Chapter 02: Developing Marketing Strategies And Plans

Front 1

Value delivery process Steps

Back 1

1. Choosing the value
2. Providing the value
3. Communicating the value

Front 2

What is Value Delivery Process?

Back 2

1. The first phase, choosing the value, represents the "homework" marketing must do before any product exists. The marketing staff must segment the market, select appropriate market target, and develop the offering's value positioning. The formula "segmentation,
targeting, positioning (STP)" is the essence of strategic marketing.
2. Once the business unit has chosen the value, the second phase is providing the value. Marketing must determine specific product features, prices, and distribution.
3. The task in the third phase is communicating the value by utilizing the sales force, sales promotion, advertising, and other communication tools to announce and promote the product. Each of these value phases has cost implications.

Front 3

Example of Value Delivery Process?

Back 3

Nike. Raw materials cost less. But Marketing, Branding, etc. adds to price.

Front 4

What is a value chain?

Back 4

Michael Porter of Harvard has proposed the value chain as a tool for identifying ways to create
more customer value. every firm is a synthesis of activities performed to design, produce, market, deliver, and support its product.

Front 5

What are the 9 value-creating activities?

Back 5

Primary activities:
1. inbound logistics
2. operations
3. oubound logistics
4. marketing and sales
5. service

Support Activities:
6. procurement
7. technology development
8. human resource management
9. firm infrastructure

Front 6

The firm's success depends not only on how well each department performs its work, but also on how well the various departmental activities are coordinated to conduct core business
processes. What are they?

Back 6

• The market sensing process. All the activities involved in gathering market intelligence, disseminating it within the organization, and acting on the information.
• The new offering realization process. All the activities involved in researching, developing,
and launching new high-quality offerings quickly and within budget. a The customer acquisition process. All the activities involved in defining target markets and prospecting for new customers.
• The customer relationship management process. All the activities involved in building deeper understanding, relationships, and offerings to individual customers.
• The fulfillment management process. All the activities involved in receiving and approving orders, shipping the goods on time, and collecting payment.

Front 7

The holistic marketing framework is designed to address three key management questions:

Back 7

1. Value exploration - How can a company identify new value opportunities?
2. Value creation- flow can a company efficiently create more promising new value offerings?
3. Value delivery- How can a company use its capabilities and infrastructure to deliver the new value offerings more efficiently?

Front 8

VALUE EXPLORATION

Back 8

companies need a well-defined strategy for value exploration.
Developing such a strategy requires an understanding of the relationships and interactions among three spaces: (1) the customer's cognitive space; (2) the company's competence space; and (3) the collaborator's resource space.

Front 9

Customer's cognitive space?

Back 9

Customer's cognitive space reflects existing and latent needs and includes dimensions such as the need for participation,
stability, freedom, and change

Front 10

Company's competency space?

Back 10

The company's competency space can be described in terms of breadth—broad versus focused scope of business; and depth—physical
versus knowledge-based capabilities

Front 11

Collaborator's resource space?

Back 11

The collaborator's resource space involves horizontal
partnerships, where companies choose partners based on their ability to exploit related market opportunities, and vertical partnerships, where companies choose partners based on their ability to serve their value creation.

Front 12

VALUE CREATION

Back 12

To craft new customer benefits, marketers must understand what the customer thinks about, wants, does, and worries about. Marketers must also observe who customers admire, who they interact with, and who influences them.

Business realignment may be necessary to maximize core competencies.

Requires three steps:
(1) (re)defining the business concept (the "big idea");
(2) (re)shaping the business
scope (the lines of business); and
(3) (re)positioning the company's brand identity (how customers should see the company).

Front 13

VALUE DELIVERY

Back 13

Delivering value often means substantial investment in infrastructure and capabilities. The company must become proficient at customer relationship management,
internal resource management, and business partnership management.

Front 14

Customer relationship management

Back 14

allows the company to discover who its customers are, how they behave, and what they need or want. It also enables the company to respond appropriately,
coherently, and quickly to different customer opportunities.

Front 15

Internal resource management

Back 15

To integrate major business processes (e.g., order processing, general ledger, payroll, and production) within a single family of software modules to respond effectively.

Front 16

Business partnership management?

Back 16

business partnership management allows the company
to handle complex relationships with its trading partners to source, process, and deliver products.

Front 17

VIEWS ON MARKETING FROM CHIEF EXECUTIVE OFFICERS

Back 17

• Doing more with less. CEOs need and expect all areas of their organizations to be more efficient; CMOs indicate that they anticipate
that their budgets will grow.
• Driving new business development. CEOs want marketing to play a more active role in driving new business development—not just new products but also new markets, channels, lines of business; CMOs cited new-product development as their primary concern.
• Becoming a full business partner. CEOs look for marketing to become a more central business partner that helps to drive profits;
CMOs are unsure that their groups have the skills to do so.

