CHAPTER 2:ELEMENTS OF MARKETING STRATEGY AND PLANNING

Part 1: Discover Marketing ManagementMcGraw-Hill

Education

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Learning Objectives

Examine the concept of value and the elements and role of the value chain.

Understand the conditions required for successful marketing planning, that marketing planning is focused on the value. proposition, and that marketing planning is a dynamic process.

Identify various types of organizational strategies.

Conduct a situation analysis. Use the framework provided for marketing

planning, along with the content in future chapters, to build a marketing plan.

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Value Is At The Core Of Marketing

Value is a ratio of benefits to costs, as viewed from the eyes of the beholder (the customer).

Form utility

Time utility

Place utility

Ownership utility

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Value Is At The Core Of Marketing

Value proposition is the firm’s communication of the unique value of its products to its customers.

The value message may include the whole bundle of benefits the company promises to deliver – not just the benefits of the product itself.

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Value Is At The Core Of Marketing

A firm’s value proposition must be strong enough to move customers past satisfaction.

Customer Satisfaction

Customer Loyalty

Customer Retention

Customer Switching

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Value Is At The Core Of Marketing

The Value Chain serves as a means for firms to identify ways to create, communicate, and deliver more customer value within a firm.

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Porter’s Value ChainEXHIBIT 2.1

Source: Michael E. Porter, Competitive Advantage (New York: Simon & Schuster, 1985).

SupportActivities

Primary Activities

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Value-Creating Activities

Primary activities

Service

Marketing and Sales

Outbound Logistics

Operations

Inbound Logistics

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Value-Creating Activities

Support activities

Procurement

Technology Development

Human Resource Management

Firm Infrastructure

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Marketing Planning

Marketing planning is the ongoing process of developing and implementing market-driven strategies for an organization. The resulting document

that records the marketing planning process in a useful framework is the marketing plan.

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Marketing Planning Is Both Strategic And Tactical

Marketing (Big M) serves as a core driver of business strategy.

marketing (little m) represents the specific programs and tactics aimed at customers and other stakeholder groups.

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For Effective Marketing Planning

Everyone in an organization must understand and support the concept of customer orientation.

All internal organizational processes and systems must be aligned around the customer.

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Framework for Marketing Planning

Marketing plan is connected to the firm’s business plan

Conduct a situation analysis Perform any needed market research Establish marketing goals and objectives Develop marketing strategies Marketing mix strategies Develop implementation plans

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Connecting the Marketing Plan to the Firm’s Business Plan

Market-driven strategic planning is often used to describe the process at the corporate or strategic business unit (SBU) level of marshaling the various resource and functional areas of the firm toward a central purpose around the customer.

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Elements Of Marketing Planning

Portfolio analysis views SBUs and sometimes even product lines as a series of investments from which it expects maximization of returns. Boston Consulting Group (BCG)

Growth-Share Matrix GE Business Screen

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Boston Consulting Group Growth-Share MatrixEXHIBIT 2.3

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GE Business ScreenEXHIBIT 2.4

“GE Business Screen,” Business Resource Software Online, www.brs-inc.com/pwxcharts.asp?32, accessed May 16, 2008.

High Med LowH

igh

Med

Low

Market Attractiveness

Bu

sin

ess

Posit

ion

Invest/Grow

SelectiveInvestme

nt

Harvest/Divest

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Elements Of Marketing Planning

Marketing planning does not occur in a vacuum A mission statement articulates an

organization’s purpose, or reason for existence.

Most mission statements also include a discussion of what the company would like to become in the future – its strategic vision.

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Elements Of Marketing Planning

Goals eventually become refined into specific, measurable, and (hopefully) attainable objectives for the firm.

Jet Blue’s goal “to fly new planes” may be refined into an objective “to purchase 15 new aircraft over two years”.

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Elements Of Marketing Planning

Organizational Strategies A strategy is a comprehensive plan

stating how the organization will achieve its mission and objectives.

A firm’s generic strategy is its overall directional strategy at the business level.

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Elements Of Marketing Planning

Three primary categories of competitive strategy: 1. Cost Leadership—

Low Cost2. Differentiation3. Focus (or Niche)

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Generic Business Strategies

Generic Business

Strategies

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Competitive Strategy OptionsEXHIBIT 2.7

Source: Michael E. Porter, Competitive Advantage (New York: Simon & Schuster, 1985).

