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�Developing Marketing �Strategies and Plans

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Chapter Questions

How does marketing affect customer value?
How is strategic planning carried out at different levels of the organization?
What does a marketing plan include?

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Phases of Value Creation and Delivery: PRAN/ SQUARE/APEX

Choosing the value

Providing the value

Communicating the value

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What is the Value Chain?

The value chain is a tool for identifying was to create more customer value because every firm is a synthesis of primary and support activities performed to design, produce, market, deliver, and support its product.

The strength of each items makes them leader/ follower/challenger

Harvard’s Michael Porter has proposed the value chain as a tool for identifying ways to create more customer value.3 According to this model, every firm is a synthesis of activities performed to design, produce, market, deliver, and support its product. The value chain identifies nine strategically relevant activities—five primary and four support activities—that create value and cost in a specific business. The primary activities are (1) inbound logistics, or bringing materials into the business; (2) operations, or converting materials into final products; (3) outbound logistics, or shipping out final products; (4) marketing, which includes sales; and (5) service. Specialized departments handle the support activities—(1) procurement, (2) technology development, (3) human resource management, and (4) firm infrastructure. (Infrastructure covers the costs of general management, planning, finance, accounting, legal, and government affairs.)

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Core Business Processes

Market-sensing process (A case of Shara group)
New-offering realization process
Customer acquisition process (EVALY?!)
Customer relationship management process
Fulfillment management process

The firm’s success depends not only on how well each department performs its work, but also on how well the company coordinates departmental activities to conduct core business processes.

These processes include:

• The market-sensing process which refers to all the activities in gathering and acting upon information about the market.

• The new-offering realization process which is all the activities in researching, developing, and launching new high-quality offerings quickly and within budget.

• The customer acquisition process which entails all the activities in defining target markets and prospecting for new customers.

• The customer relationship management process which entails all the activities in building deeper understanding, relationships, and offerings to individual customers.

• The fulfillment management process which includes all the activities in receiving and approving orders, shipping the goods on time, and collecting payment.

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Characteristics of �Core Competencies

A source of competitive advantage (IBA)
Applications in a wide variety of markets
Difficult to imitate

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Maximizing Core Competencies (IBA n Government funded projects)

(Re)define the business concept
(Re)shaping the business scope
(Re)positioning the company’s brand identity

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What is Holistic Marketing (value integration)?

Holistic marketing sees itself as integrating the value exploration, value creation, and value delivery activities with the purpose of building long-term, mutually satisfying relationships and co-prosperity among key stakeholders.

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Questions to Address in �Holistic Marketing: (BCG approach/Portors five factors)

What value opportunities are available?

How can we create new value offerings efficiently?

How can we delivery the new offerings efficiently?

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Figure 2.1 The Strategic Planning, Implementation, and �Control Processes

To ensure they select and execute the right activities, marketers must give priority to strategic planning in three key areas: (1) managing a company’s businesses as an investment portfolio, (2) assessing each business’s strength by considering the market’s growth rate and the company’s position and fit in that market, and (3) establishing a strategy. The company must develop a game plan for achieving each business’s long-run objectives.

Most large companies consist of four organizational levels: (1) corporate, (2) division, (3) business unit, and (4) product. Corporate headquarters is responsible for designing a corporate strategic plan to guide the whole enterprise; it makes decisions on the amount of resources to allocate to each division, as well as on which businesses to start or eliminate. Each division establishes a plan covering the allocation of funds to each business unit within the division. Each business unit develops a strategic plan to carry that business unit into a profitable future. Finally, each product level (product line, brand) develops a marketing plan for achieving its objectives.

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Master Marketers: What about local conglomerates?

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What is a Marketing Plan?

A marketing plan is the

central instrument for

directing and coordinating

the marketing effort.

It operates at a strategic and tactical level.

