Developing Marketing

Strategies and Plans

Chapter 2
Chapter Outline
 Marketing and Customer Value
 The Value Delivery Process
 Phases of Value Creation and Delivery
 The Value Chain
 Core Business Processes/Essential Activities
Characteristics of Core Competencies
 What is a Marketing Plan?
Corporate Headquarters’ Planning Activities
Business Unit Strategic Planning
Product Planning: The Nature and Contents of a
Marketing Plan
 Marketing Plan Contents
 Marketing and Customer Value

The task of a business is to deliver customer

value at a profit.
In a hypercompetitive economy with
increasingly informed buyers faced with
many choices, a company can only win by
fine-tuning the value delivery process and
choosing, providing, and communicating
superior value.
 The Value Delivery Process

Traditional view: The value

delivery process takes place
during the selling process.
New view: The value
delivery process begins at the
beginning of planning.
 Phases of Value Creation and
Delivery
Choosing the value-Segment the
market, select target markets, develop the
offering's value positioning. (before the
product exists)
Providing the value-Determine specific
product features, prices, and distribution.
Communicating the value-Using the
sales force, Internet, advertising to
announce and promote the product.
Each phase has cost implications.
 The Value Chain

The value chain is a tool for

identifying was to create more
customer value because every firm is
a combination of primary and
support activities performed to
design, produce, market, deliver, and
support its products.
These activities create value and
cost.
 The Value Chain
 Primary Activities
1. Inbound Logistics- Bringing the material
to the business
2. Operations- Converting the material into
final products
3. Outbound Logistics- Shipping out the
final product
4. Marketing –Which includes sales
5. Service
 The Value Chain
Support Activities (Specialized
departments)
1. Procurement- is the acquisition of goods
and services. (Buying)
2. Technology Development
3. Human Resource Management
4. Firm Infrastructure- Covers the costs of
general management, planning, finance,
accounting, legal, and government affairs.
 Core Business Processes/Essential
Activities
 1. Market-sensing process-All activities in gathering and
acting upon information about the market.
 2. New-offering realization process-Researching, developing,
and launching new high-quality offerings quickly and within
budget.
 3. Customer acquisition process-Defining target markets and
prospecting for new customers.
 4. Customer relationship management process-Building
deeper understanding, relationships, and offerings to individual
customers.
 5. Fulfillment management process-Receiving and approving
orders, shipping the goods on time, and collecting payment.
 Use cross-functional teams (is a group of people with different
functional expertise working toward a common goal) to manage core
processes.
 Characteristics of Core Competencies
Core Competencies- The main
strengths or strategic advantages
of a business.
A source of competitive advantage
Applications in a wide variety of markets
Difficult to imitate
Companies must also posses distinctive abilities
or broader business process such as customer
linking, market-sensing, and channel bonding.
The Strategic Planning, Implementation,
and Control Processes
 What is a Marketing Plan?
The Marketing Plan is
the central instrument for
directing and coordinating
the marketing effort.
It operates at strategic
and tactical level.
 Levels of a Marketing Plan
Strategic Tactical
Target Product
marketing features
decisions Promotion
Value Merchandising
proposition Pricing
Analysis of Sales channels
marketing Service
opportunities
 Corporate Headquarters’ Planning
Activities
1. Define the corporate mission
2. Establish strategic business
units (SBUs)
3. Assign resources to each SBU
4. Assess growth opportunities
 1. Define the corporate mission

Good Mission Statements

should:
Focus on a limited number of goals
Stress major policies and values
Define major competitive sphere
where the company will operate
Take a long-term view
Short, memorable, and meaningful
 2. Establishing Strategic Business Units (SBUs)

 Market definition of a
business :Customer satisfying process
Products change, needs stay
Target market definition-Focus on
selling product to current market.
Strategic market definition-Focus
on selling product to current and
potential markets.
 Characteristics of SBUs

