1-1Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc.

All rights reserved

 Chapter 3

Marketing’s Strategic Role in the

Organization
1-2
MIrwin/McGraw-Hill
cGraw-Hill/Irwin CopyrightCopyright
© 2001© by The
2004 McGraw-Hill
by The McGraw-Hill Companies,
Companies, Inc. Inc. All reserved.
All rights rights reserved
 After studying this chapter,
you should be able to:
 Discuss the three basic levels in an organization
and the types of strategic plans developed at each
level.

 Understand the organizational strategic planning

process and the role of marketing in this process.

 Describe the key decisions in the development of

corporate strategy.

1-3Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 After studying this chapter,
you should be able to:

 Understand the different general business

strategies and their relationship to
business marketing, product marketing,
and international marketing strategies.

 Realize the importance of relationships

and teamwork in executing strategic
plans.
1-4Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 Organizational Levels

The Corporate Level is the

highest level in any organization.

The Functional Level includes all the

various functional areas within a business unit.

The Business Level consists of units within the

overall organization that are generally managed
as self-contained businesses.

1-5Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 Organizational Strategic Planning

 Higher organizational level strategic

plans provide direction for strategic
plans at lower levels.

 Lower-level plans are developed

to execute higher-level plans.

1-6Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 Types of Strategic Plans
Organizational Level Type of Strategic Plan Key Strategic Decisions

Corporate Corporate strategic Corporate vision

plan Objectives & resource
allocation
Growth strategies

Business Business strategic Market scope

plan Competitive advantage

Marketing Marketing strategic Target market

plan Marketing mix

Product marketing Specific target market

plan Specific marketing mix
Execution action plan

1-7Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 The Strategic Role of Brand Loyalty

Generating
Market Share

Developing a Strong
Customer Base

Customer Equity

1-8Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 The Strategic Planning Process

1-9Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 The Role of Marketing

 Strategic Marketing:
 Marketing activities that affect corporate,
business, and marketing strategic plans.

1-10
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 The Role of Marketing
Marketers orient everyone in the organization
toward markets and customers.

Marketers analyze the current situation,

identify trends in the marketing environment,
and assess the potential impact of these trends.

Marketers development corporate, business,

and marketing strategic plans.

1-11
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 The Role of Marketing

 Marketing  Networks:
Management:  Comprise strategic
 Relates to specific alliances among
product marketing suppliers, distributors,
strategies. and the marketing firm.

1-12
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 Corporate Strategy Decisions

 Corporate Vision
 Corporate Objectives & Resource Allocation

 Corporate Growth Strategies

 Business-unit Composition

1-13
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 Corporate Vision

 Corporate Vision:
 The basic values of an organization.

 The vision specifies what

the organization stand for,
where it plans to go, and
how it plans to get there.

1-14
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 What Comprises Corporate Vision?

 Markets
 Products and services

 Geographic domain

 Core competencies

 Organizational objectives

 Organizational philosophy

 Organizational self-concept

 Desired public image

1-15
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 Core Purpose: A Company’s Reason for
Being

 3M: To solve problems innovatively.

 Hewlett-Packard: To make technical contributions for the

advancement and welfare of humanity.

 Mary Kay Cosmetics: To give unlimited opportunity to women.

 Merck: To preserve and improve human life.

 Sony: To experience the joy of advancing and applying technology

for the benefit of the public.

 Wal-Mart: To give ordinary folks the chance to buy the same things
as rich people.

1-16
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 Core Purpose

 Core Competency:
 A bundle of skills that are possessed by
individuals across the organization.

1-17
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 Questions Leading to an Effective Corporate Vision

1. Which customers will you be

serving in the future?

2. Through which channels will you

reach customers in the future?

3. Who will be your competitors in

the future?

4. Where will your margins come

from in the future?

1-18
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 Questions Leading to an Effective Corporate Vision

5. In what end-product markets

will you participate in the
future?

6. What will be the basis for your

competitive advantage in the
future?

7. What skills or capabilities will

make you unique in the
future?
1-19
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 Corporate Objectives and Resource
Allocation

 Corporate objectives specify the

achievement of desired levels of
performance during particular time
periods.

1-20
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 Corporate Objectives and Resource Allocation

Corporate objectives and

resource allocation affect
marketers in 2 basic ways:
2) Providing guidance
for the development
and Implementation of
marketing strategies.

1) In setting the
objectives for different
organizational levels.

1-21
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 Corporate Growth Strategies

Products
Same New

Market Market
Same

Penetration Expansion
Markets

Product
New

Diversification
Expansion

1-22
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 Business-Unit Composition

 Strategic Business Unit

(SBU):
 Focuses on “a single product
or brand, a line of products, or
mix of related products that
meets a common market need
or a group or related needs,
and the unit’s management is
responsible for all (or most) of
the basic business functions”

1-23
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 Business-Unit Composition

 Companies often organize around

competency-based SBUs to
establish Sustained Competitive
Advantage.

1-24
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 Business Strategy Decisions

 The basic objective of a business strategy is

to determine how the business unit will
compete successfully.

1-25
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 Business Strategy Decisions

 Dimensions of  Competitive
Strategy: Advantage:
 Market scope.  The way a business
tries to get consumers
to purchase its
 How broadly the
products over those
business views its
target market. offered by
competitors.
 Competitive
advantage.

1-26
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 General Business Strategies

Market Scope
Focused Broad
Competitive Advantage
Low price

• Easyjet • Southwest

• Jet Blue
Differentiation

• Conair • American
• Alaskan Airlines • Delta
• Midwest • United Jet Blue

1-27
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 The Rule of Three

 The Rule of Three:  Three major players often

 Naturally occurring
competitive forces will
create a consistent
structure in many
mature markets.
compete by offering a wide
range of related products
and services and serve
most major market
segments.

1-28
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 Marketing Strategy Decisions
A Marketing
Strategy Addresses:
• Selection of a
target market.
• Development of a Functional strategies
marketing mix. are at the
business-unit level.

Operating strategies
are at the product level.

1-29
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 Business & Product Marketing Strategies
Decision Area Business Marketing Strategy Product Marketing Strategy
Target market Segmented or mass approach Specific definition of target market

Product Number of different products Specific features of each product

Price General competitive price level Specific price

Distribution General distribution policy Specific distributions

Marketing
communications General emphasis on marketing Specific marketing
communications tools communications program

1-30
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 International Marketing Strategies

 Entry Strategy:  The Basic Options:

 The approach used  Exporting
to market products in  Joint Ventures
an international  Direct Investment
market.

1-31
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 International Marketing Strategies

Standardized Marketing Strategy:

The same product, price, distribution, & promotion
programs in all international markets.

Customized Marketing Strategy:

A different marketing mix for each
target market country.

1-32
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 Executing Strategic Plans with Teamwork

1. Cross-Functional Teamwork

2. Marketing Teamwork

3. Co-Marketing Alliances

1-33
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved
 Business Function Orientations

Function Basic Orientation

Marketing To attract and retain customers
Production To produce products at lowest cost
Finance To keep within budgets
Accounting To standardize financial reports
Purchasing To purchase products at lowest cost
R&D To develop newest technologies
Engineering To design product specifications

1-34
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved