2
Developing Marketing
Strategies and Plans
Developing Marketing
Strategies and Plans
A strategy is a theory about how to gain competitive
advantages. A good strategy is a strategy that
actually generates such advantages.
Strategic management is the process of specifying an
organizations objectives, developing policies and
plans to achieve these objectives, and allocating
resources so as to implement the plans.
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Levels of Goals/Plans & Their Importance
Mission
Statement
External Message
Legitimacy for
investors, customers,
suppliers, community
Strategic Goals/Plans
Senior Management
(Organization as a whole)
Tactical Goals/Plans
Middle Management
(Major divisions, functions)
Internal Message
Legitimacy,
motivation,
guides,
rationale,
standards
Operational Goals/Plans
Lower Management
(Departments, individuals)
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Strategic Goals and Plans
Strategic Goals
• Where the organization wants to be in the future
• Pertain to the organization as a whole
• Strategic Plans
• Action Steps used to attain strategic goals
• Blueprint that defines the organizational activities and
resource allocations
• Tends to be long term
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Levels of a Marketing Plan
• Strategic
• Target marketing
decisions
• Value proposition
• Analysis of
marketing
opportunities
• Tactical
•
•
•
•
•
•
Product features
Promotion
Merchandising
Pricing
Sales channels
Service
Developing Marketing Strategies and
Plans
Part 1: Marketing Value and Customer Value
1) The value delivery process
2) The value chain
3) Core competencies
4) A holistic marketing orientation and customer value
5) The central role of strategic planning
Part 2: Corporate and Division Strategic Planning
1) Defining the corporate mission
2) Defining the business
3) Assessing growth opportunities
4) Organization and organizational culture
Developing Marketing Strategies
and Plan
Part 3: Business Unit Strategic Planning
1) The business Mission
2) SWOT analysis
3) Goal Formulation
4) Strategic Formulation
5) Program Formulation and
Implementation
6) Feedback and Control
Developing Marketing Strategies and
Plan
Part 4: Product Planning: the Nature and Contents
of a Marketing Plan
1) Contents of the Marketing Plan
Hennes and Mauritz
Walk into a trendy Soho boutique in New York City and you might see high-fashion Tshirts selling for $250.
Go into an H&M clothing store and you can see a version of the same style for $25.
Founded 55 years ago as a provincial Swedish clothing company, H&M (Hennes and
Mauritz) has morphed into a clothing colossus with 950 stores in 19 countries and
an ambitious plan to expand by 100 stores a year.
The reason H&M has reached this point while so many other stores—such as once-hot
Italian retailer Benetton—have floundered is that the company has a clear mission
and the creative marketing strategies and concrete plans with which to carry it out.
"Our business concept is to give the customer unbeatable value by offering fashion and
quality at the best price," is the H&M mission as expressed on the company's Web
site.
Nothing could sound simpler. Yet, fulfilling that mission requires a well-coordinated set
of marketing activities.
Hennes and Mauritz
For instance, it takes H&M an average of three months
to go from a designer's idea to a product on a store
shelf, and that "time to market" falls to three weeks for
"high-fashion" products. H&M is able to put products
out quickly and inexpensively by:
1- having few middlemen and owning no factories
2-buying large volumes
3- having extensive experience in the clothing industry
4- having a great knowledge of which goods should be
bought from which markets
5- having efficient distribution systems
6- being cost-conscious at every stage
Nike
Critics of Nike often complain that its shoes cost almost nothing to
make yet cost the consumer so much.
True, the raw materials and manufacturing costs involved in the
making of a sneaker are relatively cheap, but marketing the
product to the consumer is expensive.
Materials, labor, shipping, equipment, import duties, and suppliers'
costs generally total less than $25 a pair.
Compensating its sales team, its distributors, its administration,
and its endorsers, as well as paying for advertising and R&D,
adds $15 or so to the total.
Nike sells its product to retailers to make a profit of $7. The
retailer therefore pays roughly $47 to put a pair of Nikes on the
shelf. When the retailer's overhead (typically $30 covering
personnel, lease, and equipment) is factored in along with • a
$10 profit, the shoe costs the consumer over $80.
