Developing Marketing

Strategies and Plans

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 The Value Delivery Process
The task of any business is to deliver customer value at a profit. A
company can win only by fine-tuning the value delivery process and
choosing, providing, and communicating superior value to
increasingly well-informed buyers.

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 …The Value Delivery Process
1. Traditional Physical Process Sequence: The traditional view of marketing
is that the firm makes something and then sells it. In this view, marketing
takes place in the selling process.
– Make the product
– Sell the product
2. Value Creation and Delivery Sequence: Instead of emphasizing making
and selling, companies now see themselves as part of a value delivery
process. In this view, marketing takes place at the beginning of planning.
The value creation and delivery sequence can be divided into three
phases:
– Choose the value: Here marketers do their “homework” to segment the
market, select the appropriate target, and develop the offering’s value
positioning.
– Provide the value: Entails selecting specific product features, prices,
and distribution.
– Communicate the value: This phase is accomplished by utilizing the
sales force, sales promotion, advertising, the Internet, and other
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communication tools to announce and promote the product.
 The Value Chain Model
Michael E. Porter, professor at Harvard Business School, has
proposed the value chain model as a tool for identifying ways to
create more customer value.

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 …The Value Chain Model
• A value chain is a set of activities that an organization
carries out to create value for its customers. The goal of
these activities is to offer the customer a level of value that
exceeds the cost of the activities, thereby resulting in a
profit margin:
Value Created and Captured – Cost of Creating that Value = Margin

• The idea of the value chain is based on the process view of

organizations, the idea of seeing a manufacturing or service
organization as a system, made up of subsystems each with
inputs, transformation processes and outputs.

• The value chain identifies nine strategically relevant

activities (five primary and four support activities) that
create value and cost in a specific business. 5
 …The Value Chain Model
Primary activities relate directly to the physical creation, sale,
maintenance and support of a product or service. They consist of the
following:
1. Inbound logistics: These are all the processes related to receiving,
storing, and distributing inputs internally. Supplier relationships are a
key factor in creating value here.
2. Operations: These are the transformation activities that change inputs
into outputs that are sold to customers. Here, operational systems create
value.
3. Outbound logistics: These activities deliver product or service to
customer. These are things like collection, storage, and distribution
systems, and they may be internal or external to an organization.
4. Marketing and Sales: These are the processes use to persuade clients
to purchase from the company instead of its competitors. The benefits
offer, and how well communicate them, are sources of value here.
5. Service: These are the activities that maintain and enhance the
product’s value, including customer support, repair services, etc. 6
 …The Value Chain Model
Support activities are handled in specialized departments:
1. Procurement: The function of purchasing the raw
materials and other inputs used in the value-creating
activities.
2. Technology development: It includes research and
development, process automation, and other technology
development used to support the value-chain activities.
3. Human resource management: The activities associated
with recruiting, development, and compensation of
employees.
4. Firm infrastructure: The firm’s infrastructure covers the
costs of general management, planning, finance,
accounting, legal, and government affairs.
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 Core Business Processes
(Michael Hammer & James Champy)

Customer relationship
Fulfillment management
management

Customer
acquisition

New-offering
realization
Market-sensing

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 …Core Business Processes
1. The market-sensing process: All the activities in gathering
market intelligence, disseminating it within the organization,
and acting on the information.
2. The new-offering realization process: All the activities in
researching, developing, and launching new high-quality
offerings quickly and within budget.
3. The customer acquisition process: All the activities in
defining target markets and prospecting for new customers.
4. The customer relationship management process: All the
activities in building deeper understanding, relationships, and
offerings to individual customers.
5. The fulfillment management process: All the activities in
receiving and approving orders, shipping the goods on time,
and collecting payment. 9
 Core Competencies
Companies can achieve competitive advantages by its core
competencies and distinctive competencies.
• A core competency is a company’s unique characteristic or
capability that provides a competitive advantage in the
marketplace, delivers value to customers, and contributes to
continued organizational growth. Core competencies
typically comprise fundamental knowledge, ability or
expertise in a specific subject area or skill set, allow a
business to reach a wide range of markets, and cannot be
easily replicated by competitors.
• A distinctive competency is any capability that
distinguishes a company from its competitors. A distinctive
competency can be any competency, core or otherwise, it is
typically a core competency that distinguishes a company
from its competitors. For example, one of Google's
distinctive competencies is its name recognition and status
as the most notable search engine. 10
 Strategic Planning
To understand marketing management, we must
understand strategic planning.
▪ Strategic planning is the process of determining a
company’s long-term goals and then identifying the
best approach for achieving those goals.
▪ Strategic planning is an organization’s process of
defining its strategy, or direction, and making
decisions on allocating its resources to pursue this
strategy. It may also extend to control mechanisms
for guiding the implementation of the strategy.
▪ Companies should have the capabilities such as
understanding, creating, delivering, capturing, and
sustaining customer value for marketing success. 11
 …Strategic Planning
To ensure that marketer select and execute the right
activities, they must give priority to strategic planning
in three key areas:
1. Managing the businesses as
an investment portfolio

