Discussion Questions: - Value Chain As A Tool For Identifying Ways To Create More Customer Value

9/17/2018
Discussion Questions
1 1. How does marketing affect

customer value?
02 2. How is strategic planning carried
out at the corporate and
Developing Marketing divisional levels?
Strategies and Plans 3. How is strategic planning carried
out at the business unit level?
4. What does a marketing plan
include?
15/e Copyright © 2018 Pearson Education, Inc. Publishing as Prentice Hall
1. 2-2
Marketing and Customer Value Value Creation and Delivery Process
• The value delivery process Choosing the Value

• The value chain
• Core competencies Providing the Value

• The central role of strategic planning
Communicating the Value
Copyright © 2018 Pearson Education, Inc. Publishing as Prentice Hall 2-3 Copyright © 2018 Pearson Education, Inc. Publishing as Prentice Hall 2-4
The Value chain Core Business Processes
• Value chain as a tool for identifying ways to

create more customer value
Every firm is a
synthesis of
activities
performed to
design, produce,
market, deliver,
and support its
product
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Core Competencies Maximizing Core competencies
Core competencies consist of

• Produce? Or
skills, experiences, resources, • Realignment is needed to maximize
• Import from offshore and technologies that offer CA core competencies
manufactures? to the firm
• 3 steps of realignment:
̶ (Re)define the business concept
A source of CA Applications ̶ (Re)shaping the business scope

Difficult for
and contributes to in a wide ̶ (Re)positioning the company’s brand
competitors
perceived variety of
to imitate customer benefits markets identity
The Central Role of Strategic

Four Organizational Levels
Planning
• To ensure they execute

• Corporate headquarters • Each business unit
• Focus on the customer right activities, prioritize
prepares a corporate SP to prepares a SP to carry
and respond effectively SP in 3 key areas:
guide the whole enterprise each business unit into
to changing needs ─ Managing the businesses as a profitable future
an investment portfolio • Each division develops a
• All departments must
─ Assessing the market’s plan to allocate funds to • Each product level
accept that ‘the growth rate and the each business unit within develops a MP for
customer is king’ company’s position in that the division achieving its objectives
market
─ Establishing a strategy
The Complete Planning, Implementation,

Marketing plan
and Control Cycle of Strategic Planning
• The central instrument for directing and

coordinating the marketing effort
– Strategic marketing plan lays

out the target markets and the
firm’s value proposition based on
mkt. opportunity analysis
– Tactical marketing plan

specifies the marketing tactics
including 4 Ps
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Corporate and Division

Define the Corporate Mission
Strategic Planning
1 Define the corporate mission • The organization’s • Over time it may change
purpose to respond to new
opportunities
2 Establish SBUs • Reasons to exist an • Acts as an invisible
organization like to hand to guide
3 make cars, lend employees
Assign resources to each SBU
money
4 Assess growth opportunities
Define the Corporate Mission Business Definition
Peter Drucker’s 5 classic questions to define

mission
• Never define • Products are transient;
What do basic needs and
business in terms of
customers value? customer groups endure
products like ‘auto
forever
What will our business’
Who is the • Transportation is a
business be?
customer? • Define business from need; automobile,
the perspective of railroad, or truck are
products that meet the
What should satisfying customer
need
What is our our business needs
business? be?
Business Definition Crafting A Mission Statement

Company Product Definition Market Definition
Company Product Market
We are a people-and-
Union Pacific We run a railroad.
Missouri-Pacific We run a railroadgoods
Wemover.
are a people-
Railroad We make copying and-goods
We help improvemover
office • Are developed • Provide a shared
Xerox collaboratively with
equipment. productivity. sense of purpose,
Xerox
Hess We make copying We improve office and shared with directions, and
We sell gasoline.
equipment We supply energy.
productivity
Corporation managers, opportunity
Paramount
Standard Oil We sell
We make gasolineWe market
movies. We supply energy
entertainment.
employees, and
Pictures customers
Encyclopaedi We sell
aColumbia
BritannicaPictures We make moviesWe distribute
encyclopedias
information.
We entertain
people
We make air
We provide climate
Carrier conditioners and
control in the home.
furnaces.
Fig: Product Orientation vs. Market Orientation Copyright © 2018 Pearson Education, Inc. Publishing as Prentice Hall 2-18
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Five Major Characteristics of a Mission Google