Encyclopedia Britannica
http://corporate.britannica.com
The Encyclopædia Britannica was born in 18th-century Scotland amid the great intellectual
ferment known as the Scottish Enlightenment.
According to one chronicler of Britannica history, Edinburgh in the mid-1700s was "a city on
the verge of a golden age, a center of learning and a home of writers, thinkers, and
philosophers.“
The first edition of the Britannica was published one section at a time, over a three-year
period, beginning in 1768.
In 1990 Encyclopædia Britannica found itself in a precarious competitive environment. CDROMs and the internet had become the study tools of choice for students and others.
Microsoft’s Encarta CD-ROM and IBM’s CD-ROM joint venture World Book were attracting
Britannica’s customers.
The result book sales fell 83% between 1990-1997.
In 1994 the company developed Britannica Online, the first encyclopedia for the Internet,
which made the entire text of the Encyclopædia Britannica available worldwide. That
year the first version of the Britannica on CD-ROM was also published.
According to a company official: “we’re reinventing our business. We are not in the book
business. We’re in the information business.”
By the 2006, the company had become a premier information site on the internet (200,000)
subscribers and (150,000) web sites selected
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Part 1: Marketing Value and Customer Value
Marketing and Customer Value
• Marketing involves satisfying consumers' needs and wants.
• The task of any business is to deliver customer value at a profit.
• In a hypercompetitive economy with increasingly rational buyers faced
with abundant choices, a company can win only by fine-tuning the value
delivery process and choosing, providing, and communicating superior
value.
• The traditional view of marketing is that the firm makes something and
then sells it. In this view, marketing takes place in the second half of the
process.
• The company knows what to make and the market will buy enough units
to produce profits. Companies that subscribe to this view have the best
chance of succeeding in economies marked by goods shortages where
consumers are not fussy about quality, features, or style—for example,
with basic staple goods in developing markets.
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Part 1: Marketing Value and Customer Value
The value delivery process
Marketing and Customer Value
The value delivery process
• The traditional view of the business process, however, will
not work in economies where people face abundant choices.
• The smart competitor must design and deliver offerings for
well-defined target markets.
• This belief is at the core of the new view of business
processes, which places marketing at the beginning of
planning.
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Part 1: Marketing Value and Customer Value
The value delivery process
Marketing and Customer Value
The value delivery process
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Part 1: Marketing Value and Customer Value
The value delivery process
Marketing and Customer Value
The Japanese have further refined this view with the following concepts:
•
•
•
•
•
Zero customer feedback time. Customer feedback should be collected
continuously after purchase to learn how to improve the product and its
marketing.
Zero product improvement time. The company should evaluate all
improvement ideas and introduce the most valued and feasible
improvements as soon as possible.
Zero purchasing time. The company should receive the required parts and
supplies continuously through just-in-time arrangements with suppliers. By
lowering its inventories, the company can reduce its costs.
Zero setup time. The company should be able to manufacture any of its
products as soon as they are ordered, without facing high setup time or
costs.
Zero defects. The products should be of high quality and free of flaws.
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Part 1: Marketing Value and Customer Value
2) The Value Chain
Michael Porter of Harvard has proposed the value chain as
a tool for identifying ways to create more customer
value.
According to this model, every firm has combination of
activities performed to design, produce, market, deliver,
and support its product.
The value chain identifies nine strategically relevant
activities that create value and cost in a specific
business.
These nine value-creating activities consist of five
primary activities and four support activities.
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Part 1: Marketing Value and Customer Value
2) The Value Chain
The primary activities cover the sequence of:
1) bringing materials into the business (inbound
logistics),
2) converting them into final products (operations),
3) shipping out final products (outbound logistics),
4) marketing them (marketing and sales), and
5) servicing them (service).
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Part 1: Marketing Value and Customer Value
2) The Value Chain
The support activities:
1) technology development,
2) human resource management,
3) firm infrastructure—are handled in certain
specialized departments, as well as elsewhere.
4) Procurement and hiring
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Part 1: Marketing Value and Customer Value
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Part 1: Marketing Value and Customer Value
2) The Value Chain
Core Business Processes Include:
1) The market sensing process.
2) The new offering realization process. All the activities
involved in researching, developing, and launching new high-quality
offerings quickly and within budget.
