MARKETING MANAGEMENT – MBA 504

PIM MBA – 2019

1. Defining Marketing for the New Realities – Chapter 1
2. Developing Marketing Strategies & Plans – Chapter 2
3. Analyzing Consumer Markets – Chapter 6
4. Conducting Market Research & Forecasting Demand – Chapter 4 & 5
5. Identifying Market Segments & Targets & Crafting the Brand Positioning – Chapters 9 & 10
6. Marketing Myopia – HBR Article
7. Creating Brand Equity – Chapter 11
8. Designing & Managing Services – Chapter 14
9. Channels & Distribution Strategies – Chapter 21 & 22
10. Revision & Discussion
Asanga Ranasinghe
Marketing & Customer Value
• Marketing is about satisfying customer needs and wants.
o The primary task of any business is to deliver customer value at a profit
o Companies that fine tune value delivery process can win in a hypercompetitive economy.

• The value delivery process

o Traditional view of marketing is about make a product & then trying to sell it
Make the product Sell the product

Design Advertise
product Procure Make Price Sell Distribute Service
Promote

Traditional physical process sequence

o Marketing takes place after the product is made - 2nd half of the process
o This view is successful in economies marked by shortage of goods where consumers are not fussy
about quality, features or style - basic staple goods in developing markets
o This view will not work in economies where people face abundant choices
o Smart competitors design & deliver their products to ‘ target markets’ Asanga Ranasinghe
Marketing & Customer Value
• The new view of marketing
o Marketing is placed at the beginning of planning
o Iinstead of making & selling, companies see themselves as a part of a value delivery process.
Value creation & delivery sequence

Choose the value Provide the value Communicate the value

Product Service Sourcing Distributing

Customer Market Value
Sales Sales Advertising
segmentation selection positioning development development Pricing
force promotion
focus Making Servicing

Strategic marketing Tactical marketing

• The process contains 3 phases

o 1st phase - Choosing the value – represents the ‘homework’ marketing staff must do before a product
launch.
Formula “Segmentation, Targeting, Positioning (STP)”
o 2nd phase - Providing the value by determining the specific product features, prices and distribution

o 3rd phase – Communicating the value by utilizing the sales force, sales promotion, advertising &
other communication tools Asanga Ranasinghe
Marketing & Customer Value
• The value chain
o Michael Porter proposed the value chain as a tool for identifying ways to create more customer value
o According to this model every firm is a synthesis of activities performed to design, practice, market,
deliver and support its product

Asanga Ranasinghe
Marketing & Customer Value Extended Reading

• The value chain

This model identifies 9 strategically relevant activities

Support (4) Primary Activities (5)

o Procurement o Inbound logistics
o Technology Development - Bringing material into the business
o Human Resource Management o Operations
o Firm Infrastructure - Converting them into finals products
o Outbound logistics
- Shipping out final products
o Marketing & sales
o Service

• Strong companies develop superior capabilities in better managing & reengineering their core business
processes
- The market sensing process
- The new offering realization process
- The customer acquisition process
- The customer relationship management process
- The fulfillment management process

• Successful companies look for competitive advantage beyond its own operations into the value chain of
suppliers, distributors & customers - “Supply Chain” Asanga Ranasinghe
Marketing & Customer Value
• Core Competencies
o Companies must look to ‘outsource’ less critical/ non-core Nike does not
activities/ resources for lower cost/ manufacture shoes, but
does shoe designing &
better efficiency/ better quality
merchandising - known
- cleaning service, landscaping, auto fleet management
as the 2 core
o This helps to companies to concentrate on core activities competencies of Nike

• Core competencies have 3 characteristics

1. A source of competitive advantage
2. Has applications in a wide variety of markets Panasonic has
3. Difficult for competitors to imitate streamlined its BUs
with emphasis on
• Market driven organizations are excelling in 3 distinctive core portable growth
capabilities through
manufacturing,
1. Market sensing abandoning mobile
2. Customer linking phones & cutting
3. Channel bonding back on solar &
rechargeable batteries
• Competitive advantage finally derives how well the company uses its
core competencies to create gaps vis-à-vis competitors
Asanga Ranasinghe
Marketing & Customer Value Extended Reading
• Holistic marketing Orientation & Customer Value
o Key focus is to manage a superior value chain and deliver a higher level of product quality, service
and speed.
o To achieve profitable growth by
▪ Expanding customer value share
▪ Building customer loyalty
▪ Capturing customer lifetime value

