CHAPTER # 2: Developing Marketing Strategies And Plans

How does marketing affect customer value?

Marketing and customer value are central concepts that drive the success of
businesses. These concepts are intricately connected through the value delivery
process, the value chain, core business processes, core competencies, and
strategic planning. Let’s break down these ideas and explore how they relate to
one another with examples.
1. Marketing and Customer Value
Marketing is the process of creating, communicating, delivering, and exchanging
offerings that have value for customers, clients, and society at large. The primary
goal of marketing is to understand and fulfill customer needs and wants, thereby
creating customer value.
Customer Value is the perceived benefit a customer gains from a product or
service compared to the cost of obtaining it. It is a key determinant of customer
satisfaction and loyalty.
Example: Apple creates high customer value by delivering innovative products like
the iPhone, which offers a seamless user experience, high-quality design, and a
robust ecosystem. Customers perceive this as worth the premium price.
2. The Value Delivery Process
The value delivery process is the sequence of activities a company undertakes to
create and deliver value to its customers. This process involves three main phases:
Choosing the Value: This is where the company identifies the target market,
determines what the customers value, and defines its value proposition.
Example: Before launching the iPhone, Apple identified a gap in the market for a
high-end smartphone that combined phone, music player, and internet browser
functionalities.
Providing the Value: This involves developing the product or service, setting the
price, and making it available to customers.
Example: Apple designed and developed the iPhone, set a premium price, and
distributed it through its stores and partners.
Communicating the Value: This includes promoting the product to customers,
highlighting its benefits and why it’s worth purchasing.
Example: Apple’s marketing campaigns for the iPhone focus on innovation, design,
and user experience, effectively communicating its value to customers.
3. The Value Chain
The value chain is a model that describes the full range of activities required to
create a product or service. These activities are categorized as primary and support
activities:

Primary Activities:
Inbound Logistics: Receiving and storing raw materials.
Operations: Transforming raw materials into finished products.
Outbound Logistics: Distributing the finished products to customers.
Marketing and Sales: Promoting and selling the products.
Service: After-sales support and customer service.
Support Activities:
Firm Infrastructure: Organizational structure, management, and planning.
Human Resource Management: Recruiting, training, and retaining employees.
Technology Development: Research and development, and technological innovation.
Procurement: Acquiring raw materials and other resources.
Example: Amazon's value chain includes its sophisticated logistics network (inbound
and outbound logistics), its e-commerce platform (operations and marketing), and
its customer service centers (service).
4. Core Business Processes
The core business processes are crucial for delivering value and achieving customer
satisfaction. These processes include:
a) Market Sensing Process
Definition: This process involves gathering, analyzing, and acting on information
about the market, including customer needs, trends, and competitor activities.
Example: Netflix continually tracks viewer preferences and market trends to adapt
its content offerings, ensuring it meets customer demands.
b) New Offering Realization Process
Definition: This process focuses on developing and launching new products or
services that meet customer needs.
Example: Tesla's development and launch of the Model 3 involved understanding
the market demand for a more affordable electric vehicle and then creating and
delivering that product.
c) Customer Acquisition Process
Definition: The activities involved in attracting and acquiring new customers.
Example: Dropbox offers free cloud storage to attract new users, using this as a
customer acquisition strategy.