2. Assessing the market’s

growth rate & the company’s
position in that market

3. Establishing a strategy
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 …Strategic Planning
Most large companies consist of four organizational levels:
1. The corporate level: 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.
2. The division level: Each division establishes a plan covering the
allocation of funds to each business unit within the division.
3. The business unit level: Each business unit develops a strategic plan
to carry that business unit into a profitable future.
4. The product level: Each product level (product line, brand) within a
business unit develops a marketing plan for achieving its objectives in
its product market.
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 Marketing Plan
Each product level, whether product line or brand must develop
a marketing plan for achieving its goals.
• A marketing plan is a business document written for the
purpose of describing the current market position of a
business and its marketing strategy for the period covered by
the marketing plan.
• The marketing plan operates at two levels:
✓ Strategic: The strategic marketing plan lays out the target
markets and the value proposition the firm will offer,
based on an analysis of the best market opportunities.
✓ Tactical: The tactical marketing plan specifies the
marketing tactics, including product features, promotion,
merchandising, pricing, sales channels, and service.
• Strategy Sets the Stage, But Tactics Is the Play.
• Strategic is the what and why, Tactical is the how. 14
Contents of A Marketing Plan
Executive Summary and table of contents

Situation analysis

Marketing strategy

Financial projections

Implementation controls
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 …Contents of A Marketing Plan
1. Executive summary and table of contents: The marketing plan should
open with a table of contents and brief summary for senior management
of the main goals and recommendations.
2. Situation analysis: This section presents relevant background data on
sales, costs, the market, competitors, and the various forces in the macro-
environment. Firms will use all this information to carry out a SWOT
analysis.
3. Marketing strategy: Here the marketing manager defines the mission,
marketing and financial objectives, and needs the market offering is
intended to satisfy as well as its competitive positioning.
4. Financial projections: Financial projections include a sales forecast, an
expense forecast, and a break-even analysis.
5. Implementation controls: The last section outlines the controls for
monitoring and adjusting implementation of the plan. Typically, it spells
out the goals and budget for each month or quarter, so management can
review each period’s results and take corrective action as needed.
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Strategic Planning, Implementation, and
Control Processes

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Corporate & Division Strategic Planning
All corporate headquarters undertake four planning
activities:

1 Define corporate mission

2 Establish SBU’s

3 Assign resources to SBU’s

4 Assess growth opportunities

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 1. Defining the Corporate Mission
(A company should address Peter Drucker’s classic questions to define its mission)