3) The customer acquisition process. All the activities involved
in defining target markets and prospecting for new customers.
4) The customer relationship management process.
5) The fulfillment management process. All the activities
involved in receiving and approving orders, shipping the goods on
time, and collecting payment.
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Part 1: Marketing Value and Customer Value
3) Core Competencies (page 39)
To be successful, a firm also needs to look for competitive
advantages beyond its own operations, into the value chains of
suppliers, distributors, and customers.
Value delivery network also called A supply Chain
To carry out its core business processes, a company needs
resources.
In the past companies controlled most of the resources
Change regarding this concept is changing
Many companies today have partnered with specific suppliers
and distributors to create a superior value delivery network also
called a supply chain.
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3) Core Competencies
• To carry out its core business processes, a company
needs resources—labor power, materials, machines,
information, and energy.
• Traditionally, companies owned and controlled most of the
resources that entered their businesses, but this situation
is changing.
• Many companies today outsource less critical resources if
they can be obtained at better quality or lower cost.
• Frequently, outsourced resources include cleaning
services, landscaping, and auto fleet management. Kodak
even turned over the management of its data processing
department to IBM.
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4) 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.
Holistic Marketing Framework
The holistic marketing framework is designed to
address three key management questions:
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?
A Holistic Marketing Orientation And
Customer Value
A Holistic Marketing Orientation And Customer Value
VALUE EXPLORATION
VALUE EXPLORATION Because value flows within and
across markets that are themselves dynamic and
competitive, 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. The customer's cognitive
space reflects existing and latent needs and includes
dimensions such as the need for participation, stability,
freedom, and change
A Holistic Marketing Orientation And Customer Value
VALUE CREATION
To exploit a value opportunity, the company needs valuecreation skills. Marketers need to:
1) identify new customer benefits from the customer's
view;
2) utilize core competencies from its business domain;
and
3) select and manage business partners from its
collaborative networks.
•
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
VALUE DELIVERY
• 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.
• Customer relationship management fallows 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.
Developing Marketing Strategies and Plan
5) The Central Role of Strategic Planning
Companies should have the capabilities to:
1) understanding customer value,
2) creating customer value,
3) delivering customer value,
4) capturing customer value, and
5) sustaining customer value.
5) The Central Role of Strategic Planning
Only a handful of companies stand out as master
marketers: Procter & Gamble, Southwest Airlines,
Nike, Disney, Nordstrom, Wal-Mart, McDonald's,
Marriott Hotels, and several Japanese (Sony,
Toyota, Canon) and European (IKEA, Club Med,
Bang & Olufsen, Electrolux, Nokia, Lego, Tesco)
companies
These companies focus on the customer and are:
1)organized to respond effectively to changing customer
needs.
2)have well-staffed marketing departments, and
3) all their other departments—manufacturing, finance,
research and development, personnel, purchasing—
also accept the concept that the customer is king.
Part 2: Corporate and Division Strategic Planning
Part 2: Corporate and Division Strategic Planning
1)
2)
3)
4)
Defining the corporate mission
Defining the business
Assessing growth opportunities
Organization and organizational culture
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Part 2: Corporate and Division Strategic Planning
What is Strategic Planning?
 It is the managerial process that helps to
develop a strategic and viable fit between
the firm’s objectives, skills, resources
with the market opportunities available.
 It helps the firm deliver its targeted
profits and growth through its
businesses and products.
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Part 2: Corporate and Division Strategic Planning
Strategic Planning calls for
Action in three key areas?
1. managing a company's businesses as
an investment portfolio.
2. assessing each business's strength by
considering the market's growth rate
and the company's position and fit in
that market.
3. establishing a strategy For each
business.
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Understanding Marketing Management
To understand marketing management, we
must understand strategic planning.
Most large companies consist of four
organizational levels:
1) the corporate level,
2) the division level,
3) the business unit level, and
4) the product level.
Understanding Marketing
Management
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) within a
business unit develops a marketing plan for achieving its
objectives in its product market.
Part 2: Corporate and Division Strategic
Planning
A marketing plan is the central
instrument for directing and
coordinating the marketing effort. It
operates at a strategic and tactical
level.
planning, implementation, and control cycle
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1)
Defining the corporate mission
How to go about it?




