Chapter 3

Elements of marketing
strategy and planning
 Learning Objectives
LO 3-1 Examine the concept of value and the elements and role of
the value chain.
LO 3-2 Understand the conditions required for successful marketing
planning, that marketing planning is focused on the value.
Proposition, and that marketing planning is a dynamic process.
LO 3-3 Identify various types of organizational strategies.
LO 3-4 Conduct a situation analysis.
LO 3-5 Use the framework provided for marketing planning, along
with the content in future chapters, to build a marketing plan.

©McGraw-Hill Education.
 Value and Utility 1 of 6

Value is a ratio of benefits to costs, as viewed from the eyes of

the beholder (the customer).
The four major types of utility are:

1. Form utility
2. Time utility
3. Place utility
4. Ownership utility

LO 3-1
©McGraw-Hill Education.
 Value is at the Core of Marketing 2 of 6

• Value proposition is the firm’s communication of

the unique value of its products to its customers.

• The value message may include the whole

bundle of benefits the company promises to
deliver – not just the benefits of the product
itself.

LO 3-1
©McGraw-Hill Education.
 The Value Proposition 3 of 6

• A firm’s value proposition must be strong enough to move

customers past satisfaction.

Customer Customer
Customer Customer
Retention Switching
satisfaction Loyalty
Increases decreases

LO 3-1
©McGraw-Hill Education.
 Porters Value Chain

LO 3-1
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 Value Creating: Primary Activities 5 of 6

• Primary activities

Inbound Logistics

Operations

Outbound Logistics

Marketing and Sales

Service

LO 3-1
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 Value Creating: Support Activities 6 of 6

• Support activities

Firm Infrastructure

Human Resource Management

Technology Development

Procurement

LO 3-1
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 Marketing Planning 1 of 9

• Marketing planning is the ongoing process of

developing and implementing market-driven
strategies for an organization.
• The resulting document that records the
marketing planning process in a useful
framework is the marketing plan.

LO 3-2
©McGraw-Hill Education. Source: John Mackey and Raj Sisodia, Conscious Capitalism (Boston, MA: Harvard Business Review Press, 2013).
 Effective Marketing Planning must be
Customer-Centric 2 of 9

• Everyone in an organization must

understand and support the
concept of customer orientation.

• All internal organizational

processes and systems must be
aligned around the customer.

• The C-Suite sets the tone.

LO 3-2
©McGraw-Hill Education.
 Framework for Marketing Planning 3 of 9

• Marketing plan is connected to the firm’s business plan.

• Conduct a situation analysis.

• Perform any needed market research.

• Establish marketing goals and objectives.

• Develop marketing strategies.

• Marketing mix strategies.

• Develop implementation plans.

Exhibit 2.2 Textbook

LO 3-2
©McGraw-Hill Education.
 Connecting the Marketing Plan to the
Firms Business Plan 4 of 9

• Market-driven strategic planning is often

used to describe the process at the corporate
or strategic business unit (SBU) level of
marshaling the various resource and
functional areas of the firm toward a central
purpose around the customer.

LO 3-2
©McGraw-Hill Education. Source: Drucker Institute, druckerinstitute.com, April 2017.
 Elements of Marketing Planning: Portfolio
Analysis 5 of 9

Portfolio analysis views SBUs and sometimes

even product lines as a series of investments
from which it expects maximization of returns

• Boston Consulting Group (BCG) Growth-Share

Matrix

• GE Business Screen

LO 3-2
©McGraw-Hill Education.
 Boston Consulting Group Groeth Share
Matrix 6 of 9

LO 2-4
©McGraw-Hill Education.
 GE Business Screen 7 of 9

Market Attractiveness
High Med Low
High

Invest/
Grow
Business Position

Med

Selective
Investment
Low

Harvest/
Divest

LO 2-4
©McGraw-Hill Education.
 Elements of Marketing Planning: Mission
Statement 8 of 9

Marketing planning does not occur in a vacuum.

• A mission statement articulates an organization’s

purpose, or reason for existence.

• Most mission statements also include a

discussion of what the company would like to
become in the future–its strategic vision.