d) Customer Relationship Management Process

Definition: Managing a company’s interactions with current and potential customers
to build long-term relationships and loyalty.
Example: Starbucks uses its rewards program to build customer loyalty by offering
personalized offers and discounts to frequent customers.
e) Fulfillment Management Process
Definition: Ensuring that the company can deliver products or services in a timely
and cost-effective manner.
Example: Amazon’s Prime service, which guarantees fast delivery, is an example of
efficient fulfillment management.
5. Core Competencies
Core competencies are unique strengths and abilities that provide a company with a
competitive advantage. These competencies are often difficult for competitors to
replicate.
Example: Google’s core competency lies in its advanced algorithms and data
processing capabilities, which power its search engine and ad targeting systems,
giving it a significant edge over competitors.
6. Central Role of Strategic Planning
Strategic planning is crucial for aligning a company’s resources and capabilities with
market opportunities. It involves:
a) Planning
Setting goals, analyzing the environment, and defining strategies to achieve those
goals.
Example: Disney’s strategic planning involves expanding its content offerings
through acquisitions like Pixar and Marvel to enhance its entertainment portfolio.
b) Implementation
Executing the strategies defined in the planning stage.
Example: Once Disney acquired Marvel, it implemented a strategy to integrate
Marvel’s superheroes into its theme parks and merchandise, maximizing the value
of the acquisition.
c) Controlling
Monitoring performance, evaluating results, and making adjustments to ensure
goals are met.
Example: Disney regularly assesses the performance of its Marvel movies and
merchandise, making strategic adjustments to optimize returns.

7. Marketing Plan and Tactical Level Planning

The Marketing Plan is a detailed roadmap that outlines the specific marketing
strategies, tactics, and actions a company will take to achieve its marketing
objectives.
Tactical Level Planning involves short-term, specific actions that support the
broader strategic goals.
Example: A tactical plan might involve a social media campaign to promote a new
product launch, aligning with the overall strategy of increasing brand awareness.
Example: Coca-Cola’s marketing plan might include a strategy to increase market
share by targeting health-conscious consumers with new products like Coca-Cola
Zero Sugar. Tactically, this could involve launching a promotional campaign focused
on the product's taste and health benefits.

