Chapter 2: Developing Marketing Strategies and Plans

I. Marketing and Customer Value

The Value Delivery Process

- composed of three phases:
A. Choosing the Value
- represents the “homework” marketing must do before any product exists
- segment the market, select appropriate target market, and develop the offering’s
value positioning
STP (segmentation, targeting, positioning) -essence of Strategic Marketing

B. Providing the Value

- marketing to determine specific product features, prices, and distribution

C. Communicating the Value

- utilizing sales force, sales promotion, advertising, and other communication tools
to announce and promote the product

*Nirmalya Kumar’s 3Vs approach to Marketing:

1. define the value segment or customers (and their needs)
2. define the value proposition
3. define the value network that will deliver the promised service

Frederick Webster’s Views of Marketing:

1. Value-defining process (market research and company self-analysis)
2. Value-developing process (new-product development, sourcing strategy, vendor
selection)
3. Value-delivering process (advertising and managing distribution)

The Value Chain

- A tool for identifying ways to create more customer value [Michael Porter]
9 Strategically Relevant Activities:
Primary Activities
1. Inbound Logistics- bringing materials into the business
2. Operations- converting materials into final products
3. Outbound Logistics- shipping out final products
4. Marketing- includes sales
5. Servicing
Support Activities
6. Procurement
7. Technology Development
8. Human Resource Management
9. Firm Infrastructure
* The firm must examine its costs and performance in each value-creating activity and
to look for ways to improve it

Core Business Processes

1. Market-sensing Process
2. New-offering Realization Process
3. Customer Acquisition Process
4. Customer Relationship Management Process
5. Fulfillment Management Process

Value-Delivery Network- a company’s supply chain and how it partners with specific
suppliers and distributors to make products and bring them to
markets

Core Competencies
1. It is a source of competitive advantage in that it makes a significant contribution to
perceived customer benefits;
2. It has applications in a wide variety of markets;
3. It is difficult for competitors to imitate.

Competitive Advantage- a company’s ability to perform in one or more ways that

competitors cannot or will not match

* Business realignment may be necessary to maximize core competencies

1. (re)defining the business concept or “big idea”
2. (re)shaping the business scope
3. (re)positioning the company’s brand identity

A Holistic Marketing Orientation and Customer Value

- integrates the value exploration, value creation, and value delivery activities with
the purpose of building long-term, mutually satisfying relationships and coprosperity
among key stakeholders

A. Value Creation
- Customer’s cognitive space: existing and latent needs
- Company’s competence space: breadth and depth
- Collaborator’s resource space: horizontal and vertical relationships
B. Value Creation
C. Value Delivery
- Customer Relationship Management: to respond to customer opportunities
- Internal Resource Management: integration of major processes
- Business Partnership Management: handling complex relationships with
trading partners
The Central Role of Strategic Planning

Strategic Planning Priority of Marketers:

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 the market
3. Establishing a strategy

Marketing Plan- a written document that summarizes what the marketer has learned
about the marketplace, indicates how the firm plans to reach its
marketing objectives, and helps direct and coordinate the marketing
effort

Strategic Marketing Plan- lays out the target markets and the value proposition
that will be offered, based on analysis of the best market
opportunities

Tactical Marketing Plan- marketing tactics, including product features, promotion,

merchandising, pricing, sales channels, and service

II. Corporate and Division Strategic Planning

Four Planning Activities of Head Quarters

1. Defining the Corporate Mission

Mission Statement- statements that organizations develop to share with managers,

employees, and (in many cases) customers
- provides shared sense of purpose, direction, and opportunity
Vision- an almost “impossible dream” that provides direction for the company for the
next 10 to 20 years

Five Major Characteristics of a Good Mission Statement:

A. It focuses on limited number of goals
B. It stresses the company’s major policies and values
C. It defines the major competitive spheres within which the company will operate
- Industry
- Products and applications
- Competence
- Market Segment
- Vertical
Vertical Sphere- the number of channel levels, from raw material to
final product and distribution, in which a company will
participate
 Hollow Corporations- consists of a person with a phone, fax, computer,
and desk who contracts out every service,
including design, manufacture, marketing, and
physical distribution
- Geography
D. It takes a long-term view
E. It is short, memorable, and meaningful as possible

