2

DEVELOPING AND IMPLEMENTING

MARKETING STRATEGIES AND
PLANS


( CLO 1 & CLO 3)

Marketing Management
2.0 Chapter Objectives
In this chapter, we examine the following
questions:
How is strategic planning carried out at
the corporate and division levels?
How is planning carried out at the
business unit level?
1-3
2.1 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.

2.1 Marketing and Customer
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
1-5
Marketing and Customer Value

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.
2.1.1 The value delivery process
Copyright 2009
Pearson Education, Inc. Publishing as Prentice Hall
Nike Creates Value
Sell the product
The Value-Delivery Process
Make the product
Procure
Design
product
Make Price Sell
Advertise/
promote
Distribute Service
Choose the Value Provide the Value Communicate the Value
(a) Traditional physical process sequence
(b) Value creation & delivery sequence
Strategic marketing
Tactical marketing
Value delivery process
The value creation and delivery sequence. The process consists of
three parts.
The first phase : Choosing the value represent the homework
marketing staff must do before any product exists.
The marketing staff
segment the market
Select appropriate market target
Develop the offerings value positioning
- Segmentation, targeting and positioning ( essence of strategic
marketing)
Second Phase : Providing The Value
Determine specific product features,
price and distribution
Third Phase :Communicating The Value
Utilizing the sales forces, sales promotion,
advertising and other communication
tools to announce and promote the
product.
What is the Value Chain?
The value chain is a tool for identifying
ways to create more customer value
because every firm is a synthesis of
primary and support activities performed to
design, produce, market, deliver, and
support its product.
Figure 2.2 Porters Value Chain
According to this model, every firm is a
synthesis of activities performed to
design, produce, market, deliver and
support its product.
The value chain identified nine ( 9)
strategically relevant activities five ( 5)
primary activities and four support
activities that create value and cost in a
specific business.
The Primary Activities cover the sequence of
bringing materials into the business ( inbound
logistics), Converting them into final products (
Operation), Shipping out final products (
Outbound logistics), marketing them (
marketing and sales) and servicing them (
services)
The Support Activities procurement, technology
development, human resource management and
firm infrastructure are handled in certain
specialized department.
The firms infrastructure covers the costs
of general management, planning, finance,
accounting , legal and government affairs.
Characteristics of Core Competencies
A source of competitive advantage
Applications in a wide variety of markets
Difficult to imitate
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.
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?
Holistic marketing orientation and
customer value
The Holistic Marketing
Framework
Value Exploration How can a company
identify new value opportunities
Value Creation How can a company
efficiently create more promising new
value offerings?
Value Delivery How can a company use its
capabilities and infrastructure to deliver
the new value offerings more efficiently
Describe the strategic planning at the corporate
and division level
1-25
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
1-26
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.
1-27
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?
1-28

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.
1-29

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.
Good mission Statements

Fred Smith wanted to deliver mail anywhere
in the United States before 10:30 A.M. the
next day, so he created FedEx.
Good Mission Statements
Focus on limited number of goals
Stress major policies and values
Define major competitive spheres
Take a long-term view
Short, memorable, meaningful
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, cost-
effective 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 allcollectors,
dealers, small businesses, unique item
seekers, bargain hunters, opportunity
sellers, and browsers.
Elements to Ensure Mission Success
History Every company has a history of aims, policies and achievements. The organization
must not depart too radically from its past history.

Current Preference of the owners and management - The current management style will
influence the formation of thought fit the companys mission. For Instance , SONY management
want to exit from the business that related to television- receiver business

The market environment The growth in the firm is due to a market factor, then it may be
related with the formation of the companys mission. For instance , Electronic Natsteel Companys
growth performance due to outsourcing then the mission its company can be
Partnering with Technological Leaders in the Global supply chain relationship

Resource The organizations resource determine which mission are possible. For instance,
Singapore Airlines would be deluding itself if it adopted the mission of becoming the worlds
largest airlines.

