Developing Marketing

Strategies and Plans

Chapter 2
Chapter Outline
Marketing and Customer Value
The Value Delivery Process
Phases of Value Creation and Delivery
The Value Chain
Core Business Processes/Essential Activities
Characteristics of Core Competencies
What is a Marketing Plan?
Corporate Headquarters’ Planning Activities
Business Unit Strategic Planning
Product Planning: The Nature and Contents of a Marketing Plan
Marketing Plan Contents
 Marketing and Customer Value

The task of a business is to deliver customer value at a

profit.
In a hypercompetitive economy with increasingly
informed buyers faced with many choices, a company
can only win by fine-tuning the value delivery process
and choosing, providing, and communicating superior
value.
 The Value Delivery Process

Traditional view: The value

delivery process takes place during
the selling process.
New view: The value delivery
process begins at the beginning of
planning.
 Phases of Value Creation and
Delivery
Choosing the value-Segment the market, select
target markets, develop the offering's value
positioning. (before the product exists)
Providing the value-Determine specific product
features, prices, and distribution.
Communicating the value-Using the sales force,
Internet, advertising to announce and promote the
product.
Each phase has cost implications.
 The Value Chain

The value chain is a tool for identifying

was to create more customer value
because every firm is a combination of
primary and support activities
performed to design, produce, market,
deliver, and support its products.
These activities create value and cost.
 The Value Chain
 Primary Activities
1. Inbound Logistics- Bringing the material to the
business
2. Operations- Converting the material into final
products
3. Outbound Logistics- Shipping out the final
product
4. Marketing –Which includes sales
5. Service
 The Value Chain
Support Activities (Specialized departments)
1. Procurement- is the acquisition of goods and
services. (Buying)
2. Technology Development
3. Human Resource Management
4. Firm Infrastructure- Covers the costs of general
management, planning, finance, accounting, legal,
and government affairs.
Core Business Processes/Essential Activities

1. Market-sensing process-All activities in gathering and acting
upon information about the market.

2. New-offering realization process-Researching, developing, and
launching new high-quality offerings quickly and within budget.

3. Customer acquisition process-Defining target markets and
prospecting for new customers.

4. Customer relationship management process-Building deeper
understanding, relationships, and offerings to individual customers.

5. Fulfillment management process-Receiving and approving
orders, shipping the goods on time, and collecting payment.

Use cross-functional teams (is a group of people with different functional
expertise working toward a common goal) to manage core processes.
 Characteristics of Core Competencies
Core Competencies-The main strengths
or strategic advantages of a business.
A source of competitive advantage
Applications in a wide variety of markets
Difficult to imitate
Companies must also posses distinctive abilities or broader
business process such as customer linking, market-sensing, and
channel bonding.
 What is a Marketing Plan?
The Marketing Plan is the
central instrument for directing
and coordinating the marketing
effort.
It operates at strategic and
tactical level.
 Levels of a Marketing Plan
Strategic Tactical
Target marketing Product features
decisions Promotion
Value proposition Merchandising
Analysis of Pricing
marketing Sales channels
opportunities Service
 Corporate Headquarters’ Planning
Activities
1. Define the corporate mission
2. Establish strategic business units
(SBUs)
3. Assign resources to each SBU
4. Assess growth opportunities
 1. Define the corporate mission

Good Mission Statements should:

Focus on a limited number of goals
Stress major policies and values
Define major competitive sphere
where the company will operate
Take a long-term view
Short, memorable, and meaningful
 2. Establishing Strategic Business Units (SBUs)

Market definition of a business

:Customer satisfying process
Products change, needs stay
Target market definition-Focus on
selling product to current market.
Strategic market definition-Focus on
selling product to current and potential
markets.
 Characteristics of SBUs

It is a single business or collection of

related business that can be planned
for separately from the rest of the
company.
It has its own set of competitors.
It has a leader responsible for strategic
planning and profitability.
 3. Assigning Resources to each SBU

Management must decide how to

allocate resources to each SBU.
Is the market value of a company
greater with or without the SBU?
 4. Assessing Growth Opportunities

