2Developing Marketing Strategies and Plans1

2-*Chapter QuestionsHow does marketing affect customer value?How is strategic planning carried out at different levels of the organization?What does a marketing plan include?

Marketing is so basic that it cannot be considered a separate function (i.e., a separate skill or work) within the business, on a par with others such as manufacturing or personnel. Marketing requires separate work and a distinct group of activities. But it is, first, a central dimension of the entire business. It is the whole business seen from the point of view of its final result, that is, from the customers point of view.

At the corporate level, marketing managers have a critical role to play as advocates for the customer and for a set of values and beliefs that put the customer first in the firms decision making, and to communicate the value proposition as part of that culture throughout the organization, both internally and in its multiple relationships and alliances.

Phases of Value Creation and DeliveryChoosing the valueProviding the valueCommunicating the value

What is the Value Chain?The value chain is a tool for identifying was to create more customer value because every firm is a synthesis of primary and support activities performed to design, produce, market, deliver, and support its product.

2-*Nike Creates Value

2-*Siemens AG has grown through new product innovation and strategic acquisitions

2-*Cisco Systems Taps into Partner Expertise to Create Value

2-*The Value Delivery ProcessDesign Product Procure Make

PriceSell Advertise/ PromoteDistribute Service Make the productSell the productCustomer SegmentationMarket selection/ focusValue PositioningProduct Develop-ment

Service Develop-ment

PricingSourcingMakingDistributingServicingSales ForceSales PromotionAdvertisingChoose the valueProvide the valueCommunicate the valueTraditional Physical Process SequenceValue Creation and Delivery SequenceStrategic MarketingTactical Marketing

2-*Improving Value Delivery the Japanese Way0 customer feedback time0 product improvement time0 purchasing time0 setup time0 defects

2-*3 Vs Approach to MarketingDefine the value segmentDefine the value propositionDefine the value network

2-*BenchmarksOrganizational costs and performance measuresCompetitorcosts and performance measures

2-*Core Business ProcessesMarket sensingFulfillmentmanagementCustomer acquisitionNew offering realizationCustomer relationship management

2-*Characteristics of Core Competencies

A source of competitive advantageApplications in a wide variety of marketsDifficult to imitate

Maximizing Core Competencies(Re)define the business concept(Re)shaping the business scope(Re)positioning the companys brand identity

What is Holistic Marketing?Holistic marketing sees itself as integrating the value exploration, value creation, and value delivery activities with the purpose of building long-term, mutually satisfying relationships and co-prosperity among key stakeholders.

Questions to Address in Holistic Marketing What value opportunities are available?How can we create new value offerings efficiently?How can we delivery the new offerings efficiently?

2-*Challenges Facing CMOsDoing more with lessDriving new business developmentBecoming a full business partner

CEOs View on Marketing1P CEO4P CEOSTP CEOME CEO

2-*The Central Role of Strategic PlanningCompanies should have capabilities of:Understanding customer valueCreating customer valueDelivering customer valueCapturing customer valueSustaining customer value

2-*Levels of a Marketing PlanStrategicTarget marketing decisionsValue propositionAnalysis of marketing opportunitiesTacticalProduct featuresPromotionMerchandisingPricingSales channelsService

2-*Corporate Headquarters Planning ActivitiesDefine the corporate missionEstablish SBUsAssign resources to each SBUAssess growth opportunities

2-*Good Mission StatementsFocus on limited number of goalsStress major policies and valuesDefine major competitive spheres

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2-*Major Competitive SpheresIndustryProductsCompetenceMarket segmentVertical channelsGeographical

Product Orientation vs. Market Orientation

CompanyProductMarketMissouri-Pacific RailroadWe run a railroadWe are a people-and-goods moverXeroxWe make copying equipmentWe improve office productivityStandard OilWe sell gasolineWe supply energyColumbia PicturesWe make moviesWe entertain people

Google

2-*Rubbermaid Commercial Products, Inc.Our vision is to be the Global Market ShareLeader in each of the markets we serve. We will earn this leadership position by providing to our distributor and end-user customers innovative, high-quality, cost-effective and environmentally responsible products. We will add value to these products by providing legendary customer service through our uncompromising Commitment to Customer Satisfaction.

2-*MotorolaThe purpose of Motorola is to honorablyserve the needs of the community by providingproducts and services of superior quality at a fair price to our customers; to do this so as toearn an adequate profit which is required forthe total enterprise to grow; and by doing so, provide the opportunity for our employees andshareholders to achieve their personal objectives.

2-*eBayWe help people trade anything on earth.We will continue to enhance the onlinetrading experiences of all collectors, dealers, small businesses, unique itemseekers, bargain hunters, opportunitysellers, and browsers.

