three basics of business success Customers Capabilities Competitive advantages
Future impact of the Internet
Irwin/McGraw-Hill & Dr. Chen3-29 © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Basic Marketing
Three Ways to Develop Market-Oriented Strategies
• Single Target Market Approach– select one homogeneous segment as the target
• Multiple Target Market Approach– select two or more target segments– develop a different marketing mix for each
segment• Combined Target Market Approach
– combine submarkets into a single target market– develop one marketing mix for the combined
target
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II. Corporate Strategy Decisions
Corporate Vision Corporate Objectives & Resource Allocation Corporate Growth Strategies Business-unit Composition
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Corporate Vision
Corporate Vision: The basic values of an
organization.
The vision specifies what the organization stand for, where it plans to go, and how it plans to get there.
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What Comprises Corporate Vision?
Markets Products and services Geographic domain Core competencies Organizational objectives Organizational philosophy Organizational self-concept Desired public image
Exhibit 3-4 (p.54)
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Core Purpose: A Company’s Reason for Being
3M: To solve problems innovatively.
Hewlett-Packard: To make technical contributions for the advancement and welfare of humanity.
Mary Kay Cosmetics: To give unlimited opportunity to women.
Merck: To preserve and improve human life.
Sony: To experience the joy of advancing and applying technology for the benefit of the public.
Wal-Mart: To give ordinary folks the chance to buy the same things as rich people.
Exhibit 3-5 (p.54)
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Core Purpose
Core Competency: A bundle of skills that are possessed by
individuals across the organization.
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Questions Leading to an Effective Corporate Vision
1. Which customers will you be serving in the future?
2. Through which channels will you reach customers in the future?
3. Who will be your competitors in the future?
4. Where will your margins come from in the future?
5. In what end-product markets will you participate in the future?
6. What will be the basis for your competitive advantage in the future?
7. What skills or capabilities will make you unique in the future?
Exhibit 3-6 (p.55)
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Corporate Objectives and Resource Allocation
Corporate objectives specify the achievement of desired levels of performance during particular time periods.
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Corporate Objectives and Resource Allocation
Corporate objectives and resource allocation affect marketers in 2 basic ways:
1) In setting the objectives for different organizational levels.
2) Providing guidance for the development
and Implementation of marketing strategies.
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New or Existing Customers
Which one is more important Growth and new-customer generation, or Retain existing customer
By George Day, Wharton School of Business
Two important capabilities of successful market-oriented firms
Market sensing capabilityCustomer-linking capability
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Corporate Growth Strategies
MarketPenetration
ProductExpansion
DiversificationMarketExpansion
ProductsPresent New
Mar
kets
New
Pre
sent
(Four Basic Types of Opportunities)
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Examples of Different Types of Opportunities
• Market Penetration – Arm & Hammer promotes new uses of its baking soda
• Market Development– Marriott Hotels target families for weekend "get-
aways" to rent rooms filled by business travelers during the week
• Product Development– Microsoft develops a new version of its Windows
operating system to appeal to the people who bought an earlier version but now want more features
• Diversification– RJR, the cigarette producer, adds baked goods to its
product line to appeal to new customers
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Business-Unit Composition
Strategic Business Unit (SBU): Focuses on “a single product
or brand, a line of products, or mix of related products that meets a common market need or a group or related needs, and the unit’s management is responsible for all (or most) of the basic business functions”
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Business-Unit Composition
Companies often organize around competency-based SBUs to establish Sustained Competitive Advantage.
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III. Business Strategy Decisions
The basic objective of a business strategy is to determine how the business unit will compete successfully.
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Business Strategy Decisions
Dimensions of Strategy: Market scope.
How broadly the business views its target market.
Competitive advantage.
Competitive Advantage: The way a business
tries to get consumers to purchase its products over those offered by competitors.
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General Business Strategies
• Easyjet
• Jet Blue
• Conair• Alaskan Airlines• Midwest
• American• Delta• United Jet Blue
• Southwest
Market ScopeFocused Broad
Com
petit
ive
Adv
anta
ge
Diff
eren
tiatio
nLo
w p
rice
Global carriers
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The Rule of Three
The Rule of Three: Naturally occurring
competitive forces will create a consistent structure in many mature markets.