Vague mission
Defines the major

competitive
spheres within
which the firm
Stresses the operates
firm’s major
values and
Takes a long-
policies
term view
Focuses on a Must be short,

limited number memorable,
of goals and meaningful
Mission of Motorola Mission of eBay
“The purpose of Motorola is to honorably

serve the needs of the community by providing “We help people trade anything on earth.
products and services of superior quality at a We will continue to enhance the online
fair price to our customers; to do this so as to trading experiences of all—collectors,
earn an adequate profit which is required for dealers, small businesses, unique item
the total enterprise to grow; and by doing so, seekers, bargain hunters, opportunity
provide the opportunity for our employees and sellers, and browsers.”
shareholders to achieve their personal
objectives.”
Establish Strategic Business Units Some SBUs of Square Group

Large companies normally manage different businesses,
each requiring its own strategy
3 characteristics of an SBU Unique competitors

A single business or
collection of related
businesses
Leader responsible
for planning and
profitability
The purpose of identifying SBUs is to develop separate strategies

and assign appropriate funding Copyright © 2018 Pearson Education, Inc. Publishing as Prentice Hall 2-24
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Assign Resources to Each SBU BCG Growth-Share Matrix
Decide how to allocate corporate resources to each

SBU (building, holding, harvesting, and divesting)
Building
GE/McKinsey Matrix Holding

Harvesting
− Classify each SBU by its Newer Model Divesting
competitive strength and Building
− Rely on shareholder
industry attractiveness
value analysis and on the Holding Divesting
BCG’s Growth-Share market value of the firm
Matrix − Value calculations
assess the potential of a
− Classify based on relative
business
market share and market
growth rate
GE/McKinsey Matrix Assess Growth Opportunities

Competitive Strength
New
Industry Attractiveness
High Leader Growth Improve or Quit

Businesses
Medium Proceed with Care Phased Withdrawal

Try Harder
Low Cash Generation Phased Withdrawal Withdrawal

Opportunities
Good Medium Poor
Eliminate
Downsizing
Businesses
Assess Growth Opportunities Assess Growth Opportunities
• Intensive growth
• Integrative growth
Projected sales
• Grow within current • Diversification growth
businesses
• Build or acquire
related businesses
• Downsizing and divesting older
• Add attractive businesses
unrelated businesses
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Intensive Growth Intensive Growth
Ansoff’s Product-Market Expansion Grid— A tool

for identifying company growth opportunities
• Corporate
management should
first review
opportunities for
improving existing
businesses
Growth Strategy of Starbucks Growth Strategy of Starbucks
• Starbucks has designed an ambitious, multi-pronged • Market penetration: Make – How? Add new stores in current
more sales to current market areas; improve ad, prices,
growth strategy to maintain its phenomenal growth
customers without changing menu, service, attract competitors’
customers.
products
– How? Review new demographic
• Market development: Identify
(seniors/ethnic consumers) or
and develop new markets for geographic (Asian, European, &
current products South American) markets; convert
non-users to users in current
• Product development: Offer market.
modified or new products to – How? Add food offerings, sell
current markets coffee in supermarkets, co-brand
• Diversification: Start up or products in current markets.
buy businesses outside – How? Make and sell CDs, testing
current products and markets restaurant concepts, or branding
casual clothing
Integrative Growth Diversification Growth

A firm can increase sales and profits through backward, • Diversification growth makes sense when
forward, or horizontal integration within its industry
good opportunities exist outside the
present businesses
Wholesaler
Supplier Business
Competitor
Horizontal Integration
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Downsizing and Divesting Older

Diversification Growth Businesses
New products having technological or
Concentric marketing synergies with existing • Carefully prune, harvest, or divest the tired old
product lines
Strategy businesses to release needed resources for
Appealing to a different customer group other uses and reduce costs
Horizontal Unrelated new products

Strategy Appealing to current customers
Conglomerate New businesses having no relationships

Strategy Appealing to any customer groups
Organization and Organizational Corporate Culture

Culture
• A company’s organization consists of its structures,
policies, and corporate culture, all of which can … is the shared experiences, stories, beliefs,
become dysfunctional in a rapidly changing and norms that characterize an organization.
business envt.
Strategic planning
is done within the
context of a
company’s
structures, policies,
and corporate
culture
Marketing Innovation Business Unit Strategic

Planning Process
• Marketing innovation is crucial
(BlackBerry)
– Innovation by 3 unrepresented
groups
– Can challenge company
orthodoxy and stimulate new
ideas
• Develop strategy by choosing

the firm’s view of the future
– Make scenario analysis by
asking “What if…”
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SWOT Analysis External environment
Favorable Unfavorable Marketing opportunity
SW
• An area of buyer need
A formal
Internal
and interest
framework for Strength Weakness
identifying and • 3 main sources of
framing market opportunity Environmental threat
OT
organizational – Offer something short in
supply
• An unfavorable trend
growth
External
or development
Opportunity Threat – Supply an existing product
opportunities in a new way
– Offer a new product
Market Opportunity Analysis (MOA) Internal Environment
• Can we articulate the • Can we deliver the

benefits convincingly to a benefits better than
defined target market(s)? any actual or potential
competitors?
• Can we locate the target
market(s) and reach them • Will the financial rate
with cost-effective media and of return meet or
trade channels? exceed our required
threshold for
• Does our company possess
investment?
or have access to the critical
capabilities and resources
we need to deliver the
customer benefits?
Goal formulation (MBO) Strategic Formulation
• Unit’s objectives must be

