Marketing Strategies and Plans

Learning Objectives

1. Understand the marketing and customer-perceived value.

2. Discuss corporate and divisional strategic planning.

3. Develop a marketing plan

Challenges and Opportunities of Marketing in Today’s Economy

Traditional ideas about marketing strategy began to change forever during the mid-1990s. Advances in
computer, communication, and information technology forever changed the world and the ways that
marketers reach potential customers.

According to Ferrell and Hartline (2010), there are seven (7) fundamental changes to marketing and
business practice, as well as to our own personal buying behavior.

1. Power Shift to Customers. Perhaps the single most important change during the last two decades is
the shift in power from marketers to consumers. Rather than businesses having the ability to manipulate
customers via technology, customers often manipulate businesses because of their access to
information, the ability to comparison shop, and the control they have overspending. As power
continues to shift to customers, marketers have little choice but to ensure that their products are unique
and of high quality, thereby giving customers a reason to purchase their products and remain loyal to
them.

2. Massive Increase in Product Selection. The variety and assortment of goods and services offered for
sale on the Internet and in traditional stores is staggering. The vast amounts of information available
online has changed the way we communicate, read the news, and entertain ourselves. This radical
increase in product selection and availability has exposed marketers to inroads by competitors from
every corner of the globe.

3. Audience and Media Fragmentation. Changes in media usage and the availability of new media
outlets have forced marketers to rethink they way they communicate with potential customers. When
the growth of the Internet, satellite radio, and mobile communication is added to this mix, it becomes
increasingly difficult for marketers to reach a true mass audience. Media audiences have become
fragmented due to (1) the sheer number of media choices we have available today, and (2) the limited
time we have to devote to any one medium. Today, customers increasingly get information and news
from Facebook and Twitter rather than The New York Times or CBS. They spend a growing amount of
time online or interacting with handheld devices— more time than they spend reading magazines or
watching television.

4. Changing Value Propositions. Even before ‘‘The Great Recession’’ began in 2008, consumers and
business buyers were already facing increasing costs associated with energy, gasoline, food, and other
essentials. Then, as the economy weakened, buyers were forced to tighten their belts and look for other
ways to lower expenses. Today, many of these same consumers face pay cuts or losing their jobs in
addition to increased expenses. These and other economic hardships have forced consumer and
business buyers to rethink value propositions and focus on the importance of frugality.

5. Shifting Demand Patterns. In some cases, changes in technology have shifted customer demand for
certain product categories. News is one well-known example, where traditional newspapers are slowing
disappearing while online and mobile news continue to grow. Another example is the explosive growth
in the digital distribution of music and video. The success of Apple’s iPod and iTunes, YouTube, and
Netflix, along with the continuing integration of television and computers, has dramatically shifted
demand for the recording and movie industries.

6. Privacy, Security, and Ethical Concerns. Changes in technology have made our society much more
open than in the past. As a result, these changes have forced marketers to address real concerns about
security and privacy, both online and offline. Businesses have always collected routine information
about their customers. Now, customers are much more attuned to these efforts and the purposes for
which the information will be used. Though customers appreciate the convenience of e-commerce, they
want assurances that their information is safe and confidential.

7. Unclear Legal Jurisdiction. When a company does business in more than one country (as many
Internet-based firms do), that company often faces a dilemma with respect to differing legal systems.
Today, this difference is especially keen for firms that do business in both the United States and China.
Google, for example, faces a difficult situation in dealing with the Chinese government’s censorship
demands. Though Google is a U.S. firm, it must comply with the Chinese request by operating a
completely separate search service that censors information considered sensitive by the Chinese
government.

Taking on the Challenges of Marketing Strategy

One of the greatest frustrations and opportunities in marketing is change—customers change,

Another fact about marketing strategy is that it is inherently people-driven. Marketing strategy is
about people (inside an organization) trying to find ways to deliver exceptional value by fulfilling the
needs and wants of other people (customers, shareholders, business partners, society at large), as well
as the needs of the organization itself. Marketing strategy draws from psychology, sociology, and
economics to better understand the basic needs and motivations of these people— whether they are
the organization’s customers (typically considered the most critical), its employees, or its stakeholders.
In short, marketing strategy is about people serving people. The combination of continual change and
the people-driven nature of marketing makes developing and implementing marketing strategy a
challenging task. A perfect strategy that is executed perfectly can still fail. This happens because there
are very few rules for how to do marketing in specific situations. In other words, it is impossible to say
that given ‘‘this customer need’’ and these ‘‘competitors’’ and this ‘‘level of government regulation’’
that Product A, Price B, Promotion C, and Distribution D should be used. Marketing simply doesn’t work
that way. Sometimes, an organization can get lucky and be successful despite having a terrible strategy
and/or execution. The lack of rules and the ever-changing economic, sociocultural, competitive,
technological, and political/legal landscapes make marketing strategy a terribly fascinating subject.
Developing a viable and effective marketing strategy has become extremely challenging. Even the most
admired marketers in the world like McDonald’s, Procter & Gamble, Anheuser-Busch, and Toyota
occasionally have problems meeting the demands of the strategic planning process and developing the
‘‘right’’ marketing strategy (Ferrell and Hartline, 2010).