It is a single business or

collection of related business
that can be planned for
separately from the rest of the
company.
It has its own set of
competitors.
It has a leader responsible for
 3. Assigning Resources to each SBU

Management must decide

how to allocate resources to
each SBU.
Is the market value of a
company greater with or
without the SBU?
 4. Assessing Growth Opportunities

1. Planning new

businesses
2. Downsizing businesses
3. Terminating older
business
 1. Planning new businesses
If there is a gap between
desired sales and projected
sales
Develop or acquire new
businesses to fill the gap
The Strategic Planning Gap
Intensive Growth Strategies/ Improve existing
businesses
Ansoff’s Product-Market Expansion Grid
 Intensive Growth/Improve existing
businesses
Market-penetration strategy- Gain more
market share with current products in
current markets.
Market-development strategy- Find or
develop new markets for current products.
Product-development strategy- Develop
new products of potential interest to current
markets.
Diversification strategy - Develop new
products for new markets.
Integrative growth / Build or acquire businesses related to current
businesses

Backward integration-
Example: acquire supplier.
Forward integration-Example:
acquire wholesaler or retailer.
Horizontal integration-
Example: acquire one or more
competitors.
 The Supply Chain
Supplier(raw material or components)
Transportation(inbound logistics)
Manufacturer
Transportation (outbound logistics)
Warehousing
Wholesaler
Retailer
Final consumer
Diversification growth /Add attractive unrelated businesses

Concentric strategy-Seek new products

that have technological or marketing
synergies with existing product lines that
appeal to a different group of customers.
Horizontal strategy-Search for unrelated
new products that appeal to current
customers.
Conglomerate strategy-Seek new
businesses that have no relationship to
current technology, products, or markets.
 2. Downsizing businesses
3. Terminating older businesses

Downsizing- Whereby a company reduces

its size and operations to increase its
efficiency and profitability. Reduce employees
and company activities.
Terminating older businesses- Sell off old
unprofitable businesses to reduce costs.
 Business Unit Strategic Planning

1. The Business Mission

2. SWOT Analysis
3. Goal Formulations
4. Strategic Formulation
5. Program Formulation and
Implementation
6. Feedback and Control
 1. The Business Mission
2.External Environment (Opportunity and Threat) (SWOT Analysis)
Each Business unit needs to define its specific
mission within the broader company mission.
Marketing opportunity is an area of buyer needs
and interest that a company has a high probability of
profitably satisfying.
1. Offer something that is in short supply
2. Supply an existing product or service in a new or
superior way:
 a. problem detection method-Ask consumers for suggestions.
 b. ideal method-Ask consumers to imagine an ideal version of the
product.
 c. consumption chain method-Ask consumers to chart the steps in
acquiring , using, and disposing of a product.
External Environment (Opportunity and
Threat) (SWOT Analysis)
Environmental threat is a challenge posed
by an unfavorable trend or development that
in the absence of defensive marketing action
would lead to lower sales or profit.
Internal Environment (Strengths and Weaknesses) (SWOT
Analysis)

Evaluate strengths and

weaknesses
Find new strengths
 3. Goal Formulations

Develop specific goals for the planning

period.
Businesses units usually pursue a mix of
objectives :
Profitability
Sales Growth
Market share improvement
Risk containment
Innovation
Reputation
 4. Strategic Formulation

A strategy is a game plan for getting there.

Marketing Strategies
Overall cost leadership-achieve the lowest
production and distribution to underprice competitors
and win market share.
Differentiation-achieve superior performance in an
important customer benefit area valued by a large part
of the market.
Focus-Focus on one or more narrow market segments
and pursue either cost leadership or differentiation.
 Firms directing the same strategy to the same target market
constitute a strategic group.
5. Program Formulation and Implementation
6. Feedback and Control

Program Formulation and

Implementation:
Estimate cost
Sufficient results to justify cost
Feedback and Control:
It is critical for organizations to examine
the changing environment and adopt new
goals and behaviors.
Product Planning: The nature and contents of a Marketing Plan