Three major players often compete by offering a wide range of related products and services and serve most major market segments.
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IV. Marketing Strategy Decisions
A Marketing Strategy Addresses:
• Selection of a target market.
• Development of a marketing mix.
Operating strategies are at the product level.
Functional strategiesare at the
business-unit level.
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Business & Product Marketing Strategies
Target market Segmented or mass approach Specific definition of target market
Product Number of different products Specific features of each product
Price General competitive price level Specific price
Distribution General distribution policy Specific distributions
Marketing General emphasis on marketing Specific marketing communications communications tools communications program
Decision Area Business Marketing Strategy Product Marketing Strategy
4P’s= Product + Price + Promotion + Place Exhibit 3-11, p.63
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• One ideal competitive position in the industry
• Benchmarking of all activities and achieving best practice
• Aggressive outsourcing and partnering to gain efficiencies
• Advantages rest on a few success factors, critical resources, core competencies
• Flexibility and rapid responses to all competitive and market changes
• Unique competitive position for the company
• Activities tailored to strategy
• Clear trade-offs and choices vis-à-vis competitors
• Competitive advantage arises from fit across activities
• Sustainability comes from the activity system, not the parts
• Operational effectiveness a given
The implicit Strategy Model of the Past Decade
Sustainable Competitive Advantage
Alternative Views of Strategy
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International Marketing Strategies
Entry Strategy: The approach used
to market products in an international market.
The Basic Options: Exporting Joint Ventures Direct Investment
International Strategic Orientation: Selection of a
(international) strategic orientation.
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International Marketing Strategies
Customized Marketing Strategy:A different marketing mix for each
target market country.
Standardized Marketing Strategy:The same product, price, distribution, & promotion
programs in all international markets.
Global strategy vs. Multinational strategy
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Effective Global Branding
Four common ideas about effective global branding: Stimulate the sharing of insights and best practices
across countries Support a common global brand-planning process Assign managerial responsibility for brands in order to
create cross-country synergies and to fight local bias Execute brilliant brand-building strategies
A study of 35 countries in Japan, Europe, and the US
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“… In turbulent times, an enterprise has to be managed both to withstand sudden blows and to avail itself of sudden unexpected opportunities. This means that in turbulent times the fundamentals have to be managed, and managed well.”
Source: P. Drucker, Managing in Turbulent Times, 1980
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Environmental Drivers
EnvironmentalDrivers
Timecompression
Globalization
TechnologyIntegration
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Framework for Global Competition:Alignment of Global Vision with IT using Global Drivers
Global Visionand Strategy
Global Drivers
Information Technology
• Data • Application• Infrastructure
Globalization
NetworkOrganization
N
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V. Executing Strategic Plans with Teamwork
1. Cross-Functional Teamwork
2. Marketing Teamwork
3. Co-Marketing Alliances
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Business Function Orientations
Function Basic Orientation
Marketing To attract and retain customersProduction To produce products at lowest costFinance To keep within budgetsAccounting To standardize financial reportsPurchasing To purchase products at lowest costR&D To develop newest technologiesEngineering To design product specifications
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Management vs. Leader Management
Planning Budgeting Organizing Staffing Controlling Problem-solving
Leadership Establishing direction Aligning people Motivating Inspiring Empowering Problem-preventing
•Working with conflict•Relationship building•Understanding how to work effectively in teams•Knowing when to say NO!
•Effective communication•Deep listening•Facilitating•Negotiating
“Soft” Interpersonal Skills
TM -58Dr. Chen, Information, Organization, and Control
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Business Drivers
Organization
Market Technology
Regulation Employees/Work
Business Processes
Solution to Business Requirements
Dr. Chen, Information, Organization and Control
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A Systematic Approach
VisionStrategyTactics
Business Plan
Competitive OptionsRoles and RelationshipsRedefine/ DefineTelecommunications as the Delivery VehicleSuccess Factor Profile
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Business Systems Planning (BSP) Approach(Top-Down)
Organizational databases
Information architecture
Data classes
Business processes Applications
Business strategies
IT Planning: Stages, Methods, and Outputs
NDr. Chen, IT Operations and Management Processes TM -62