LO 3-2
©McGraw-Hill Education.
EXAMPLES: Mission statements

1. Uber: We ignite opportunity by setting the world in

motion.
2. Google: To organize the world's information and
make it universally accessible and useful.
3. Kickstarter: To help bring creative projects to life.
4. Tesla: To accelerate the world’s transition to
sustainable energy.
5. Life is Good: To spread the power of optimism.
6. Wawa: Fulfilling Lives, Every Day.
7. Squarespace: Squarespace empowers people with
creative ideas to succeed.
 Elements of Marketing Planning: Goals 9 of 9

• Goals eventually become

refined into specific,
measurable, and (hopefully)
attainable objectives for the
firm.
• Jet Blue’s goal “to fly new
planes” may be refined into
an objective “to purchase
15 new aircraft over two
years.”

LO 3-2
©McGraw-Hill Education.
 Elements of Marketing Planning: Strategy
1 of 6

Organizational strategies

• A strategy is a comprehensive plan stating how

the organization will achieve its mission and
objectives.

• A firm’s generic strategy is its overall directional

strategy at the business level.

LO 3-3
©McGraw-Hill Education.
 Generic Business Strategies 2 of 6

Growth Stability Retrenchment

• Concentration via • Continue current • A weak

vertical or activities. competitive
horizontal position may force.
• Useful short-term
integration.
strategy. • Focuses assets
• Diversification via where there is
• Dangerous in the
concentric or greater potential.
long-run if
conglomerate
competition
means.
changes.

LO 3-3
©McGraw-Hill Education.
 Elements of Marketing Planning:
Strategy Categories 3 of 6

Three primary categories of competitive

strategy:

1. Cost leadership—low cost

2. Differentiation
3. Focus (or niche)

LO 3-3
©McGraw-Hill Education.
 Generic Business Strategies 4 of 6

Growth

Retrench- Concent-
ment ration
Generic
Business
Strategies

Diversi-
Stability
fication

LO 3-3
©McGraw-Hill Education.
 Competitive Strategy Options 5 of 6

Competitive Advantage
Lower Cost Differentiation
Broad Target

Cost Leadership Differentiation

Competitive Scope

Narrow Target

Focus
Cost Focus
Differentiation

LO 3-3
©McGraw-Hill Education.
 Miles and Snows Strategy Types 6 of 6

Prospectors

Reactors Strategic Analyzers

Types

Defenders

LO 3-3
©McGraw-Hill Education.
 Situation analysis: Macro-Level
External Environment 1 of 3

Macro-Level External Environment

Political,
Socio-Cultural/
Legal, and Technological Economic Natural
Demographic
Ethical

LO 3-4
©McGraw-Hill Education.
 Situation analysis: Competitive
Environmental Factors 2 of 3

Competitive Environmental Factors

Threat of Bargaining
Threat of new Rivalry among Bargaining
substitute power of
entrants existing firms power of buyers
products suppliers

LO 3-4
©McGraw-Hill Education.
 Situation analysis: Internal
Environmental Factors 3 of 3

Internal Environmental Factors

Firm structure
Firm culture Firm leadership Firm resources
and systems

LO 3-4
©McGraw-Hill Education.
 Elements of Marketing Planning:
Market Research 1 of 5

Perform any needed market research.

Establish marketing goals and objectives.

• Goals are qualitative.

• Objectives are quantitative.

LO 3-5
©McGraw-Hill Education.
 PRODUCT: Market Combinations 2 of 5

Product Emphasis

Existing Products New Products

Strategy = Strategy =
Existing Markets

Market Penetration Product Development

Seek to increase sales of existing Create growth by selling new

Market Emphasis

products to existing markets. products in existing markets.

Strategy = Strategy =
Market Development Diversification
New Markets

Introduce existing products to new Emphasize both new products and

markets. new markets to achieve growth.

LO 3-5
©McGraw-Hill Education.
 Elements of Marketing Planning:
Implementation 3 of 5
Implementation Plan

Forecast

Budget

Appropriate Marketing Metrics

LO 3-5
©McGraw-Hill Education.
 Elements of Marketing Planning:
Control and Plans 4 of 5

• Marketing control: Process of measuring marketing results and

adjusting the marketing plan as needed.
• Action plans: Implementation strategy that describes specific
tasks and the resources needed, who is responsible, and
metrics to track success.
• Contingency plans: Plans that can be implemented should
something happen that negates the viability of the marketing
plan.

LO 3-5
©McGraw-Hill Education.
 Tips for Successful Marketing Planning
5 of 5

• Stay flexible
• Utilize input, but don’t become paralyzed by
information and analysis
• Don’t underestimate the implementation part of the
plan
• Stay strategic, but also stay on top of the tactical
• Give yourself and your people room to fail and try
again

LO 3-5
©McGraw-Hill Education.