A marketing plan is written document that

summarizes what the marketer has learned
about the marketplace and indicates how the
firm plans to reach its marketing strategies.
 Marketing Plan Contents
 Executive summary and table of contents-A table of
contents and a brief summary for top managers of the
main goals and recommendation.
 Situation analysis-Background data on sales, costs, the
market, the competitors, and the various forces in the
marcroenviroment.
 Marketing strategy-Define the mission, marketing and
financial objectives, and the needs that the market
offering intends to satisfy plus the competitive
positioning.
 Financial projections-Includes a sales forecast, an
expense forecast, and a break-even analysis.
 Implementation controls-Outlines the controls for
monitoring and adjusting the implementation of the plan.
 References
Kotler, Philip and Kevin Lane Keller .
Marketing Management. Pearson Education
Limited, 2012.
Porter’s Generic Strategies
Cost: Compete by offering the lowest prices.
Differentiation: Product or service that offers
unique value.
Focus: Narrow or Large, focus on an entire
industry or a small market segment.
Generic Strategies

Samsung
Walmart
Galaxy

REI Big 5
The Value Chain
Value Chain (contd.)
Inbound Logistics: raw materials brought into
the company
Operations: any part of the business that
converts raw materials into products and
services
Outbound Logistics: Getting the products
and services to the customers.
Value Chain (contd.)
Sales/Marketing: Entire buyers to purchase
products and services.
Service: Support of products and services
that customers have purchased.
Firm Infrastructure: All the organizational
functions that support the business.
Technology connected/supported.
Human Resources Management: Recruiting
hiring, and retaining employees.
Value Chain (contd.)
Technology Development: Advances and
innovations adopted to add value to the
company.
Procurement: Acquiring raw materials for
production/operations.
The Value Chain Model & CRM
Enterprise
Resources
Planning
Supply
Customer
Chain
Relationship
Manageme Management
nt Graphic from Docstock.com
 Government
Porter’s 5 Force Model
Threat
New
of Regulation

Entrants

Bargaining Bargaining
Industry
Power of Power of
Rivalry
Suppliers Buyers

Threat of
Substitute
Products
5 Forces
Bargaining Power of Buyers (customers): Ability of
the customers to put the firm under pressure to
reduce prices.
Bargaining Power of Suppliers: Power of suppliers
to control prices.
Intra-Industry Rivalry: Competitiveness of a given
industry. Threat of New Entrants: Profitable
industries attract new competitors. (Amazon
producing TV shows)
Threat of substitute products and services:
Other entities that consumers can use,
instead of your product. (bike instead of car)
Entry Barriers
Creating a barrier to entry to would be
competitors.
Southern California Edison
Utility, captive market
To open an electric company would require a
massive infrastructure
Bar
Liquor license is a cost that might prohibit
entrants
Online mega-store like Amazon
New entrants cannot compete with branding,
infrastructure and supply chain
Switching Costs
Switching Cost – The cost of a customer to
switch to another product or service.
Used to reduce the threat of new entrants
and substitute products.
Increasing Switching Costs
Deals for Staying with You (loyalty programs)
Memberships
Contracts
Strategies and Forces
Using Information Systems for Competitive
Advantage
Business Process Management Systems
Control of processes gives competitive
advantage because ___.
Electronic Data Interchange
Automation of the value chain gets products to
market quicker.
Allows for integration of partners in the value
chain.
Allows for flexible value chain because of
automation.
Competitive Advantage (contd.)
Collaborative Systems – Easier ways for
people to collaborate in work and processes.
Google Drive
MS SharePoint
Cisco WebEx
Atlassian Confluence
IBM Lotus Notes
Competitive Advantage (contd.)
Decision Support Systems
Assist with decision making at all levels,
particularly semi-structured.
Data Analytics
Internally: Having centralized data can give
opportunities to see what the data is telling
you.
Externally: Data sources can inform
strategic decisions about new technologies
and your industry.