Chapter 2

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? How can management assess marketing performance?

TWO VIEWS OF THE VALUE DELIVERY PROCESS

Traditional

Physical Process Sequence

Make the product Sell the product

Value

Creation and Delivery Sequence

Choose the value (STP) Provide the value (specific features, price, distribution etc.) Communicate the value (announce & promote)

OTHER VIEWS
Kumars

3Vs

Define the value segment or customers (and their needs) Define the value proposition Define the value network to deliver promised service

Frederick Webster Marketing is:

Value-defining process like market research Value-developing processes including new-product development, sourcing strategy, and vendor selection Value-delivering processes such as advertising and managing distribution

THE VALUE CHAIN

Proposed by Michael Porter (Harvard) in the book: "Competitive Advantage: Creating and Sustaining superior Performance" (1985) Tool for identifying ways to create more customer value Firm is a synthesis of NINE activities

Primary Activities Inbound logistics Operations Outbound logistics Marketing and sales Service Support Activities Firm infrastructure Human resource management Technology development Procurement

Examine the costs and performance in each value-creating activity Compare with Benchmarks study the best of class practices

Margin: effectiveness in performing these activities efficiently

CORE COMPETENCIES
Characteristics

C. K. Prahalad and Hamel (1990)

A source of competitive advantage Applications in a wide variety of markets Difficult for competitors to imitate

Competitive advantage exists in two situations: low cost or differentiation Distinctive capabilities excellence in broader business process ex. Netflix, pioneer online DVD rental service

ROLE OF STRATEGIC PLANNING

Managing a companys businesses as an investment portfolio Assessing each businesss strength Establishing a strategy to achieve its long-run objectives

MARKETING PLAN
Central instrument for directing and coordinating the marketing effort Two levels:

Strategic marketing planlays out the firms target markets and value propositions, based on the best market opportunities. Tactical marketing planspecifies the marketing tactics, including product features, promotion, pricing, and service.

CORPORATE PLANNING ACTIVITIES

I. Defining the corporate mission Peter Drucker: What is our business? Who is the customer? What will our business be?

Good Mission Statements

Focus on limited number of goals Stress major policies and values Define major competitive spheres Ex: to organize the world's information and make it universally accessible and useful

MAJOR COMPETITIVE SPHERES

Industry Market

segment

Products

and applications (range of same that company supply) Competence (company mastered in performing activity and leverage

Vertical

(no. of channel levels from r/m to final product wherein company will participate)

Geographical

II.

Defining the Business

Product definitions (ex. Auto business, clothing business) Market definitions (Business must be viewed as customer satisfying process not a goods producing process)

define the business in terms of needs, not products

Hardware & software manufactures { Builder of networks } Define the target market who drinks cola Everyone who drinks something to quench thirst
Strategic market def. Help improve office productivity Target market def.

Distribute information

BUSINESS DEFINED IN 3 DIMENSIONS

Customer groups Customer needs Technology

Selling halogen lightening systems for TV studios

CHARACTERISTICS OF AN SBU
Single business or collection of related businesses Own set of competitors Manager responsible for strategic planning and profit performance

Purpose: develop separate strategies & assign appropriate funding

GROWTH OPPORTUNITIES

Intensive growth (identify opportunities for further growth within current businesses)

Integrative growth (identify opportunities to build or acquire businesses that are related to current businesses): forward or backward integration
Diversification growth (identify the opportunities to add attractive businesses that are unrelated to current businesses) 1. Concentric diversification: (technological or marketing synergy) 2. Horizontal diversification: (technologically unrelated) 3. Conglomerate diversification: (no relation with its current technology, products or markets)

I. INTENSIVE GROWTH

Review the opportunities for improving existing businesses

Igor Ansoff proposed product-market expansion grid or Ansoff Matrix Ansoff Matrix represents the different options open to a marketing manager when considering new opportunities for sales growth

TWO VARIABLES

Market in which firm operates

Product intended for sale

Remain in the Existing or current market

Enter in new market

Selling existing or current products

Developing new ones

Existing

PRODUCTS

New

Existing

INCREASING RISK MARKET PENETRATION

PRODUCT DEVELOPMENT
INCREASING RISK

Sell more in existing Markets MARKETS MARKET DEVELOPMENT Achieve higher sales/market share of existing products in new markets

Sell new products in existing markets

DIVERSIFICATION

New

Sell new products in new markets

Existing

PRODUCTS

New

Existing

MARKET PENETRATION

PRODUCT DEVELOPMENT

MARKETS
MARKET EXTENSION DIVERSIFICATION

New

THE BUSINESS UNIT STRATEGIC PLANNING PROCESS

Ext. envt. (O and threats) Business mission Goal Formulation Strategy Formulation

SWOT analysis
Internal envt. (S and W)

Program Formulation Implementation Feedback and Control

EFFECTIVE GOAL FORMULATION

Arranged hierarchically from most to least important Stated quantitatively Realistic Consistent

PORTERS GENERIC STRATEGIES

Overall cost leadership Differentiation Focus

MCKINSEYS SEVEN S ELEMENTS

Hardware Strategy Structure Systems Software Style Skills Staff Shared values

MARKETING PLAN CONTENTS

Executive summary Table of contents Situation analysis Marketing strategy Financial projections Implementation controls

THANK YOU