Managing Marketing Processes

----
Aligning Strategy and the Marketing Planning
Process
Seminar 2

Robin Teigland
Master of General Management
Stockholm School of Economics

September 5, 2013
Seminar 2 Overview
 Taking a look at strategy

 Group Assignment presentations

 Guest Speaker, Fredrik Jansson, Tata

Consulting Services

2
Some core concepts in strategy

 Mission
 Purpose: Why we exist

 Values
 What we believe in and how we behave

 Vision
 What we want to be

Collis & Rukstad, 2008

3
Walt Disney
 Purpose/Mission
 To make people happy
 Values
 No cynicism
 Nurturing and promulgation of “wholesome American
values”
 Creativity, dreams, and imagination
 Fanatical attention to consistency and detail
 Preservation and control of the Disney magic

Collis & Rukstad 2008 4

What matters for success?
Companies most successful in creating long-term
shareholder value are typically those that:
a) Have a vision and mission—They give precedence to purpose
and goals other than profitability and shareholder return
b) Have strong, consistent, ethical values

Examples:
• “Visionary”, e.g., Disney, HP, IBM, Merck, P&G, Shell, Wal-Mart
• Boeing
• Focus pre-1996: “to build great planes,”
• Weak financial controls—yet high profitability
• Focus 1997-2003 : “creating shareholder value”
• Outcome: loss of market leadership, declining profitability

Grant 2008
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 The Strategy Hierarchy

Where should
we compete?

How should
we compete?

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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

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Publishing as Prentice Hall
2-7
Characteristics of SBUs (Strategic Business Units)

 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

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Publishing as Prentice Hall
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 What is business strategy?
 Strategy
 An integrated and coordinated set of
commitments and actions designed to
gain a competitive advantage
 Competitive advantage
 When two or more firms compete within
the same market, one firm possesses a
competitive advantage over its rivals
when it earns (or has the potential to
earn) a persistently higher rate of profit

Hitt, Ireland & Hoskisson 2006 9

Components of business strategy

1. Long-term goal (objective)

1. Scope of the firm (customer or offering,

geographic location, vertical integration

1. Competitive advantage

Collis & Rukstad 2008 10

Strategy ≠ Business Model
 Business model (Magretta, 2002)
 Describes, as a system, how the pieces of a business
fit together.
 Does not factor in one critical dimension of
performance: competition
 Reflection of a realized strategy

Every organization has a business model . [it] makes

some choices, which have consequences. [But] not every
organization has a strategy - a plan of action for different
contingencies that may arise. (Casadesus et al. 2010)

11
Example of Strategy Statement

Edward Jones *
 To grow to 17,000 financial advisers by 2012 by
offering trusted and convenient face-to-face
financial advice to conservative individual
investors who delegate their financial
decisions, through a national network of one-
financial-adviser offices.

*Probably from 2007

Collis & Rukstad 2008 12

Generic strategies

Type of
competitive advantage
Differentiation Low cost

Broad Differentiation Cost leadership

Scope
(Customer/
variety)
Narrow Differentiation- Cost-based
based focus focus

Porter 1998 13
Generic strategies in the auto industry
Type of
competitive advantage
Differentiation Low cost

Mercedes Nissan
Broad
Scope (Differentiation) (Cost leadership)
(Customer/
variety)
Narrow BMW Lada
(Differentiation- (Cost-based
based focus) Focus)

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 Making choices
 Strategy is about choosing what NOT to do:
 Which customers not to serve
 What products or services not to offer
 Which activities not to perform

Strategy is about NOT being all things to all people

Porter 15
Avoid being stuck in the middle

High

Differentiation Cost leadership

Return on
investment

Low
Low High

Market share

Porter 16
What is the basis for strategy?
 Today external environment characterized by
increasing pace of change
 New technologies
 Globalization
 Increasing information/knowledge flows
 Changing customer preferences

 A firm’s resources and capabilities offer a more

secure basis for strategy than market focus

Grant 2008 17
Exploiting differences, not doing the same!

Competitive advantage:
Ability to outperform others
due to exploiting unique
features of firm’s resources
and capabilities

Grant 2008 18
What are resources?

-Inputs into a firm’s production process

-A firm’s tangible, intangible, and human
assets

What is their potential for creating

competitive advantage?

Grant 1991 19
 What are capabilities?
 “A capability is the capacity for a set of
resources to perform a task or an activity in an
integrative manner.”

 In other words …
 The deployment of resources to achieve a goal
 The ability to do something…
 Used interchangeably with competence

Grant 2008 20
Identifying organizational capabilities:
A functional classification
FUNCTION CAPABILITY EXAMPLES
Corporate Financial management ExxonMobil, GE
Management Strategic control IBM, Samsung
Coordinating business units BP, P&G
Managing acquisitions Citigroup, Cisco
MIS Speed and responsiveness through Wal-Mart, Dell,
rapid information transfer Capital One
R&D Research capability Merck, IBM
Development of innovative new products Apple, 3M
Manufacturing Efficient volume manufacturing Briggs & Stratton
Continuous Improvement Nucor, Harley-D
Flexibility Zara, Four Seasons
Design Design capability Apple, Nokia
Marketing Brand management P&G, LVMH, Coke
Quality reputation Johnson & Johnson
Responsiveness to market trends MTV, L’Oreal
Sales, Distribution Sales responsiveness PepsiCo, Pfizer
& Service Efficiency and speed of distribution LL Bean, Dell
Customer Service Singapore Airlines
Caterpillar

