12e

Chapter 5
Business Marketing Planning: Strategic
Perspectives

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 Chapter Outline
i. Marketing’s strategic role in strategy development-
Hierarchy of strategies
ii. The multifunctional nature of business marketing decision
making
iii. The components of a business model that can be
converted into superior positions of advantage in the
business market
iv. The way in which a new class of smart, connected products
is transforming competition
v. A valuable framework detailing the processes and systems
that drive strategy success
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part,
except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
school-approved learning management system for classroom use.
 Imagine that you as a Marketing
Manager, invited to be a part of the
company’s Strategic Planning.
How can you contribute?
 Marketing’s Strategic Role
 Market-driven organizations will emphasis on:
 Center on customers
 Take an outside-in view of strategy
 Demonstrate an ability to sense market trends ahead
of their competitors

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 Hierarchy of Strategies
Cor
pora
te
stra
tegy
Business-level
strategy

Functional strategy

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
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 Corporate Strategy
 Defines the businesses in which a company competes, in a
manner that uses resources to convert distinctive
competence into competitive advantage
 Role of marketing
 Assessing market attractiveness and the competitive
effectiveness of the firm
 Promoting a customer orientation to the various
constituencies in management decision making
 Formulating the firm’s overall value proposition and
articulating it to the market

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
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 Business-Level Strategy
 Centres on how a firm competes in a given industry and
positions itself against its competitors
 Competition is between individual business units
 Strategic business unit (SBU): Single business or collection of
businesses that has:
 A distinct mission, a responsible manager & its own
competitors and that is relatively independent of other
business units
 Role of marketing :
 Provide a detailed analysis of customers, competitors,
firm’s distinctive skills and resources to compete in
particular market segment.
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
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 Functional Strategy
 Centres on how resources allocated to the various functional
areas can be used most efficiently and effectively to support
the business-level strategy
 Role of marketing :
 Allocate and coordinate marketing resources and activities
to achieve the firm’s objective within a specific product
market

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
school-approved learning management system for classroom use.
 Strategic Formulation and the Hierarchy
of Strategies
 Interplay between the three levels of strategic formulation:
 Cuts across functional areas
 Involves issues related to long term objectives
 Involves allocating resources across SBUs and/or product
markets
 Include decisions about the direction of corporate strategy,
application of technology, and choice of alliance partners

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
school-approved learning management system for classroom use.
 Conflicts in Strategy Formulation
Process
 Two forces that causes conflicts within company:
i. Thought-worlds
ii. Turfs/ Territories
 Thought-worlds = Different meanings assigned to a proposed
strategy –motivated by deeper differences in organizational
subcultures
 Subcultures exist when one subunit shares different
values, beliefs, and goals than another subunit
 Turfs = Functional managers are likely to resist strategic
changes that threaten their field.

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
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 Negotiated Outcomes
 Collective decisions emerge from negotiation and
compromise among partisan participants
 Choices must be negotiated with each interest group
attempting to achieve its own ends
 Results of collective decisions tend to develop incrementally
and depend on the partisan values and influence of the
various interest groups

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
school-approved learning management system for classroom use.
 So, what is it to Marketing Managers?

 Marketing managers should:

 Be sensitive to the likely response it may arouse in other
interest groups
 Develop and use a communication network that includes
organizational members who have a major stake in the
decision
 Be able to use the personal networks to understand the
interests of other stakeholders, communicate their own
interests clearly and sensitively

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
school-approved learning management system for classroom use. 12
Figure 5.1 - Strategic Decision Processes
 Functional Integrated Planning
 Successful marketing managers know how to integrate
functional areas
 Understand the capabilities of manufacturing, R&D, and
customer service
 Capitalize on the strengths in developing marketing
strategies
 Facilitate strategies that are responsive to customer needs
 Assume a central role in strategy implementation

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
school-approved learning management system for classroom use.
 Responsibility charting in a multifunctional
nature of decision making
 Approach that can classify decision-making roles and
highlight the multifunctional nature of business marketing
decision making
 Responsible (R) - Manager takes initiative, analyzes
situation, develops alternatives, consults with others,
makes initial recommendation
 Approve (A) - Manager accepts or rejects decisions
 Consult (C) - Manager offers input
 Implement (M) - Manager is accountable for implementing
decision
 Inform (I) - Manager is informed of the decision
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
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 Marketing Strategy Center
 Constitutes members of the organization involved in the
business marketing decision-making process
 Representatives may assume more than one role
 Roles evolve during the marketing strategy development
process
 Composition is not strictly prescribed by the organization
chart
 Needs of a particular strategy situation influence the
composition of the strategy center

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
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 Managing Strategic Interdependencies
 Minimizing interdepartmental conflict is a challenge for
marketer
 Individual strategy center participants are motivated by
personal and organizational goals
 Organizational objectives may be different for different
functional areas
 Managing conflict, promoting cooperation, developing and
coordinating strategy is a fundamental responsibility for
marketing managers

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
school-approved learning management system for classroom use.
 Figure 5.2 - Components of a Business
Model

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
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 Elements of Customer Interface
Channels a firm uses to reach and
Fulfillment and support support customers

Knowledge captured from

Information and insight customers and the degree to
which this information is used