3. What is of
value to the
customer? 4. What will our
business be?
2. Who is the
customer?

5. What should
1. What is our
our business be?
business?

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 Product-Oriented vs. Market-Oriented
Definitions of a Business
Companies often define themselves in terms of products: They are in the “auto business” .
Market definitions of a business, however, describe the business as a customer satisfying
process. Transportation is a need: the horse and carriage, automobile, railroad, airline, ship,
and truck are products that meet that need.
 Mission Statements
• A mission statement is a statement of the purpose of a
company, organization or person; its reason for existing; a
written declaration of an organization’s core purpose and
focus that normally remains unchanged over time.
• Mission statement of Google: “To organize the world’s
information and make it universally accessible and useful”
• Characteristics of good mission statements:
1. Focus on a limited number of goals
2. Stress major policies and values
3. Define major competitive spheres/areas
4. Take a long-term view
5. Short, memorable, meaningful 21
 …Mission Statements
Major Competitive Spheres:
• Industry: Some companies will operate in only one industry;
some only in a set of related industries; some only in industrial
goods, consumer goods, or services; and some in any industry.
• Products and applications: Firms define the range of
products and applications they will supply.
• Competence: The firm identifies the range of technological
and other core competencies it will master and leverage.
• Market segment: The type of market or customers a company
will serve.
• Vertical channels: The number of channel levels, from raw
material to final product and distribution, in which a company
will participate.
• Geographic: The range of regions, countries, or country
groups in which a company will operate.
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 2. Establishing Strategic Business Units
• A strategic business unit is a separate, specialized
subsystem in the company which act as an independent
company.
• A strategic business unit is a fully functional and distinct
unit of the business that develops their own strategic vision
and direction.
• A strategic business unit is a semi-autonomous corporate
unit that focuses on a product offering and market
segment.
• Strategic Business Unit is an autonomous division or
organizational unit, small enough to be flexible and large
enough to exercise control over most of the factors
affecting its long-term performance. 23
 …Establishing Strategic Business Units
An SBU has three characteristics:

It has its own set

of competitors

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

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3. Assigning Resources to Each SBU
GE / McKinsey Matrix BCG’s Growth-Share Matrix

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 …Assigning Resources to Each SBU
GE/McKinsey matrix:
• In 1970s, General Electric (GE) was managing a huge and complex portfolio
of unrelated products and was unsatisfied about the returns from its
investments in the products. GE consulted the McKinsey & Company and as
a result the nine-box framework was designed. The nine-box matrix plots the
BUs on its 9 cells that indicate whether the company should invest in a
product, harvest/divest it or do a further research on the product and invest
in it if there’re still some resources left. The BUs are evaluated on two axes:
industry attractiveness and a competitive strength of a unit.
• Three different strategies can be distinguished and adopted using the
GE/McKinsey matrix:
– Grow/Invest: Growth is facilitated by expanding the market or making
investments.
– Hold: By making careful investments, the current market is
consolidated.
– Harvest/Sell: No extra investments but mainly focusing on maximizing
returns. 26
 …Assigning Resources to Each SBU
BCG’s Growth-Share Matrix:
• It is a portfolio planning model developed by
Bruce D. Henderson of the Boston Consulting
Group in 1970.
• It classifies business portfolio into four categories
(stars, cash cows, question marks, and dogs)
based on industry attractiveness (growth rate of
that industry) and competitive position (relative
market share).
• The general purpose of the analysis is to help
understand, which brands the firm should invest
in and which ones should be divested. 27
4. Assessing Growth Opportunities
Planning New
Businesses

Opportunities

Terminating Older
Downsizing Businesses
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 …Assessing Growth Opportunities
Assessing growth opportunities involves:
– Planning new 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.
– Downsizing: Reducing the size of a
company by eliminating workers and/or
divisions within the company.
– Terminating older businesses
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The Strategic-Planning Gap

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 …The Strategic-Planning Gap
• In the above Figure, the lowest curve projects the
expected sales over the next five years from the
current business portfolio. The highest curve
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?
– Intensive opportunities: Identify opportunities to
achieve further growth within current businesses.
– Integrative opportunities: Identify opportunities to
build or acquire businesses that are related to current
businesses.
– Diversification opportunities: Identify opportunities to
add attractive businesses unrelated to current businesses.
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 Intensive Growth Strategies
For fill up the strategic planning gap corporate management’s first
course of action should be a review of opportunities for improving
existing businesses. One useful framework for detecting new
intensive growth opportunities is a “product-market expansion
grid” proposed by Harry Igor Ansoff. It considers the strategic
growth opportunities for a firm in terms of current and new products
and markets.

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 …Intensive Growth Strategies
1. Market-penetration strategy: The company first
considers whether it could gain more market share
with its current products in their current markets .
2. Market-development strategy: The company
considers whether it can find or develop new markets
for its current products.
3. Product-development strategy: The company
considers whether it can develop new products of
potential interest to its current markets.