How is strategic planning carried out at different levels of

the organization?
Strategic planning is a crucial process that helps organizations set goals, allocate
resources, and define actions to achieve those goals. This process is carried out at
different levels of an organization, often involving various planning activities. Below
is an explanation of how strategic planning is executed at these levels, including the
concepts you've mentioned:
1. Planning Activities at Different Organizational Levels
Strategic planning can be broken down into four key activities:
1. Define the Corporate Mission
The corporate mission is the foundational statement that defines the company’s
overall purpose, what it aims to achieve, and its core values. It provides a sense of
direction and guides decision-making across all levels of the organization.
Example: Google's mission statement is "to organize the world’s information and
make it universally accessible and useful." This mission guides all of Google’s
business activities, from search engines to data-driven products.
2. Establish Strategic Business Units (SBUs)
A Strategic Business Unit (SBU) is a semi-autonomous unit within a larger
organization, with its own mission, objectives, and competition. SBUs operate
independently but align with the overall corporate strategy. This step involves
identifying and establishing these units based on factors like product offerings,
market segments, or geographical areas.
Characteristics of an SBU:
Distinct Mission: Each SBU has its own specific mission.
Separate Competitors: It competes in a distinct market or with a distinct set of
competitors.
Autonomy: It has control over its own resources and strategies.
Example: Samsung is a large conglomerate with multiple SBUs, such as its mobile
phone division, home appliance division, and semiconductor division. Each of these
SBUs operates in different markets with different competitors and strategic
objectives.
3. Assign Resources to Each Strategic Business Unit
Once SBUs are established, the next step is to allocate resources (such as capital,
manpower, and technology) to each unit based on its needs and potential for
growth. Resource allocation should be strategic, ensuring that high-potential SBUs
receive the support they need to thrive, while lower-priority units receive fewer
resources.
Example: General Electric (GE) used to allocate significant resources to its aviation
and healthcare SBUs, which were seen as high-growth areas, while gradually
divesting from less profitable or declining sectors like its home appliances division.
4. Assess Growth Opportunities
The final step involves identifying and evaluating potential growth opportunities for
each SBU. This can be done through various growth strategies, such as market
penetration, market development, product development, diversification, and
integrative growth. Companies also consider whether to divest or downsize less
profitable units.
2. Simple-Sounding Questions
Strategic planning often starts with simple-sounding yet profound 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
From these answers the organization can develop a good mission statement
3. Product Definition vs. Market Definition
Product Definition: Focuses on what products the company offers. For example,
Apple defines the iPhone as a smartphone that combines a phone, an iPod, and an
internet communicator.
Market Definition: Focuses on the customer needs or problems the product
addresses. For Apple, the iPhone could be defined in the market as a device that
satisfies the need for communication, entertainment, and information access.
Example:
Product Definition: A company may define itself as a manufacturer of "sports
shoes."
Market Definition: The same company might define itself as being in the "fitness
and lifestyle market," aiming to improve health and well-being through innovative
products.
4. Target Market Definition vs. Strategic Market Definition
Target Market Definition: Specifies the specific group of customers a company
aims to serve. For instance, Nike targets athletes and fitness enthusiasts.
Strategic Market Definition: Takes a broader view, considering potential new
markets or segments the company could enter. Nike might consider expanding into
casual fashion by targeting non-athletes who still buy sportswear.
Example:
Target Market: McDonald's targets busy professionals for its breakfast menu.
Strategic Market: McDonald's might consider health-conscious consumers as a
strategic market, thus expanding its offerings to include more healthy options.
5. Vague Mission Statement vs. Clear Mission Statement
Vague Mission Statement: Lacks specificity and direction. Example: "We aim to
be the best company."
Clear Mission Statement: Clearly defines the company’s purpose and objectives.
Example: "To be the world’s leading provider of innovative mobile technology,
enabling people to connect seamlessly anywhere and anytime."
6. Vague Philosophy vs. Clear Philosophy
Vague Philosophy: Provides little guidance on values or principles. Example: "We
believe in innovation."
Clear Philosophy: Clearly articulates the company’s core values and guiding
principles. Example: "We believe in relentless innovation to create technology that
improves lives."
7. Strategic Business Unit (SBU) and Its Characteristics
An SBU is a distinct unit within a larger organization, responsible for its own strategy
and performance.
Characteristics of an SBU:
• Single business or collection of related businesses that can be planned
separately from the rest of the company
• Own set of competitors
• Manager responsible for strategic planning and profit performance and
controls most factors affecting profit
8. Shareholder Value Analysis