Distinctive competence The organization should base its mission on what it does best. For
instance Japans Honda has nurtured its major core competence namely making engines. Its
skill at designing and improving engines has been the basis of its move into such products as
motorcycles, automobiles or lawnmowers

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 customer-
satisfying 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.

Copyright 2009 Pearson
Education, Inc. Publishing as Prentice Hall
Dimensions That Define a Business
Customer
groups
Technology
Customer
needs
Corporate Headquarters
Planning Activities
Define the corporate mission
Establish strategic business units
(SBUs)
Assign resources to each SBU
Assess growth opportunities

1-39
Strategic Business Units

The purpose of identifying the
company's strategic business units
is to develop separate strategies
and assign appropriate funding.

2-40
Strategic Planning:
Frame the Picture
Very large multiproduct firms may have
divisions called strategic business units
(SBUs)
SBUs operate like separate businesses with
their own mission, business objectives,
resources, managers, and competitors
Strategic planning is done at both the
corporate and SBU levels
Strategic Business Units (SBUs)
Large firms like
the Walt Disney
Company usually
operate several
SBUs. Disney
SBUs include
theme parks,
movie studios,
TV networks, and
cruise line
Characteristics of SBUs
It is a single business or collection of
related businesses
It has its own set of competitors
It has a leader / manager responsible for
strategic planning and profitability and Efficiency


1-43
Assigning Resources to SBUs
The purpose of identifying the companys 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.
Figure 2.5 The Business Unit
Strategic Planning Process
Strategic planning:
Developing a strategic fit between
organizational goals and capabilities, and
changing marketing opportunities
Copyright 2009 Pearson
Education, Inc. Publishing as
Prentice Hall
2-45
Strategic Planning Step 1:
Define the Mission
Answer three key questions:
What business are we in?
What customers should we serve?
How do we develop firms capabilities and
focus its efforts?
Mission statement:
A formal document that describes the firms
overall purpose and what it hopes to achieve
in terms of its customers,
products, and resources
Copyright 2009 Pearson
Education, Inc. Publishing as
Prentice Hall
2-46
Strategic Planning Step 1:
Define the Mission
Answer three key questions:
What business are we in?
What customers should we serve?
How do we develop firms capabilities and
focus its efforts?
Mission statement:
A formal document that describes the firms
overall purpose and what it hopes to achieve
in terms of its customers,
products, and resources
Copyright 2009 Pearson Education, Inc.
Publishing as Prentice Hall
2-47
Step 1: Define the Mission
Coca Colas Mission Statement


Everything we do is inspired by our enduring mission:
To Refresh the World in body, mind, and spirit.
To Inspire Moments of Optimism through our brands and our actions.
To Create Value and Make a Difference everywhere we engage.
http://www.missionstatements.com/fortune_500_mission_statements.html


What is a SWOT Analysis?
An important strategic planning tool, SWOT analysis, helps planners
compare internal organizational strengths and weaknesses with
external opportunities and threats. (SWOT is an acronym for
strengths, weaknesses, opportunities, and threats.) This form of
analysis provides managers with a critical view of the organizations
internal and external environments and helps them evaluate the
firms fulfillment of its basic mission.
A scan of the internal and external environment is an important part
of the strategic planning process.
Environmental factors internal to the firm usually can be classified as
strengths (S) or weaknesses (W), and those external to the firm can
be classified as opportunities (O) or threats (T).
Such an analysis of the strategic environment is referred to as a
SWOT analysis.
Step 2 :SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats
Copyright 2009 Pearson
Education, Inc. Publishing as
Prentice Hall
2-50
The Important OF SWOT
Analysis
SWOT enables the firm to develop
strategies that maximize strengths and
capitalize upon opportunities
The SWOT analysis provides information
that is helpful in matching the firm's
resources and capabilities to the
competitive environment in which it
operates.