Cost Leadership Differentiation

Cost FocusFocus

Differentiation

Lower Cost Differentiation

Competitive Advantage

Narr

ow

Targ

et

Com

peti

tive S

cop

e

Bro

ad T

arg

et

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Elements Of Marketing Planning

Core competenciesDistinctive competencies Sustainable competitive advantage

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Miles and Snow’s Strategy Types

Strategic Types

Prospectors

Analyzers

Defenders

Reactors

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Situation Analysis 26

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Situation Analysis 27

Forces Driving Industry CompetitionEXHIBIT 2.9

Source: Michael E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors (Boston: The Free Press, 1980).

Potential entrants(Threat ofmobility)

Supplier(Supplierpower)

Industrycompetitors

(Segment rivalry)

Buyers(Buyerpower)

Substitutes(Threat of

substitutes)

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Situation Analysis 29

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Elements Of Marketing Planning

Summarize the situation analysis into a SWOT analysis: A convenient way to summarize key

findings into a matrix of strengths, weaknesses, opportunities, and threats.

Internal analysis reveals strengths and weaknesses, while external analysis points to potential opportunities and threats.

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SWOT Analysis TemplateEXHIBIT 2.10

Source: J. David Hunger and Thomas H. Wheelen, Essentials of Strategic Management, 4th ed. (Upper Saddle River, NJ: Prentice Hall, 2007).

Strengths (S)

List 5–10 internalstrengths here

Weaknesses (W)

List 5–10 internalweaknesses here

Threats (T)

List 5–10 externalthreats here

INTERNALFACTORS

(IFAS)

EXTERNALFACTORS(EFAS)

S/O Based Strategies

Generate strategies herethat use strengths to takeadvantage of opportunities

W/O Based Strategies

Generate strategies herethat take advantage ofopportunities byovercoming weaknesses

S/T Based Strategies

Generate strategies herethat use strengths toavoid threats

Opportunities (O)

List 5–10 externalopportunities here

W/T Based Strategies

Generate strategies herethat minimize weaknessesand avoid threats

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Elements Of Marketing Planning

Additional Aspects of Marketing Planning Perform Any Needed Market Research

Establish Marketing Goals and ObjectivesGoals are qualitativeObjectives are quantitative

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Elements Of Marketing Planning

Additional Aspects of Marketing Planning Develop Marketing Strategies

Market penetration strategiesProduct development strategiesMarket development strategiesDiversification strategies

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Product – Market CombinationsEXHIBIT 2.11

Source: H. Igor Ansoff, The New Corporate Strategy (New York: John Wiley & Sons, 1988).

Strategy =Market

Penetration

Seek to increasesales of existingproducts toexisting markets

Strategy =Product

Development

Create growthby selling newproducts inexisting markets

Strategy =Market

Development

Introduce existingproducts to newmarkets

Strategy =Diversification

Emphasize bothnew products andnew markets toachieve growth

Existing Products New Products

Product Emphasis

ExistingMarkets

NewMarkets

MarketEmphasis

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Elements Of Marketing Planning

Implementation Plan Forecast

Budget

Appropriate Marketing Metrics

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ELEMENTS OF MARKETING PLANNING

Marketing Control Process of measuring marketing results and

adjusting the marketing plan as needed. Action Plans

Implementation strategy that describes specific tasks and the resources needed, who is responsible, and metrics to track success.

Contingency Plans Plans that can be implemented should

something happen that negates the viability of the marketing plan.

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TIPS FOR SUCCESSFUL MARKETING PLANNING

1. Stay flexible

2. Utilize input, but don’t become paralyzed by information and analysis

3. Don’t underestimate the implementation part of the plan

4. Stay strategic, but also stay on top of the tactical

5. Give yourself and your people room to fail and try again

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Photo Credits

Slide 2-6: Sean Hunter/Getty Images; Steve Hix/Corbis

Slide 2-10: Image Source/Getty Images Slide 2-12: John Lund/Drew Kelly/Blend

Images Slide 2-19: Getty Images Slide 2-21: McGraw Hill Companies (all)

FedEx Image Jill Braaten, photographer A&F image Andrew Resek, photographer Walmart image John Flournoy, photographer

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