Defining the corporate mission
Establishing SBUs
Allocating resources for SBUs
Planning for new business
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Corporate Mission
 This seeks to embody the entire goals
of the organization and the objective of
its existence.
 It seeks to provide a sense of purpose,
direction and opportunity
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Defining the Corporate Mission
According to Peter Drucker, it is time to ask some
fundamental 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? Successful companies
continuously raise these questions and answer
them thoughtfully and thoroughly.
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5 questions that the firm must
ask itself





What is our business?
Who is our customer?
What does our customer need?
What will our business be?
What should our business be?
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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.
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Good mission Statements
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.
Fred Smith wanted to deliver mail anywhere
in the United States before 10:30 A.M. the
next day, so he created FedEx.
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Rubbermaid Commercial Products, Inc.
“Our vision is to be the Global Market Share
Leader in each of the markets we serve. We
will earn this leadership position by
providing to our distributor and end-user
customers innovative, high-quality, costeffective and environmentally responsible
products. We will add value to these products
by providing legendary customer service
through our Uncompromising Commitment
to Customer Satisfaction.”
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.”
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.”
Good Mission Statements
1. focus on a limited number of goals. The
statement, "We want to produce the highest-quality products, offer the most
service, achieve the widest distribution, and sell at the lowest prices" claims too
much.
2. stress the company's major policies and
values.
3. define the major competitive spheres
within which the company will operate
Major Competitive Spheres
•
•
•
•
•
•
Industry
Products
Competence
Market segment
Vertical channels (Ford)
Geographic
Defining the Business
Companies often define their businesses
in terms of products:
They are in the "auto business" or the
"clothing business."
Defining the Business
A business must be viewed as a customersatisfying process, not a goods-producing
process.
Products are transient; basic needs and customer
groups endure forever. Transportation is a
need: the horse and carriage, the automobile,
the railroad, the airline, and the truck are
products that meet that need.
Dimensions that Define a Business
• Customer groups
• Customer needs
• Technology
Table 2.2
Product Orientation vs. Market Orientation
Company
Product
Market
Missouri-Pacific
Railroad
We run a railroad
We are a peopleand-goods mover
Xerox
We make copying
equipment
We improve office
productivity
Standard Oil
We sell gasoline
We supply energy
Columbia Pictures
We make movies
We entertain
people
Strategic Business Units
The purpose of identifying the company's
strategic business units is to develop separate
strategies and assign appropriate funding.
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SBU has three characteristics:
1. It is a single business or collection of related
businesses that can be planned separately 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 and profit performance and
who controls most of the factors affecting profit.
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Assessing Growth Opportunities
1. planning new businesses,
2. downsizing, or
3. terminating older businesses.
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Assessing Growth Opportunities
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Assessing Growth Opportunities
1.
2.
3.
4.
INTENSIVE GROWTH
Integrative Growth
Diversification Growth
Downsizing and Divesting
Older Business
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Assessing Growth Opportunities
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Assessing Growth Opportunities
1. market-penetration strategy The
company first considers whether it could
gain more market share with its current
products in their current markets .
2. market-development strategy the
company considers whether it can find or
develop new markets for its current
products.
3. product-development strategy the
company considers whether it can
develop new products of potential interest
to its current markets
4. diversification strategy the company will
also review opportunities to develop new
products for new markets.
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Four market-product strategies: alternative ways to expand
sales revenues for Ben & Jerry’s
Slide 2-27
Success Probability for each of the 4 basic
strategies:
Diversification strategy 1 in 20
Market-development Strategy is 1 in 4
Product-development strategy 50-50
Market-penetration is the highest
Business Unit Strategic Planning

Strategic planning:
 Developing a strategic fit between
 organizational goals and capabilities, and
 changing marketing opportunities
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Ben & Jerry’s: a SWOT analysis to get it growing again
Slide 2-34
Business Portfolio Analysis
• Cash Cows – SBU’s that have a high market
share of a low sales growth market.
• Stars – SBU’s that have a high market share of
a high sales growth market.
• Question marks – SBU’s that have a low market
share of a high sales growth market.
• Dogs – SBU’s that have a low market share of a
low sales growth market.