o Holistic marketing orientation – can be viewed as 3 steps

▪ Value exploration – how can a company identify new value opportunities? Need to understand the following:
- The customer’s cognitive space – existing/ latent needs, need for participation, stability, freedom and change
- The company’s competence space - current and what can be built in the future
- The collaborators resource space - horizontal and vertical partnerships
▪ Value creation – how can a company efficiently create more promising new value offerings?
- Identify new customer benefits from the customer’s view point
- Utilize core competencies from the company business domain to deliver value
- Select & manage business partners from its collaborative networks
▪ Value delivery – how can a company use its capabilities and infrastructure to deliver the new value offerings
more efficiently?
– Substantial investment in infrastructure and capabilities to deliver value
– Sharpen customer relationship management, business partnership & Internal resource management Asanga Ranasinghe
Marketing & Customer Value
• The Central Role of Strategic Planning
o Strategic planning has to focus on the following:
▪ Managing the company’s businesses as an investment portfolio
▪ Assessing each business’s strength vis-à-vis by market growth & company position & fit in that market
▪ Establishing a strategy to win in the long term

The Strategic Planning, Implementation & Control Processes Asanga Ranasinghe

Marketing & Customer Value
Strategic planning happens at 4 organizational levels
1. Corporate level: designing a corporate strategic plan to guide the whole enterprise –
resource allocation investment/ divestment
2. Division level: planning on allocating resources to each business unit
3. Business unit level: planning to make each unit profitable in the future
4. Product level: doing a Marketing Plan to drive brand growth/ profitability

The marketing plan is for directing & coordinating the marketing effort. Operate at 2 levels

1. Strategic marketing plan: lays out target markets & the value proposition that will be offered
based on the analysis of best fit – opportunity/ core competencies

2. Tactical marketing plan: specifies the marketing tactics, including product features,
promotion, merchandising, pricing, sales channels & services.

Asanga Ranasinghe
Corporate & Division Strategic Planning

At corporate level 4 types of planning activities are undertaken. They are:

1. Defining the corporate mission

2. Establishing Strategic Business Units (SBUs)

3. Assigning resources to each SBU

4. Assessing growth opportunities

Asanga Ranasinghe
Corporate & Division Strategic Planning
Defining The Corporate Mission
• To define its mission a company must address Peter Drucker’s 5 classic questions
o What is our business?
o What will our business be?
o What should our business be?
o Who is the customer?
o What is of value to the customer?

• Companies must view their businesses from satisfying a customer need as opposed to selling
a product

Asanga Ranasinghe
Corporate & Division Strategic Planning
• A clear thoughtful mission statement provides employees with a shared sense of purpose,
direction & opportunity

• Good mission statements have 5 major characteristics

1. They focus on a limited number of goals
2. They stress the company’s major policies and values
3. They define the major competitive spheres within which the company will operate - industry,
products & applications, competence, market segment, vertical (channels) geographical
(regions/ countries)
4. They take a long term view
5. They are short, memorable, and meaningful as possible

• Mission statements are at their best when they reflect a vision, an almost “impossible dream”
that provides a direction for the company for the next 10 - 20 years

Sony’s former president Akio Morita Fred Smith wanted to deliver

wanted everyone to have access to mail anywhere in the US
“personal portable sound” so his company before 1030 AM the next day,
created the Walkman & portable CD player so created FedEx
Asanga Ranasinghe
Corporate & Division Strategic Planning
Establishing Strategic Business Units
-

• Companies often define their businesses in terms of products

o “auto business” or the “clothing business”
• Levitt argues that market definition of business is superior to product definitions
& a business must be viewed as a customer-satisfying process not as a goods-
producing process
o transportation is a need & a bicycle, automobile, rail, airline are products that
meet the this need
• Levitt encourage companies to redefine their businesses in terms of needs not
products
o IBM a “hardware & software manufacturer” to a “builder of networks”
• Moving from product to market definition.
o Focusing on selling a product or service to focusing on the need to satisfy

✓ Pepsi could define its target market as everyone who drinks a cola beverage – competitors are other colas
✓ A strategic market definition could be everyone who might drink something to quench his/ her thirst –
competitors are other non-cola soft drinks, bottled water, fruit juices, tea & coffee