Marketing and Customer Value

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.

What is customer value?

Customer value is the satisfaction the customer experiences (or expects to experience) by taking a given
action relative to the cost of that action. The given action is traditionally a purchase, but could be a sign-
up, a vote or a visit, while the cost refers to anything a customer must forfeit in order to receive the
desired benefit, such as money, data, time, knowledge (Mansfield 2018)

Measuring Customer Value

There are many equations and models for measuring customer value. The simplest is this:

Perceived Value = Perceived Benefits / Cost

In other words, for a given set of benefits, as the cost rises, the perceived value drops.

This is an important point. Value does not refer to price. It refers to the perceived benefits stood to be
gained in the context of price. Cost is only part of the equation. Literally.

Two identical products with identical exposure can only compete on cost. Two differentiated products
do not have to compete on cost. Products are not just differentiated by their features. They can also be
differentiated because of their brand. If Toyota brings out a car, you may presume it’s reliable because
one of its key brand features is reliability. If another carmaker releases a near-identical car, they may
struggle to compete because they do not share the same customer perceptions.

The Drivers of Value

Product function

Points of differentiation
Quality

Service

Marketing

Branding

Price

Existing relationships or experience

These are drivers that impact a customer’s perception of value. Some you can control, some you cannot.
For any individual customer they will rank differently in importance. Some people love brands. Some
people only buy cheap. Some favor short form content. Some people treasure personal relationships
(Mansfield 2018)

What can you do?

Think of everything you do in terms of delivering value to your customers and audience with the
understanding that they have choices and you are not the only choice.

Understand your market well enough that you can break it down into individual segments with unifying
characteristics that will respond in the same way to a given value proposition.

Always look for the opportunity to create new value propositions.

Look for avenues to communicate this value at the right time and in the right place.

Listen to your customers. Learn their perceptions about what you offer. Do not hesitate to change based
on what you learn. The customer, in this case, is always right.

The Value Delivery Process

The traditional—but dated—view of marketing is that the firm makes something and then sells it, with
marketing taking place during the selling process. Companies that take this view to succeed only in
economies marked by goods shortages where consumers are not fussy about quality, features, or style
—for example, basic staple goods in developing markets.

In economies with many different types of people, each with individual wants, perceptions, preferences,
and buying criteria, the smart competitor must design and deliver offerings for well-defined target
markets. This realization inspired a new view of business processes that places marketing at the
beginning of planning. Instead of emphasizing making and selling, companies now see themselves as
part of a value delivery process.

We can divide the value creation and delivery sequence into three phases (Kumar 2004).
First, choosing the value is the “homework” marketers must do before any product exists. They must
segment the market, select the appropriate target, and develop the offering’s value positioning. The
formula “segmentation, targeting, positioning (STP)” is the essence of strategic marketing.

The second phase is providing the value. Marketing must identify specific product features, prices, and
distribution.

The task in the third phase is communicating the value by utilizing the Internet, advertising, sales force,
and any other communication tools to announce and promote the product. The value delivery process
begins before there is a product and continues through development and after launch. Each phase has
cost implications.

The Value Chain

Harvard’s Michael Porter has proposed the value chain as a tool for identifying ways to create more
customer value According to this model, every firm is a synthesis of activities performed to design,
produce, market, deliver, and support its product.

Nine strategically relevant activities— five primary and four support activities— 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.

The firm’s task is to examine its costs and performance in each value-creating activity, benchmarking
against competitors, and look for ways to improve. Managers can identify the “best of class” practices of
the world’s best companies by consulting customers, suppliers, distributors, financial analysts, trade
associations, and the media to see who seems to be doing the best job. Even the best companies can
benchmark, against other industries if necessary, to improve their performance. GE has benchmarked
against P&G as well as developing its own best practices (Vorhies and Morgan 2005).

