2 Developing Marketing Strategies and Plans 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?

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 Porter’s 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 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 operations—to its suppliers and distributors to create a superior value-delivery network (supply chain).

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

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,

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 company’s businesses as an investment portfolio. 2) Assessing each business’s strength by the market’s growth rate and the company’s position and fit in that market. 3) Establish strategy.

The Central role of Strategic planning con’t Most large companies consist of four organizational levels: 1) Corporate level. 2) Division level. 3) Business unit level. 4) Product level.

The Central role of Strategic planning con’t 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

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

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?

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

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

“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.”

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.”

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

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.

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

Assessing Growth Opportunities A) Involves planning for new businesses. B) Downsizing or terminating old businesses. Intensive Growth Integrative Growth Diversification Growth

The Strategic Planning Gap

The Business Unit Strategic Planning Process

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

Porter’s 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)

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

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.

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

Evaluating Marketing Plan Is the plan simple? Is the plan specific? Is the plan realistic? Is the plan complete?