Front 18

What is a marketing plan?

Back 18

The marketing plan is the central instrument for directing and coordinating the marketing
effort. The marketing plan operates at two levels: strategic and tactical. The strategic marketing plan lays out the target markets and the value proposition that will be offered, based on an analysis of the best market opportunities. The tactical marketing plan specifies the marketing tactics, including product features, promotion, merchandising, pricing, sales channels, and service.

Front 19

Stateging Planning Implementation and Control Steps

Back 19

Planning, Implementing and Controlling

Front 20

What are the four main planning activities?

Back 20

1. Defining the corporate mission
2. Establishing strategic business units
3. Assigning resources to each SBU
4. Assessing growth opportunities

Front 21

Corporate Mission?

Back 21

Mission statements are at their best when they reflect a vision, an almost "impossible dream" that provides a direction for the company for the next 10 to 20 years.
Organizations develop mission statements to share with managers, employees, and (in many cases) customers. A clear, thoughtful mission statement provides employees with a shared sense of purpose, direction, and opportunity. The statement guides geographically dispersed employees to work independently and yet collectively toward realizing the organization's
goals.

Front 22

Good mission statements have what three major characteristics?

Back 22

1. First, they focus on a limited number of goals.
2. Second, mission statements stress the company's major policies and values.
3. Third, they define the major competitive spheres within which the company
will operate: Industry, Products and applications, Competence, Market segment, Vertical, Geographical

Front 23

What is a target market definition?

Back 23

A target market definition tends to focus on selling a product or service. Pepsi - Pepsi could define its target market as everyone who drinks a cola beverage
and competitors would therefore be other cola companies.

Front 24

What is a strategic market definition?

Back 24

A strategic market definition
could be everyone who might drink something to quench his or her thirst.

Front 25

What is an SBU?

Back 25

Strategic Business Unit

Front 26

SBU's three characteristics?

Back 26

1. It is a single business or collection of related businesses from the rest of the company.
2. It has its own set of competitors.
3. It has a manager who is responsible for strategic planning who controls most of the factors affecting profit.

Front 27

How does one assess Growth Opportunities?

Back 27

The first option is to identify opportunities to achieve further growth within current businesses
(intensive opportunities). The second is to identify opportunities to build or acquire businesses that are related to current businesses integrative opportunities). The third is to identify opportunities to add attractive businesses that are unrelated to current businesses (diversification opportunities).

Front 28

INTENSIVE GROWTH?

Back 28

The company first considers whether it could gain more market share with its current products in their current markets (market-penetration strategy). Next it considers whether it can find or develop new markets for its current products (market-development strategy). Then it considers whether it can develop new products of potential interest to its current markets (product-development strategy). Later it will also review opportunities to develop new products for new markets (diversification strategy).

Front 29

What is "product-market expansion grid"?

Back 29

a useful framework for detecting new intensive growth opportunities called a "product-market expansion grid". Corporate management's first course of action should be a review of opportunities for improving existing businesses.

Front 30

INTEGRATIVE GROWTH

Back 30

A business's sales and profits may be increased through backward,
forward, or horizontal integration within its industry.

The company might acquire one or more of its suppliers (such as plastic material producers) to gain more control or generate more profit (backward integration). It might acquire some wholesalers or retailers, especially
if they are highly profitable (forward integration). Finally, Musicale might acquire one or more competitors, provided that the government does not bar this move (horizontal integration).

Front 31

Diversification growth?

Back 31

Diversification growth makes sense when good opportunities
can be found outside the present businesses. A good opportunity is one in which the industry is highly attractive and the company has the right mix of business strengths to be successful.

Front 32

Types of Diversification Growth?

Back 32

Several types of diversification are possible.

First, the company could seek new products
that have technological or marketing synergies with existing product lines, even though the new products themselves may appeal to a different group of customers (concentric strategy)

Second, the company might search for new products that could appeal to current customers even though the new products are technologically unrelated to its current product line (horizontal strategy).

Finally, the company might seek new businesses that have no relationship to its current technology, products, or markets (conglomerate strategy).

Front 33

DOWNSIZING AND DIVESTING OLDER BUSINESSES

Back 33

Companies must not only develop new businesses; they must also carefully prune, harvest, or divest tired old businesses in order to release needed resources and reduce costs. Weak businesses require a disproportionate
amount of managerial attention. Managers should focus on growth opportunities, and not fritter away energy and resources trying to salvage hemorrhaging businesses.

Front 34

What is a corporate culture?

Back 34

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

Front 35

Clash of Corporate Cultures Example?

Back 35

Daimler-Chrysler

Front 36

Strategic Formulation:

Back 36

Consists of a marketing strategy, and a compatible technology strategy and sourcing strategy.