Shareholder value analysis evaluates how strategic decisions impact the financial
value delivered to shareholders. It involves calculating the present value of
expected future cash flows generated by the business and comparing it to the
investment required.
Example:
A company might invest in a new technology that is expected to increase profits by
$100 million over the next five years. Shareholder value analysis would compare
the present value of this expected profit against the investment cost to determine if
the decision increases shareholder value.
9. Intensive Growth Strategies
Market Penetration: Increasing sales of existing products in existing markets.
Example: Coca-Cola running aggressive marketing campaigns to boost the sales of
Coke in existing markets.
Market Development: Entering new markets with existing products. Example:
Starbucks expanding its coffee shops to new countries.
Product Development: Introducing new products to existing markets. Example:
Apple launching new versions of the iPhone.
Diversification: Entering new markets with new products. Example: Amazon
moving from selling books to a full range of retail products and cloud computing
services.
10. Integrative Growth
Integrative growth involves increasing sales and profits by acquiring or merging with
other companies at different stages of the value chain.
Backward Integration: Acquiring suppliers. Example: A car manufacturer
acquiring a steel supplier.
Forward Integration: Acquiring distributors or retailers. Example: A farmer
starting a farm-to-table restaurant.
Horizontal Integration: Acquiring competitors. Example: Facebook acquiring
Instagram.
11. Diversification Growth
Diversification involves expanding into new industries or markets, often unrelated to
the current business.
Example: Disney acquiring ESPN to diversify from entertainment into sports media.
12. Downsizing and Divesting Older Businesses
This strategy involves reducing the company’s scope by selling off or closing down
less profitable or non-core business units.
Example: General Electric selling its appliance division to focus on its core
businesses like aviation and healthcare.
Summary Example (Connecting Everything):
Let's take Amazon as an example.
Mission Statement: "To be Earth’s most customer-centric company."
Product Definition: Online retail of a vast array of products.
Market Definition: E-commerce, cloud computing, and AI-driven services.
Target Market: Online shoppers looking for convenience and variety.
Strategic Market: Expanding into global markets and new industries like grocery
(via Whole Foods acquisition).
SBU Example: Amazon Web Services (AWS) operates as an SBU with its own
strategic objectives and competition.
Shareholder Value: Investments in AWS, despite initial costs, have significantly
increased Amazon’s overall value.
Growth Strategies: Market penetration by offering Prime memberships, product
development through Kindle, and diversification by entering the entertainment
industry (Amazon Studios).
Integrative Growth: Acquiring Whole Foods as forward integration.
Diversification Growth: Expanding into cloud computing with AWS.
Downsizing: Amazon selling off less profitable divisions like its diaper business,
Diapers.com.
Strategic planning at Amazon illustrates the integration of various components to
maintain its market leadership and drive continuous growth
Growth Opportunities:
Market Penetration: Increasing market share in existing markets with existing
products.
Market Development: Expanding into new markets with existing products.
Product Development: Introducing new products into existing markets.
Diversification: Expanding into new products and new markets.
Integrative Growth: Acquiring or merging with companies at different stages of
the value chain.
Example: Amazon continually assesses growth opportunities through its various
SBUs. For instance:
Market Penetration: Amazon increases its share in the e-commerce market
through aggressive pricing and expanding Prime memberships.
Product Development: The introduction of new Amazon-branded devices like the
Echo.
Market Development: Expanding AWS services into new international markets.
Diversification: Moving into grocery retail with the acquisition of Whole Foods.
Integrative Growth: Acquiring companies like Zappos and Ring to enhance its
product offerings.
Summary Example (Combining Everything):
Let's use Disney as an example to illustrate all four activities:
Define the Corporate Mission: Disney’s mission is "to entertain, inform and inspire
people around the globe through the power of unparalleled storytelling."
Establish SBUs: Disney has several SBUs, such as Disney Parks, Disney Studios,
ESPN, and Disney+, each operating independently but aligning with Disney’s
overarching mission.
Assign Resources to SBUs: Disney allocates significant resources to its Disney+
streaming service, seeing it as a high-growth SBU, especially during the shift
towards digital content consumption.
Assess Growth Opportunities: Disney evaluates growth through diversification
(acquiring 21st Century Fox), market penetration (increasing Disney+ subscribers),
and product development (creating original content for Disney+).
By following these four planning activities, Disney strategically aligns its business
units and resources to achieve growth and maintain its position as a global
entertainment leader
Business Unit Level: Focuses on specific product or market segments. Google’s
Android division might have a mission to “lead the mobile OS market and drive
innovation in mobile technologies.”
Functional Level: Addresses strategies at the departmental level. Google’s
marketing department might focus on strategies to increase Android’s market share
by 10% in two years.