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Levels of a Marketing Plan

Strategic

Target marketing decisions
Value proposition
Analysis of marketing opportunities

Tactical

Product features
Promotion
Merchandising
Pricing
Sales channels
Service

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Corporate Headquarters’ �Planning Activities

Define the corporate mission
Establish strategic business units (SBUs)
Assign resources to each SBU
Assess growth opportunities

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Good Mission Statements

Focus on a limited number of goals
Stress major policies and values
Define major competitive spheres
Take a long-term view
Short, memorable, meaningful

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Google

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�Major Competitive Spheres: Suvastu Properties: Affordable hospitality

Industry
Products
Competence
Market segment
Vertical channels
Geographic:

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Product Orientation vs. �Market Orientation

Company	Product	Market
Missouri-Pacific Railroad	We run a railroad	We are a people-and-goods mover
Xerox	We make copying equipment	We improve office productivity
Standard Oil	We sell gasoline	We supply energy
Columbia Pictures	We make movies	We entertain people

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Dimensions Define a Business

Customer Groups

Customer Needs

Technology

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Characteristics of SBUs

It is a single business or collection of related businesses
It has its own set of competitors
It has a leader responsible for strategic planning and profitability

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Figure 2.2 The Strategic Planning Gap

Assessing growth opportunities includes planning new businesses, downsizing, and terminating older businesses. If there is a gap between future desired sales and projected sales, corporate management will need to develop or acquire new businesses to fill it.

Figure 2.2 illustrates this strategic-planning gap for a major manufacturer of blank compact disks called Musicale (name disguised). The lowest curve projects the expected sales over the next five years from the current business portfolio. The highest describes desired sales over the same period. Evidently, the company wants to grow much faster than its current businesses will permit.

How can it fill the strategic-planning gap? The first option is to identify opportunities for growth within current businesses (intensive opportunities). The second is to identify opportunities to build or acquire businesses related to current businesses (integrative opportunities). The third is to identify opportunities to add attractive unrelated businesses (diversification opportunities).

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What is Corporate Culture?

Corporate culture is the

shared experiences, stories, beliefs,

and norms that

characterize an organization.

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Figure 2.3 The Business Unit Strategic Planning Process

The business unit strategic-planning process consists of the steps shown in Figure 2.3.. Each business unit needs to define its specific mission within the broader company mission. The overall evaluation of a company’s strengths, weaknesses, opportunities, and threats is called SWOT analysis. It’s a way of monitoring the external and internal marketing environment. Once the company has performed a SWOT analysis, it can proceed to goal formulation, developing specific goals for the planning period. Goals are objectives that are specific with respect to magnitude and time. Goals indicate what a business unit wants to achieve; strategy is a game plan for getting there. Every business must design a strategy for achieving its goals, consisting of a marketing strategy and a compatible technology strategy and sourcing strategy. Even a great marketing strategy can be sabotaged by poor implementation. If the unit has decided to attain technological leadership, it must strengthen its R&D department, gather technological intelligence, develop leading-edge products, train its technical sales force, and communicate its technological leadership. Once they have formulated marketing programs, marketers must estimate their costs.

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SWOT Analysis

Strengths

Weaknesses

Opportunities

Threats

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Market Opportunity Analysis (MOA)

Can the benefits involved in the opportunity be articulated convincingly to a defined target market?
Can the target market be located and reached with cost-effective media and trade channels?
Does the company possess or have access to the critical capabilities and resources needed to deliver the customer benefits?

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Market Opportunity Analysis (MOA)

Can the company deliver the benefits better than any actual or potential competitors?
Will the financial rate of return meet or exceed the company’s required threshold for investment?

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Figure 2.4 �Opportunity and Threat Matrices

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Goal Formulation and MBO

Unit’s objectives must be hierarchical
Objectives should be quantitative
Goals should be realistic
Objectives must be consistent

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Porter’s Generic Strategies

Overall cost leadership

Differentiation

Focus

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McKinsey’s Elements of Success

Strategy

Structure

Systems

Style

Shared values

Staff

Skills

According to McKinsey & Company, strategy is only one of seven elements—all of which start with the letter s—in successful business practice.41 The first three—strategy, structure, and systems—are considered the “hardware” of success. The next four—style, skills, staff, and shared values—are the “software.” The first “soft” element, style, means company employees share a common way of thinking and behaving. The second, skills, means employees have the skills needed to carry out the company’s strategy. Staffing means the company has hired able people, trained them well, and assigned them to the right jobs. The fourth element, shared values, means employees share the same guiding values. When these elements are present, companies are usually more successful at strategy implementation.

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Marketing Plan Contents

Executive summary
Table of contents
Situation analysis
Marketing strategy
Financial projections
Implementation controls

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Evaluating a Marketing Plan

Is the plan simple?
Is the plan specific?
Is the plan realistic?
Is the plan complete?

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For Review

How does marketing affect customer value?
How is strategic planning carried out at different levels of the organization?
What does a marketing plan include?