2

Developing Marketing
Strategies and Plans
Chapter Questions
 How does marketing affect customer value?
 How is strategic planning carried out at
different levels of the organization?
 What does a marketing plan include?

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Phases of Value Creation and Delivery

Assessing the opportunities

Choosing the value

Designing the value

Delivering the value

Communicating the value

What is the Value Chain?

The value chain is a tool for identifying ways

to create more customer value because
every firm is a synthesis of primary and
support activities performed to design,
produce, market, deliver, and support its
product.
 The value chain identifies nine strategically relevant
activities—five primary and four support activities—
that create value and cost in a specific business.
 The primary activities are
 (1) inbound logistics, or bringing materials into the
business; (2) operations, or converting materials into
final products; (3) outbound logistics, or shipping out
final products; (4) marketing, which includes sales;
and (5) service.

 Specialized departments handle the support activities

—(1) procurement, (2) technology development, (3)
human resource management, and (4) firm
infrastructure. (Infrastructure covers the costs of
general management, planning, finance, accounting,
legal, and
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government affairs.)
 The firm’s success depends not only on how
well each department performs its work,but
also how well company coordinates
departmental activities to conduct core
business process.

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Core Business Processes
 Market-sensing process
 New-offering realization process
 Customer acquisition process
 Customer relationship management process
 Fulfillment management process

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• The market-sensing process which refers to all the activities in
gathering and acting upon information about the market.

• The new-offering realization process which is all the activities in

researching, developing, and launching new high-quality offerings
quickly and within budget.

• The customer acquisition process which entails all the activities

in defining target markets and prospecting for new customers.

• The customer relationship management process which entails

all the activities in building deeper understanding, relationships,
and offerings to individual customers.

• The fulfillment management process which includes all the

activities in receiving and approving orders, shipping the goods on
time, and collecting payment
Characteristics of
Core Competencies
 A source of competitive advantage
 Applications in a wide variety of markets
 Difficult to imitate
 Maximizing Core Competencies
 (Re)define the business concept
 (Re)shaping the business scope
 (Re)positioning the company’s brand identity
What is Holistic Marketing?

Holistic marketing sees itself as integrating

the value exploration, value creation, and
value delivery activities with the purpose of
building long-term, mutually satisfying
relationships and co-prosperity among key
stakeholders.

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Questions to Address in
Holistic Marketing

What value opportunities are available?

How can we create new value offerings

efficiently?

How can we delivery the new offerings

efficiently?

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 Most large companies consist of four
organizational levels:

 (1) corporate
 (2) division
 (3) business unit
 (4) product.

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 Corporate headquarters is responsible for designing a
corporate strategic plan to guide the whole enterprise;
it makes decisions on the amount of resources to
allocate to each division, as well as on which
businesses to start or eliminate.
 Each division establishes a plan covering the
allocation of funds to each business unit within the
division.
 Each business unit develops a strategic plan to carry
that business unit into a profitable future.
 Finally, each product level (product line, brand)
develops a marketing plan for achieving its objectives
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What is a Marketing Plan?

A marketing plan is the

central instrument for
directing and coordinating
the marketing effort.
It operates at a strategic and tactical level.

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 Levels of a Marketing Plan
 Strategic  Tactical
 Target marketing  Product features

decisions  Promotion

 Value proposition  Merchandising

 Analysis of  Pricing

marketing  Sales channels

opportunities  Service

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Figure 2.1 The Strategic Planning,
Implementation, and
Control Processes

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Corporate and Division Strategic
Planning

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Corporate Headquarters’
Planning Activities
 Define the corporate mission
 Establish strategic business units (SBUs)
 Assign resources to each SBU
 Assess growth opportunities

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Define the Corporate Mission

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 A Mission Statement defines the company's
business, its objectives and its approach to
reach those objectives. 
 Organizations develop mission statements to
share with managers, employees, and (in
many cases) customers. A clear, thoughtful
mission statement provides a shared sense of
purpose, direction, and opportunity.

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 To define its mission, a company should
address Peter Drucker’s classic questions:
What is our business?
 Who is the customer?
 What is of value to the customer?
 What will our business be?
 What should our business be?

