1-1Irwin/McGraw-Hill

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 3

Marketings Strategic Role in the Organization

Irwin/McGraw-Hill 1-2 McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Inc. rights reserved. Copyright 2004 by The McGraw-Hill Companies, Companies, Inc. All All rights reserved.

After studying this chapter, you should be able to:

Discuss the three basic levels in an organization and the types of strategic plans developed at each level.
Understand the organizational strategic planning process and the role of marketing in this process. Describe the key decisions in the development of corporate strategy.
Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

1-3Irwin/McGraw-Hill

After studying this chapter, you should be able to:

Understand

the different general business strategies and their relationship to business marketing, product marketing, and international marketing strategies.
the importance of relationships and teamwork in executing strategic plans.
Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Realize

1-4Irwin/McGraw-Hill

Organizational Levels
The Corporate Level is the highest level in any organization.

The Functional Level includes all the various functional areas within a business unit. The Business Level consists of units within the overall organization that are generally managed as self-contained businesses.
1-5Irwin/McGraw-Hill
Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Organizational Strategic Planning

Higher organizational level strategic plans provide direction for strategic plans at lower levels.

Lower-level plans are developed to execute higher-level plans.

1-6Irwin/McGraw-Hill

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Types of Strategic Plans

Organizational Level Type of Strategic Plan Key Strategic Decisions Corporate Corporate strategic plan Corporate vision Objectives & resource allocation Growth strategies Market scope Competitive advantage

Business

Business strategic plan

Marketing

Marketing strategic plan

Product marketing plan

Target market Marketing mix

Specific target market Specific marketing mix Execution action plan

1-7Irwin/McGraw-Hill

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

The Strategic Role of Brand Loyalty

Generating Market Share

Developing a Strong Customer Base

Customer Equity
1-8Irwin/McGraw-Hill
Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

The Strategic Planning Process

1-9Irwin/McGraw-Hill

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

The Role of Marketing

Strategic Marketing:

Marketing activities that affect corporate, business, and marketing strategic plans.

Irwin/McGraw-Hill 1-10

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

The Role of Marketing

Marketers orient everyone in the organization toward markets and customers.

Marketers analyze the current situation, identify trends in the marketing environment, and assess the potential impact of these trends.

Marketers development corporate, business, and marketing strategic plans.

Irwin/McGraw-Hill 1-11 Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

The Role of Marketing

Marketing Management:

Networks:

Relates to specific product marketing strategies.

Comprise strategic alliances among suppliers, distributors, and the marketing firm.

Irwin/McGraw-Hill 1-12

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Corporate Strategy Decisions

Corporate Vision Corporate Objectives & Resource Allocation Corporate Growth Strategies Business-unit Composition

Irwin/McGraw-Hill 1-13

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Corporate Vision

Corporate Vision:

The basic values of an organization.

The vision specifies what the organization stand for, where it plans to go, and how it plans to get there.

Irwin/McGraw-Hill 1-14

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

What Comprises Corporate Vision?

Markets Products and services Geographic domain Core competencies Organizational objectives Organizational philosophy Organizational self-concept Desired public image

Irwin/McGraw-Hill 1-15 Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Core Purpose: A Companys Reason for Being

3M: To solve problems innovatively. Hewlett-Packard: To make technical contributions for the advancement and welfare of humanity. Mary Kay Cosmetics: To give unlimited opportunity to women. Merck: To preserve and improve human life. Sony: To experience the joy of advancing and applying technology for the benefit of the public. Wal-Mart: To give ordinary folks the chance to buy the same things as rich people.

Irwin/McGraw-Hill 1-16

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Core Purpose

Core Competency:

A bundle of skills that are possessed by individuals across the organization.

Irwin/McGraw-Hill 1-17

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Questions Leading to an Effective Corporate Vision

1.

Which customers will you be serving in the future?

Through which channels will you reach customers in the future? Who will be your competitors in the future? Where will your margins come from in the future?
Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

2.

