Developing Marketing

Strategies and plans

Customer value
Value creation done by the company is an on going
process.
Value is created by meeting customer needs.
Value is the ratio between customers perceived benefits
and the resources.
Two types of benefits:
Functional benefits: Benefits that are based on product
attributes that provides the customer with functional
utility
Emotional benefits: Provides customer with positive
feeling when they purchase or use any product.
Customer value
Once the creation of value takes place it lead to the
customer satisfaction which in turn leads to customer
retention.
The overall objective of providing value to customers
continuously and more effectively than the
competition is to have and to retain highly satisfied
customers.
Because there is customer lifetime value (CLV)
attached to every customer.
Customers evaluate service quality by comparing what
they expect with what they have received.
5Cs of marketing
The success of any business depends upon its
marketing strategy
Marketing strategy is guided by 5 cs.
1. customer needs.
A company seeks to satisfy certain needs.
Marketing department tries to divide the market then
select one or more segment to target with right kind of
positioning and specially designed marketing mix
5Cs of marketing
2.Company:
Apart from customer analysis company analysis is
important.
Company should understand its financial and r&d
capabilities, its distribution system etc.
3. competition:
4.collaborators: They help company to manufacture and
deliver goods/services to the customers in better way.
5. Context
Value delivery Process
Value creation and Value delivery is the main component
of marketing
Value delivery Process
Value creation and Value delivery are divided into 5
phases:
1st : Assessing market opportunities and customer
value.
Value delivery Process
Value delivery &Creation

3. Delivering value
Value chain
Michael porter has proposed value chain as a tool for
identifying ways to create more customer value.
Value chain is the range of activities.
Value chain has identified 9 activities that creates
value:
Out of this 9 activities 5 activities are primary
activities and remaining 4 are support activities.
Primary activities are directly concerned with the
production.
Support activities are indirectly concerned with
production.
https://www.slideshare.net/singhalshubham/pizza-h
ut-value-chain-analysis
https://www.strategicmanagementinsight.com/tools/
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Value chain
Value chain
Primary activities:
Bringing materials into business.
Converting them into final products
Shipping out final products
Marketing them
Providing services
The firms task is to examine the cost and performance
of each value creating activity.
Strategic planning, implementation and
control
Large organizations work on basis of following
organizational levels:
Corporate
Division level
Business unit level
Product level
Corporate and division strategic planning
All corporate headquarters undertake four planning
activities.
Defining Mission:
Mission statement is reason for the existence of
organization.
Mission statement should be communicated to
managers, employees and customers.
Tata groups mission: Is to improve the quality of life of
the communities we serve.
Corporate and division strategic planning
 Over a time period mission may change to take advantage of new
opportunities or respond to new market condition.
Establishing SBU’s:
Assigning resources to each SBU’s:
Once the organization has identified SBU’s the
management then decided how to allocate funds to each
of them.
Corporate Portfolio Analysis
BCG Matrix
Developed by the Boston Consulting Group
Considers market share and industry growth rate
Classifies firms as:
 Cash cows: low growth rate, high market share
 Stars: high growth rate, high market share
 Question marks: high growth rate, low market share
 Dogs: low growth rate, low market share
The BCG Matrix
 BCG Matrix of Amul
High Market share Low Market Share

High Amul Milk

Growth Amul Cheese Amul Chocolates
Rate Amul Lassi

Low Amul Butter

Amul Ice cream Amul Probiotic Dahi
Growth
Amul butter milk Amul Flaavyo
Rate
BCG Matrix of Mc Donald
High Market share Low Market Share

High Maharaja Mac spicy Chatpata Naan

Growth spicy Paneer wrap Aloo/Kebab
Rate Salad wrap Mexican Aloo wrap

Mc Aloo tikki Potato wedges

Low Masala Tea
Mc Veggies
Growth
French fries
Rate
Calculation of market share and growth
rate(BCG Matrix)
Market share = SBU sales in current year
Leading rivals sales in current year
RMS = (Company market share / Biggest competitor's market
share) x 100

