Chapter

2
Developing
Marketing
Strategies and Plans

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Learning Objectives
1. How does marketing affect customer value?
2. How is strategic planning carried out at the corporate
and divisional levels?
3. How is strategic planning carried out at the business
unit level?
4. What does a marketing plan include?

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 Marketing and customer Value
• The value delivery process

• The value chain

• Core competencies

• The central role of strategic planning

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The value delivery process/ value
creation is:
CHOOSING THE/ segment, select
target, develop offering value
proposition,

PROVIDING THE VALUE/ identify

product feature, price, distribution.

COMMUNICATING THE VALUE/

promoting through internet,
advertising, sales force.

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 The Value chain
• A tool for identifying ways to create more customer
value/ adding up values from raw material to
finished product.
– Every firm is a synthesis of activities performed to
design, produce, market, deliver, and support its
product.
– Related strategic activities:
1. inbound material logistics to business. 2. operations.
3. outbound final product logistics to customers. 4.marketing
5. services provided. 6. HRM 7. arrangement 8. technology
9. infrastructure: costs of mgt, planning, finance, legal.
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 Core business processes
• Market-sensing process/ market discovery
• New-offering realization process/ research and develop
the product, offer the product/
sampling test (pre commercialization).
• Customer acquisition process/ look after the target, gain
and retain your customers.
• Customer relationship management process/ build up
deep understanding of customers, and a long lasting
relationship.
• Fulfillment management process/marketing, receiving
orders, shipping, follow-up, collecting
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 Core competencies/ the competitive
advantage
• A source of competitive advantage and makes a
significant contribution to perceived customer
benefits
• Applications in a wide variety of markets
• Difficult for competitors to imitate
• Competitive advantage in:
the product. Human, channels, services,
technology.
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 Steps to Maximizing Core
competencies
• (Re)define the business concept/ review business
philosophy, mission and vision.

• (Re)shaping the business scope/ redesign your

business in terms of product and market.

• (Re)positioning the company’s brand identity/

Redesign value if it was changed. Make frequent
visits.COPYRIGHT © 2016 PEARSON
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 Central role of strategic planning
• Managing the businesses as an investment portfolio.
• Assessing the market’s growth rate and the
company’s position in that market
• Establishing a strategy
• Organization is consisted of four levels:
Corporate: design the overall strategy.
Division: to design plans for the business units.
Business unit: to design plans for the product.
Product line:
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 Marketing plan
• The central instrument for directing and
coordinating the marketing effort

– Strategic: Target decisions, Value proposition,

market opportunities. Done by the corporate level.
– Tactical: the Ps decisions.

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 Figure 2.1
Strategic Planning, Implementation,
and Control Processes

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 Corporate and division strategic
planning
• Defining the corporate mission GM

• Establishing strategic business units/ Buick

• Assigning resources to each strategic business

unit

• Assessing growth opportunities/ for the units

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 Defining the
corporate mission
• What is our business?
• Who is the customer?
• What is the meaning of value to the customer?
• What will our business be?
• What should our business be?
• Major competitive spheres:
industry. Product. Competence. Market
segment. Channels. Geographic coverage.:
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 Product Orientation vs.
Market Orientation
Company Product Market
Missouri-Pacific We run a railroad We are a people-
Railroad and-goods mover

Xerox We make copying We improve office

equipment productivity

Standard Oil We sell gasoline We supply energy

Columbia Pictures We make movies We market

entertainment

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 Good Mission statements
• Focus on a limited number of goals
• Stress the company’s major policies and values
• Define the major competitive spheres within
which the company will operate
• Take a long-term view
• Are as short, memorable, and meaningful as
possible

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 Establishing Strategic Business
Units
• A single business or collection of related
businesses/ Buick in GM.

• Has its own set of competitors

• Has a leader responsible for strategic planning

and profitability/ Officer.

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 Assigning Resources
to Each SBU
• Management must decide how to allocate
corporate resources to each SBU

– Portfolio-planning models/ (expand the concept).

– Shareholder/market value analysis/ financial

analysis on the corporate level or on business
units.

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Assessing growth opportunities

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 Assessing growth opportunities
• Intensive Growth

• Integrative Growth

• Diversification Growth

• Downsizing and Divesting Older Businesses

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 Intensive growth
• Corporate management should
first review opportunities for
improving existing businesses.
Market penetration st.
market development st.
Product development st.