Front 37

Generic Stategies

Back 37

• Overall cost leadership.
• Differentiation.
• Focus.

Front 38

Strategic Alliances?

Back 38

Companies are also discovering that they need strategic partners
if they hope to be effective. Even giant companies—AT&T, IBM, Philips, Siemens—often cannot achieve leadership, either nationally or globally, without forming alliances with domestic or multinational companies that complement or leverage their capabilities and resources.

Front 39

Marketing Alliances?

Back 39

Strategic Alliances take form of Marketing Alliances.

1. Product or service alliances - One company licenses another to produce
two companies jointly market their complementary products or a new instance, H&R Block and Hyatt Legal Services—two service businesses—together in a marketing alliance.
2. Promotional alliances- One company agrees to carry a promotion company's
product or service. McDonald's, for example, has often teamed up offer products related to current Disney films as part of its meals for children.
3. Logistics alliances- One company offers logistical services for another product.
For example, Abbott Laboratories warehouses and delivers all of 3M's surgical products to hospitals across the United States.
4. Pricing collaborations - One or more companies join in a special pricing Hotel and rental car companies often offer mutual price discounts.

Front 40

What are problems of measuring profit performance of a company with ROI (Return on Investment)?

Back 40

1. Profits are arbitrarily measured and subject to manipulation. Cash flow is more important. As someone observed: "Profits are a matter of opinion; cash is a fact." 2. Investment ignores the real value of the firm. More of a company's
value resides in its intangible marketing assets—brands, market knowledge, customer relationships, and partner relation-ships—than in its balance sheet. These assets are the drivers of long-term profits.

Front 41

What is a marketing plan about?

Back 41

A marketing plan is a written document that summarizes what the marketer has learned about the marketplace and indicates how the firm plans to reach its marketing objectives.
It contains tactical guidelines for the marketing programs and financial allocations over the planning period. It is one of the most important outputs of the marketing process.

Front 42

Contents of the Marketing Plan

Back 42

• Executive summary and table of contents.
• Situation analysis.
• Marketing strategy.
• Financial projections.
• Implementation controls.

Front 43

MARKETING PLAN CRITERIA?

Back 43

1. Is the plan simple? Is it easy to understand and act on? Does it communicate its content easily and practically?
2. Is the plan specific? Are its objectives concrete and measurable?
Does it include specific actions and activities, each with specific dates of completion, specific persons responsible, and specific budgets?
3. Is the plan realistic? Are the sales goals, expense budgets, and milestone dates realistic? Has a frank and honest self-critique been conducted to raise possible concerns and objections?
4. Is the plan complete? Does it include all the necessary elements?

Front 44

Summary 1

Back 44

The value delivery process involves choosing (or identifying),
providing (or delivering), and communicating superior
value. The value chain is a tool for identifying key activities that create value and costs in a specific business.

Front 45

Summary 2

Back 45

Strong companies develop superior capabilities in managing
core business processes such as new-product realization,
inventory management, and customer acquisition and retention. Managing these core processes effectively means creating a marketing network in which the company works closely with all parties in the production and distribution chain, from suppliers of raw materials to retail distributors. Companies no longer compete—marketing networks do.

Front 46

Summary 3

Back 46

According to one view, holistic marketing maximizes value exploration by understanding the relationships between the customer's cognitive space, the company's competence
space, and the collaborator's resource space; maximizes
value creation by identifying new customer benefits from the customer's cognitive space, utilizing core competencies
from its business domain, and selecting and managing
business partners from its collaborative networks; and maximizes value delivery by becoming proficient at customer relationship management, internal resource management, and business partnership management.

Front 47

Summary 4

Back 47

Market-oriented strategic planning is the managerial process of developing and maintaining a viable fit between the organization's objectives, skills, and resources and its changing market opportunities. The aim of strategic planning
is to shape the company's businesses and products so that they yield target profits and growth. Strategic planning
takes place at four levels: corporate, division, business
unit, and product.

Front 48

Summary 5

Back 48

The corporate strategy establishes the framework within which the divisions and business units prepare their strategic plans. Setting a corporate strategy entails four activities: defining the corporate mission, establishing strategic business units (SBUs), assigning resources to each SBU based on its market attractiveness and business strength, and planning new businesses and downsizing older businesses.

Front 49

Summary 6

Back 49

Strategic planning for individual businesses entails the following
activities: defining the business mission, analyzing external opportunities and threats, analyzing internal strengths and weaknesses, formulating goals, formulating strategy, formulating supporting programs, implementing the programs, and gathering feedback and exercising control.

Front 50

Summary 7

Back 50

Each product level within a business unit must develop a marketing plan for achieving its goals. The marketing plan is one of the most important outputs of the marketing process.