2-*Dimensions That Define A BusinessCustomer groupsTechnologyCustomer needs

2-*Assessing Growth Opportunity1. Market-penetration strategy3. Product-development strategy2. Market-development strategy4. Diversifi-cation strategyCURRENT ProductsNEW ProductsCURRENT MarketsNEW MarketsAnsoffs Product-Market Expansion Grid

2-*The Growth of Starbucks

2-* Intensive Growth Integrative Growth Diversification Growth Downsizing and Divesting older business

Assessing Growth Opportunity

2-*Characteristics of SBUsIt is a single business or collection of related businessesIt has its own set of competitorsIt has a leader responsible for:Strategic planningProfitabilityEfficiency

2-*OrganizationsCulturePoliciesStructure

2-*Business Unit Strategic PlanningThe Business MissionSWOT Analysis Marketing OpportunityGoal FormulationProgram Formulation & ImplementationFeedbacks & Controls

2-*Marketing OpportunityTo supply something that is in short supplyTo supply an existing product in a new or a superior wayTo offer a totally new product/ service

2-*Market Opportunity Analysis (MOA)Can the benefits involved in the opportunity be articulated convincingly to a defined target market?Can the target market be located and reached with cost-effective media and trade channels?Does the company possess or have access to the critical capabilities and resources needed to deliver the customer benefits?

2-*Market Opportunity Analysis (MOA)_2Can the company deliver the benefits better than any actual or potential competitors?Will the financial rate of return meet or exceed the companys required threshold for investment?

2-*Figure 2.6 Opportunity Matrix

2-*Figure 2.6 Threat Matrix

2-*FedEx added Sunday deliveries based on customer requests andmarket demandFedEx

2-*Goal Formulation and MBOUnits objectives must be hierarchicalObjectives should be quantitativeGoals should be realisticObjectives must be consistent

2-*Porters Generic StrategiesOverall Cost LeadershipDifferentiationFocus

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McKinseys Elements of SuccessStrategyStructureSystemsStyleShared valuesStaffSkills

2-*Goal Formulation and MBORequirements for using MBOUnits objectives must be hierarchicalObjectives should be quantitativeGoals should be realisticObjectives must be consistent

2-*Categories of Marketing AlliancesProduct or Service AlliancesPromotional AlliancesLogistics AlliancesPricing collaborations

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2-*Marketing PlanA written document that summarizes what the marketer has learned about the marketplace and indicates how the firm plans to reach its marketing objectives.Must be consumer- and competitor-oriented

2-*Marketing Plan Contents Executive summary Table of contents Situation analysis Marketing strategy Financial projections Implementation controls

2-*Evaluating a Marketing Plan Is the plan simple? Is the plan specific? Is the plan realistic? Is the plan complete?

2-*Characteristics of Core CompetenciesA source of competitive advantageApplications in a wide variety of marketsDifficult to imitate

2-*Table 2.3 Product Orientation vs. Market Orientation

CompanyProductMarketMissouri-Pacific RailroadWe run a railroadWe are a people-and-goods moverXeroxWe make copying equipmentWe improve office productivityStandard OilWe sell gasolineWe supply energyColumbia PicturesWe make moviesWe entertain people

2-*Marketing DiscussionWhat implications do Porters valuechain and the holistic marketingorientation model have formarketing planning?

***We can divide the value creation and delivery sequence into three phases.2 First, choosing the value represents the homework marketing must do before any product exists. Marketers must segment the market, select the appropriate target, and develop the offerings value positioning. The formula segmentation, targeting, positioning (STP) is the essence of strategic marketing. The second phase is providing the value. Marketing must determine specific product features, prices, and distribution. The task in the third phase is communicating the value by utilizing the sales force, Internet, advertising, 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.*Harvards Michael Porter has proposed the value chain as a tool for identifying ways to create more customer value.3 According to this model, every firm is a synthesis of activities performed to design, produce, market, deliver, and support its product. The value chain identifies nine strategically relevant activitiesfive primary and four support activitiesthat 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. (Infrastructure covers the costs of general management, planning, finance, accounting, legal, and government affairs.)**********Business realignment may be necessary to maximize core competencies. It has three steps: (1) (re)defining the business concept or big idea, (2) (re)shaping the business scope, and (3) (re)positioning the companys brand identity. Consider what Kodak is doing to realign its business by taking a look at the case in the text.*Holistic marketers thus succeed by managing a superior value chain that delivers a high level of product quality, service, and speed. They achieve profitable growth by expanding customer share, building customer loyalty, and capturing customer lifetime value.Holistic marketers address three key management questions:1. Value explorationHow a company identifies new value opportunities2. Value creationHow a company efficiently creates more promising new value offerings3. Value deliveryHow a company uses its capabilities and infrastructure to deliver the new value offerings more efficiently*********Companies often define themselves in terms of products: They are in the auto business or the clothing business. Market definitions of a business, however, describe the business as a customer satisfying process. Transportation is a need: the horse and carriage, automobile, railroad, airline, ship, and truck are products that meet that need.Viewing businesses in terms of customer needs can suggest additional growth opportunities. Table 2.3 lists companies that have moved from a product to a market definition of their business. It highlights the difference between a target market definition and a strategic market definition.*Compare the rather vague mission statements on the left with Googles mission statement and philosophy on the right. Does Googles mission meet the criteria of good mission statements?******************According to McKinsey & Company, strategy is only one of seven elementsall of which start with the letter sin successful business practice.41 The first threestrategy, structure, and systemsare considered the hardware of success. The next fourstyle, skills, staff, and shared valuesare the software. The first soft element, style, means company employees share a common way of thinking and behaving. The second, skills, means employees have the skills needed to carry out the companys strategy. Staffing means the company has hired able people, trained them well, and assigned them to the right jobs. The fourth element, shared values, means employees share the same guiding values. When these elements are present, companies are usually more successful at strategy implementation.**********