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How does marketing affect customer

value? How is strategic planning carried out at different levels of the organization? What does a marketing plan include?

The Value Delivery Process

3 Vs Approach to Marketing
Define the value segment

Define the value proposition

Define the value network

Porters Value Chain

Organizational costs and performance measures Competitor costs and performance measures

Core Business Processes

Market sensing New offering realization Customer acquisition
Customer relationship management

Fulfillment management

Wal-Marts stock replenishment process is legendary

Characteristics of Core Competencies

A source of competitive advantage
Applications in a wide variety of markets Difficult to imitate

Challenges Facing CMOs

Doing more with less

Driving new business development

Becoming a full business partner

Levels of a Marketing Plan

Strategic Target marketing decisions Value proposition Analysis of marketing opportunities Tactical Product features Promotion Merchandising Pricing Sales channels Service

The Strategic Planning, Implementation, and Control Processes

Corporate headquarters planning activities

Define the corporate mission Establish SBUs Assign resources to each SBU Assess growth opportunities

Good Mission Statements

Focus on limited number of goals
Stress major policies and values

Define major competitive spheres

Major Competitive Spheres

Geographical Products

Vertical channels

Competence Market segment

Dimensions That Define A Business

Customer groups

Customer needs


Components of Strategic Management Process

STRATEGY FORMULATION Existing Business Model

Mission , Vision, Values & Goals

External Analysis: Opportunities & Threats SWOT Strategic Choice Functional Level Strategies Business - Level Strategies Global Strategies Corporate Level Strategies STRATEGY IMPLEMENTATION Internal Analysis: Strengths & Weaknesses


Governance and Ethics Designing Organization Culture Designing Organization Controls

Designing Organization Structure

Levels of Strategy-Making in a Diversified Company

CorporateLevel Managers BusinessLevel Managers Functional Managers Operating Managers Corporate Strategy
Two-Way Influence

Business Strategies Two-Way Influence Functional Strategies

Two-Way Influence

Operating Strategies

Levels of Strategy-Making in a Single-Business Company

Business-Level Managers Business Strategy
Two-Way Influence

Functional Managers

Functional Strategies
Two-Way Influence

Operating Managers

Operating Strategies

Corporate Level Issues

Corporate Portfolio Management

Portfolio balance Markets Organisations needs Attractiveness of business units Profitability Growth rates Portfolio fit Synergies between business units Synergies with corporate parent

The Growth Share (or BCG) Matrix

The BCG Matrix method is based on the product life cycle

theory that can be used to determine what priorities should be given in the product portfolio of a business unit

The BCG Matrix

To ensure longterm value creation, a company should have a

portfolio of products both high growth products in need of cash inputs and low-growth products that generate a lot of cash

BCG Matrix has two dimensions : market share and

market growth

Placing Products in the BCG Matrix results in four categories

in the portfolio of a company : STARS High Growth / High Market Share CASH COWS Low growth / High Market Share DOGS Low Growth / Low Market Share QUESTION MARKS High Growth / Low Market Share

BCG Matrix Method can help understand a frequently

made strategy mistake having a one-size-fits-all approach to strategy : such as a generic growth target (say 10% p.a) or a generic return on capital (say 8% p.a) for the entire corporation

GE / McKinsey Matrix

The GE / McKinsey Matrix is a model to perform a business portfolio analysis on the strategic Business Units of a corporation

A Business Portfolio is the collection of Strategic Business Units that make up a corporation

The Aim of a portfolio Analysis is:

Analyse its current business portfolio and decide which SBUs should receive more or less investments Develop growth strategies for adding new products and businesses to the portfolio Decide which businesses or products should no longer be retained

BCG Matrix is the best-known portfolio planning framework - the GE / McKinsey Matrix is a later and more advanced form of the BCG Matrix

The GE / McKinsey Matrix is more sophisticated than the BCG Matrix in three aspects: Market / Industry attractiveness replaces market growth as the dimension of industry attractiveness

Competitive strength replaces market share as the dimension by

which the competitive position of each SBU is assessed

GE / McKinsey Matrix works with a 3x3 Grid while the BCG Matrix
has only 2x2 Grid (allows for more sophistication)

Strategic Business Units are portrayed as a circle plotted in the GE / Mckinsey Matrix, whereby:

The size of the circles represent the market size The size of the pies represent the market share of the SBUs Arrows represent the direction and the movement of the SBUs in the future

The 7-S framework of McKinsey is a Value Based Management (VBM) model that describes how one can holistically and effectively organize a company. Together these factors determine the way in which a corporation operates.