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Good Mission Statement
Five Major Characteristics
 Focus on a limited number of goals
 Stress major policies and values
 Take a long-term view
 They define the major competitive spheres
within which the company will operate.
 Short, memorable, meaningful

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 Cont…
Components of a good mission statement
 Customers

 Products and Services

 Markets

 Technology

 Concern for survival growth and profitability

 Self concept

 Concern for public image

 Philosophy

 Concern for employees

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 Cont…
 What are the firm’s customers?
 What are the firm’s products and services?
 Geographically where does it compete?
 Is the firm technologically advance?
 Is the firm committed to growth and financial stability?
 What is the competitive advantage of the firm?
 Is firm responsive to public and environmental issues?
 What are the basic beliefs values and aspirations of
the firm?
 Are the employees valuable assets of the firm?

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Establish Strategic Business Units (SBUs)

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Characteristics of SBUs
 It is a single business or collection of related
businesses
 It has its own set of competitors
 It has a leader responsible for strategic
planning and profitability

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Assign resources to each SBU

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 Once the company has defined SBUs,
management must decide how to allocate
resources to each SBU.
 BCG growth matrix use relative market share
and annual rate of market growth as a criteria
for investment decisions, classifying SBUs
such as dogs, cash cows, question marks and
stars.

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 CASH COWS: Products/Businesses in low
growth markets with a high market share.
 STARS: Products/Businesses in high growth
markets with a high market share.
 QUESTION MARK: Products/Businesses in
high growth markets with low market share.
 DOGS: Products/Businesses with low growth
and low market share.

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Assess growth opportunities

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 Cont…
 Assessing growth opportunities includes
planning new businesses, downsizing and
terminating older businesses.

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 Growth Opportunities

1. Intensive Growth Opportunities: To identify

opportunities within current businesses.
2. Integrative Growth Opportunities: to build or
acquire business related to current
businesses.
3. Diversification: To identify opportunities to add
attractive unrelated businesses.

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Intensive Growth Opportunities

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 Market Penetration
 This strategy is considered low-risk, as it
involves existing products and existing
markets. This strategy generates growth by
focusing on leveraging a company’s current
products within its existing markets

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 Market Development
 This strategy involves some risk, as it
leverages existing products in new markets.
This strategy is ideal for companies that have
identified previously overlooked markets or
who want to significantly expand their market
reach 

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 Product Development
 This one leverages new products in existing
markets. This tactic is ideal for companies who
want to launch a new product in an existing
market. 

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 Diversification
 The Diversification Strategy is the highest risk
strategy in the product market expansion
universe. Used when companies want to
introduce new products to new markets,
diversification requires a significant
commitment of both time and resources. 

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 Integrative Growth Opportunities
 Horizontal Integration consists of companies that acquire a
similar company in the same industry.
 Companies may choose to undergo horizontal integration in order
to increase their size
 achieve economies of scale
 reduce competition
 to gain access to new customers or markets, including overseas.

Facebook's 2012 acquisition of Instagram

Disney's 2006 acquisition of Pixar

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 Why Horizontal Integration Is
Important
 When implemented correctly, horizontal integration
can increase the market share and power of two
companies. The companies can merge synergies,
product lines, and enter new markets.
 Horizontal integration also reduces the level of
competition in the market while boosting the revenue
of the participants who otherwise may not have
prevailed in a fierce market environment
independently. Through integration, the parties
involved can share institutional knowledge while
reducing expenses.

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 Integrative Growth Opportunities
 Vertical Integration:
 Vertical integration is a strategy whereby a company owns or
controls its suppliers, distributors or retail locations to control its
value or supply chain. Vertical integration benefits companies by
allowing them to control process, reduce costs and improve
efficiencies. It is an arrangement in which the supply chain of a
company is owned by that company ( backward integration) or it
might acquire some wholesalers or retailers (forward integration)

This strategy is important for many companies for several

reasons.
 It increase profits from the newly acquired operations by selling
its products directly to consumers
 It also guarantees efficiencies in the production process
 and 2-46
cuts down on delays in delivery and transportation.
 Cont…
 A car manufacturer is undergoing a backward
integration if it acquires a tire manufacturer. This
ensures the manufacturer it has a steady supply of
tires in order to keep making its cars.

 A car manufacturer may acquire an automotive

dealership through forward integration. This not only
gets the manufacturer closer to the consumer, but it
also gives the company more revenue.

