Marketing Management

Arab World Edition

Kotler, Keller, Hassan, Baalbaki, and Shamma

Chapter 2
Developing Marketing
Strategies and Plans

Instructor: Mahmoud Tarda

Chapter Questions

1. How does marketing affect customer value?

2. How is strategic planning carried out at different levels
of the organization?
3. What does a marketing plan include?

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 Chapter Question 1:

Marketing and Customer Value How does marketing affect

customer value?

The task of any business is to deliver customer value at a

profit.

In a competitive market, a company can win only by fine-

tuning the value delivery process and choosing, providing,
and communicating superior value.

Traditional view: The value delivery process takes place

during the selling process.(make the product and sell it).

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 Chapter Question 1:
How does marketing affect
customer value?
The Value Delivery Process (New View)

The value creation and delivery sequence can be divided into

three phases.

• Choosing the value-Segment the market, select target

markets, develop the offering's value positioning. (before
the product exists)

• Providing the value-Determine specific product features,

prices, and distribution.

• Communicating the value-Using the sales force,

Internet, advertising to announce and promote the
product.

• Each phase has cost implications.

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2-4
 Chapter Question 1:
How does marketing affect
customer value?
The Value Chain

The value chain is a tool for identifying ways to create more

customer value.

In the value chain model, every firm is a synthesis of primary

and support activities.

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 The Value Chain

6
 The Value Chain (Primary Activities)

1. Inbound Logistics- Bringing the material to the business

2. Operations- Converting the material into final products

3. Outbound Logistics- Shipping out the final product

4. Marketing –Which includes sales

5. Service

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 The Value Chain (Support Activities)

1. Procurement- is the acquisition of goods and services.

(Buying)

2. Technology Development

3. Human Resource Management

4. Firm Infrastructure- Covers the costs of general

management, planning, finance, accounting, legal, and
government affairs.

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 Chapter Question 1:
How does marketing affect
customer value?
Core business processes

 1. Market-sensing process-All activities in gathering and acting upon information

about the market.
 2. New-offering realization process-Researching, developing, and launching new
high-quality offerings quickly and within budget.
 3. Customer acquisition process-Defining target markets and prospecting for new
customers.
 4. Customer relationship management process-Building deeper understanding,
relationships, and offerings to individual customers.
 5. Fulfillment management process-Receiving and approving orders, shipping the
goods on time, and collecting payment.
 Use cross-functional teams (is a group of people with different functional expertise
working toward a common goal) to manage core processes.
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 Chapter Question 1:
How does marketing affect
customer value?
Core Competencies

Three characteristics of core competencies:

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

The companies use benchmarking to evaluate its

performance and costs comparing with other companies.

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 Chapter Question 1:
How does marketing affect
customer value?
A Holistic Marketing Orientation
and Customer Value

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 prosperity among key stakeholders.

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 Holistic Marketing

• Holistic marketers addresses three key management

questions:
• Value Exploration – How the firm identifies new value
opportunities.
• Value Creation – How efficiently a company creates more
promising new value offerings
• Value Delivery – How a company uses its capabilities and
infrastructure to deliver the new value offering more
efficiently.

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 Chapter Question 1:
How does marketing affect
customer value?

Fig 2.2: A Holistic Marketing Framework

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 Chapter Question 1:
How does marketing affect
customer value?

The Central Role of Strategic Planning

Fig 2.3: The Strategic Planning, Implementation, and Control Process

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 Chapter Question 2:

Corporate and Division Strategic How is strategic planning

done at different levels of
Planning the organization?

All corporate headquarters undertake four planning activities:

1. Defining the corporate mission.
2. Establishing strategic business units (SBUs).
3. Assigning resources to each SBU.
4. Assessing growth opportunities.

We’ll look at each process.

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 Chapter Question 2:
How is strategic planning
done at different levels of
Defining the Corporate Mission the organization?

Good mission statements:

• Focus on a limited number of goals
• Stress major policies and values
• Define major competitive spheres
• Take a long-term view
• Are short, memorable and meaningful

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 Chapter Question 2:
How is strategic planning
done at different levels of
Defining the Corporate Mission the organization?

Mission statements define the major competitive spheres in

which the company will operate:
• Industry
• Products
• Competence
• Market segment
• Vertical channels
• Geographic

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 Chapter Question 2:
How is strategic planning
done at different levels of
the organization?

Table 2.1: Product-Oriented versus Market-Oriented Definitions of a Business

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 Chapter Question 2:
How is strategic planning
done at different levels of
Establishing Strategic Business the organization?

Units

An SBU has three characteristics, as follows.

1. It is a single business, or related businesses, that can be
planned separately from the rest of the company.
2. It has its own set of competitors.
3. It has a manager responsible for strategic planning and
profit performance.