Strengths
A firm's strengths are its resources and
capabilities that can be used for
developing a competitive advantage.
Examples of such strengths include:
Patents
Strong brand names
Good reputation among customers
Cost advantages from proprietary know-how
Exclusive access to natural resources
Good access to distribution networks
Weaknesses
The absence of certain strengths are a
weakness. For example, the following
may be considered weaknesses:
Lack of patent protection
A weak brand name
Poor reputation among customers
High cost structure
Lack of access to best natural resources
Lack of access to key distribution channels

Weaknesses - Continued
In some cases, a weakness may be the
flip side of a strength.
For example, a firm has a large amount of
manufacturing capacity.
While this capacity may be considered a strength that
competitors do not share, it also may be a considered
a weakness if the large investment in manufacturing
capacity prevents the firm from reacting quickly to
changes in the strategic environment.
Opportunities
The external environmental analysis may reveal
certain new opportunities for profit and growth.
Some examples of such opportunities include:

An unfulfilled customer need
Arrival of new technologies
Loosening of regulations
Removal of international trade barriers
Threats
Changes in the external environmental
also may present threats to the firm.
Some examples of such threats
include:

shifts in consumer tastes away from the
firm's products
emergence of substitute products
new regulations
increased trade barriers

The SWOT Matrix
A firm should not necessarily pursue the
more lucrative opportunities (overextending).
Rather, it may have a better chance at
developing a competitive advantage by
identifying a fit between the firm's
strengths and upcoming opportunities.
In some cases, the firm can overcome a
weakness in order to prepare itself to
pursue a compelling opportunity.
SWOT Interactions

Step 3 -Goal Formulation
Effective goals should be formulated so
that they are:
Arranged hierarchically from broader to
more specific objectives
Stated in quantitative terms
Realistic
Consistent with each other and the
company mission

Step 4 :Strategic Formulation
Strategy dictates the game plan for
achieving goals. Porters generic
strategies offer a starting point for strategic
thinking:
Overall cost leadership
Differentiation
Focus


Porters Generic Strategies:
1. Overall cost leadership; lowest production and
distribution cost in order to get lower price than its
competitor and winning the market.
2. Differentiation; concentrates on achieving superior
performance in an important customer benefit
area. Example, the firm seeking quality leadership.
3. Focus; business focuses on one or more narrow
market segments.
2) Strategic Alliances

There are four forms of MDS.
Exporting
Licensing
Joint Venture
Direct Investment

Step 5 Program Formulation
and Implementation
Program formulation and implementation
involves:
Developing supporting programs
Estimating implementation costs
Carefully managing the details so great
strategy isnt ruined by poor
implementation
Feedback and control is crucial
Step 6 : Feedback and Control
As it implements its strategy, the firm needs to track
the results and monitor new developments on the
marketing environment.
If the environments change, the company can count it,
so the company need to review and revise its
implementation, programs, strategies, or even
objective.
The key to organizational health is willingness to
examine the changing environment and to adopt new
goals and behaviors.
High performance organizations continuously monitor
the environment and use flexible strategic planning to
maintain a fit with the evolution of the environment.

Portfolio Analysis


The business portfolio is the collection of
businesses and products that make up
the company. The best business
portfolio is one that fits the companys
strength and helps exploit the most
attractive opportunities


Portfolio Analysis
BCG matrix
GE Matrix


The Aim of Portfolio Analysis is

Analyze its current business portfolio and
decided which SBU s should receive more
or less investment
Develop growth strategies for adding new
products and business to the portfolio
Decide which businesses or product
should no longer be retained


BCG Matrix ( Boston Consulting Group)

The market growth rate on the vertical
axis indicates the annual growth rate of
the market in which the business operates.

Relative market share, which measured
on the horizontal axis, refers to the SBUs
market share relative to that of its largest
competitor in the segment.


Question Marks

Businesses that operates in high growth
markets but low relative market shares.
A question mark requires a lot cash because
the company has to spend money on plant,
equipment and personnel to keep up with the
fast growing market and because it wants to
overtake the market leader.
The company has to think hard about whether to
keep pouring money into this business.