 Eg Ikea's 2015 purchase of forests in Romania to

supply its own raw materials
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Figure 2.2 The Strategic Planning
Gap

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Figure 2.3 The Business Unit
Strategic Planning Process

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SWOT Analysis

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SWOT Analysis

Strengths

Weaknesses

Opportunities

Threats

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SWOT Analysis
SW
.Strength
A strength is a resource or
capacity the organization can
use effectively to achieve its
objectives.
 Weaknesses
Weaknesses are negative and
internal factors that affect your
organizational successes
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OT
 Opportunity
A market opportunity is an
area of buyer need and
interest that a company has
high probability of profitability.
 Threat
It is a challenge posed by an
unfavorable trend that in
absences of a defensive
marketing action would lead to
lower sales and profitability
 SWOT Analysis: Opportunities
 There are 3 main sources of market
opportunities
1) To offer something that is in short supply
2) To supply an existing product or service in
new superior way.
3) To ask consumers what do they want.

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 Market Opportunity Analysis
(MOA)
 To evaluate opportunities, companies can
use MOA to ask question like.
1) Can we articulate the benefits convincingly
to defined a target market?
2) Can the target market be located and
reached with cost-effective media and trade
channels?
3) Does the company possess or have access
to the critical capabilities and resources
needed to deliver the customer benefits?
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Market Opportunity Analysis
(MOA)
 Can the company deliver the benefits better
than any actual or potential competitors?
 Will the financial rate of return meet or
exceed the company’s required threshold for
investment?

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Goal Formulation

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 Goal Formulation
 Once SWOT analysis is done, company can proceed to goal
formulation, developing specific goals for the planning period.

 Most business units have mix of objectives, including profitability,

market share, improvement, innovation, reputation etc.

 Must be arrange hierarchical, from most to least important.

 Objectives should be quantitative
 Goals should be realistic
 Objectives must be consistent

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Strategy Formulation

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 Strategy Formulation

 Michael Porter has proposed three generic

strategies that provide a good starting point for
strategic thinking overall cost leadership,
differentiation, and focus.

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Porter’s Generic Strategies

Overall cost leadership

Differentiation

Focus

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 Cont…
 With overall cost leadership, firms work to achieve the lowest
production and distribution costs so they can underprice
competitors and win market share.

 Differentiation strategy is built on a belief that one needs a clear

and unique positioning. Differentiation leadership focuses in
providing perks that add value for consumers.

 Focus: The business focus on one or more narrow market

segments, gets to know them and pursue with either cost
leadership or differentiation strategy.

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 Strategic Alliances
 Even giant companies often cannot achieve
leadership, either nationally or globally, without
forming alliances with domestic or
multinational companies.
 Many strategic alliances take the form of
marketing alliances. These fall into four major
categories

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Categories of Marketing Alliances
 Product or service alliance
 Promotional alliance
 Logistics alliances
 Pricing collaborations

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 Cont..

1. Product or service alliances—One company licenses

another to produce its product, or two companies jointly
market their complementary products or a new product.
Dominos & Coke..
2. Promotional alliances—One company agrees to carry
a promotion for another company’s product or service.
Happy Meal…
3. Logistics alliances—One company offers logistical
services for another company’s product. TCS, Fedex,
UPS…
4. Pricing collaborations—One or more companies join in
a special pricing collaboration. Hotel and rental cars…
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 Implementation
 Proper implementation of the strategies, even
a great marketing strategy can be damaged by
poor implementation. Eg if the unit has
decided to attain technological leadership, it
must strengths its R&D department, train its
technical sales force etc.

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 Feedback and Control
 Feedback control in marketing involves
measuring the outputs (results)
of marketing decisions, comparing these
results to goals, and then taking corrective
action so as to meet these goals. ... If
forecasts show that goals are not attainable,
the inputs or even the process are changed in
order to ensure that goals are met.

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McKinsey’s Elements of Success

Skills Strategy

Staff Structure

Style Systems

Shared values

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Marketing Plan Contents

 Executive summary
 Table of contents
 Situation analysis
 Marketing strategy
 Financial projections
 Implementation controls

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 What is Corporate Culture?

Corporate culture is the

shared experiences, stories, beliefs,
and norms that
characterize an organization.

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Evaluating a Marketing Plan

 Is the plan simple?

 Is the plan specific?
 Is the plan realistic?
 Is the plan complete?

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For Review
 How does marketing affect customer value?
 How is strategic planning carried out at
different levels of the organization?
 What does a marketing plan include?

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