IV. Strategic Marketing Process
Process whereby an organization
allocates it marketing mix resources to
reach its target markets.
Planning
Implementation
Evaluation
Planning Phase – Situation Analysis
• This is a complete analysis of the firm’s
situation which assesses internal strengths
and weaknesses and external threats and
opportunities (SWOT)
• Internal analysis (controllable factors) –
assess the firm itself to identify strengths
and weaknesses
• External analysis (uncontrollable factors) –
assess the firm’s external environment to
identify opportunities and threats
Planning Phase – Marketing
Objectives
• Specific levels of performance desired
for a product or product line to be
achieved by a given date.
• Stated in terms of market share, sales,
profit
• Should be measureable, attainable,
specific, and consistent with
organizational objectives
Planning Phase: Product
Positioning
• The process where marketers try to
create a product image or identity in the
minds of their target market relative to
competitive products.
Implementation Phase
• Process of putting the marketing plan
into action.
• Involves great attention to detail
Evaluation
• Involves measuring the results of the
actions from the implementation phase
and comparing them with goals set in
the planning phase.
sales analysis
market share analysis
expense to sales analysis
SBU
Establishing Strategic Business Units
A business can be defined in terms of three
dimensions: customer groups, customer needs, and
technology.
 It is a company within a company
 The business is differentiated from the rest of the
company
 It has its own set of competitors
 It is a separate profit centre
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Assigning Resources to SBUs
The purpose of identifying the company’s strategic
business units is to develop separate strategies
and assign appropriate funding to the entire
business portfolio.
Senior managers generally apply analytical tools to
classify all of their SBUs according to profit
potential. Two of the best-known business portfolio
evaluation models are the Boston Consulting Group
model and the General Electric model.
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SWOT Analysis




Strengths
Weaknesses
Opportunities
Threats
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The Mission
• Mission; the organization’s reason for
existing.
• Mission Statement;
• states the basic business scope and
operations
• may include the market and customers
• some may describe company values,
product quality, attitudes toward
employees
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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
Good Mission Statements
•
•
•
•
•
Focus on a limited number of goals
Stress major policies and values
Define major competitive spheres
Take a long-term view
Short, memorable, meaningful
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
Ansoff’s Product-Market
Expansion Grid
•
•
•
•
Market penetration strategy
Market development strategy
Product development strategy
Diversification strategy
Ansoff’s Product-Market
Grid
Current products
Current Mkts
New Mkts
Mkt penetration
strategy
Mkt development
strategy
New products
Product development
strategy
Diversification
strategy
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The Planning Process




Analysing Market opportunities
Developing Marketing strategies
Planning Marketing Programs
Managing the Marketing Effort
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Marketing Control
 Annual Plan control
 Profitability control
 Strategic Control
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Market-oriented strategic
planning
Market-oriented strategic is the managerial process
of developing and maintaining a viable fit among
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 and keep the
company healthy despite any unexpected threats
that may arise.
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What is Corporate Culture?
Corporate culture is the shared
experiences, stories, beliefs, and norms
that characterize an organization.
SWOT Analysis
•
•
•
•
Strengths
Weaknesses
Opportunities
Threats
Goal Formulation
Once the company has performed a SWOT analysis, it can proceed to
develop specific goals for the planning period.
•
•
•
•
Unit’s objectives must be hierarchical
Objectives should be quantitative
Goals should be realistic
Objectives must be consistent
Market Opportunity Analysis (MOA)
• Can the benefits involved in the opportunity
be articulated convincingly to a defined target
market?
• Can the target market be located and
reached with cost-effective media and trade
channels?
• Does the company possess or have access
to the critical capabilities and resources
needed to deliver the customer benefits?
Strategic Formulation
1) Porter’s Generic Strategies
• Overall cost leadership
• Differentiation
• Focus
2) Strategic Alliances
There are four forms of MDS.
1) Exporting
2) Licensing
3) Joint Venture
4) Direct Investment
Marketing Plan Contents
 Executive summary
 Table of contents
 Situation analysis
 Marketing strategy
 Financial projections
 Implementation controls
Evaluating a Marketing Plan
 Is the plan simple?
 Is the plan specific?
 Is the plan realistic?
 Is the plan complete?