Diversification strategy: The company will also

review opportunities to develop new products for new
markets. 33
 Integrative Growth Strategies

Backward Forward
Integration Integration

Supplier Business Wholesaler

Integration
Horizontal

Competitor

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 …Integrative Growth Strategies
• Integrative growth is a growth strategy in which a
company increases its sales and profits through
backward, forward, or horizontal integration within
its industry.
– Backward integration: A company may acquire one or
more of its suppliers to gain more control or generate
more profits.
– Forward integration: It might acquire some wholesalers
or retailers, especially if they are highly profitable.
– Horizontal integration: It might acquire one or more
competitors through acquisition.
➢ If the company is still not satisfied with its sales
and profits, it must consider diversification.
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Diversification Growth

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 …Diversification Growth
• Diversification makes sense when a company finds
a highly attractive new industry where it can
leverage its strength.
Three types of diversification are possible:
– Concentric diversification: The company could seek
new products that have technological or marketing
synergies with existing product lines appealing to a new
group of customers.
– Horizontal diversification: The company can develop
new products that are technologically unrelated to its
current product line and could appeal to its current
customers.
– Conglomerate diversification: The company may seek
new opportunities that have no relation with its current
technology, products, or markets.
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Downsizing & Divesting Older Businesses

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 Organization & Organizational Culture
Strategic planning happens within the context of the
organization. A company’s organization consists of its
structures, policies, and corporate culture.
• Corporate culture is the shared experiences, stories,
beliefs, and norms that characterize an organization.
• Corporate culture is the way people dress, talk to one
another, and greet customers.

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 Marketing Innovation

Identify and encourage new ideas

Scenario Analysis
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 …Marketing Innovation
• Innovation is the process of translating an idea or
invention into a goods or service that creates value
for which customers will pay.
• Marketing innovation is the implementation of a
new marketing method involving significant changes
in product design or packaging, product placement,
product promotion or pricing.
• Senior management should identify and encourage
fresh ideas from three groups that tend to be
underrepresented in strategy making:
1. Employees with youthful perspectives
2. Employees who are far removed from company
headquarters
3. Employees who are new to the industry
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Business Unit Strategic Planning

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 Business Mission

Each business unit needs to define its specific mission

within the broader company mission.

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 SWOT Analysis
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.

Strengths

Weaknesses

Opportunities

Threats

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 Goal Formulation
• Goals are objectives that are specific with
respect to magnitude and time. The unit’s
objectives must meet the following four
criteria:
1. Objectives must be arranged hierarchically,
from the most to the least important
2. Objectives should be quantitative whenever
possible
3. Objectives should be realistic
4. Objectives must be consistent 45
 Strategy Formulation
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.

Overall Cost Leadership

Differentiation

Focus
Porter’s
Strategic Alliances
Generic 46
Strategies
 …Strategy Formulation
Michael Porter has proposed three generic
strategies that provide a good starting point for
strategic thinking:
1. Overall cost leadership: Firms work to achieve the
lowest production and distribution costs so they can
under price than competitors and win market share.
2. Differentiation: The business concentrates on achieving
superior performance in an important customer benefit
area valued by a large part of the market.
3. Focus: The business focuses on one or more narrow
market segments, gets to know them intimately, and
pursues either cost leadership or differentiation within
the target segment.
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 …Strategy Formulation
• For achieving leadership, either nationally or
globally, companies form alliances with domestic or
multinational companies that complement or
leverage their capabilities and resources.
• A strategic alliance is an agreement between two or
more parties to pursue a set of agreed upon
objectives needed while remaining independent
organizations.
• Four major type of marketing alliances:
– Product or service alliances
– Promotional alliances
– Logistics alliances
– Pricing collaborations
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Program Formulation and Implementation

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 Elements in Successful Business Practice
According to McKinsey & Company, there are seven “S” in successful
business practice. Strategy is only one of them. The 7S are as follows:
1. Strategy: A method or plan chosen to achieve a goal.
2. Structure: The way that something is built, arranged, or organized.
3. Systems: A collection of elements that are organized for a common purpose.
4. Style: Employees share a common way of thinking and behaving.
5. Skills: Employees have the skills needed to carry out the company’s
strategy.
6. Staffing: Company has hired able people, trained them well, and assigned
them to the right jobs.
7. Shared values: Employees share the same guiding values.

• 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.”
• When these elements are present, companies are usually more successful
at strategy implementation.
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Feedback and Control

Strong leadership
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THE END