MARKETING MANAGEMENT

( Chapter 2)
1/ Value Proposition

A company’s value proposition is the set of benefits or values it promises to deliver to

consumers to satisfy their needs

2/ Value Chain

Primary Activities: These are the main activities involved in creating and delivering a product or
service. They include:

 Inbound Logistics: Activities related to receiving, storing, and distributing inputs

internally.

Example: A car manufacturer receiving tires from suppliers and storing them in a warehouse
until they're needed on the production line.

 Operations/production: Activities that transform inputs into the final product.

Example: An automobile assembly plant converts individual components into fully assembled
cars through various production processes

 Outbound Logistics: These activities involve storing, distributing, and delivering the final
product or service to customers.

Example: A courier company collects packages from customers, sorts and organizes them, and
ensures their timely delivery to the intended recipients.

 Marketing and Sales: These activities involve promoting and selling the product or
service to customers.

Example: A software company designs marketing campaigns, conducts market research, and
engages in sales activities to generate awareness and drive customer adoption.

 Service: These activities encompass providing customer support, after-sales service, and
maintaining customer satisfaction.
Example: An IT services provider offers technical support, software updates, and troubleshooting
services to ensure customer satisfaction and continued usage.

Support Activities: These activities support the primary activities.

 Procurement: These activities involve sourcing, negotiating, and purchasing inputs or

resources required for the organization's operations.

Example: A restaurant procures ingredients, kitchen equipment, and other supplies from various
suppliers to support its daily operations.

 Technology Development: These activities focus on research, development, and

innovation to enhance products, processes, and systems.

Example: An electronics company invests in R&D to develop new technologies, improve product
features, and stay ahead of competitors

 Human Resource Management: These activities involve attracting, developing, and

retaining employees to support the organization's goals.

Example: A retail chain recruits and trains staff, provides performance evaluations, and offers
employee development programs to ensure a skilled and motivated workforce.

 Firm Infrastructure: refers to the organizational structure, control systems, company

culture and management processes that form the backbone of a company.
 Organizational Structure:
o Centralized Structure: Toyota practices a centralized organizational structure
where decisions are made at the top levels.
o Decentralized Structure: Spotify operates with a decentralized structure,
allowing teams to make decisions.
 Control Systems:
o Quality Control Checks: McDonald's has stringent quality control checks to
ensure consistency.
 Management Processes:
o Budgeting Process: Walmart's meticulous budgeting process helps in cost
management.
 Company Culture:
o Google is known for its open culture promoting innovation.

3/ Core Competency
A core competency is a unique capability and advantage that a company possesses that allows
it to differentiate itself from its competitors and provide superior value to its customers

Characteristics of Core Competency:

 Provides Potential Access to a Wide Variety of Markets: A core competency should

open up new opportunities and be usable in various market spaces.

Example: Apple's core competency in designing intuitive user interfaces has been applied across
its product range, from iPhones to Macs to iPads.

 Increases Customer Benefits: Whatever the competency is, it should ultimately

benefit the customer in terms of value.

Example: Amazon's competency in logistics and supply chain efficiency ensures quick and
reliable delivery for customers

 Difficult for Competitors to Imitate: A true core competency is often hard for rivals
to replicate, either because it's deeply embedded in the company's culture or
because it would be too costly or complex to imitate.

Example: Coca-Cola's secret formula or brand reputation is a core competency because it's
nearly impossible for competitors to duplicate.

4/ Strategic Planning

1. Strategic planning is the process by which an organization defines its strategy and
makes decisions on allocating its resources to pursue this strategy.
 Defining the Corporate Mission: statement describes the company's current
business and purpose — essentially why it exists.
 Characteristics of Good Mission Statements:
o They focus on a limited number of goals
o They take a long-term view
o They are as short, memorable, and meaningful as possible
 A vision statement provides a future-oriented declaration of the company's
aspirations and goals. It paints a picture of what the company aims to become or
achieve in the future.
2. Establishing Strategic Business Units: An SBU is a distinct unit within an organization
that operates with its own business strategies, objectives, and resources.
Example: Procter & Gamble, a multinational consumer goods company, has several SBUs, such
as Beauty, Grooming, Health Care, etc. Each SBU focuses on specific product categories and
caters to specific target markets.

3. Assigning Resources to Each SBU: This involves allocating resources like financial,
human, technological asset to each SBU based on its needs, potential for growth, and
strategic importance. This ensures that each SBU has the necessary tools and support to
achieve its objectives.

Example: This involves allocating resources like financial, human, technological asset to each
SBU based on its needs, potential for growth, and strategic importance. This ensures that each
SBU has the necessary tools and support to achieve its objectives.

