Marketing Management: Developing Marketing Strategies and Plans

Marketing Management
Fifteenth Edition
Chapter 2
Developing
Marketing
Strategies and
Plans
Copyright © 2016, 2012, 2009 Pearson Education, Inc. All Rights Reserved
Learning Objectives
2.1 How does marketing affect
customer value?
2.2 How is strategic planning
carried out at the corporate and
divisional levels?
2.3 How is strategic planning
carried out at the business unit
level?
2.4 What does a marketing plan
include?
Kotler on Marketing
It’s more important to do what is

strategically correct than what is
immediately profitable.
Bashir on Marketing
It’s rather more important to do what is

ethically correct than what is just strategic to
the marketer.
Marketing and Customer Value
• The value delivery process
• The value chain
• Core competencies
• The central role of strategic planning
The Value Delivery Process (a
combination of three functions
enlisted below)
• Choosing the value (STP)
• Providing the value (product/service features, prices,
distribution)
• Communicating the value (IMC = integrated marketing
communication or promotion mix)
The Value Chain (Every firm is a value
chain: Michael Porter)
• A tool for identifying ways to create more customer
value
– Every firm is a synthesis of activities performed to
design, produce, market, deliver, and support its
product
Value chain (Two types of activities)
• Primary activities:
1. Inbound logistics (Sourcing the raw materials)
2. Operations (Production)
3. Outbound logistics (Storing or warehousing the finished goods)
4. Marketing (Selling and other marketing related functions)
5. Service (Associated services and after sale services)
• Support activities:
1. Procurement (performs mostly the inbound logistics jobs and also production)
2. Technology development (supports or reinforces the primary activities to be done well)
3. Human resource management (Hiring, training, motivating, and supervising people to

get the activities done)
4. Firm infrastructure (Mission, Vision, structures, and other departments)
Core Competencies (Unique
capability/secret resource)
• A source of competitive advantage and makes a
significant contribution to perceived customer benefits
• Applications in a wide variety of markets
• Difficult for competitors to imitate (copyright)
• Example: Canon (Japan) [camera: captures images
and reproduces it ] After camera they introduced
photocopier, printer, scanner etc.
Maximizing Core Competencies
Businesses need to realign themselves to maximize
core competencies. Realignment has three steps:
• (Re)define the business concept [Otobi, McDonald’s]
• (Re)shaping the business scope [Canon, Apple,
Samsung, Honda]
• (Re)positioning the company’s brand identity
[Kohinoor recently has taken steps to revive their
brand identity]
Marketing Plan
• The central instrument for
directing and coordinating the
marketing effort
– Strategic [STP]
– Tactical [4 Ps]
Figure 2.1 Strategic Planning,
Implementation, and Control Processes
Corporate and Division Strategic
Planning
• Defining the corporate mission
• Establishing strategic business units (SBUs)
• Assigning resources to each strategic business unit
• Assessing growth opportunities
Defining the Corporate Mission [For NSU]
• What is our business? [Education, training, and research]
• Who is the customer? [Students, professionals]
• What is of value to the customer? [Educational programs and
professional trainings of global standard that meet their career
goals]
• What will our business be? [To be in the top 100 universities in
ASIA]
• What should our business be? [To offer valued programs that will
develop our learners to engage in innovation and tasks that
contribute to the community development].
North South University is a global center of education and research that
ranks among the top universities in ASIA by providing innovative academic
programs and emphasizing research towards broader community
development.
Good Mission Statements
• Focus on a limited number of goals
• Stress the company’s major policies and values
• Define the major competitive spheres [scope] within
which the company will operate
• Take a long-term view
• Are as short, memorable, and meaningful as possible
Product Orientation vs. Market
Orientation
Company Product Market
Missouri-Pacific We run a railroad We are a people-
Railroad and-goods mover
Xerox We make copying We improve office
equipment productivity
Standard Oil We sell gasoline We supply energy
Columbia We make movies We market
Pictures entertainment
Mission statement
• To build total brand value by innovating to deliver
customer value and customer leadership faster,
better, and more completely than our competition.
(vague mission statement)
• Google’s “To organize the world’s information and