Asanga Ranasinghe
Corporate & Division Strategic Planning
Establishing Strategic Business Units
-

• Large companies define SBUs in terms of 3 dimensions

1. customer groups
2. customer needs
3. technology
• The purpose of identifying SBUs is to develop separate strategies & assign appropriate funding
to grow businesses profitably

• An SBU has 3 characteristics

1. It is a single business or collection of related businesses that can be planned separately
from the rest of the company
2. It has its own set of competitors
3. It has a business head who is responsible for strategic planning/ profit performance, who controls most
of the factors affecting profit
Consumer
Foods Financial Information Plantation
Leisure Property Transportation
& Services Technology Services
Retail Asanga Ranasinghe
Corporate & Division Strategic Planning
• Assigning Resources to Each SBU
Stars Question Marks
• High growth & high share business BCG Matrix • Low share business in high
• Often need heavy investment to grow growth markets
& gain share • Need a lot of cash to hold let
• Eventually growth will slow alone grow share
down & become cash cows • Either build to Stars or phased
High Star Question
out
Market
Mark
growth
rate
?
Cash Cows Cash Dog Dogs
• Low growth & Low Cow • Low growth & low
high share $ share business
established
• May generate enough
business High Low cash to maintain
• Need less
themselves but do not
investment to hold share Relative
market promise large sources of cash
• Cash generators to pay
share
the company bills & support Stars
Asanga Ranasinghe
Corporate & Division Strategic Planning
• Assessing Growth Opportunities
o Involves planning new businesses & downsizing/ terminating older businesses
o If there is a gap between future desired sales & projected sales, businesses have to be developed or
acquire new businesses to fill the gap

Strategic
Desired planning
Sales gap
Intensive growth
Sales ($ millions)

Current
Portfolio

0 1 2 3 4 5
Time (years)
The Strategic Planning Gap
Asanga Ranasinghe
 Corporate & Division Strategic Planning
• Assessing Growth Opportunities
• Intensive growth: identify opportunities to achieve further growth within current business (intensive
opportunities)
o Three intensive growth strategies as per the Ansoff Product Market Expansion Grid

Market Penetration Product Development

A growth strategy that increase A growth strategy that offer
sales of modified or new product
Current product portfolio portfolio to current market
in the current market segments
Segment by creating new
customers

Market Development Diversification

A growth strategy that A growth strategy that start up
identify & develop new or acquire businesses outside
market segments for the current product portfolio &
current product portfolio market segments
Asanga Ranasinghe
 Corporate & Division Strategic Planning Extended Reading

• Assessing Growth Opportunities Through its singular focus on sports programming &
news, ESPN grew from a small regional broadcaster
• Intensive growth into the biggest name in sports. The strategy was to
make sure that ESPN is there wherever sports fans
watched, read & discussed sports.
ESPN is now owned by Walt Disney with a revenue
Market Penetration of close to $ 10 B.

Television penetration
into many markets
through its 10 cable Product Development
channels A web site, a magazine,
more than 600 local radio
Market Development affiliates, original movies
ESPN International partly & television series, book
or wholly owns 47 publishing, a sports
television networks merchandize, catalog &
outside US, reaching online store, music &
sports fans in more than Diversification
video games
200 countries &
Restaurants (ESPN Zone)
territories across all 7
continents Asanga Ranasinghe
Corporate & Division Strategic Planning
• Assessing Growth Opportunities
• Integrative growth: identify opportunities to build or acquire businesses that are related to current
businesses (integrative opportunities)
o a business can increase sales & profits through backward, forward or horizontal integration
within its industry

Hayleys, the giant Sri Lankan

conglomerate now controlled • Sri Lanka: Hayleys expansion into Retail with
by businessman Dhammika Singer augur well with Government’s plan in
Perera which acquired Singer making Sri Lanka a Retail Hub
Sri Lanka earlier this week, • Buys Singer's local unit in near Rs. 11 bln
appears to be reverting back deal
to a model which included • Hayleys’ ambitious foray into retail trade
consumer electronics that
failed many years ago.

