Topic 3: Links of Strategic

Marketing Management to
Corporate Strategy

By: Aishath Faseeha Mohamed

 Strategic Planning 2

▶ Systematic process of
envisioning a desired future,

and translating this vision

into broadly defined goals

or objectives and a

sequence of steps to

achieve them. In contrast

to long-term planning

(which begins with the

current status and lays

 Strategic Management 3

▶ Set of decisions and actions used to

implement strategies that will provide
a competitively superior fit between
the organization and its environment
so as to achieve organizational goals

▶ Responsibility = top managers &

chief executive
 Strategic Management 4

Managers ask such questions

as...
 What changes and trends are occurring?
 Who are our customers?
 What products or services should we offer?
 How can we offer these products or services
most efficiently?
 Grand Strategy 5

⦿ General plan of major action to achieve long-term

goals
⦿ Falls into three general categories
1. Growth
2. Stability
3. Retrenchment

A separate grand
strategy can be
defined for global
operations

https://www.youtube.com/watch?v=e7rxkkKO3vc
 Grand Strategy: Growth 6

▶ Growth can be promoted

internally by investing in
expansion or externally by
acquiring additional business
divisions
- Internal growth = can include
development of new
or changed products
- External growth = typically
involves diversification –
businesses related to current
product lines or into new areas
 Grand Strategy: Stability 7

 As the name implies, a stability business strategy seeks to maintain

operations and market size and position. This strategy is
characteristic of small risk-averse firms or firms operating in a very
precarious market that is comfortable with its current position.

 Stability, sometimes called a pause strategy, means that

the organization wants
▶ to remain the same size or
▶ to grow slowly and in a controlled fashion
Grand Strategy: Retrenchment 8

▶ Retrenchment = the organization goes

through a period of forced decline by
either shrinking current business units
or selling off or liquidating entire
businesses

▶ Liquidation = selling off a business nit

for the cash value of the assets, thus
terminating its existence

▶ Divestiture = involves selling off of

businesses that no longer seem central
to the corporation
 9

 Is there a link to
marketing?
 Global Corporate Strategies 10

High
Transnational
Globalization Strategy
Strategy • Seeks to balance global
• Treats world as a
efficiencies and local
single global market
• Standardizes global responsiveness
• Combines standardization
products/advertising
and customization for
Need for Global Integration

strategies
product/advertising
strategies

Export
Strategy Multi-domestic Strategy
•Domestically • Handles markets
focused independently for each
country
•Exports a few
• Adapts product/advertising
domestically produced
products to selected to local tastes and needs
countries
Low
Low Need for National High
Responsiveness
 Global Strategy 11

⦿ Globalization = product design and

advertising strategies are standardized
around the world
⦿ Multi-domestic = adapt product and
promotion for each country
⦿ Transnational = combine global
coordination with flexibility to meet
specific needs in various countries
 Purpose of Strategy
⦿ The plan of action that prescribe resource
allocation and other activities for dealing with the
environment, achieving a competitive
advantage, that help the organization attain
goals.
Strategies focus on:
● Core competencies
● Developing synergy
● Creating value for ustomers

12
Three Levels of Strategy in Organizations 13

Corporate-Level Strategy:
What business are we in?
Corporation

Business-Level Strategy:
How do we compete?

Textiles Unit Chemicals Unit Auto Parts Unit

Functional-Level Strategy:
How do we support the business-level
strategy?

Finance R&D Manufacturing Marketing

Activity 3.1(30 mins)
1. Choose a national or multinational company
and explain the three levels of strategy in
that organization.
2. Write down a Grand strategy for the chosen
organization using 3 categories.
Strategic Management Process 14

Scan External Identify Strategic

Environment – Factors –
National, Opportunities,
Global Threats Implement
Strategy via
Evaluate Formulate Changes in:
Current Mission, Define new Strategy – Leadership
SWOT Mission culture,
Goals, Corporate,
Strategies Goals, Grand Business, Structure, HR,
Strategy Information &
Functional control
Scan Internal systems
Identify Strategic
Environment – Core
Factors –
Competence,
Strengths,
Synergy, Value
Weaknesses
Creation
Strategy Formulation vs. Implementation 15

▶ Strategy Formulation = stage of strategic

management that involves planning
and decision making that lead to the
establishment of the organization’s goals
and of a specific strategic plan
▶ Strategy Implementation = stage of
strategic management that involves
the use of managerial and
organizational tools to direct resources
toward achieving strategic outcomes
 Strategic Corporate Planning
16
and Marketing
▶ Corporate goals (e.g. growth or stabilization) and general
principles (e.g. mission statement and ethical principles) are
typically superordinate to market-oriented planning.
▶ Profitability targets (earnings, return on sales etc.)
▶ Goals regarding size and growth (Sales volume or growth,
market leadership etc.)
▶ Financial goals (liquidity, level of financing, etc.)
▶ Social Goals (jobs, employee satisfaction etc.)
▶ Power goals (Company independence, economic and social
influence etc.)
▶ Visions (Long-term general goals)
 Strategic Corporate 17
Planning and Marketing

▶ Ethical Principles:
companies have to decide whether
they should withdraw from markets
for harmful (e.g. cigarettes) or
ecologically damaging products (e.g.
pesticides).
 Relevant Markets, Market Areas
and Market Segments 18

▶ In which market are we active or do we wish to become active?