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 (Hammer and
Champy 1993). These processes include:

• The market-sensing process—gathering and acting upon information about the market

• The new-offering realization process—researching, developing, and launching new high-quality

• The customer acquisition process—defining target markets and prospecting for new customers
• The customer relationship management process—building deeper understanding, relationships, and
offerings to individual customers

• The fulfillment management process—receiving and approving orders, shipping goods on time, and
collecting payment

Strong companies are reengineering their workflows and building cross-functional teams to be
responsible for each process (Katzenbach and Smith 1993).

A firm also needs to look for competitive advantages beyond its own operations in the value chains of
suppliers, distributors, and customers. Many companies today have partnered with specific suppliers
and distributors to create a superior value delivery network, also called a supply chain (Keller and Kotler
2015).

Source: International Labour Organization. Value chain explained. Retrieved from

Now let's apply the principle (Question for Module 2a).

Corporate and Division Strategic Planning

Whether they let their business units set their own goals and strategies or collaborate in doing so, all
corporate headquarters undertake four planning activities: (1) Defining the corporate mission, (2)
Establishing strategic business units, (3) Assigning resources to each strategic business unit, and (4)
Assessing growth opportunities (Keller and Kotler 2015).

Defining the Corporate Mission

To define its mission, a company should address Peter Drucker’s classic questions: What is our business?
Who is the customer? What is of value to the customer? What will our business be? What should our
business be? These simple-sounding questions are among the most difficult a company will ever have to
answer. Successful companies ask them continuously and answer them thoughtfully and thoroughly. An
additional question for a business to address in today’s highly competitive markets is: why should
people bother to buy from them?

Companies often define themselves in terms of products. Market definitions of a business, however,
describe the business as a customer satisfying process. A target market definition tends to focus on
selling a product or service to a current market. A strategic market definition, however, also focuses on
the potential market.

Crafting a Mission Statement

A clear, thoughtful mission statement, developed collaboratively with and shared with managers,
employees, and often customers, provides a shared sense of purpose, direction, and opportunity. At its
best, it reflects a vision, an almost “impossible dream,” that provides direction for the next 10 to 20
years (Keller and Kotler, 2015).
Good mission statements have five major characteristics.

1. They focus on a limited number of goals. Compare a vague mission statement such as “To build total
brand value by innovating to deliver customer value and customer leadership faster, better, and more
completely than our competition” to Google’s ambitious but more focused mission statement, “To
organize the world’s information and make it universally accessible and useful.”

2. They stress the company’s major policies and values. Narrowing the range of individual discretion lets
employees act consistently on important issues.

3. They define the major competitive spheres within which the company will operate.

4. They take a long-term view. Management should change the mission only when it ceases to be
relevant.

5. They are as short, memorable, and meaningful as possible.

Relationship between missions and visions

While missions are essentially concerned with what the company is about and how it behaves, visions
are more associated with future corporate goals. Visions may be vague or precise but they give the
organization a sense of purpose. Good business leaders create a vision for an organization, articulate the
vision and motivate personnel to seek and achieve it. A vision and a mission can be one and the same,
but the concepts, though related, are not necessarily the same. Broadly speaking, visions refer to future
intentions and missions to delivering present ones. Both visions and missions are inspirational. Visions
once achieved need to be restated. Missions, meanwhile, are continuous in that they encapsulate an
organization’s purpose (Keller and Kotler 2015).

A paradigm change from sellers’ to buyers’ markets challenges everything an organisation stands for and
may require a complete and challenging evaluation of both vision and mission statements.

The Central Role of Strategic Planning

Marketers must prioritize strategic planning in three key areas:

(1) managing their businesses as an investment portfolio

(2) assessing the market’s growth rate and the company’s position in that market, and

(3) establishing a strategy.

Most large companies consist of four organizational levels: corporate, division, business unit, and
product. Corporate headquarters designs 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.

Assessing Growth Opportunities

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. One option is to identify opportunities for
growth within current businesses (intensive opportunities). A second option is to build or acquire
businesses related to current businesses (integrative opportunities). A third option is to add attractive
unrelated businesses (diversification opportunities).

• Intensive growth. Marketers can use a “product-market expansion grid” to consider the firm’s
strategic growth opportunities in terms of current and new products and markets. The company first
considers whether it could gain more market share with its current products in current markets, using a
market-penetration strategy.

Next it considers whether it can find or develop new markets for its current products in a market-
development strategy. Then it considers whether it can develop new products for its current markets
with a product-development strategy. Later the firm will also review opportunities to develop new
products for new markets in a diversification strategy.