Asanga Ranasinghe
Corporate & Division Strategic Planning
• Assessing Growth Opportunities
• Diversification growth: identify opportunities to add attractive businesses that are unrelated to current
businesses (diversification opportunities)
o concentric strategy: seek new products that have technological or marketing
synergies
o horizontal strategy: seek for new products that could appeal to current customers
even though they are technologically unrelated
o conglomerate strategy: seek new businesses that have no relationship in technology,
product or market to the existing portfolio

• Samsung best known for its smartphones, tablets and

televisions.
• The electronics giant also makes military hardware,
apartments, ships and operates a Korean amusement park!
• The business currently has around 350,000 employees and
in 2011 reported revenues of $220 billion and economists
estimate that Samsung's revenues account for about 20% of
the value of South Korea's economy!

Asanga Ranasinghe
Corporate & Division Strategic Planning
• Assessing Growth Opportunities
• Downsizing & divesting older businesses: must carefully prune, harvest or divest tired old businesses to
release needed resources & reduce costs.
o week businesses require a disproportionate amount of managerial attention
o managers should focus on growth opportunities not trying to salvage
hemorrhaging businesses

P&G sells Pringles for $1.5bn

Diamond Foods to buy US consumer group’s last food
business
Diamond Foods to Merge P&G's Pringles Business into
the Company
Accretive combination makes Diamond the number
two global player in savory snack category

Asanga Ranasinghe
Corporate & Division Strategic Planning Extended Reading

• Organization & Organization Culture

o Strategic planning is done within a context of an organization which in turn consists of its structure,
policies and corporate culture
o Of the 3 culture is the hardest to change, yet it is the key element that need change to successfully
implement a new strategy
o Culture is an elusive concept – shared experiences, stories, beliefs, & norms that characterize an
organization
o Corporate culture is shaped by regional/ national cultures/ traditions
o Western organizations are more individualistic vs. Asian team working. Chinese/ Japanese company
cultures are more autocratic, experience based & action oriented
o Internet is the latest influence on corporate culture
– enhances market efficiency by making information abundant, instantaneous, &
accessible
– lowers entry barriers & lead to intense competition
o Corporate cultures may transform with privatization of state-owned ventures, joint ventures &
acquisitions
o Organizational cultures which place the customer interest first & foster innovation which help create new
customers & keep them loyal, profitably help their companies to out perform in today's” new world
Asanga Ranasinghe
Business Unit Strategic Panning
External Business Unit Strategic Planning Process
environment
(opportunity
and threat
analysis)

Business Goal Strategy Program implementation Feedback

mission SWOT analysis formulation formulation formulation &
control

Internal
environment
(strengths/
weakness
analysis)

Asanga Ranasinghe
 Business Unit Strategic Panning
• SWOT Analysis
Analysis of the overall company’s strengths & weaknesses in operating in an external environment full of
opportunities & threats to its business
External environment (opportunity & threat) analysis Internal environment (strengths & weaknesses) analysis
o Monitoring key macro environmental forces o Not all attractive opportunities can be exploited by a
o Observing significant micro environment factors company
o Key is to have the right market intelligence to track o To take advantage of opportunities & to face threats/
trends in the environment challenges successfully each business needs to evaluate
its internal strengths & weaknesses
o Good marketing is the art of finding, developing &
profiting from opportunities o Areas to be assessed are in
▪ Marketing: company reputation, market share,
o 3 sources of market opportunities customer satisfaction/ retention, product & service
– supplying for short supply quality, pricing/ promotion/ sales force effectiveness,
– supplying an existing product or service in a new or & geographical coverage
superior way ▪ Finance: cost & availability of capital, cash flow,
– supplying a totally new product or service financial stability
o An environmental threat is a challenge posed by an ▪ Manufacturing: Facilities, economies of scale,
unavoidable trend or development that would lead to capacity, workforce, OTIF, technical skills
lower sales/ profit ▪ Organization: visionary, capable leadership,
– in the absence of a defensive marketing plan dedicated employees, entrepreneurial orientation,
Asanga Ranasinghe
Business Unit Strategic Panning Extended Reading

• Goal Formulation

Once SWOT is over, the company must develop specific goals for the planning period. Goals must be
specific objectives with respect to magnitude & time

• Goals must meet the following criteria

- Arranged hierarchically from the most to the least important
- Stated quantitatively whenever possible
- Always realistic & achievable, yet stretching
- Consistent with strategy