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 Figure 2.3
ESPN Growth Opportunities

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 INTEGRATIVE GROWTH
• A business can increase sales and profits through
backward, forward, or horizontal integration
within its industry.
• Backward: take over supplier.
• Forward: take over distributors.
• Take over rivals.
• All are based on acquisition

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 Diversification growth
• Diversification growth makes sense when
good opportunities exist outside the present
businesses/ or current industry in saturated.

–The industry is highly attractive and the

company has the right mix of business
strengths to succeed
–Related product st.
–Unrelated product st.
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 Downsizing and Divesting Older
Businesses
• Companies must carefully prune (cut of), harvest,
or divest tired old businesses to release needed
resources for other uses and reduce costs/ most
likely economic, or tough competition.

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 Organization and Organizational
Culture
• A company’s organization consists of its structures,
policies, and corporate culture, all of which can
become dysfunctional in a rapidly changing business
environment

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 Organization and Organizational
Culture
• Corporate culture: “The shared experiences,
stories, beliefs, and norms that characterize an
organization”, values, the founder.

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 Marketing Innovation
• Innovation in marketing is critical

• Employees can challenge company orthodoxy

(taboo) and stimulate new ideas. (This is the
major disaster of the Arab world).

• Firms develop strategy by choosing their view

of the future
– Scenario analysis
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 Figure 2.4
The Business Unit
Strategic-planning Process

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 SWOT Analysis

Strengths

Weaknesses

Opportunities

Threats

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 External environment
• Marketing opportunity: an area of buyer need and
interest that a company has a high probability of
profitably satisfying.

• Environmental threat: challenge posed by an

unfavorable trend or development that, in the absence of
defensive marketing action, would lead to lower sales or
profit
Opportunities. Leave of rival.
Threats. Lowering import taxes and tariffs.
imposing more taxes and fees on products.
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 Market Opportunity Analysis
(MOA)
• Can we articulate the benefits convincingly to a defined
target market(s)? Can the opportunity be a market.?
• Can we locate the target market(s) and reach them with
cost-effective media and trade channels? Can the target
market be communicated with effectively?
• Does our company possess or have access to the critical
capabilities and resources we need to deliver the customer
benefits? Can the firm process the product efficiently and
effectively?

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 Market Opportunity Analysis
(MOA)
• Can we deliver the benefits better than any
actual or potential competitors? Can the firm
deliver the product competitively?

• Will the financial rate of return meet or exceed

our required threshold for investment? Does it
worth it financially?

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 Figure 2.5
Opportunity And Threat Matrices

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 Internal environment
• Strengths

• Weaknesses
• For all functions and activities.

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 Goal formulation (MBO)
• Unit’s objectives must be arranged hierarchically/
ROI 5%, sales +, expenses -,
salesforce training, enhance customer relation,
Just-in-time, wastes -.
• Objectives should be quantitative. #, %, ABC
• Goals should be realistic. Based on forecasting
• Objectives must be consistent
• Objectives as: profit, sale, market share,
reputation, survival, growth, innovation.
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 Strategic formulation:
Porter’ s Generic Strategies

OVERALL COST LEADERSHIP/ Make your costs of production

and distributing low.
.

DIFFERENTIATION/ Make your product differ

From rivals

FOCUS/ focus on one market or segment/ Niche

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 Strategic formulation:
Strategic alliances
• Categories of marketing alliances
– Product or service alliance/ outsourcing,
offshoring, giving a license or joint production..
One market outlet for two or more products..
– Promotional alliance/ joint promotion, one touristic
package (airlines). KFC and Pepsi..
– Logistics alliances/ shipping two or more
products.
– Pricing collaborations/ KFC and Pepsi. Traveling
package.
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 Program Formulation and
Implementation
• McKinsey’s Elements of Success/ Hardware and
software.
Skills Strategy

Staff Structure
Systems/
Style
MIS

Shared values

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 Feedback and control
• Peter Drucker: it is more important to “do the
right things”—to be effective—than “to do things
right”—to be efficient
Because environment change faster than the
firm, firm may stay efficient and lose
environment opportunity..
– The most successful companies, however, excel
at both, effective and efficient.
– It’s better doing the right thing in lower grade than
doing the wrong thing in higher grade.
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Marketing Plan Contents

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

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Evaluating a Marketing Plan

 Is the plan simple/succinct?

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

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 Other marketing plan contents
• Marketing research

• Specifications for internal and external

relationships/ internally between departments,
and externally with customers
• Action plans and schedules/ break down
strategy to action plans and programs. As
well budget, timeframe, schedules and
metrics. Copyright © 2016 Pearson Education, Inc. 2-42
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