Integrative growth. A business can increase sales and profits through backward integration (acquiring a
supplier), forward integration (acquiring a distributor), or horizontal integration (acquiring a
competitor). Horizontal mergers and alliances don’t always work out, however.

Diversification growth. This 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 succeed.
The firm might seek new products that have technological or marketing synergies with existing product
lines, though appealing to a different group of customers. Or it might use a horizontal strategy to search
for unrelated new products that appeal to current customers. Finally, the company might seek new
businesses with no relationship to its current technology, products, or markets, adopting a
conglomerate strategy to diversification.

Contents of a Marketing Plan

A marketing plan is a written document that summarizes what the marketer has learned about the
marketplace and indicates how the firm plans to reach its marketing objectives. It contains tactical
guidelines for the marketing programs and financial allocations over the planning period.

A marketing plan is one of the most important outputs of the marketing process. It provides direction
and focus for a brand, product, or company. It informs and motivates key constituents inside and
outside an organization about its marketing goals and how these can be achieved. Nonprofit
organizations use marketing plans to guide their fund-raising and outreach efforts, and government
agencies use them to build public awareness of nutrition and stimulate tourism.
Most marketing plans cover one year in anywhere from 5 to 50 pages. Smaller businesses may create
shorter or less formal marketing plans; corporations generally require highly structured documents.
Every part of the plan must be described in considerable detail.

A marketing plan usually contains the following sections (Keller and Kotler 2015):

• Executive summary and table of contents. The marketing plan should open with a brief summary for
senior management of the main goals and recommendations. A table of contents outlines the rest of the
plan and all the supporting rationale and operational detail.

• Situation analysis. This section presents relevant background data on sales, costs, the market,
competitors, and the macroenvironment. How do we define the market, how big is it, and how fast is it
growing? What are the relevant trends and critical issues? Firms will use all this information to carry out
a SWOT analysis.

• 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. All
this requires inputs from other areas, such as purchasing, manufacturing, sales, finance, and human
resources.

• Marketing tactics. Here the marketing manager outlines the marketing activities that will be
undertaken to execute the marketing strategy.

• The product or service offering section describes the key attributes and benefits that will appeal to
target customers.

• The pricing section specifies the general price range and how it might vary across different types of
customers or channels, including any incentive or discount plans.

• The channel section outlines the different forms of distribution, such as direct or indirect.

• The communications section usually offers high-level guidance about the general message and media
strategy. Firms will often develop a separate communication plan to provide the detail necessary for
agencies and other media partners to effectively design the communication program.

• Financial projections. Financial projections include a sales forecast, an expense forecast, and a break-
even analysis. On the revenue side is forecasted sales volume by month and product category, and on
the expense side the expected costs of marketing, broken down into finer categories. The break-even
analysis estimates how many units the firm must sell monthly (or how many years it will take) to offset
its monthly fixed costs and average per-unit variable costs.

A more complex method of estimating profit is risk analysis. Here we obtain three estimates (optimistic,
pessimistic, and most likely) for each uncertain variable affecting profitability, under an assumed
marketing environment and marketing strategy for the planning period. The computer simulates
possible outcomes and computes a distribution showing the range of possible rates of returns and their
probabilities.

• 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.

From Marketing Plan to Marketing Action

Marketers start planning well in advance of the implementation date to allow time for marketing
research, analysis, management review, and coordination between departments. As each action
program begins, they monitor ongoing results, investigate any deviation from plans, and take corrective
steps as needed. Some prepare contingency plans; marketers must be ready to update and adapt
marketing plans at any time.

The marketing plan typically outlines budgets, schedules, and marketing metrics for monitoring and
evaluating results. With budgets, marketers can compare planned and actual expenditures for a given
period. Schedules show when tasks were supposed to be completed and when they actually were.

Source: Visme. How to Create a Marketing Plan | Step-by-Step Guide. Retrieved from
http://www.youtube.com

Summary

The value delivery process includes choosing (or identifying), providing (or delivering), and
communicating superior value. The value chain is a tool for identifying key activities that create value
and costs in a specific business. Market-oriented strategic planning is the managerial process of
developing and maintaining a viable fit between the organization’s objectives, skills, and resources and
its changing market opportunities. The aim of strategic planning is to shape the company’s businesses
and products so they yield target profits and growth. Strategic planning takes place at four levels:
corporate, division, business unit, and product.

Each product level within a business unit must develop a marketing plan for achieving its goals. The
marketing plan is one of the most important outputs of the marketing process.