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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?