Business Unit Strategic Planning

1. Business Mission: Defines the purpose, scope, and objectives of the
organization.
2. SWOT Analysis: Identifies internal Strengths, Weaknesses, external
Opportunities, and Threats to inform strategic decisions.
3. Goal Formulation: Establishes specific, measurable, achievable, relevant, and
time-bound (SMART) goals aligned with the mission.
4. Strategy Formulation: Develops a plan to achieve goals, considering factors
like competition, market trends, and resource allocation.
5. Program Formulation: Translates strategies into actionable programs and
initiatives.
6. Implementation: Puts plans into action, allocating resources and assigning
responsibilities.
7. Feedback and Control: Monitors progress, identifies deviations, and makes
adjustments to stay on track.

Here's an example to illustrate this process:

Company: GreenCycle, a recycling services provider
Business Mission: Reduce waste, promote sustainability, and become a leading
recycling services provider.
SWOT Analysis:
- Strengths: Experienced team, efficient processes
- Weaknesses: Limited geographic presence, high operating costs
- Opportunities: Growing demand for recycling services, expanding into new
markets
- Threats: Intense competition, changing regulations
Goal Formulation:
- Increase market share by 20% within two years
- Expand services to three new regions within 18 months
- Reduce operating costs by 15% within a year
Strategy Formulation:
- Develop strategic partnerships to enter new markets
- Invest in technology to improve efficiency and reduce costs
- Enhance marketing efforts to raise brand awareness
Program Formulation:
- Develop a partnership program to identify and engage with potential partners
- Implement a technology upgrade roadmap
- Launch a targeted marketing campaign
Implementation:
- Assign cross-functional teams to lead each program
- Allocate resources and budget
- Establish key performance indicators (KPIs) to measure progress
Feedback and Control:
- Regularly review KPIs and program progress
- Make adjustments to strategies and programs as needed
- Celebrate successes and identify areas for improvement

This example demonstrates how GreenCycle uses business unit strategic planning
to achieve its mission and goals. By following this process, organizations can create
a clear roadmap for success and make data-driven decisions to drive growth and
improvement.

What does a marketing plan include?

Here's an explanation of the market plan, its shortcomings, and its contents:
Market Plan
A market plan is a document that outlines an organization's marketing objectives,
strategies, and tactics to achieve business goals. It helps allocate resources,
prioritize initiatives, and measure performance.
Shortcomings of Marketing Plans
Common shortcomings of marketing plans include:
1. Lack of Realism: Overly ambitious or unrealistic goals and assumptions.
2. Insufficient Competitive Analysis: Inadequate understanding of competitors, their
strengths, and weaknesses.
3. Short Run Focus: Prioritizing short-term gains over long-term sustainability and
growth.
Evaluating Marketing Plan
To evaluate a marketing plan, consider:
1. Clarity and coherence
2. Realism and feasibility
3. Alignment with business objectives
4. Thoroughness of situation analysis
5. Effectiveness of strategies and tactics
6. Measurability of performance indicators
Marketing Plan Contents
A comprehensive marketing plan typically includes:
1. Executive Summary: A concise overview of the plan.
2. Table of Contents: A clear outline of the plan's structure.
3. Situation Analysis: An examination of internal and external factors, including:
- Market analysis
- Competitive analysis
- Customer analysis
- SWOT analysis
4. Marketing Strategy: A description of how to achieve marketing objectives,
including:
- Target market segmentation
- Positioning
- Branding
- Pricing
5. Marketing Tactics: Specific actions to execute the marketing strategy, including:
- Advertising
- Promotion
- Public relations
 - Digital marketing
- Sales and distribution
6. Financial Projections: Quantifiable predictions of revenue, expenses, and ROI.
7. Implementation Controls: A plan for monitoring, evaluating, and adjusting the
marketing plan, including:
- Performance metrics
- Timeline
- Budget allocation
- Resource assignment
By understanding these elements, you can create a comprehensive marketing plan
that helps your organization achieve its goals and avoid common pitfalls.
Let's consider an example to illustrate the market plan and its
components:
Company: GreenClean, a startup offering eco-friendly cleaning products.
Market Plan:
Executive Summary:
GreenClean aims to capture 10% of the cleaning products market share within two
years by offering high-quality, eco-friendly products.