3.

4.

Irwin/McGraw-Hill 1-18

Questions Leading to an Effective Corporate Vision

5.

In what end-product markets will you participate in the future? What will be the basis for your competitive advantage in the future?
What skills or capabilities will make you unique in the future?
Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

6.

7.

Irwin/McGraw-Hill 1-19

Corporate Objectives and Resource Allocation

Corporate

objectives specify the achievement of desired levels of performance during particular time periods.

Irwin/McGraw-Hill 1-20

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Corporate Objectives and Resource Allocation

Corporate objectives and resource allocation affect marketers in 2 basic ways:

2) Providing guidance for the development and Implementation of marketing strategies.

1) In setting the objectives for different organizational levels.

Irwin/McGraw-Hill 1-21

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Corporate Growth Strategies

Products
Same Same New

Markets

Market Penetration Product Expansion

Market Expansion

New

Diversification

Irwin/McGraw-Hill 1-22

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Business-Unit Composition

Strategic Business Unit (SBU):

Focuses on a single product or brand, a line of products, or mix of related products that meets a common market need or a group or related needs, and the units management is responsible for all (or most) of the basic business functions

Irwin/McGraw-Hill 1-23

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Business-Unit Composition

Companies often organize around competency-based SBUs to establish Sustained Competitive Advantage.

Irwin/McGraw-Hill 1-24

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Business Strategy Decisions

The basic objective of a business strategy is to determine how the business unit will compete successfully.

Irwin/McGraw-Hill 1-25

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Business Strategy Decisions

Dimensions of Strategy:

Competitive Advantage:

Market scope. How broadly the business views its target market. Competitive advantage.

The way a business tries to get consumers to purchase its products over those offered by competitors.

Irwin/McGraw-Hill 1-26

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

General Business Strategies

Market Scope Focused Competitive Advantage Low price Easyjet Broad Southwest

Jet Blue

Differentiation

Conair Alaskan Airlines Midwest

American Delta United Jet Blue

Irwin/McGraw-Hill 1-27

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

The Rule of Three

The Rule of Three:

Naturally occurring competitive forces will create a consistent structure in many mature markets.

Three major players often compete by offering a wide range of related products and services and serve most major market segments.

Irwin/McGraw-Hill 1-28

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Marketing Strategy Decisions

A Marketing Strategy Addresses: Selection of a target market. Development of a marketing mix.

Functional strategies are at the business-unit level.

Operating strategies are at the product level.

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Irwin/McGraw-Hill 1-29

Business & Product Marketing Strategies

Decision Area Target market Business Marketing Strategy Segmented or mass approach Product Marketing Strategy Specific definition of target market

Product

Number of different products

Specific features of each product

Price

General competitive price level

Specific price

Distribution

General distribution policy

Specific distributions

Marketing

communications

General emphasis on marketing communications tools

Specific marketing communications program

Irwin/McGraw-Hill 1-30

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

International Marketing Strategies

Entry Strategy:

The Basic Options:

The approach used to market products in an international market.

Exporting Joint Ventures Direct Investment

Irwin/McGraw-Hill 1-31

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

International Marketing Strategies

Standardized Marketing Strategy: The same product, price, distribution, & promotion programs in all international markets.

Customized Marketing Strategy: A different marketing mix for each target market country.

Irwin/McGraw-Hill 1-32

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Executing Strategic Plans with Teamwork

1.

Cross-Functional Teamwork Marketing Teamwork Co-Marketing Alliances

2.

3.

Irwin/McGraw-Hill 1-33

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Business Function Orientations

Function Marketing Production Finance Accounting Purchasing R&D Engineering Basic Orientation To attract and retain customers To produce products at lowest cost To keep within budgets To standardize financial reports To purchase products at lowest cost To develop newest technologies To design product specifications

Irwin/McGraw-Hill 1-34

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.