Nature of the interaction between

Relationship dynamics the firm and its customers

Pricing choices offered by a

Pricing structure business concept

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
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 Core Strategy
 Determines how the firm chooses to compete
 Elements:
 Business mission: Describes overall strategic objective,
sets course direction, and defines performance criteria to
measure progress
 Product/market scope: Defines where the firm competes
 Basis for differentiation: Captures the essence of how firm
competes differently than its rivals do

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
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 Differentiation of Products and
Services
 Business is differentiated when its value-adding activities are
perceived as superior and profitable
 Value-added features need to motivate customers to pay a
higher premium than the cost of superior performance

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
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 Strategic Resources
 Core competencies
 Set of skills, systems, and technologies that create uniquely
high value for customers
 Strategic assets
 Tangible requirements for advantage that enable a firm to
exercise its capabilities
 Core processes
 Methodologies and routines that companies use

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
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 Value Network
 Complements and enriches the firm’s research base
 Includes:
 Suppliers
 Strategic alliance partners
 Coalitions

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
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 Figure 5.3 - Strategic Positioning

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
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 Smart, Connected Products
 Cloud computing: Scalable and elastic IT-related capabilities
are provided as a service to external customers using
Internet technologies
 Internet of Things (IoT): Connects devices such as everyday
consumer objects and industrial equipment onto the network
 Big Data: Massive amounts of data collected over time that
are difficult to analyze and process using common database
management tools
 Big Data Analytics: Process of examining large data sets
containing a variety of data types
 To uncover hidden patterns, unknown correlations, market trends,
customer preferences, and other useful information
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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
school-approved learning management system for classroom use.
 Capabilities of Smart, Connected
Products
 Continuous monitoring of a product’s condition, operation,
usage, and external environment through sensors and
external data sources
 Control through remote commands or algorithms that are
incorporated into the device or reside in the product cloud
 Application of algorithms and analytics to product usage data
to enhance product performance

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
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 Capabilities of Smart, Connected
Products (continued)
 Preventative maintenance when failure is imminent and
completes repairs remotely
 Smart, connected products:
 Operate autonomously
 Self-diagnose their own service needs
 Adapt to users’ preferences
 Self-coordinate with other products and systems

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
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 Effect of Smart, Connected Products on
Marketing Strategies
 Marketing strategists can secure new insights into how
products create value for customers by gathering and
analyzing product usage data
 By capitalizing on the rich data flows from customers,
managers can:
 Create product and service bundles that provide greater
value to each segment
 Price the bundles to capture a greater share of that value

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
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 Effect of Smart, Connected Products on
Marketing Strategies (continued)
 Product usage and performance data offer improvements in
predictive maintenance and service productivity
 Product data can signal existing and future problems and
enable firms to make timely equipment repairs

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 What is the framework
detailing the processes and
systems that drive strategy to
success?
 Figure 5.4 - The Management System

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
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 Tool 1: Balanced Scorecard
 Comprehensive system for converting a company’s
vision and strategy into a tightly connected set of
performance measures
 Combines financial measures of past performance
with measures of the drivers of performance

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
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 Figure 5.5 - Balanced Scorecard

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
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 Customer Perspective: Core Measures

Market share Represents the proportion of business in a given market

(in terms of number of customers, dollars spent, or unit
volume sold) that a business unit sells.

Customer acquisition Tracks, in absolute or relative terms, the rate at which a

business unit attracts or wins new customers or business.

Customer retention Tracks, in absolute or relative terms, the rate at which a

business unit retains customers.
Customer satisfaction Matches the satisfaction level of customers on specific
performance criteria such as quality, service, or on-time
delivery reliability.

Customer profitability Assesses the net profit of a customer, or segment, after

deducting the unique expenses required to support that
customer or segment.

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 Aligning Internal Business Processes to the
Customer Strategy

Customer Strategy The Focus of Internal Business Processes

Operations Customer Innovation

Management Relationship Management
Management

Low-total-cost Highly efficient Ease of access for Seek process

strategy operating customers; superb innovations gain
processes efficient, post-sales service scale economies
timely distribution

Product leadership Flexible Capture customer Disciplined, high-

strategy manufacturing ideas for new performance
processes rapid offering educate product
introduction of customers about development first-
new products complex new to-market
product/services

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
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 Aligning Internal Business Processes to the
Customer Strategy (continued)

Customer The Focus of Internal Business Processes

Strategy
Operations Management Customer Relationship Innovation
Management Management
Complete Deliver broad product/ Create customized Identify new
customer service line create solutions for customers opportunities to
solutions network of suppliers for build strong customer serve customers
strategy extended product/ service relationships develop anticipate future
capabilities customer knowledge customer needs

Lock-in Provide capacity for Create awareness Develop and enhance

strategies proprietary influence switching costs proprietary product
product/service reliable of existing and potential increase
access and ease of use customers breadth/applications
of standard

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 Tool 2: Strategy Map
 Tool for visualizing a firm’s strategy as a chain of
cause-and-effect relationships among strategic
objectives
 Enables an organization to describe and illustrate its
objectives, initiatives, and targets

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except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
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 Figure 5.6 - Strategy Map

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part,
except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or
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