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 Chapter Question 2:
How is strategic planning
done at different levels of
Assigning Resources to Each SBU the organization?

Managers decide how to allocate resources.

Boston Consulting Group’s Growth-Share Matrix can be used to

make investment decisions. Defines four types of SBUs:

1. Stars: high-growth market, high-share product.

2. Cash cows: low-growth market, high-share product.
3. Question marks: low-share product, high-growth market.
4. Dogs: low-share product, low-growth market.

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 Chapter Question 2:
How is strategic planning
done at different levels of
Assessing Growth Opportunities the organization?

Fig 2.4: The Strategic Planning Gap

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 Chapter Question 2:
How is strategic planning
done at different levels of
Assessing Growth Opportunities the organization?

How to fill the strategic planning gap?

• Intensive growth
• Integrative growth (Vertical integration strategies ‘
backward and forward vertical integration strategies’ and
Horizontal integration strategies)
• Diversification growth
• Downsizing and divesting older businesses

Almaria diversified its product range

when it expanded into bakery products

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 Chapter Question 2:
How is strategic planning
done at different levels of
Assessing Growth Opportunities the organization?

Fig 2.5: Three Intensive Growth Strategies:

Ansoff’s Product–Market Expansion Grid

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 Chapter Question 2:
How is strategic planning
done at different levels of
Organization and Organizational the organization?

Culture

Strategic planning happens within the context of the

organization.

Corporate culture is the shared experiences, stories, beliefs,

and norms that characterize an organization.

Key question: is the culture customer-centric?

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 Chapter Question 2:
3:

Business Unit Strategic Planning How

Whatis does
done at
strategic
plan
a marketing
different
planning
include?
levels of
the organization?

Business unit strategic-planning involves the steps shown in Fig 2.6

Fig 2.6: The Business Unit Strategic-Planning Process

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 Chapter Question 2:
How is strategic planning
done at different levels of
Step 1: The Business Mission the organization?

Each business unit needs to define its specific mission within

the broader company mission.

Step 2: SWOT Analysis

Strengths, Weaknesses, Opportunities, Threats

- For monitoring the external and internal marketing
environment

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 Chapter Question 2:
How is strategic planning
done at different levels of
(Step 2: SWOT Analysis) the organization?

Market Opportunity Analysis

• Can the benefits involved in the opportunity be articulated

convincingly to a defined target market?
• Can the target market be located and reached with cost-effective
media and trade channels?
• Does the company possess or have access to the critical
capabilities and resources needed to deliver the customer benefits?
• Can the company deliver the benefits better than any actual or
potential competitors?
• Will the financial rate of return meet or exceed the company’s
required threshold for investment?

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 Chapter Question 2:
How is strategic planning
done at different levels of
(Step 2: SWOT Analysis) the organization?

Fig 2.7: Opportunity and Threat Matrices

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 Chapter Question 2:
How is strategic planning
done at different levels of
Step 3: Goal Formulation the organization?

• Unit’s objectives must be hierarchical

• Objectives should be quantitative
• Goals should be realistic
• Objectives must be consistent

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 Chapter Question 2:
How is strategic planning
done at different levels of
Step 4: Strategic Formulation the organization?

Porter’s Generic Strategies

• Overall cost leadership
• Differentiation
• Focus

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 Chapter Question 2:
How is strategic planning
done at different levels of
(Step 4: Strategic Formulation) the organization?

Strategic Alliances
There are four major categories of marketing alliances:
• Product or service alliances
• Promotional alliances
• Logistics alliances
• Pricing collaborations

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 Chapter Question 2:
How is strategic planning
done at different levels of
Step 5: Program Formulation and the organization?

Implementation
Depends on:
• Clear formulation of marketing programs
• Accurate cost planning
• Competent implementation

Step 6: Feedback and Control

The key to organizational health is willingness to examine the
changing environment and adopt new goals and behaviors.

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 Chapter Question 3:

Product Planning: The Nature What does a marketing

plan include?
and Contents of a Marketing Plan

A marketing plan is the central instrument for directing

and coordinating the marketing effort. It operates at a
strategic and tactical level.

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 Chapter Question 3:
What does a marketing
plan include?
Levels of a Marketing Plan

Strategic Tactical
• Target marketing decisions • Product features
• Value proposition • Promotion
• Analysis of marketing • Merchandising
opportunities • Pricing
• Sales channels
• Service

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 Chapter Question 3:
What does a marketing
plan include?
Marketing Plan Contents

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

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 Chapter Question 3:
What does a marketing
plan include?

Evaluating a Marketing Plan

✓ Is the plan simple?

✓ Is the plan specific?
✓ Is the plan realistic?
✓ Is the plan complete?

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