MARKETING MANAGEMENT
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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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Marketing and Customer value
 Marketing involves satisfying consumers’ needs and
wants.The task of any business is to deliver customer
value at a profit.
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Figure 2.1 The Value Delivery Process
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The Value Delivery Process
 The traditional view of marketing is that the firm makes
something and then sells it.
 Will not work in economies where people face abundant choices
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The Value Delivery Process
 New belief: marketing begins with planning process.
 Value creation and delivery consists of three parts:
 Choosing the value (segment the market, define target
market, develop
 “offering”).
 2) Providing the value (product features, prices, and
distribution channels).
 3) Communicating the value (sales force, advertising, and
promotional tools).
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The Value Chain
 Michael Porter’s Value Chain identifies nine strategically relevant
activities that create value and costs (five primary and four support
activities).
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The Value Chain
 Primary activities:
 1) Inbound logistics (material procurement).
 2) Operations (turn into final product).
 3) Outbound logistics (shipping and warehousing).
 4) Marketing (marketing and sales).
 5) Servicing (service after the sale).
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The Value Chain
 Support activities:
 1) Procurement.
 2) Technology development.
 3) Human resource management.
 4) Firm infrastructure.
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Core business processes:
 The market sensing process (marketing intelligence).
 2) The new offering realization process (research and
development).
 3) The customer acquisition process (defining target markets and
consumers).
 4) The customer relationship management process (deeper
understanding of
 consumers).
 The fulfillment management process( receiving, shipping and
collecting payments)
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Value delivery network( Supply chain)
Strong companies develop superior capabilities in these core business
processes. Strong companies also reengineer the workflows and build
cross-functional teams responsible for each process. Many companies
have partnered with suppliers and distributors to create a superior
value-delivered network.
To be successful today, a firm must look for competitive advantages
beyond its own operations—to its suppliers and distributors to create
a superior value-delivery network (supply chain).
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CORE Competencies
 It has three characteristics
 It is a source of competitive advantage in that it makes
significant contribution to perceived customer benefits
 It has applications in a wide variety of market
 It is difficult for competitors to imitate
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The Central role of Strategic planning
 Successful marketing thus requires companies to have
capabilities such as understanding customer value,
creating customer value, delivering customer value,
capturing customer value, and sustaining customer
value. Only a select group of companies stand out
as master marketers: Procter & Gamble, Southwest
Airlines, Nike, Disney, Nordstrom,
Barnes & Noble, Starbucks, Wal-Mart,
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The Central role of Strategic planning
 To ensure that they select and execute the right activities,
marketers must give priority to strategic planning in three
key areas
 1) Managing a company’s businesses as an investment
portfolio.
 2) Assessing each business’s strength by the market’s growth
rate and the company’s position and fit in that market.
 3) Establish strategy.
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The Central role of Strategic planning
con’t
 Most large companies consist of four organizational levels:
1) Corporate level.
2) Division level.
3) Business unit level.
4) Product level.
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The Central role of Strategic planning
con’t
 The marketing plan is the central instrument for directing
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and coordinating the
marketing effort.
The marketing plan operates on two levels: strategic and
tactical.
1) The strategic marketing plan lays out target markets and
the value proposition.
2) The tactical marketing plan specifies the product,
promotion, merchandising, pricing, sales channels, and
service
CORPORATE AND DIVISION STRATEGIC
PLANNING
 All corporate headquarters undertake four planning
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activities:
1) Defining the corporate mission.
2) Establishing strategic business units (SBUs).
3) Assign resources to each SBU.
4) Assessing growth opportunities.
Defining the Corporate Mission
 A) Key questions to ask:
 1) What is our business?
 2) Who is the customer?
 3) What is of value to the customer?
 4) What will our business be?
 5) What should our business be?
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Good Mission Statements
 Focus on limited number of goals
 Stress major policies and values
 Define major competitive spheres
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Good Mission Statements
 Mission statements are best when guided by a “vision”
that provides direction for the company.
 Focus on limited number of goals
 Stress major policies and values
 Define major competitive spheres
 They take a long-term view
 A good mission statement is as short, memorable, and
meaningful as possible
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Motorola
“The purpose of Motorola is to honorably
serve the needs of the community by providing
products and services of superior quality at a
fair price to our customers; to do this so as to
earn an adequate profit which is required for
the total enterprise to grow; and by doing so,
provide the opportunity for our employees and
shareholders to achieve their personal
objectives.”
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eBay
“We help people trade anything on earth.
We will continue to enhance the online
trading experiences of all – collectors,
dealers, small businesses, unique item
seekers, bargain hunters, opportunity
sellers, and browsers.”
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Major Competitive Spheres
 Industry:
Some companies will operate in only one
industry; some only in a set of related
industries; some only in industrial goods, consumer goods, or
services; and some in any industry
 Products and applications:
Firms define the
range of products and applications they
will supply.
 Competence:
The firm identifies the range of
technological and other core competencies
it will master and leverage
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Major Competitive Spheres
 Market segment:
The type of market or customers a
company will serve is the market segment.
 Vertical: The vertical sphere is the number of channel
levels, from raw material to final product
and distribution, in which a company will participate.
 Geographical: The range of regions, countries, or
country groups in which a company
will operate defines its geographical sphere.
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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
 Profitability
 Efficiency
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Assessing Growth Opportunities
 A) Involves planning for new businesses.
 B) Downsizing or terminating old businesses.
 Intensive Growth
 Integrative Growth
 Diversification Growth
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The Strategic Planning Gap
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The Business Unit Strategic Planning
Process
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Goal Formulation and MBO
 Requirements for using MBO
 They must be arranged hierarchically, from
the most to
the least important.
 Objectives should be quantitative whenever possible.
 Goals should be realistic.
 Objectives must be consistent
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Porter’s Generic Strategies
 Overall cost leadership: To achieve the lowest production and
distribution cost so they can lower their price and capture large mkt share.
 Differentiation: Business concentration on uniquely achieving superior
performance in an important customer benefit area value by large part of mkt.
 Focus: Business focuses on one or more narrow segment. (pursue cost
leadership differentiation within target segment)
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Categories of Marketing Alliances
 Product or Service Alliances
 Promotional Alliances
 Logistics Alliances
 Pricing collaborations
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Product planning: The Nature and
content of marketing Plan
 A) Each product level (product line, brand) must develop a
marketing plan for achieving its goals. 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.
 B) Marketing plans are becoming more customer and
competitor orientated. The plan
draws more input from all the business functions and is team
developed.
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Marketing Plan Contents
 Executive summary
 Table of contents
 Situation analysis
 Marketing strategy
 Financial projections
 Implementation controls
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Evaluating Marketing Plan
 Is the plan simple?
 Is the plan specific?
 Is the plan realistic?
 Is the plan complete?
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