Table of Contents:
1. Situation Analysis
2. Marketing Strategy
3. Marketing Tactics
4. Financial Projections
5. Implementation Controls
Situation Analysis:
- Market Analysis: Growing demand for eco-friendly products
- Competitive Analysis: Few competitors in the eco-friendly cleaning products
market
- Customer Analysis: Health-conscious consumers and environmentally aware
individuals
- SWOT Analysis:
 - Strengths: High-quality products, unique selling proposition (USP)
- Weaknesses: Limited marketing budget, new entrant in the market
- Opportunities: Growing demand, partnerships with environmental organizations
- Threats: Competition from established brands, regulatory changes
Marketing Strategy:
- Target Market Segmentation: Health-conscious consumers and environmentally
aware individuals
- Positioning: Eco-friendly, high-quality cleaning products
- Branding: GreenClean - "Cleaning with a conscience"
- Pricing: Premium pricing strategy
Marketing Tactics:
- Advertising: Social media, influencer marketing, and targeted online ads
- Promotion: Partnerships with environmental organizations, in-store promotions
- Public Relations: Media outreach, press releases
- Digital Marketing: Email marketing, content marketing
- Sales and Distribution: Online store, partnerships with eco-friendly retailers
Financial Projections:
- Revenue: $250,000 (Year 1), $500,000 (Year 2)
- Expenses: Marketing ($50,000), Production ($100,000), Distribution ($50,000)
- ROI: 20% (Year 1), 30% (Year 2)
Implementation Controls:
- Performance Metrics: Website traffic, social media engagement, sales revenue
- Timeline: Quarterly review and adjustment of marketing tactics
- Budget Allocation: Marketing (30%), Production (40%), Distribution (30%)
- Resource Assignment: Marketing Manager, Sales Team, Production Team
Shortcomings:
- Lack of Realism: Aggressive revenue projections without sufficient market research
- Insufficient Competitive Analysis: Limited analysis of competitors' strengths and
weaknesses
- Short Run Focus: Emphasis on short-term sales revenue rather than long-term
sustainability and growth
Evaluating Marketing Plan:
- Clarity and coherence: 8/10
- Realism and feasibility: 6/10 (due to aggressive revenue projections)
- Alignment with business objectives: 9/10
- Thoroughness of situation analysis: 7/10 (limited competitive analysis)
- Effectiveness of strategies and tactics: 8/10
- Measurability of performance indicators: 9/10

Explain role of research and relationship in

marketing plan
Research plays a crucial role in understanding customers and building relationships
in a marketing plan:
Customers' Requirements:
- Identify needs, wants, and preferences
- Understand pain points and challenges
- Determine product or service features and benefits
Example: Conducting customer surveys to understand requirements for eco-friendly
cleaning products.
Customers' Expectations:
- Understand what customers expect from products or services
- Identify expectations for quality, price, and service
- Determine how to meet or exceed expectations
Example: Analyzing online reviews to understand customer expectations for
GreenClean's prducts.
Customers' Perceptions:
- Understand how customers perceive the brand, products, and services
- Identify strengths, weaknesses, opportunities, and threats
- Determine how to influence perceptions through marketing strategies
Example: Conducting focus groups to understand customer perceptions of
GreenClean's brand and products.
Customers' Satisfaction:
- Measure satisfaction levels with products or services
- Identify areas for improvement
- Determine how to increase satisfaction and loyalty
Example: Conducting customer satisfaction surveys to identify areas for
improvement.
Customers' Loyalty:
- Understand what drives loyalty and retention
- Identify strategies to build and maintain loyalty
- Determine how to encourage advocacy and referrals
Example: Implementing a customer loyalty program to reward repeat customers.
Relationships (Internal):
- Cross-functional collaboration
- Employee engagement and training
- Internal communication and feedback
Example: Collaborating with sales and customer service teams to understand
customer needs.
Relationships (External):
- Customer relationships
- Partner relationships (suppliers, distributors, etc.)
- Influencer relationships
- Stakeholder relationships (investors, media, etc.)

Example: Building relationships with environmental organizations and influencers to

promote GreenClean's products.
By incorporating research on customers' requirements, expectations, perceptions,
satisfaction, and loyalty, as well as building internal and external relationships,
GreenClean can create a comprehensive marketing plan that resonates with their
target audience and drives business growth.