• Most common goals are in the areas of

• Profitability • There are sometimes trade-offs when setting goals
• Sales growth o Short-term profit vs long-term growth
• Market share o Deep penetration of exiting markets vs development of new
• Improvements markets
• Risk containment o Profit goals vs non-profit objectives
• Innovation o High growth vs low risk
• Reputation
• Each choice calls for a different marketing strategy
Asanga Ranasinghe
Business Unit Strategic Panning
• Strategy Formulation
o Goals – What a business unit wants to achieve?
o Strategy - How to achieve the goals? – game plan to get there
o Porter has proposed 3 strategies for growth – Porter’s Generic Strategies

Michael Porter
defines strategy as
“creation of unique
& valuable position
involving a different
set of activities”. A
company can claim
to have a strategy
when it “performs
different activities
from rivals or
performs similar
activities in different
ways”

Asanga Ranasinghe
The Nature and Contents of a Marketing Plan
• A marketing plan is a written document that summarises what the marketer has learned about
the marketplace and indicates how the firm plans to reach its marketing objectives.

• A marketing plan must cover 5 broad areas as follows:

1. Executive summary and table of contents – brief outline of main goals and recommendations – a
summary for senior management
2. Situation analysis - relevant background data on sales, costs, the market, competitors, forces of
macro environment
o How do you define the market? How big is it? How fast is it growing?
o What are the relevant trends & critical issues? A SWOT
3. Marketing strategy – a definition of mission, marketing and financial objectives, needs the market
offering is intended to satisfy and its competitive positioning
4. Marketing tactics – outline of marketing activities to execute the strategy – deployment of the 4Ps
and marketing channels
5. Financial projections - sales forecast, expense forecast & breakeven analysis. Also a risk analysis
for optimistic, most likely & below expected scenarios.
6. Implementation controls - controls for monitoring and adjusting implementation of the plan. Also
build contingencies.
Asanga Ranasinghe
The Nature and Contents of a Marketing Plan

Macro analysis Stage 1- Environmental Analysis PEST

Micro analysis Stage 2- Capability Audit SWOT

Objectives Setting Stage 3 – Setting of Measureable MMOs

Marketing Objectives

Stage 4 – Developing Marketing Growth /

Strategy Formulation Generic Strategy
Strategies/ Plans for Growth

Marketing Tactics Stage 5 – Developing the Marketing STP/ 4Ps

Development Mix
Asanga Ranasinghe
Marketing Excellence (page 59/ 60) -Emirates
26 successive years of profitable Largest Airbus
Has a mission to Considered to be an innovative
operations across 142 & Boeing
provide high- organization & technology
destinations & 80 countries, aircraft
quality leader with a customer oriented
employing 52 K people in 162 operator in the
commercial air approach at a competitive price
different countries world
transportation
services

The global strategy aims at Its corporate positioning is not as an

efficient competition, Arab airline operating internationally but
exceeding far beyond the rather as a global company based out of
limits of Gulf & ME markets Middle East

Emirates is under Competitors are struggling to

competitive threat compete with Emirates & some of
Emirates is under cost pressure from other gulf them accuse Emirates of benefiting
due to its heavy expenditure on carriers such as from obscured exemptions &
aircrafts and rising fuel costs Etihad and Gulf Air subsides from the government as
despite being lean on other cost due to open skies well as borrowing advantages
components such as HR costs policy of the UAE
Asanga Ranasinghe
 Summary
• The value delivery process includes identifying, delivering, and communicating superior value. The value
chain is a tool for identifying key activities that creates value and costs in a specific business.
• Strong companies develop superior capabilities in managing core business processes such as new-product
realization, inventory management, and customer acquisition and retention. Managing these core
processes effectively means creating a marketing network in which the company works closely with all
parties in the production and distribution chain, from suppliers of raw materials to retail distributors.
• 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.
• Setting a corporate strategy means defining the corporate mission, establishing strategic business units
(SBUs), assigning resources to each, and assessing growth opportunities.
• Businesses unit strategic planning includes defining the business mission, analyzing the external
opportunities and threats, analyzing internal strengths and weaknesses, formulating goals, formulating
strategy, formulating supporting programs, implementing the programs, and gathering feedback and
exercising control.
• 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.
Asanga Ranasinghe