2. Establishing Strategic Business Units

* Market definitions of a business are superior to product definitions
* Companies must see their business as a customer-satisfying process, not a goods-
producing process
* Products are transient; basic needs and customer groups endure forever

Target Market definition- current market focus

Strategic Market definition- current market focus + potential market focus

Three Dimensions of a Business:

A. Customer groups
B. Customer needs
C. Technology

Strategic Business Units- a single business or collection of related businesses that can be
planned separately from the rest of the company, with its own
set of competitors and a manager who is responsible for
strategic planning and profit performance
- develop separate strategies and assign appropriate funding

3. Assigning Resources to each SBU

* Allocate resources to each SBU

4. Assessing Growth Opportunities

* Includes planning new business, downsizing, and terminating older businesses.

Filling of Strategic-Planning Gap:

A. Intensive Growth
- review opportunities for improving existing businesses
Market Penetration Strategy- whether it could gain more market share with
its current products in their current markets
Market Development Strategy- whether it can find or develop new markets
for its current products
Product Development Strategy- whether it can develop new products of
potential interests to its current markets
Diversification Strategy- develop new products for new markets
B. Integrative Growth
- a business can increase sales and profits through backward, forward, or
horizontal integration within its industry

C. Diversification Growth
- makes sense when good opportunities exist outside the present businesses-the
industry is highly attractive and the company has the right mix of business strengths to
be successful

Organization and Organizational Culture

Organization- a company’s structure, policies, and corporate culture

Corporate Culture- the shared experiences, stories, beliefs, and norms that characterize
an organization

Marketing Innovation
Scenario Analysis- developing plausible representation’s of a firm’s possible future that
make different assumptions about forces driving the market and
include different uncertainties

III. Business Unit Strategic Planning

Business Mission  SWOT Analysis  Goal Formulation  Strategy Formulation 

Program Formulation  Implementation  Feedback and Control

The Business Mission

- define its specific mission within the broader company mission

SWOT Analysis
- a way of monitoring external and internal marketing environment that provides
an overall evaluation of a company’s strengths, weaknesses, opportunities, and threats

A. External Environment Analysis (Opportunity and Threats)

Marketing Opportunity- an area of buyer need and interest that a company
has a high probability of profitably satisfying
1. Supply something that is in short supply
2. Supply an existing product or service in a new or superior way
a. Problem Detection Method- ask consumers their suggestions
b. Ideal Method- consumers imagine an ideal version of the
product or service
 c. Consumption Chain Method- asks consumers to chart their
steps in acquiring, using, and
disposing of a product

Environment Threat- a challenge posed by an unfavourable trend or development

that would lead, in the absence of defensive marketing
action, to lower sales or profit

B. Internal Environment Analysis (Strengths and Weaknesses)

Goal Formulation
- the process of developing specific goals for the planning period

Goals- objectives that are specific with respect to magnitude and time

Management by Objectives (MBO)- a method of management whereby managers

and employees define goals for every
department, project, and person and use them
to monitor subsequent performance

Strategy Formulation
Strategy- a game plan for getting there
1. Marketing Strategy
2. Technology Strategy
3. Sourcing Strategy

Porters Generic Strategies

1. Overall Cost Leadership: lowest production and distribution costs
2. Differentiation: uniquely achieving superior performance in an important
customer benefit area valued by a large part of the market
3. Focus: business focuses on one or more narrow market segments

Strategy [Porter]- the creation of a unique and valuable position involving a

different set of activities

Strategic group- firms pursuing the same strategy directed to the same target
market

Strategic Alliance:
1. Product or service alliance
2. Promotional alliances
3. Logistics alliances
4. Pricing collaborations
 Partners Relationship Management [PRM]
- the activities the firm undertakes to build mutually satisfying long-term
relations with key partners such as suppliers, distributors, ad agencies, and
marketing research suppliers

Program Formulation and Implementation

* Even a great marketing strategy can be sabotaged by poor implementation

Feedback and Control