Ch 2: developing marketing strategies & plans

The value chain: is a tool for identifying wants to create more customer value because
every firm is a synthesis of primary & support activities performed to design, produce, market, deliver, & support its product. The firm success depends on how well each department performs & also on how these departments coordinate together to conduct Core business processes.

Core business processes include the following:

1- The market sensing process: all the activities in gathering market intelligence,

disseminating it with in the organization & acting on the information.

- The new-offering realization process: all the activities in researching, developing, &

launching new high-!uality offering !uickly & within the budget.

"- The customer acquisition process: all the activities in defining target markets &

prospecting for new customers.

#- The customer relationship management process: all the activities in building deeper,

understanding, relationships, & offerings to individual customers.

$- The fulfillment of management process: all the activities in receiving & approving orders,

shipping the goods on time, & collecting payment.

Characteristics of core competencies:

1- % source of competitive advantage in that it makes a significant contribution to perceived customer benefits. - &t has applications in a wide variety of markets. "- &t's difficult for competitors to imitate.

How to be a vigilant organization?

(e have to be able to answer the following) 1- Can we learn from the past* - +ow should the present be evaluated* "- (hat do we envision for the future*

Holistic marketing: integrating the value e,ploration, value creation, & value delivering
activities with the purpose of building long-term mutually satisfying relationship & co prosperity among key stakeholders. The holistic marketing framework is designed to address three key management !uestions.
1- Value exploration) how can a company identify new value opportunities*

Through understanding the relationship between) %- the customer cognitive space .needs-. /The company competence space. C- The collaborator's resource space .horizontal partnership-.
- Value creation) how can a company efficiently create more promising new value

offerings*
"- Value delivery) how can a company use its capabilities & infrastructure to deliver the new

value offerings more efficiently* .customer relationship management-

The central role of strategic planning: The marketing plan: is the central instrument for directing &coordinating the marketing
effort, it operates at both strategic & tactical level.

Strategic marketing plan: lays out the target markets & the value proposition the firm will
offer, based on the analysis of the best marketing opportunities.

Tactical marketing plan: specifies the marketing tactics, including product features,
promotion, merchandising, pricing, sales channels, & services.

Corporate &division strategic planning: Corporate headquarters four planning activities: !" #efining the corporate mission:
%n organization e,ists to accomplish something. &n order to define an organization's mission it should answer the following) what is our business* (ho is the customer* (hat is the value of the customer* (hat will our business be* (hat should our business be* 0rganizations develop mission statement to share with employees, managers, & customers. % successful mission statement provides the employees with a shared sense of purpose, direction, & opportunity. 1ood mission statement has five characteristics) a- 2ocused on a limited number of goals. b- 3tress ma4or policies & values. c- 5efine ma4or competitive spheres .industry, products & applications, competence, market segment, vertical, & geographical-. d- Take a long-term view. e- 3hort, memorable, & meaningful.

$" %stablishing strategic business units:

Companies often define its business in terms of its products, but a market definition of a business is superior to product definition.

% business can define itself in terms of three dimensions) customer groups, customer needs, & technology. 6arge companies normally manage !uite different businesses each re!uiring its own strategy so it classifies it to strategic business units. Strategic business unit has three characteristics:
1- &t's a single business or collection of related businesses, which can be planned separately

from the rest of the company.

- &t has its own set of competitors. "- &t has a manager responsible for strategic planning & profit performance, who controls most

of the factors affecting profit. The purpose of identifying the company's strategic business unit is to develop separate strategies & assign appropriate funding.

&" 'ssigning resources to each S():

0nce it has defined 3/7s, management must decide how to allocate corporate resources to each. 3/7 can be classified according to the e,tent of its competitive advantage & the attractiveness of its industry .the 189:c;insey matri,- or the /C1's growth share matri,, uses the relative market share & annual rate of market growth as a criteria to make a business decision. high ** !uestion mark << stars market growth rates dogs Cash cow

6ow 6ow market share high

/oston Consulting 1roup matri, :anagement would want to grow .**-, harvest or draw cash .cash cow-, hold on to a business .stars-.

'ssessing growth opportunities:

&t includes planning new businesses, downsizing, & terminating older business.

*rowth opportunities:
(hen a gap between desired sales & pro4ected sales occurs management will need to develop or ac!uire new business to fill it so it can use one of the following)

'+ ,ntensive growth:

% framework for detecting new intensive growth opportunities is called .product-market e,pansion grid-. The company could do one thing of the following four) Current product 1-:arket-penetration strategy Current markets .can we gain more market share with our current products-:arket-development strategy =ew markets .can we find new markets for my current product=ew product "- product-development strategy .can we develop new products to our current markets#-diversification strategy .can we develop new products for new markets-

(+ ,ntegrative growth:
&ncreasing sales & profits through backward, forward, or horizontal integration with in the industry .a company can ac!uire one or more of its suppliers or its wholesalers to get more control or more profits-.