▶ “The relevant market is defined as that section of the total
market which is relevant to the competitive strategy, i. e. that
market field which the marketing instruments are directed to
in the sense of a served market”
▶ The degree of substitutability is crucial
▶ same or similar performance of the products (for many customers, cars
of the BMW 3 Series and the Mercedes C Class are largely
substitutable, the Smart and the VW Passat Estate less so);
▶ same or similar occasions for using the products (e.g. hamburgers and
hot dogs are used in similar situations for a quick meal,
whereas soft drinks (like cola) and wine are likely to be
used very differently).
 Relevant Markets, Market 19
Areas and Market Segments
▶ In many industries there is an orientation towards national
markets
▶ This orientation reflects the cultural, social, economical and political
unity of national markets
▶ Following factors have contributed to the development of
national
markets
▶ Important advertising media (TV, newspapers) serve national markets as
a whole and can only be deployed efficiently for products with a
national orientation.
▶ Availability throughout the national market is considered a precondition
for establishing major brands.
▶ Retail companies active in the overall national market prefer to have
widely known brands in their product range.
Target Portfolios 20
 Target Portfolio 21

▶ Market Opportunity
▶ Market Size
▶ Market Growth
▶ Industry Profitability
▶ Competitive intensity
▶ Market entry barriers
▶ Level of capital investment
▶ Number and structure of buyers
▶ Dependence on raw materials and
energy
▶ Dependence on economic trends
 Target Portfolio 22

▶ Position of the company

▶ Current market share
▶ Current relative market share (in relation to
major
competitors)
▶ Size of the company
▶ Financial strength of the company
▶ Image of the company
▶ Existing customer relationships
▶ Operating margin
▶ Expertise
▶ Cost situation (economies of scale,
experience curve etc.)
▶ Management Quality
 Fundamental Market 23

Strategy Options
▶ Differentiation involves achieving advantages over competitors in terms of
product features which are of interest to customers.
Following are some means of differentiation
▶ Service Life and reliability of products
▶ Design
▶ Customer Service
▶ Technology
▶ Distribution System
▶ Brands
▶ Customer Relationships
 Fundamental Market Strategy 24
Options
▶ Comprehensive Cost Leadership involves
becoming the most cost-effective provider in the industry.
This opens up the possibility of offering one’s own product
at lower prices than competitors or generating higher profit
contributions with prices on a par with competitors, which
in turn can be used to consolidate and strengthen the
competitive position
▶ Quantity-Related Cost Degression
▶ Technological Lead, Know-How and Expertise
▶ Access to Cost-Effective Production Factors
▶ Cost-Effective Product Design
 Timing Aspects of Marketing: 25
Early Mover (Pioneers)
 Pioneers, of course, can relatively freely select the most attractive market
segment without regard to competitors or existing customer loyalties.
 Pioneers that have developed a novel technology can attempt to protect this,
primarily through patents, thus making it harder for other providers to enter
the market
 Customer switching costs represent an advantage for the pioneer in that
customers cannot easily switch to other competitors appearing later, as such a
switch may be associated with adaptation difficulties
 Network effects are of a similar nature.“In situations where customers seek a
common standard or the ability to interact with other users, the pioneering firm
has the first opportunity to develop “network effects
 Pioneer is able to lay down benchmarks, standards and rules of the game
 Pioneer has access to scarce resources
 Experience curve effects
 Timing Aspects of marketing, Late 26
mover (follower)
 The risks and challenges of pioneers
favour later market entry (follower
strategy)
▶ Feasibility of development projects not
clear in the early period
▶ The risk of insufficiently matured
projects and potential image effects
▶ Free riders in cases where there is no
patent protection
▶ Pioneers have the burden of
c ommunicating relevant information
about completely new products
 Timing aspects of marketing: 27

Early Followers
 Early followers have more information on the market
and thus carry less risk than pioneers (reduced market
uncertainty)
 Early followers can benefit from the advance
performance of the pioneer regarding technical and
market development.
 Early followers can orientate themselves towards the
slightly later phases of technical advancement, which in
the beginning is very rapid.
 For early followers, development of the market with
regard to standards and the providers’ market
positions has not yet consolidated.
 In contrast to late followers, early followers can still
assume a relatively long duration on the market
 Strategic Windows 28

▶ Strategic windows are “limited periods during which the “fit”

between the key requirements of a market and the particular
competencies of a firm competing in that market is at an
optimum
▶ Three type of discontinuities that lead to strategic windows
▶ Innovative Demand This is about completely new customer
groups, whose needs differ fundamentally from those of
existing customers in an industry. For example, the group of
potential customers for PCs developed from computer nerds
and amateurs in the initial phase to commercial users
(companies, authorities etc.) in the second phase to private
households today, each with new opportunities for providers.
 Strategic Windows (cont…) 28
▶ Essential Changes of Customer References and Product
Properties This refers to a change in customer wishes and the
matching products, which loosens the ties to existing providers
and thus offers opportunities for new competitors. An example
for this is the market for TV program guides, in which magazines
structured according to the time of day and not the programme
providers (ARD, ZDF, Arte etc. in Germany) became ever more
prevalent as the number of receivable TV channels grew.

▶ Fundamentally New Technologies A technological discontinuity

that allows customer needs to be satisfied in new ways offers
companies that master this new technology the opportunity of
breaking up rigid market structures. Thus, the transition from
mechanical to electronic watches allowed completely new
providers like Seiko or Citizen to gain a dominant position.
 Questions: 30

⦿ Can we achieve corporate objectives without a

marketing plan?
⦿ Can a successful marketing plan be
develop without proper strategic
marketing process?
⦿ Can a proper strategic marketing plan be
carried out without an effective development
of corporate strategy?
⦿ Can an effective corporate strategy be
developed without ca rrying out a
proper strategic management process?