Grant 2008 21
Architecture of resources and capabilities

ORGANIZATIONAL
CAPABILITIES

Organization Management
Structure Systems

RESOURCES
TANGIBLE INTANGIBLE HUMAN
•Technology
•Financial •Skills/know-how
•Reputation
•Physical •Capacity for
•Culture
communication
•Brand
& collaboration
•Customer
•Motivation
loyalty

Grant 2008 22
Links between resources, capabilities
and competitive advantage
INDUSTRY
ENVIRONMENT
COMPETITIVE STRATEGY
ADVANTAGE
ORGANIZATIONAL
CAPABILITIES

RESOURCES
TANGIBLE INTANGIBLE HUMAN
•Technology •Skills/know-how
•Financial •Reputation •Capacity for
•Physical •Culture communication
•Brand & collaboration
•Customer •Motivation
loyalty

Grant 2008 23
 Defining organizational capabilities
Organizational Capabilities = firm’s capacity for
undertaking a particular activity (Grant)

Distinctive Competence = activity that an

organization does particularly well relative to
competitors (Selznick)

Core Competence = capabilities that are

fundamental to a firm’s strategy and performance
(Hamel and Prahalad)

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Characteristics of Core Competencies
 A source of competitive advantage
 Applications in a wide variety of markets
 Difficult to imitate

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Publishing as Prentice Hall
2-25
Core Competencies -Tree Diagram
End Products End Products
1 2 3 4 5 6 7 8 9 10 11 12

Business Business Business Business

1 2 3 4

Core Product 1 Core Product 3 Core Product 2

Competence
Competence Competence
Competence Competence
Competence Competence
Competence
11 22 33 44

http://www.youtube.com/watch?
v=Ar_r2kE9Ej4&NR=1 Prahalad & Hamel 1990 26
Disney
Walt Disney Studios’ 1984 Strategic Architecture
• Character Merchandise
• Movies for • Magic Kingdom • Epcot Center • General real estate
theatrical, brokerage & resort & • Records
End television and • Golfing • Camping property mgmt services
• Merchandise & publishing
Products home video • Shopping Village • Hotels • Develops commercial & licenses
markets industrial properties
• Conference • Educational computer
• Cable channel Center • Plans resort & primary software, films, cassettes
home communities & filmstrips

Visual Media Theme Parks & Resorts Community Other Media

Business • Walt Disney Studios • Disneyland Development • Character
Units merchandising &
• Disney Channel • Walt Disney World • Disney Development publications
• Home video • Epcot Center Co.
• Records & music
• Tokyo Disney • Arvida Community publishing
Development
• Educational media
Capabilities
• Distribution
(Buena Vista)

Core Filmed Entertainment & Real Estate Consumer

Products Recreational Parks,
Entertainment Shows & Resorts Development Products

Core Creativity
Competencies Brand Image Imagineering
(Characters)

Grant 2008 27
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.

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Publishing as Prentice Hall
2-30
Holistic Marketing

Copyright
Copyright©©2011
2011Pearson
PearsonEducation,
Education,Inc.
Inc.
Publishing
PublishingasasPrentice
PrenticeHall
Hall
2-31 1-31
Questions to Address in Holistic Marketing

Value Exploration:
What value opportunities are available?

Value Creation:
How can we create new value offerings efficiently?

Value Delivery:
How can we deliver the new offerings efficiently?

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Publishing as Prentice Hall
2-32
Phases of Value Creation and Delivery

Choosing the value (STP)

Providing the value (price, place, product)

Communicating the value (promotion)

Copyright © 2011 Pearson Education, Inc.

Publishing as Prentice Hall
2-33
Group Assignment for Today
1. What do you think that the mission statement says about the
customer focus, value creation, market scope, guiding values, and
core competencies of this company?

2. For your company, how do specific marketing actions appear to

relate to the stated mission? E.g., does the advertising reflect the
customer focus in the mission statement? In preparation for later
stages of your work, make notes about how the mission affects the
markets and customers to be served, the product/service offering,
the competition, and higher-level strategy.

3. What changes would you suggest to the mission statement in

order to make it more effective as a guide for the marketing
planning process or an inspiration for managers and employees?

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Marketing Plan Teams
MGM MARKETING  
FALL 2013  

GROUPS PREFERENCES
1. B2C (Fortune 500) Product
DRAGON
 
1. B2C (Fortune 500) Service
THE MOJITOS
 
1. B2B SME Service
PEAK PERFORMANCE
 
1. B2C SME (<250) Product (ASSESSIO)
ORANGE
 
1. B2B SME (<250) Product (VETROLIFE)
OPERATION BRAHMA
 
1. B2C SME Services (LINAS MATKASSE)
THE TRANSFORMERS
 

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Seminar 3 Overview

 Market Analysis and Planning

 Group Assignment presentations

 Guest Speaker, Peter Gavelin, SSE

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