1. Planning new businesses

2. Downsizing businesses
3. Terminating older business
 1. Planning new businesses
If there is a gap between desired
sales and projected sales
Develop or acquire new businesses
to fill the gap
The Strategic Planning Gap
Intensive Growth Strategies/ Improve existing
businesses
Ansoff’s Product-Market Expansion Grid
 Intensive Growth/Improve existing
businesses
Market-penetration strategy- Gain more market
share with current products in current markets.
Market-development strategy- Find or develop new
markets for current products.
Product-development strategy- Develop new
products of potential interest to current markets.
Diversification strategy - Develop new products for
new markets.
Integrative growth / Build or acquire businesses related to current
businesses

Backward integration-Example:
acquire supplier.
Forward integration-Example:
acquire wholesaler or retailer.
Horizontal integration- Example:
acquire one or more competitors.
 The Supply Chain
Supplier(raw material or components)
Transportation(inbound logistics)
Manufacturer
Transportation (outbound logistics)
Warehousing
Wholesaler
Retailer
Final consumer
Diversification growth /Add attractive unrelated businesses

Concentric strategy-Seek new products that

have technological or marketing synergies with
existing product lines that appeal to a different
group of customers.
Horizontal strategy-Search for unrelated new
products that appeal to current customers.
Conglomerate strategy-Seek new businesses
that have no relationship to current technology,
products, or markets.
 2. Downsizing businesses
3. Terminating older businesses

Downsizing- Whereby a company reduces its size

and operations to increase its efficiency and
profitability. Reduce employees and company
activities.
Terminating older businesses- Sell off old
unprofitable businesses to reduce costs.
 Business Unit Strategic Planning

1. The Business Mission

2. SWOT Analysis
3. Goal Formulations
4. Strategic Formulation
5. Program Formulation and Implementation
6. Feedback and Control
 1. The Business Mission
2.External Environment (Opportunity and Threat) (SWOT Analysis)
Each Business unit needs to define its specific mission
within the broader company mission.
Marketing opportunity is an area of buyer needs and
interest that a company has a high probability of profitably
satisfying.
1. Offer something that is in short supply
2. Supply an existing product or service in a new or superior
way:
 a. problem detection method-Ask consumers for suggestions.
 b. ideal method-Ask consumers to imagine an ideal version of the product.
 c. consumption chain method-Ask consumers to chart the steps in
acquiring , using, and disposing of a product.
External Environment (Opportunity and
Threat) (SWOT Analysis)
Environmental threat is a challenge posed by an
unfavorable trend or development that in the absence
of defensive marketing action would lead to lower
sales or profit.
Internal Environment (Strengths and Weaknesses) (SWOT
Analysis)

Evaluate strengths and weaknesses

Find new strengths
 3. Goal Formulations

Develop specific goals for the planning period.

Businesses units usually pursue a mix of objectives :
Profitability
Sales Growth
Market share improvement
Risk containment
Innovation
Reputation
 4. Strategic Formulation

A strategy is a game plan for getting there.

Marketing Strategies
Overall cost leadership-achieve the lowest production and
distribution to underprice competitors and win market share.
Differentiation-achieve superior performance in an important
customer benefit area valued by a large part of the market.
Focus-Focus on one or more narrow market segments and
pursue either cost leadership or differentiation.
Firms directing the same strategy to the same target market constitute a
strategic group.
5. Program Formulation and Implementation
6. Feedback and Control

Program Formulation and Implementation:

Estimate cost
Sufficient results to justify cost
Feedback and Control:
It is critical for organizations to examine the
changing environment and adopt new goals and
behaviors.
Product Planning: The nature and contents of a Marketing Plan

A marketing plan is written document that

summarizes what the marketer has learned about the
marketplace and indicates how the firm plans to reach
its marketing strategies.
 Marketing Plan Contents
Executive summary and table of contents-A table of contents
and a brief summary for top managers of the main goals and
recommendation.
Situation analysis-Background data on sales, costs, the market,
the competitors, and the various forces in the marcroenviroment.
Marketing strategy-Define the mission, marketing and financial
objectives, and the needs that the market offering intends to
satisfy plus the competitive positioning.
Financial projections-Includes a sales forecast, an expense
forecast, and a break-even analysis.
Implementation controls-Outlines the controls for monitoring
and adjusting the implementation of the plan.
 References
Kotler, Philip and Kevin Lane Keller . Marketing
Management. Pearson Education Limited, 2012.