4. Assessing growth opportunities: Planning new businesses, downsizing and terminating

older businesses. Corporate management will need to fill the gap in between future
desired sales and projected sales.

5/ Strategic Options

 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).
 Third is to identify opportunities to add
attractive unrelated businesses (diversification opportunities).

6/ Assessing Growth Opportunities

Intensive Growth

 Market-Penetration Strategy
o Encouraging current customers
o Attracting competitors’ customers (weaknesses in competitors’ products or
marketing programs).
o Convincing non-users (skincare,
software)
 Market-Development Strategy

o Identifying new user groups

o Additional distribution channels

 o New geographic area
 Product-Development Strategy
o Product modification via new features :
o Different quality level
o “New” product
 Diversification strategy refers to the methods and actions used to develop
new products or modify existing products to New market.

Integrative Opportunities

 Integrative opportunities refer to

business strategies where a company
seeks to combine with other parts of
the production and/or distribution
process (stages of its industry's value
chain) .
 These strategies aim to improve
efficiency, quality, or innovation, or
access new markets or customers.

 Integration Strategies:

o Forward integration: Forward integration is when a company moves closer to the

end customer in the supply chain. This typically involves taking control of or
acquiring a distributor or retailer.

Example: Starbucks: Originally, Starbucks was primarily a wholesaler of high-quality coffee

beans. They sold their beans to local restaurants and some consumers directly. However, as part
of their forward integration strategy, they began opening their own coffee shops where they
sold brewed coffee and other drinks directly to consumers.

o Backward integration: Backward integration is when a company moves back in the

supply chain, usually taking control of or acquiring a supplier or producer of raw
materials

Example: An automobile company deciding to produce its own steel or tires rather than buying
them from external suppliers. For instance, Tesla's acquisition of a company like Maxwell
Technologies (which specializes in battery technology) can be seen as a move to control and
improve the batteries they use in their electric cars.

o Horizontal integration: Horizontal integration involves a company expanding its

operations into the same part of the supply chain. This is often done by acquiring or
merging with a direct competitor.

Example: The merger of Marriott and Starwood Hotels in 2016, the merger of Anheuser-Busch
InBev and SABMiller in 2016, the merger of The Walt Disney Company and 21st Century Fox in
2017
Diversification Opportunities

 When a company decides to diversify its business activities, it essentially ventures into
new, unfamiliar/unrelated markets or industries.
 The primary reason for diversification is risk spreading – by not putting all resources into
one industry or market, a company can protect itself against industry-specific
downturns or other market adversities.
 Diversification can also provide growth opportunities by tapping into new revenue
streams.

Example: Virgin Group started as a record shop. Today, the conglomerate has diversified into
numerous sectors, including airlines (Virgin Atlantic), telecommunications (Virgin Mobile), and
spaceflight (Virgin Galactic).

7/ SWOT Analysis

Strengths: are the attributes, resources, or capabilities that give an organization a competitive
edge over its rivals. These are what the company excels at and uses to gain a strategic
advantage.

Weaknesses: are areas where the

organization might be lacking or
vulnerable compared to
competitors. These are aspects that
prevent the company from realizing
its full potential.

Opportunities: are external factors

that a business can exploit to its
advantage.

Threats: are external factors that

could jeopardize the current and
future performance of a business.

8/ What are goals?

Goals are statements of what needs to be accomplished to move towards the Vision.

Some common examples of business goals:

 Maximize profits
 Grow revenues
 Capture a bigger market share
 Provide better customer service
 Raise employee skill levels
9/ What are objectives?

Objectives provide much

more specific, quantifiable,
time-sensitive statements of
what the goal actually
means and how you will
know you are reaching it.

You might have multiple

objectives for each goal, all
helping you assess the
effectiveness of your
strategy.

10/ What is the difference between goals and objectives?

Alignment and order: Goals are set to achieve the mission/vision of an organization, while
objectives are set for the accomplishment of goals. Goals are thus higher in order than
objectives

Specificity: Goals are general statements of what is to be achieved. They do not specify the
tasks that need to be performed to accomplish them. Objectives, on the other hand, are
specific measurable actions one takes within a certain timeframe.

Tangibility: Goals can be intangible and non-measurable, but objectives are defined in terms of
tangible targets.

Example: the goal to “provide excellent customer service” is intangible, but the objective to
“reduce customer wait time to one minute” is tangible and helps in achieving the main goal.

11/ Strategy Formulation

A marketing strategy is a long-term plan for achieving

a company's goals.