Stars

The market leaders in a high-growth
market. A star does not necessarily
produce a positive cash flow for the
company.
The company must spend substantial
funds to keep up with the high market
growth and fight off competitors attack.


Cash Cows

Stars with a falling growth rate that still have the largest
relative market share and produce a lot of cash for the
company.
The company does not have to finance expansion
because the markets growth rate has slowed.
Because the business is the market leader, it enjoys
economies of scale and higher profit margin.
The company uses its cash cows to pay bills and
support other businesses.
If this cash cow starts losing relative market share, the
company will have to pump money back into it to
maintain market leadership.

Dogs

Businesses that have weak market market
shares in low-growth markets.
The company should consider whether it
is holding on to these businesses for
good reason.

SBU STRATEGIES

Four strategies can be pursued : Build, hold
, harvest or divest.

Building Strategies
Building is appropriate for question marks
whose market share must grow if they are
to become stars.


Hold Strategies

Hold strategy is appropriate for strong
cash cows if they are to continue yielding
large positive cash flows.

Harvest Strategies

Harvest strategy is to increase short-term cash flow
regardless of long term effect.
Harvesting involves a decision to cash in on its crop
to milk its business
Harvesting involves eliminating R & D expenditures , not
replacing the physical plant, not replacing salesperson,
reducing advertising expenditures.
This strategy is appropriate for weak cash cows whose
future is dim and from which more cash flow is needed.
Question marks and dogs


Divest Strategies
Divest strategy is to sell or liquidate the
business because resources can be better
used elsewhere.
Question marks and dogs

Build Hold Harvest Divest
Question
marks
cow Cows
Question
marks
Dog
Question marks
Dogs
MATRIX GE ( GENERAL ELECTRIC)

Industry Attractiveness
The vertical axis of GE matrix industry attractiveness,
which is determined by factors such as the following :
Market growth rate
Market size
Demand variability
Industry profitability
Industry rivalry
Global Industry




Business Strength


The horizontal axis of GE matrix industry
is the strength industry of the business
unit.
Some factors that can be used to
determine business unit strength include:
Market share
Growth in the market share
Brand equity
Distribution channel access
Production capacity
Each business unit can be portrayed as a
circle plotted on the matrix, with the
information conveyed as follows :
Market size is represented by the size of
circle
Market share of SBU is shown by using
the circle as a pie chart
Arrow represents the direction and the
movement of the SBUs in the future.

The following is an example of such
representation


The shading of the circle indicates 38% market share for the
strategic unit
The arrow in the upward left direction indicates that the business
unit is projected to gain strength relative to competitors
The tip of the arrow indicates the future position of the center point
of the circle.


One companys seven businesses are plotted. This
time the size of each circle represents the size of the
relevant market rather than the size of the companys
business.
The dark brown shaded part of the circle represents
that businesss market share.
Thus the companys clutch business operates in a
moderate-sized market and enjoys approximately a 30-
percent market share.


PROTECT POSITION
Invest to grow at maximum
digestible rate
Concentrate effort on
maintaining strength
INVEST TO BUILD
Challenge for leadership
Build selectively on
strengths
Reinforce vulnerable areas
BUILD SELECTIVELY
Specialize around limited
strengths
Seek ways to overcome
weakness
Withdraw if indications of
sustainable growth are
lacking
BUILD SELECTIVELY
Invest heavily in most
attractive segments
Build up ability to counter
competition
Emphasize profitability by
raising productivity
SELECTIVELY/MANAGE
FOR EARNINGS
Protect existing program
Concentrate investments in
segments where profitability
is good and risks are
relatively low.
LIMITED EXPANSION OR
HARVEST
Look for ways to expand
without high risk; otherwise,
minimize investment and
rationalize operations
PROTECT AND REFOCUS
Manage for current earnings
Concentrate on attractive
segments
Defends strengths
MANAGE FOR EARNINGS
Protect position in most
profitable segments
Upgrade product line
Minimize investment
DIVEST
Sell at time that will
maximize cash value
Cut fixed costs and avoid
investment meanwhile







Strong Medium
Weak