Chapter 2: Developing

Marketing Strategies
and Plans
Learning Outcomes
1. How does marketing affect customer value?
2. How is strategic planning carried out at the corporate and divisional levels?
3. How is strategic planning carried out at the business unit levels?
4. What does a marketing plan include?
Marketing and Customer Value
THE VALUE DELIVERY PROCESS – It begins before there is a product
and continues through development
 The value creation and delivery process is divided into three
phases:
1. Choosing the value, segment the market, identify target market
and develop offering’s value positioning. (Essence of strategic
marketing  “segmentation, targeting, Positioning”).
2. Providing the value
3. Communicating the value
The Value Chain
According to Michael Porter: Value chain is a tool for identifying ways
to create more customer value. Every process that a product goes
through should be adding some value to it.
 Nine Strategically relevant activities-five primary and four
supporting, create value and cost in a specific business  Primary
activities: inbound logistics, operations, outbound logistics,
marketing and service.
Supporting activities: procurement, technology department, HRM
and firm infrastructure (this covers the cost of general management,
planning, finance, accounting, legal and government affairs).
The Firm’s success depends not just on how efficiently each departments works
but also on how each department is well-linked to each other in order to bring
coherence & smoothness in business processes. These processes include:
The Market Sensing Process: All the activities in gathering market intelligence,
spreading it in the company and acting on the info.
The New-offering realization Process: All the activities in researching,
developing and launching new high quality offerings quickly & with in the
budget
The Customer Acquisition: All the activities in defining & prospecting customers
The Customer Relationship Management Process: All the activities in building
deeper & enduring relationship with customers
The Fulfillment Management Process: All the activities in approving & receiving
orders, shipping the goods on time, and collecting payment
CORE COMPETENCIES

A core competency has 3 characteristics:

1) It is a source of competitive advantage and makes a significant contribution to perceived
customer benefits
2) It has applications in a wide variety of markets
3) It is difficult for competitors to imitate
A Holistic Marketing Orientation
and Customer Value

“integrating the value exploration, value creation, and value delivery activities with the purpose
of building long-term, mutually satisfying relationships and coprosperity among key
stakeholders.
Holistic marketers address three key management questions:
1. Value exploration—How a company identifies new value opportunities
2. Value creation—How a company efficiently creates more promising new value offerings
3. Value delivery—How a company uses its capabilities and infrastructure to deliver the new
value offerings more efficiently
THE CENTRAL ROLE OF STRATEGIC PLANNING

 Marketer’s must prioritize strategic planning in three key areas:

1. Managing the businesses as an investment portfolio.
2. Assessing the market’s growth rate and the company’s position in the market.
3. Establishing a strategy  corporate, division, business unit and product.
Marketing Plan
The Marketing Plan is the central instrument for directing and coordinating the marketing effort.
 It operates at two levels:
1. Strategic
2. Tactical
Strategic Marketing Plan: It lays out the target markets and the firm’s value proposition, based
on an analysis of the best market opportunities.
Tactical Marketing Plan: It specifies the marketing tactics, including product features, promotion,
merchandising, pricing, sales channels, and service.
The Strategic Planning,
Implementation and Control
Processes
Corporate and Division Strategic
Planning
All Corporate Head Quarters undertake Four planning strategies:

1. Defining corporate mission

2. Establishing strategic business units
3. Assigning resources to each SBU’s
4. Assessing growth opportunities
1.Defining The Corporate
Mission
 To define its mission, a company should address Peter Drucker’s classic 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 be?
 A clear, thoughtful mission statement provides a shared sense of purpose,
direction, and opportunity.
2. Establishing SBU’s
(Strategic Business Units)
An SBU has three characteristics:
1. It is a single business, or a 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 manager responsible for strategic planning and profit performance, who controls
most of the factors affecting profit.
3. Assigning Resources To Each SBU’s
 Several portfolio-planning models provide ways to make investment decisions. Such as:
The GE/McKinsey Matrix classifies each SBU by the extent of its competitive advantage and
the attractiveness of its industry.
BCG’s Growth-Share Matrix, uses relative market share and annual rate of market growth
as criteria to make investment decisions
Criticism: Portfolio-planning models like these have fallen out of favor as oversimplified and
subjective. Newer methods rely on shareholder value analysis, and on whether the market
value of a company is greater with an SBU or without it (whether it is sold or spun off).
These value calculations assess the potential of a business based on growth opportunities
from global expansion, repositioning or retargeting, and strategic outsourcing.
The GE/McKinsey Matrix
The BCG Matrix
4. Assessing Growth Opportunities
• Management decides how to allocate resources to each SBU’s
• For example:
1. Its competitive advantage and attractiveness of its industry
2. Relative market share & growth rate
1. ITENSIVE GROWTH:
◦ It has four directions
i. When company strives to increase market share with current products in current
markets, using Market Penetration strategy
ii. Or the company can develop the new market for its current products using
market development strategy
iii. Then it considers whether it can develop new products of potential interest to its
current customers using product development strategy
iv. Or the firm can also review opportunities to develop new products for new
market in a diversification strategy
2. INTEGERATIVE GROWTH:

