MARKETING MANAGEMENT

2
Developing Marketing
Strategies and Plans

Chapter Questions
How does marketing affect

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

value
Marketing involves satisfying

consumers needs and wants. The task

of any business is to deliver customer
value at a profit.

Figure 2.1 The Value Delivery Process

The Value Delivery Process

The traditional view of marketing is

that the firm makes something and

then sells it.
Will not work in economies where people face

abundant choices

The Value Delivery Process

New belief: marketing begins with

planning process.

Value creation and delivery consists of

three parts:
Choosing the value (segment the market,
define target market, develop
offering).
2) Providing the value (product features,
prices, and distribution channels).
3) Communicating the value (sales force,
advertising, and promotional tools).

The Value Chain

Michael Porters Value Chain identifies nine

strategically relevant activities that create

value and costs (five primary and four support
activities).

The Value Chain

Primary activities:
1) Inbound logistics (material

procurement).
2) Operations (turn into final product).
3) Outbound logistics (shipping and
warehousing).
4) Marketing (marketing and sales).
5) Servicing (service after the sale).

The Value Chain

Support activities:
1) Procurement.
2) Technology development.
3) Human resource management.
4) Firm infrastructure.

Core business processes:

The market sensing process (marketing

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intelligence).
2) The new offering realization process
(research and development).
3) The customer acquisition process (defining
target markets and consumers).
4) The customer relationship management
process (deeper understanding of
consumers).
The fulfillment management
process( receiving, shipping and collecting
payments)

Value delivery network( Supply

chain)
Strong companies develop superior capabilities
in these core business processes. Strong
companies also reengineer the workflows and
build cross-functional teams responsible for
each process. Many companies have partnered
with suppliers and distributors to create a
superior value-delivered network.
To be successful today, a firm must look for
competitive advantages beyond its own
operationsto its suppliers and distributors to
create a superior value-delivery network
(supply chain).
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CORE Competencies
It has three characteristics
It is a source of competitive advantage in

that it makes significant contribution to

perceived customer benefits
It has applications in a wide variety of
market
It is difficult for competitors to imitate

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The Central role of Strategic

planning
Successful marketing thus requires

companies to have capabilities such as

understanding customer value, creating
customer value, delivering customer
value, capturing customer value, and
sustaining customer value. Only a select
group of companies stand out
as master marketers: Procter & Gamble,
Southwest Airlines, Nike, Disney,
Nordstrom,
Barnes & Noble, Starbucks, Wal-Mart,
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The Central role of Strategic

planning
To ensure that they select and execute the

right activities, marketers must give priority

to strategic planning in three key areas
1) Managing a companys businesses as an
investment portfolio.
2) Assessing each businesss strength by
the markets growth rate and the
companys position and fit in that market.
3) Establish strategy.

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The Central role of Strategic

planning cont
Most large companies consist of four

organizational levels:
1) Corporate level.
2) Division level.
3) Business unit level.
4) Product level.

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The Central role of Strategic

planning cont
The marketing plan is the central

instrument for directing and coordinating the

marketing effort.
The marketing plan operates on two
levels: strategic and tactical.
1) The strategic marketing plan lays out
target markets and the value proposition.
2) The tactical marketing plan specifies
the product, promotion, merchandising,
pricing, sales channels, and service
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All corporate headquarters undertake four

planning activities:
1) Defining the corporate mission.
CORPORATE
AND
DIVISION
2) Establishing
strategic business units
STRATEGIC
PLANNING
(SBUs).
3) Assign resources to each SBU.
4) Assessing growth opportunities.

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Defining the Corporate

Mission
A) Key questions to ask:
1) What is our business?
2) Who is the customer?
3) What is of value to the customer?
4) What will our business be?
5) What should our business be?

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Good Mission Statements

Focus on limited number of goals
Stress major policies and values
Define major competitive spheres

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Good Mission Statements

Mission statements are best when

guided by a vision that provides

direction for the company.
Focus on limited number of goals
Stress major policies and values
Define major competitive spheres
They take a long-term view
A good mission statement is as short,

memorable, and meaningful as possible

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Motorola
The purpose of Motorola is to honorably
serve the needs of the community by providing
products and services of superior quality at a
fair price to our customers; to do this so as to
earn an adequate profit which is required for
the total enterprise to grow; and by doing so,
provide the opportunity for our employees and
shareholders to achieve their personal
objectives.
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eBay
We help people trade anything on earth.
We will continue to enhance the online
trading experiences of all collectors,
dealers, small businesses, unique item
seekers, bargain hunters, opportunity
sellers, and browsers.
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Major Competitive Spheres

Industry:

Some companies will operate in

only one industry; some only in a set of related
industries; some
only in industrial goods, consumer goods, or
services; and some in any industry
Products and applications:
Firms
define the range of products and applications
they
will supply.
Competence:
The firm identifies the
range of technological and other core
competencies
it
will master and leverage
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Major Competitive Spheres

Market segment:

The type of market or

customers a company will serve is the market
segment.
Vertical:
The vertical sphere is the number of
channel levels, from raw material to final product
and distribution, in which a company will
participate.
Geographical:
The range of regions,
countries, or country groups in which a company
will operate
defines its geographical sphere.
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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

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Assessing Growth Opportunities

A) Involves planning for new businesses.
B) Downsizing or terminating old

businesses.
Intensive Growth
Integrative Growth
Diversification Growth

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The Strategic Planning Gap

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The Business Unit Strategic

Planning Process

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Goal Formulation and MBO

Requirements for using MBO
They must be arranged hierarchically, from

the most to the least important.

Objectives should be quantitative whenever
possible.
Goals should be realistic.
Objectives must be consistent

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Porters Generic Strategies

Overall cost leadership: To achieve the lowest
production and distribution cost so they can lower their
price and capture large mkt share.

Differentiation: Business concentration on uniquely

achieving superior performance in an important
customer benefit area value by large part of mkt.

Focus: Business focuses on one or more narrow

segment. (pursue cost leadership differentiation within
target segment)

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Categories of Marketing
Alliances
Product or Service Alliances
Promotional Alliances
Logistics Alliances
Pricing collaborations

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Product planning: The Nature

and content of marketing Plan
A) Each product level (product line, brand)

must develop a marketing plan for achieving

its goals. 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.
B) Marketing plans are becoming more
customer and competitor orientated. The plan
draws more input from all the business
functions and is team developed.
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Marketing Plan Contents

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

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Evaluating Marketing Plan

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

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