make it universally accessible and useful.” (Good
mission statement)
Establishing Strategic Business Units
• A single business or collection of related businesses
[Oral care = Close Up, Pepsodent, Pepsodent
toothpowder, which is an SBU for UNILEVER]
• Has its own set of competitors
• Has a leader responsible for strategic planning and
profitability [Oral care product group manager or
brand manager to take the responsibility of strategic
planning and profitability framed in sustainability]
Assessing Growth Opportunities (1 of 2)
Figure 2.2 The Strategic- Planning Gap
Assessing Growth Opportunities (2 of 2)
• Intensive Growth
• Integrative Growth
• Diversification Growth
• Downsizing and Divesting Older Businesses
Intensive Growth
• Corporate management
should first review
opportunities for improving
existing businesses
Developing Strategies for
intensive Growth
Product/ Market Expansion Grid [Ansoff]
Existing New
Products Products
Existing 1. Market 3. Product
Markets Penetration Development
New 2. Market
Markets Development
22
Product/ Market Expansion
Grid
 Market Penetration: making more sales to
current customers without changing its
products.
 How? Add new stores in current market areas,
improve advertising, prices, service or store
design.
 Market Development: develop new
markets for its current products.
 How? Identify new demographic or
geographic markets.
23
Product/ Market Expansion
Grid
 Product Development: offering modified
or new products to current markets.
 How? New styles, flavors, colors, or modified
products.
24
Integrative Growth
• A business can increase sales and profits through
backward [supply linkage], forward [opening retail
outlets], or horizontal integration [mergers or strategic
alliances] within its industry
Diversification Growth
• Diversification growth makes sense when good
opportunities exist outside the present businesses
– The industry is highly attractive and the company has
the right mix of business strengths to succeed
– For example, PRAN is a highly diversified company,
Bashundhara likewise]
Downsizing and Divesting Older
Businesses
• Companies must carefully prune, harvest, or divest
tired old businesses to release needed resources for
other uses and reduce costs
Organization and Organizational
Culture (1 of 2)
• A company’s organization consists of its structures,
policies, and corporate culture, all of which can
become dysfunctional in a rapidly changing business
environment
Organization and Organizational
Culture (2 of 2)
• Corporate culture: “The shared experiences, stories,
beliefs, and norms that characterize an organization”
Figure 2.4 The Business Unit
Strategic-Planning Process
SWOT Analysis
• Strengths
• Weaknesses
• Opportunities
• Threats
Checklist for evaluating strengths/weakness
analysis
Figure 2.5 Opportunity And Threat
Matrices
TOWS Matrix
Goal Formulation (MBO)
• Unit’s objectives must be arranged hierarchically
• Objectives should be quantitative
• Goals should be realistic
• Objectives must be consistent
Strategic Formulation: Porter’s
Generic Strategies
• Overall cost leadership [Chinese companies are a
significant follower of this strategy]
• Differentiation (or uniqueness) [Apple, Sony, BMW
etc. are following differentiation strategy]
• Focus [combination of both strategies in a niche
(small) market] example, Toyota launched Hybrid car.
Strategic Formulation: Strategic
Alliances
• Categories of marketing alliances
– Product or service alliance (City Bank with AMEX)
– Promotional alliance (Coca Cola and McDonald’s)
– Logistics alliances (IUB and NSU can make some
logistics arrangements to offer better service)
– Pricing collaborations (Hotel and car rental service)
Program Formulation and
Implementation
• McKinsey’s Elements of Success
– Skills
– Staff
– Style
– Strategy
– Structure
– Systems
– Shared values
Feedback and Control
• Peter Drucker: it is more important to “do the right
thing”—to be effective—than “to do things right”—to
be efficient
– The most successful companies, however, excel at
both
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Marketing Management

It’s more important to do what is

It’s rather more important to do what is

1. Inbound logistics (Sourcing the raw materials)

3. Outbound logistics (Storing or warehousing the finished goods)

4. Marketing (Selling and other marketing related functions)

5. Service (Associated services and after sale services)

2. Technology development (supports or reinforces the primary activities to be done well)

3. Human resource management (Hiring, training, motivating, and supervising people to

4. Firm infrastructure (Mission, Vision, structures, and other departments)

• Google’s “To organize the world’s information and

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