Shared Value
The interconnecting center of McKinsey's model is: Shared Values. What does the organization stands for and what it believes in - Central beliefs and attitudes.

Plans for the allocation of a firms scarce resources, over time, to reach identified goals, Environment, competition, customers

The way the organization's units relate to each other: centralized, functional divisions (top-down); decentralized (the trend in larger organizations); matrix, network, holding, etc.

The procedures, processes and routines that characterize how important work is to be done: financial systems; hiring, promotion and performance appraisal systems; information systems

Numbers and types of personnel within the organization

Cultural behaviour of the organization and how key managers behave in achieving the organizations goals - Management Styles.

Distinctive capabilities of personnel or of the organization as a whole - Core Competences.

Grand Strategies

Grand strategies, often called master or business

strategies, provide basic direction for strategic actions Indicate the time period over which long-range objectives are to be achieved Any one of these strategies could serve as the basis for achieving the major long-term objectives of a single firm Firms involved with multiple industries, businesses, product lines, or customer groups usually combine several grand strategies

Types of Grand Strategies

Concentrated Growth Market Development Conglomerate Diversification Turnaround

Product Development
Innovation Horizontal Integration Vertical Integration Concentric Diversification Consortia

Liquidation Bankruptcy Joint Ventures Strategic Alliances

Porters Generic Strategies

Overall Cost Leadership

-Were initially used in early 1980s and seem to be popular even today. -They outline the three main strategic options open to organization that wish to achieve a sustainable competitive advantage

Cost Leadership
The low cost leader in any market gains competetive

advantage from being able to produce at the lowest cost. No Frills Cost is driven down through all the elements of the Value Chain

The sources of Cost Advantages

Economies of Scale
Experience or Learning Curve Capacity Utilization Product Design Location Vertical Integration/Outsourcing Value chain Configuration

D means providing something unique that is valuable

to the buyer beyond simply offering a low price..Porter Differentiated goods & services satisfy the needs of customers through a sustainable competitive advantage. This allows companies to desensitize price and focus on value that generates a comparatively higher price and a better margin

Incurs additional cost in creating competitive

advantage Could be copies by competitors Key to Successful Differentiation Understanding customer needs & preferences Commitment to customers Knowledge of companys capabilities innovation

Key is creating value for the customers

Size Colour

Subjective Related to image &

Performance Packaging

status Exclusivity, identity

Complementary services

Uniqueness that is not valuable
Too much differentiation Too high a premium price Easy imitation Dilution of brand Different perceptions

Niche or Focus Strategy

Focus based on the choice of a narrrow competitive

scope within an industry Two variants cost focus, differentiation focus

Characteristics of SBUs
It is a single business or collection of related businesses

It has its own set of competitors

It has a leader responsible for Strategic planning Profitability Efficiency


The Strategic Planning Gap

Ansoffs Product-Market Expansion Grid Used for intensive growth strategies

Integrative growth
Backward Integration Forward Integration Horizontal Integration

Diversification Growth Downsizing & divesting older


The Business Unit Strategic Planning Process

SWOT Analysis
Strengths Weaknesses Opportunities Threats

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?

Market Opportunity Analysis (MOA)_2

Can 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?

Opportunity Matrix

Threat Matrix

Goal Formulation and MBO

Requirements for using MBO Units objectives must be hierarchical Objectives should be quantitative Goals should be realistic Objectives must be consistent

The Star Alliance

Categories of Marketing Alliances

Product or Service Alliances Promotional Alliances

Logistics Alliances

Pricing Collaborations

Feedback and Control

Marketing Plan Contents

Executive summary Table of contents Situation analysis Marketing strategy Financial projections Implementation controls

Evaluating a Marketing Plan

Is the plan simple? Is the plan specific? Is the plan realistic? Is the plan complete?