CH 3: Elements of Marketing

Strategy, Planning, and Competition

Dr. Jingbo Zhang
 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.
LO 3-1 Examine the concept of value and
the elements and role of the value chain.
Value and Utility

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

the beholder (the customer).

A Benefit is some type of utility that the company and its products
and services provides a customer.
Value and Utility

A Cost may be financial, time, opportunity costs, or otherwise.

The four major types of utility are:

1. Form utility
2. Time utility
3. Place utility
4. Ownership utility
Value and Utility

Form created when the firm converts raw materials into finished
utility products that are desired by the market.

Owner- They are created when products are available

Time
utility
ship to customers at a convenient location when
utility
Place they want to purchase them, and facilities of
utility exchange are available that allow for transfer of
the product ownership from seller to buyer.
Value Is at the Core of Marketing

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.
 The Value Proposition
A firm’s value proposition must be strong enough to move customers
past satisfaction.

Customer Customer
Customer Customer
Retention Switching
Satisfaction Loyalty
Increases Decreases

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 The Value Chain

The value chain serves as a means for firms to

identify ways to create, communicate, and deliver
more customer value within a firm.

The Value Chain is illustrated on the next slide.

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Exhibit 3.1 Porter’s Value Chain

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 Value Creating: Primary Activities
• Primary Activities how the firm converts
the raw materials into
how the firm goes final products
about sourcing raw Inbound Logistics
materials for production

Operations
how the firm transports how the firm
and distributes the final communicates the value
products to the Outbound Logistics proposition to the
marketplace marketplace.
Marketing and Sales
how the firm supports
customers during and Service
after the sale.

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 Value Creating: Support Activities
• Support Activities
how the firm is set up how the firm ensures it
for doing business; are Firm Infrastructure has the right people in
the internal processes place, trains them, and
aligned and efficient. keeps them.
Resource Human Management

how the firm embraces Technology Development

technology usage for how the firm deals with
the benefit of vendors and quality
customers. Procurement issues

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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.
 Marketing Planning

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.

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 Marketing Planning Is Both Strategic
and Tactical

Marketing (Big M) serves as a core driver of business strategy.

marketing (little m) represents the specific programs and tactics

aimed at customers and other stakeholder groups.

The common link between these two levels is marketing planning.

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Everyone Owns Marketing Planning

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.

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 Framework for Marketing Planning
Exhibit 3.2 Condensed Framework for Marketing Planning

Ensure the marketing plan is connected to the firm’s business • Marketing mix strategies:
plan, including organizational level mission, vision, goals,
objectives, and strategies. • Product/branding strategies.
• Service strategies.
Conduct a situation analysis. • Pricing strategies.
• Macro-level external environment. • Supply chain strategies.
• Competitive environment. • Promotional strategies.
• Internal environment. Develop implementation plans.
Perform any needed market research. • Programs/action plans for each strategy including
timetable, assignment of responsibilities, and resources
Establish marketing goals and objectives. required.
Develop marketing strategies. • Forecasts and budgets.
• Metrics for marketing control.
• Product-market combinations.
• Market segmentation, target marketing, positioning. Provide for contingency planning.

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 Connecting the Marketing Plan to the Firm’s
Business Plan

Market-driven strategic planning often describes 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.

• A strategic business unit (SBU) is a relatively autonomous division or organizational

unit of a large company that operates independently but within the corporate umbrella,
exercising control over most of the factors affecting its long-term performance.

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 Elements of Marketing Planning: Portfolio
Analysis

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.

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Exhibit 3.3 Boston Consulting Group Growth-Share Matrix

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Exhibit 3.4 GE Business Screen

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LO 3-3 Identify various types of organizational
strategies.
 Elements of Marketing Planning: Mission
Statement

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.

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 Elements of Marketing Planning: Goals & Objectives

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.”

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 Elements of Marketing Planning: Strategy

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.

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 Generic Business Strategies

Growth Stability Retrenchment

• Concentration via • Continue current • A weak competitive

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

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Elements of Marketing Planning: Strategy Categories

Three primary categories of competitive strategy:

1. Cost leadership: low cost (not price)
2. Differentiation: Unique goods or services for which
customers will pay a premium price’
3. Focus (or niche): Narrow customer groups

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Exhibit 3.7 Competitive Strategy Matrix

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 Elements of Marketing Planning:
Competencies
Core competencies: Activities the firm does well.

Distinctive competencies: Core competencies that are superior to

competitors.

Sustainable competitive advantage: Cannot be easily duplicated

by competitors.

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 Miles and Snow’s Strategy Types
Firm exhibits continual innovation by finding
and exploiting new product and market
opportunities.
Firm heavily relies on analysis and
imitation of the successes of other
organizations, especially prospectors.

Firm lacks any coherent

strategic plan or apparent
means of effectively
competing; reactors do well to
merely survive in the
competitive marketplace.

Firm searches for market stability and production

of only a limited product line directed at a narrow
market segment, focusing on protecting
established turf.

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LO 3-4 Conduct a situation analysis.
 Situation Analysis: Macro-Level External
Environment

Macro-Level External Environment

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

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Situation Analysis: Competitive Environmental Factors

Competitive Environmental Factors

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

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Exhibit 3.9 Forces Driving Industry Competition

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Situation Analysis: Internal Environmental Factors

Internal Environmental Factors

Firm structure
Firm culture Firm leadership Firm resources
and systems

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 Elements of Marketing Planning: SWOT Analysis

Summarize the situation analysis into a SWOT analysis:

• A convenient way to summarize key findings into a matrix
of strengths, weaknesses, opportunities, and threats.
• Internal analysis reveals strengths and weaknesses, while
external analysis points to potential opportunities and
threats.

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Exhibit 3.10 SWOT Analysis Template
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LO 3-5 Use the framework provided
for marketing planning, along with the
content in future chapters, to build a
marketing plan.
 Elements of Marketing Planning: Market Research

Perform any needed market research.

Establish marketing goals and objectives.
• Goals are qualitative.
• Objectives are quantitative.

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 Elements of Marketing Planning: Additional Aspects

Develop marketing strategies.

• Market penetration strategies.
• Product development strategies.
• Market development strategies.
• Diversification strategies.

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Exhibit 3.11 Product-Market Combinations

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 Elements of Marketing Planning: Control and Plans

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.

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 Tips for Successful Marketing Planning

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

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