Profits of a business can be increased using backward and

forward or horizontal integration:
Backward Integration (Apple, Samsung..)
Forward Integration (Huawei- use to be components
manufacturer but now selling devices as well)
3. DIVERSIFICATION GROWTH:

Three kinds of diversification is possible:

i. Concentric diversification: Company could seek new products that have technological
or marketing synergies with existing product lines appealing to new customers. E.g.,
Apple- Mac, I-pod, I-phone

ii. Horizontal Diversification: Company could develop new products which are
technologically unrelated to its product line but could appeal to existing customers.
E.g., HP- Printer, Paper, Cartridge … Detergent and comfort conditioner

iii. Conglomerate Diversification: Company may seek new opportunities that have no
relation with its current technology, product or markets. E.g., Engro- Fertilizers,
chemical, foods
4. DOWNSIZING AND DIVESTING OLD BUSINESSES:

Companies must carefully prune, harvest, or divest tired old

businesses to release needed resources for other uses and reduce
costs.
BUSINESS UNIT STRATEGIC
PLANNING
The business unit strategic-planning process consists of the following steps:
1. SWOT ANALYSIS:
i. Opportunity and Threat Analysis
◦ A marketing opportunity is an area of buyer need that a company has a
high probability of profitably satisfying. One source of marketing opportunity
is to supply some thing i.e., in short supply. Another is to supply an existing
product in a superior way.
◦ An environmental threat is a challenge post by unfavorable trends

ii. Strength and weakness analysis

◦ Strength refers to internal ability to take advantage of a market opportunity
i. Opportunity Matrix ii. Threat Matrix
GOAL FORMULATION
 Goals are objectives that are specific with respect to magnitude and time.
 The business unit sets these objectives and then manages by objectives (MBO).
 For an MBO system to work, the unit’s objectives must meet four criteria:
1. They must be arranged hierarchically, from most to least important. The business
unit’s key objective for the period may be to increase the rate of return on investment.
Managers can increase profit by increasing revenue and reducing expenses. They can
grow revenue, in turn, by increasing market share and prices.
2. Objectives should be quantitative whenever possible. The objective “to increase the
return on investment (ROI)” is better stated as the goal “to increase ROI to 15 percent
within two years.”
3. Goals should be realistic. Goals should arise from an analysis of the business unit’s
opportunities and strengths, not from wishful thinking.
4. Objectives must be consistent. It’s not possible to maximize sales and profits
simultaneously.
STRATEGIC FORMULATION
PORTER’S GENERIC STRATEGIES: Michael Porter has proposed three generic strategies that
provide a good starting point for strategic thinking:
Overall cost leadership: Firms work to achieve the lowest production and distribution costs so
they can underprice competitors and win market share.
Differentiation: The business concentrates on achieving superior performance in an important
customer benefit area valued by a large part of the market.
Focus: The business focuses on one or more narrow market segments, gets to know them
intimately, and pursues either cost leadership or differentiation within the target segment.
STRATEGIC ALLIANCE
Product or Service Alliance:
One company licenses another to produce its product, or two companies jointly market their
complementary products or a new product.
Promotional Alliance:
One company agrees to carry a promotion for another company’s product or service.
Logistic Alliance:
One Company offers logistical services for another companies products.
Pricing Collaboration:
One or more companies join in special pricing collaboration such as airlines & hotels.
Program Formulation and Implementation

According to McKinsey & Company, strategy is only one of seven elements—all

of which start
with the letter s—in successful business practice. The first three—strategy,
structure, and
systems—are considered the “hardware” of success. The next four—style, skills,
staff, and shared values—are the “software.”

When these elements are present, companies are usually more successful at
strategy implementation.
Feedback and Control

 Once an organization fails to respond to a changed environment, it becomes increasingly hard

to recapture its lost position.
 The key to organizational health is willingness 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 a written document that summarizes what the marketer has learned about the
marketplace and indicates how the firm plans to reach its marketing objectives. It contains tactical
guidelines for the marketing programs and financial allocations over the planning period. A marketing
plan usually contains the following sections:
 Executive summary and table of contents
Situation analysis
 Marketing strategy
 Marketing tactics
 Financial projections
 Implementation controls