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Marketing Management MBA Lecture notes 2010: Developing Marketing Strategies

Marketing Management MBA Lecture notes 2010: Developing Marketing Strategies

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Published by Ehab Mesallum
Every business must design a strategy for achieving its goals, consisting of a marketing strategy, and a compatible technology strategy, and sourcing strategy.
Every business must design a strategy for achieving its goals, consisting of a marketing strategy, and a compatible technology strategy, and sourcing strategy.

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Published by: Ehab Mesallum on Mar 12, 2010
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Chapter 2:
DEVELOPING MARKETING STRATEGIES AND PLANS
MARKETING AND CUSTOMER VALUE
Marketing involves satisfying consumers’ needs and wants. The
task of any business is to deliver customervalue at a profit.
The Value Delivery Process
The traditional view of marketing is that the firm makes something and then sells it.This will not work in economies where people face abundant choice.New belief:
marketing begins with the planning process.
Value creation and delivery consists of three parts:1)
 
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).Figure 2.1 (a and b) illustrates value creation and delivery sequence.
Each of these “values” involves a cost component to the company.
The Japanese use:1.
 
Zero
customer feedback time.2.
 
Zero
product-improvement time.3.
 
Zero
purchasing time.4.
 
Zero
set-up time.5.
 
Zero
defects.
Nirmalya Kumar’s 3 “Vs” approach to marketing:
1.
 
Define the
value segment
or segments.2.
 
Define the
value proposition.
 3.
 
Define the
value
 
network
.Frederick Webster views marketing in terms of:1.
 
Value defining
process.2.
 
Value
 
developing
processes.3.
 
Value
 
delivering
processes.
The Value Chain
A concept introduced by
Michael Porter
. Value Chain (Figure 2.2) identifies nine strategicallyrelevant activities that create value and costs (five primary and four support activities).
A) Primary activities:
1)
Inbound logistics
(material procurement).2)
Operations
(converting materials into final product).3)
Outbound logistics
(shipping and warehousing).4)
Marketing
(marketing and sales).5)
Servicing
(service after the sale).
 
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B) Support activities:
1)
Procurement
.2)
Technology
 development.3)
Human
 
resource
 management.4) Firm
infrastructure
.
The firm’s task is to
examine its
costs andperformance
in eachvalue-creating activity andto look for ways to improveperformance.
Core business processes:
1.
 
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).5.
 
The fulfillment management process (receiving, shipping, and collecting payments).
 
Strong companies develop superior capabilities in these core business processes.
 
Example
: Wal-Mart is strong in stock replenishment. Computer system is connected to suppliers, to shipreplacement merchandise at the same rate it moves off the shelf. (Vendor managed inventories system
VMI)
 
Strong companies also reengineer the workflows and build cross-functional teams responsible for eachprocess.
Example
: Xerox Customer Operations Group links sales, shipping, installation, service, andbilling smoothly into one another.
 
Many companies have partnered with suppliers and distributors to create a superior value-deliverednetwork.
C) Value-delivery network (supply chain).
To be successful today, a firm must look for competitive advantages beyond its own operations
to itssuppliers and distributors to create a superior value-delivery network (supply chain).
Core Competencies
Companies need resources (labor, materials, energy, etc.)1)
 
competencies
: the essence of the business
outsource if competency is cheaper and available.2)
 
Competitive advantage: =
 
distinctive capabilities
(excellence in broader business processes).3)
 
Competitive advantage: =
core competencies
+
distinctive capabilities
activity systems
 
A Holistic Marketing Orientation and Customer ValueFigure2.3
shows the interaction between customers, company, collaborators, and value-based activities(value exploration, value creation, and value delivery) to create, maintain, and renew customer valueHolistic marketing addresses three key management questions:1)
Value exploration
identify new value opportunities.2)
Value creation
create more promising new value offerings.3)
Value delivery
deliver the new value offerings more efficiently.
Strategy
requires the understanding of the relationships and interactions among these three spaces.
Value Exploration
 
Customer’s cognitive space
(reflects existing and latent needs and includes participation, stability,freedom, and change).
 
Company’s
competence space
(broad versus focused scope of business and depth physical versusknowledge-based capabilities).
 
The
collaborator resource space
(horizontal and vertical partnerships).
Value Creation:
Marketer’s need to:
1.
 
Identify
new customer
benefits
 
from the customer’s view.
2.
 
Utilize core competencies.
 3.
 
Select and manage
business partners
from its collaborative networks.Business
realignment
may be necessary to maximize core competencies.a. (Re) defining the
business concept
big idea.b. (Re) shaping the
business scope
lines of business.c. (Re) position the
 
company’s brand identity
.
Value Delivery
What Companies Must Become?Often requires an investment in infrastructure and capabilities.
 
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1.
 
Customer relationship management: Who the customers are? respond to different customeropportunities.2.
 
Internal resource management: Integrate major business processes within a single family of softwaremodules. (ERP)3.
 
Business partnership management: Allow the company to handle complex relationships with its tradingpartners.
The Central Role of Strategic Planning
A) Calls for action in three 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 fitin that market.
3.
 
Establish strategy.
B) Most large companies consist of 
four organizational
levels:1.
 
Corporate level.2.
 
Division level.3.
 
Business unit level.4.
 
Product level.C) The
marketing plan
is the central instrument for directing and coordinating the marketing effort. Themarketing 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, saleschannels, and service.
Figure2.4
shows the strategic complete planning, implementation, and control process.
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
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?
Mission statements are best when guided
by a “vision” that provides direction for the company.
Figure 2.5
gives examples of three mission statements.Good mission statements have
three major characteristics
:1) Focused on a
limited number
of goals.
2) Stresses the company’s major
policies and values
.3) Defines the major
competitive spheres
within which the company will operate by defining the:a. Industry.b. Products and applications.c. Competence.d. Market-segment.e. Vertical.f. Geographical.
Defining the Business:
Redefine the definition of businesses in
terms of needs and not products.Table 2.2
gives several examples of companies that have moved from product to market definition of theirbusinesses.1.
 
A
target market
definition tends to focus on selling a product or service (Pepsi® and all who drink colasodas).2.
 
A
strategic market definition
is broader and more encompassing (Pepsi redefines its strategy to
everyone who has a “thirst”).
3.
 
A business can be defined in terms of 
three dimensions
:a.
 
Customer groups.b.
 
Customer needs.c.
 
Technology.
Assessing Growth Opportunities
1.
 
Involves planning for new businesses.

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