This involves deciding on a particular course of action

and how resources will be allocated.

 Differentiation Strategy: Company seeks to

distinguish its products or services from that
 of competitors: the goal is to be unique. A company may use creative advertising,
distinctive product features, higher quality, better performance, exceptional service or
new technology to achieve a product being perceived as unique.

 Focus Strategy: Focus is a type of competitive strategy that emphasizes concentration

on a specific regional market (niche), product, or group of buyers such as:
 Demographic (for example young women)
 The sales channel (for example online)
 Budget (for example wealthy people)
 Area (for example Europe)

 Overall Cost Leadership Strategy: Attempting to gain competitive advantage by

reducing overall costs below the costs of competing firms.

15/ Program Formulation and Implementation

Program formulation: This step breaks down the strategy into actionable programs or projects.
It's about creating a detailed plan to execute the strategy effectively

• Supplier Negotiations Program: Engage with suppliers to negotiate bulk purchase

discounts or long-term contracts at favorable rates.

• Process Efficiency Improvement Program: Implement lean manufacturing or Six Sigma

techniques to reduce waste and improve production efficiency.

• Economies of Scale Program: Expand production facilities to produce goods in large

quantities and distribute fixed costs over more units.

• Cost Monitoring and Reduction Program: Regularly review all company expenses and
find areas to cut costs without compromising on product quality.

Example:

• Goal: Want to be fit (in a good shape)

• Objectives: loose (reduce) weight 15 kg over next 6 months

• Strategy: Exercise one hour daily

• Program

o Week 1-2:

o Mondays, Wednesdays, Fridays: Cardio (e.g., jogging, cycling, swimming)

 o Tuesdays, Thursdays: Strength training (e.g., weight lifting, resistance bands
exercises)

o Saturdays: Flexibility exercises (e.g., yoga, Pilates)

o Sundays: Rest or light walking

o Week 3-4: Introduce interval training in cardio sessions.

o Week 5 onwards: Gradually increase the intensity or duration of the workouts.

o Fitness tracking app, join a fitness club/gym, use dietary app, stay hydrated and
sleep well

16/ Implementation

This is where the rubber meets the road. The formulated programs are executed in this phase,
and the organization starts working actively towards achieving the set goals.

Implementation activities may involve:

 Obtaining sufficient (human and financial) resources to support the implementation.

 Defining specific tasks, responsibilities (for team members), and deadlines (to achieve
certain objectives).
 Executing the marketing program (detailed day-to-day operational marketing actions for
each Ps).
 The actual "doing" part of the project, where tasks are carried out as per the plan.
 Writing ads, setting a temporary price discount for a product, and offering a “two for
one” promotion.

17/ Feedback and Control

Gaining feedback and control involves tracking, measuring, evaluating the results of marketing
strategies and taking corrective action to ensure that the objectives are achieved.

There two types of actions we can take:

 Exploiting positive deviations: This happens when we face far better results than what
we set in our goals. The idea is to replicate what worked well in the future marketing
programs in order to achieve successful outcomes every time.
 Correcting negative deviations: This happens when the marketing program falls short of
its goals. When we identify the reasons behind these negative deviations, we can take
corrective actions.

18/ Product Planning

A marketing plan is a written document that is developed by product managers working within
the overall strategies set by levels above them.

Components of marketing plan:

• Executive Summary and Table of Contents: A short description that highlights the main
objectives, strategies, and outcomes expected from the marketing plan.

• Situation Analysis: This section offers a comprehensive look at the market situation. It
examines sales data, costs, competitors, and macroenvironmental forces. Key questions
answered include the size of the market, its growth rate, key trends, and challenges. A
SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) is often done at this
stage.

• Marketing Strategy: This is where the product manager defines the product's mission
and its marketing and financial objectives. It involves:

• Identifying target market segments.

• Defining how the product will satisfy the needs of these segments.
• Competitive positioning.
• Coordinating across various departments like sales, finance, and manufacturing.

 Financial Projections: This section provides:

 A sales forecast which predicts the number of units that will be sold.

 An expense forecast that projects costs associated with the product.

 A break-even analysis which tells how many units of the product must be
sold to cover costs.

 Risk analysis, which evaluates different scenarios (optimistic, pessimistic,

most likely) to understand potential profitability and challenges (contingency
plan).

 Implementation Controls: The final step in marketing plan is about execution. This
section provides:

o A roadmap for implementing the marketing plan.

o Milestones and goals that need to be achieved.

o Monitoring and evaluation mechanisms to measure the success of the plan

and take corrective action if required.