C+

#iversification growth:

&t makes sense when good opportunities e,ist outside the present business, the industry is highly attractive & the company has the right mi, of business strength to be successful.

#ownsizing & divesting older businesses:

(eak businesses re!uire a disproportionate amount of managerial attention. Companies must carefully prune, harvest, or divest tired old businesses in order to release needed resources to other uses & reduce costs.

-rganization & organizational culture: The corporate culture) it is the shared e,periences, stories, beliefs, & norms that
characterize the organization.

.arketing innovation: Tactics / strategies for managing change:

1- %void the innovation name for the team. - 7se the buddy system .find like-minded collaborator within the organization-. "- 3et the metrics in advance .different sets of funding, testing criteria-. #- %im for !uick hits first .easy to do ideas-. $- 1et data to backup your gut .feedback-.

(usiness unit strategic planning: (usiness unit strategic planning process consists of the following steps:
8,ternal 8,ternal environment environment .opportunities .opportunities & & threatsthreats-

/usines /usines s s mission mission

1oal 1oal formulation formulation

3trategy 3trategy formulation formulation

?rogram ?rogram formulation formulation

&mpelementatio &mpelementatio n n

2eedback 2eedback & & control control

&nternal &nternal environment environment .strengths .strengths & & weaknessesweaknesses-

30(T analysis

a" (usiness mission:

8ach business unit needs to define its specific mission with in the boarder company mission.

b" S0-T anal1sis:

&t is the overall evaluation of a company's strength, weaknesses, opportunities, & threats.

%2ternal environment 3opportunities & threat+ anal1sis: .arket opportunities anal1sis 3.-'+:
(e can determine an opportunity's attractiveness by asking & answering the following !uestions) 1- Can the benefits involved in the opportunity be articulated convincingly to a defined target market* - Can we locate the target market.s- & reach them with cost-effective media & trade channels* "- 5oes our company possess or have access to the critical capabilities & resources we need to deliver the customer benefits* #- Can we deliver the benefits better than any actual or potential competitors* $- (ill the financial rate of return meet or e,ceed our re!uired threshold for investment*

%nvironmental threat) is a challenge posed by an unfavorable trend or development that

would lead > in the absence of defensive marketing action, to lower sales or profit.

,nternal environment 3strengths & weaknesses+ anal1sis:

8ach business needs to evaluate its internal strengths & weaknesses@ it could do that through using a checklist for performing strengths 9 weaknesses analysis so that the company could correct its lethal weaknesses & take advantage of its strengths to find new opportunities.

c" *oal formulation:

%fter performing 3(0T analysis the company can proceed to develop its goals for the planning period. The unit's ob4ective should have four criteria) 1- They must be arranged hierarchally, from the most to the least important. - 0b4ectives should be !uantitative whenever possible. "- 1oals should be realistic. #- 0b4ective must be consistent.

d" Strategic formulation:

8ach business must design a strategy for achieving its goals, consisting of a marketing strategy & a compatible technology strategy & sourcing strategy.

4orter s generic strategies:

These strategies provide a good starting point for strategic thinking) 1- 0verall cost leadership) the lower your costs are the lower your prices are, so you can beat your competitor & win large market share. - 5ifferentiation) the business concentrates on uni!uely achieving superior performance in an important customer benefit area valued by a large part of the market. "- 2ocus) the business focuses on one or more narrow market segments. The firm gets to know these segments intimately & pursues either cost leadership or differentiation within the target segments.

Strategic alliances:
:a4or categories of strategic alliances) 1- ?roduct or service alliances) when a company licenses another to produce its product or to 4oin together to make a new product. - ?romotional alliances) one company agrees to carry a promotion for another company. "- 6ogistics alliances) one company offers logistical services for another company's product #- ?ricing collaborations) one or more companies 4oin in a special pricing collaboration.

e" 4rogram formulation & implementation:

% successful business practice has seven elements@ strategy is only one of them) 1- 3trategy #- 3tyle - structure $- skills "- system A- staff B- shared values

These entire elements combine together to formulate the program & affects its success. 3o the company has to be careful when picking its staff & has to make sure that they are skilled enough, the shared values it wants them to have to make it work. f- 2eedback & control) % company's strategic fit with the environment will inevitably erode, because the market environment changes faster that the seven 3s of a company. Thus a company might remain efficient while it losses its effectiveness. The most successful companies e,cel at both. ?roduct planning) the nature & content of a marketing plan) 1- 8,ecutive summary & table of content. - 3ituation analysis. "- :arketing strategy. #- 2inancial pro4ections. $- &mplementation controls.