• Goals are specific arranged hierarchically
Strategy is a game
objectives with • Objectives should be plan for achieving
respect to quantitative objectives
magnitude and
• Objectives should be
time
realistic
• Objectives must be
consistent
Porter’s Generic Strategies
“The essence of strategy is

choosing what not to do.”
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Program Formulation and

Strategic Formulation
Implementation
 McKinsey’s Elements of Success
 Categories of marketing
alliances Skills Strategy
• Product or service alliance
“Software” “Hardware
• Promotional alliance of success Staff Structure ” of
success
• Logistics alliances
• Pricing collaborations Style Systems
Shared
values
Contents of a Marketing Plan

Feedback and control
Executive Summary and table of contents

 Peter Drucker: it is more
important to “do the right Situation analysis
thing”—to be effective—
than “to do things right”— Marketing strategy and tactics
to be efficient
– The most successful
companies, however, excel Financial projections
Strong leadership
at both
Implementation controls
Evaluating a Marketing Plan Other Marketing Plan Contents
 The role of marketing research

 Is the plan simple/succinct?
 Is the plan specific?  Specifications for internal and
external relationships
 Is the plan realistic?
 Is the plan complete?  From marketing plan to
marketing action
Copyright © 2018 Pearson Education, Inc. Publishing as Prentice Hall 2-53
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9/17/2018
Marketing Debate
1. What good is a mission statement?

2. What implications do Porter’s value chain
and the holistic marketing orientation model
have for marketing planning?
3. Take a position:
(a) Mission statements are critical to a successful
marketing organization.
(b) Mission statements rarely provide useful
marketing value.
Copyright © 2018 Pearson Education, Inc. Publishing as Prentice Hall 2-55
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9/17/2018

1 1. How does marketing affect

Marketing and Customer Value Value Creation and Delivery Process

• The value delivery process Choosing the Value

• Core competencies Providing the Value

The Value chain Core Business Processes

• Value chain as a tool for identifying ways to

Core Competencies Maximizing Core competencies

Core competencies consist of

A source of CA Applications ̶ (Re)shaping the business scope

The Central Role of Strategic

• To ensure they execute

The Complete Planning, Implementation,

• The central instrument for directing and

– Strategic marketing plan lays

– Tactical marketing plan

Corporate and Division

4 Assess growth opportunities

Define the Corporate Mission Business Definition

Peter Drucker’s 5 classic questions to define

Business Definition Crafting A Mission Statement

Five Major Characteristics of a Mission Google

Defines the major

Focuses on a Must be short,

Mission of Motorola Mission of eBay

“The purpose of Motorola is to honorably

Establish Strategic Business Units Some SBUs of Square Group

3 characteristics of an SBU Unique competitors

The purpose of identifying SBUs is to develop separate strategies

Assign Resources to Each SBU BCG Growth-Share Matrix

Decide how to allocate corporate resources to each

GE/McKinsey Matrix Holding

GE/McKinsey Matrix Assess Growth Opportunities

High Leader Growth Improve or Quit

Medium Proceed with Care Phased Withdrawal

Low Cash Generation Phased Withdrawal Withdrawal

Assess Growth Opportunities Assess Growth Opportunities

Intensive Growth Intensive Growth

Ansoff’s Product-Market Expansion Grid— A tool

Growth Strategy of Starbucks Growth Strategy of Starbucks

Integrative Growth Diversification Growth

Downsizing and Divesting Older

Horizontal Unrelated new products

Conglomerate New businesses having no relationships

Organization and Organizational Corporate Culture

Marketing Innovation Business Unit Strategic

• Develop strategy by choosing

SWOT Analysis External environment

Favorable Unfavorable Marketing opportunity

Market Opportunity Analysis (MOA) Internal Environment

• Can we articulate the • Can we deliver the

Goal formulation (MBO) Strategic Formulation

• Unit’s objectives must be

“The essence of strategy is

Program Formulation and

Contents of a Marketing Plan

Executive Summary and table of contents

Evaluating a Marketing Plan Other Marketing Plan Contents

 The role of marketing research

Copyright © 2018 Pearson Education, Inc. Publishing as Prentice Hall 2-53

1. What good is a mission statement?

Copyright © 2018 Pearson Education, Inc. Publishing as Prentice Hall 2-55

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