Growth rate = Industry sales in current year – Last years sales

Industry sales in last years
GE Matrix
The GE / McKinsey matrix is similar to the BCG
matrix
The GE matrix however, attempts to improve upon the
BCG matrix in the following two ways:
The GE matrix generalizes the axes as "Industry
Attractiveness" and "Business Unit Strength" whereas
the BCG matrix uses the market growth rate as a proxy
for industry attractiveness and relative market share as a
proxy for the strength of the business unit.
The GE matrix has nine cells vs. four cells in the BCG
matrix.
GE Matrix
Industry attractiveness consists of following factors:
Market growth rate
Market size
Demand variability
Industry profitability
Industry rivalry
Global opportunities
Macro environmental factors
GE Matrix
Business Unit Strength:
Market share
Growth in market share
Brand equity
Distribution channel access
Production capacity
Profit margins relative to competitors
Corporate and division strategic planning
Assessing growth:
It includes planning new business, downsizing and
terminating older business.
There are 3 options for identifying growth
opportunities:
1. Intensive Growth opportunities:
In this case ansoff has suggested product market
expansion grid
It is tool that helps companies to identify opportunities
in respective market and product.
ansoff
Corporate and division strategic planning
2. Integrative growth:
Identifying opportunities to acquire or build business
that are related to current businesses.
A business can increase sales and profits through
Backward, Forward and Horizontal integration.
3. Diversification:
Diversification are of two types related and unrelated
Diversification.
Business Unit Strategic planning
Business Unit Strategic
planning
The business mission:
Example :Tata motors mission statement is to be
passionate in anticipating and providing the best
vehicles and experience that excite our customers.
Step 2: Conducting an external analysis
Organization is a social entity.
Identifying opportunities and threats
Opportunities : chances for firm’s growth/progress.
Threats : elements that could cause trouble to the
business.
Strategic Management Process (cont’d)
Step 3: Conducting an internal analysis
Assessing organizational resources and capabilities.
 Strengths: any activities that organization does well and
possess required resources.
 Weaknesses: any activities that organization does not do well

and do not possess required resources.

Steps 2 and 3 combined are called a SWOT analysis.

(Strengths, Weaknesses, Opportunities, and Threats)
Strengths:
Established distribution Network
After sales service
Good understanding of Indian Markets

Weakness:
Low interior quality inside the cars when compared to
quality players like Hyundai and other new foreign
players like Volkswagen, Nissan etc.

Opportunities:
Prospective buyers from Two wheelers segment
Increased Purchasing power of Middle class category
Threats:
Competition from second hand car
Competition from Tata Nano
Strategic Management Process (cont’d)
Step 4: Goal formulation:
Goals means desired outcome or target.
Two ways of goal setting:
Traditional Approach goal setting
Broad goals are set by top level managers.
Goals are then broken into sub goals for each
organizational level.
MBO is a process of setting mutually agreed upon
goals.
Goals are jointly set by managers and employees.
Traditional Approach goal setting
Strategic Management Process (cont’d)
For MBO system to work the units objective must
meet the following criteria:
Must be arranged hierarchically on the basis of its
importance.
Must be quantitative terms.
Goals must be realistic.
Strategic Management Process (cont’d)
Step 5: Formulating strategies
Michael porter has proposed three generic strategies:
Cost leadership strategy: Aims at increasing profit by
reducing selling price and overall cost
Differentiation strategy : Aims at increasing profit by
making changes in the product
Focus strategy: Aims to focus on narrow market rather
than wider market.
Michael porter 5 force model
It is a tool that helps the company to understand the
level of competition within an industry.
Michael porter 5 force model
Threat of new entrants:
 Threat of new entrants is high when:
 Capital requirements to start the business are less

 Customers can easily switch (low switching cost)

 Your product is not differentiated

 The worst condition is when the entry barriers are low and exit
barriers are high.
Threat of Substitutes:
 Threat of Substitutes is when:
 There are many substitute products available

 Customer can easily find the product or service that you’re offering at

the same or less price

 Quality of the competitors’ product is better
Michael porter 5 force model
Profits and prices are effected by the substitute.
Bargaining power of Buyers:
Bargaining power of Buyers is high when:
 Few buyers chasing too many goods
 Buyer purchases in bulk quantities
 Product is not differentiated
 Buyer’s cost of switching to a competitors’ product is low
 Buyers are price sensitive
 Poses Credible Threat of backward integration
Michael porter 5 force model
Bargaining power of suppliers
Bargaining power of suppliers is high when:
 Suppliers are concentrated and well organized
 a few substitutes available to supplies
 Their product is most effective or unique
 Switching cost, from one suppliers to another, is high
 Poses threat of forward integration.
Michael porter 5 force model
Industry rivalry is high :
Industry rivalry is high when:
 There are number of small or equal competitors
 Customers have low switching costs
 Exit barriers are high and rivals stay and compete
 Fixed cost are high .
Strategic Management Process (cont’d)
Step 6: Implementing strategies
No matter how effectively is the strategies planned it
can't succeed unless it is implemented properly
Step 7: Evaluating Results
How effective strategies have been?