Ch 2: developing marketing strategies & plans
The value chain:is a tool for identifying wants to create more customer value because every firm is a synthesis of primary & support activities performed to design, produce, market, deliver, & support its product.
The firm success depends on how well each department performs & also on how these departments coordinate together to conduct Core business processes.
Core business processes include the following:
1-The market sensing process:all the activities in gathering market intelligence, disseminating it with in the organization & acting on the information.
2-The new-offering realization process:all the activities in researching, developing, & launching new high-quality offering quickly & within the budget.
3-The customer acquisition process: all the activities in defining target markets & prospecting for new customers.
4-The customer relationship management process:all the activities in building deeper, understanding, relationships, & offerings to individual customers.
5-The fulfillment of management process:all the activities in receiving & approving orders, shipping the goods on time, & collectingpayment.
Characteristics of core competencies:
1-A source of competitive advantage in that it makes a significant contribution to perceivedcustomer benefits.
2-It has applications in a wide variety of markets.
3-It’s difficult for competitors to imitate.
How to be a vigilant organization?
We have to be able to answer the following:
1-Can we learn from the past?
2-How should the present be evaluated?
3-What do we envision for the future?
Holistic marketing: integrating the value exploration, value creation, & value delivering activities with the purpose of building long-term mutually satisfying relationship & co prosperity among key stakeholders.
The holistic marketing framework is designed to address three key management questions.
1-Value exploration: how can a company identify new value opportunities?
Through understanding the relationship between: A) the customer cognitive space (needs). B) The company competence space. C) The collaborator’s resource space (horizontal partnership).
2-Value creation: how can a company efficiently create more promising new value offerings?
3-Value delivery: how can a company use its capabilities& infrastructure to deliver the new value offerings more efficiently?(customer relationship management)
The central role of strategic planning:
The marketing plan: is the central instrument for directing &coordinating the marketing effort, it operates at both strategic & tactical level.
Strategic marketing plan: lays out the target markets & the value proposition the firm will offer, based on the analysis of the best marketing opportunities.
Tactical marketing plan:specifies the marketing tactics, including product features, promotion, merchandising, pricing, sales channels, & services.
Corporate &division strategic planning:
Corporate headquarters’ four planning activities:
1-Defining the corporate mission:
An organization exists to accomplish something. In order to define an organization’s mission it should answer the following: what is our business? Who is the customer? What is the value of the customer? What will our business be? What should our business be?
Organizations develop mission statement to share with employees, managers, & customers. A successful mission statement provides the employees with a shared sense of purpose, direction, & opportunity.
Good mission statement has five characteristics:
a)Focused on a limited number of goals.
b)Stress major policies & values.
c)Define major competitive spheres (industry, products & applications, competence, market segment, vertical, & geographical).
d)Take a long-term view.
e)Short, memorable, & meaningful.
2-Establishing strategic business units:
Companies often define its business in terms of its products, but a market definition of a business is superior to product definition.
A business can define itself in terms of three dimensions: customer groups, customer needs, & technology.
Large companies normally manage quite different businesses each requiring its own strategy so it classifiesit to strategic business units. Strategic business unit has three characteristics:
1-It’s a single business or collection of related businesses, which 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 & profit performance, who controls most of the factors affecting profit.
The purpose of identifying the company’s strategic business unit is to develop separate strategies & assign appropriate funding.
3- Assigning resources to each SBU:
Once it has defined SBUs, management must decide how to allocate corporate resources to each. SBU can be classified according to the extent of its competitive advantage & the attractiveness of its industry (the GE/McKinsey matrix) or the BCG’s growth share matrix, uses the relative market share & annual rate of market growth as a criteria to make a business decision.
high
??question mark / **
stars / market growth rates
dogs / Cash cow
Low
Lowmarket sharehigh
Boston Consulting Group matrix
Management would want to grow (??), harvest or draw cash (cash cow), hold on to a business (stars).
Assessing growth opportunities:
It includes planning new businesses, downsizing, & terminating older business.
Growth opportunities:
When a gap between desired sales & projected sales occurs management will need to develop or acquire new business to fill it so it can use one of the following:
A)Intensive growth:
A framework for detecting new intensive growth opportunities is called (product-market expansion grid).
The company could do one thing of the following four:
Current product / New productCurrent markets / 1-Market-penetration strategy
(can we gain more market share with our current products) / 3- product-development strategy
(can we develop new products to our current markets)
New markets / 2-Market-development strategy
(can we find new markets for my current product) / 4-diversification strategy
(can we develop new products for new markets)
B)Integrative growth:
Increasing sales & profits through backward, forward, or horizontalintegration with in the industry (a company can acquire one or more of its suppliers or its wholesalers to get more control or more profits).
C)Diversification growth:
It makes sense when good opportunities exist outside the present business, the industry is highly attractive & the company has the right mix of business strength to be successful.
Downsizing & divesting older businesses:
Weak businesses require a disproportionate amount of managerial attention. Companies must carefully prune, harvest, or divest tired old businesses in order to release needed resources to other uses & reduce costs.
Organization & organizational culture:
The corporate culture: it is the shared experiences, stories, beliefs, & norms that characterize the organization.
Marketing innovation:
Tactics / strategies for managing change:
1-Avoid the innovation name for the team.
2-Use the buddy system (find like-minded collaborator within the organization).
3-Set the metrics in advance (different sets of funding, testing criteria).
4-Aim for quick hits first (easy to do ideas).
5-Get data to backup your gut (feedback).
Business unit strategic planning:
Business unit strategic planning process consists of the following steps:
SOWT analysis
a-Business mission:
Each business unit needs to define its specific mission with in the boarder company mission.
b-SWOT analysis:
It is the overall evaluation of a company’s strength, weaknesses, opportunities, &threats.
External environment (opportunities & threat) analysis:
Market opportunities analysis (MOA):
We can determine an opportunity’s attractiveness by asking & answering the following questions:
1-Can the benefits involved in the opportunity be articulated convincingly to a defined target market?
2-Can we locate the target market(s) & reach them with cost-effective media & trade channels?
3-Does our company possess or have access to the critical capabilities & resources we need to deliver the customer benefits?
4-Can we deliver the benefits better than any actual or potential competitors?
5-Will the financial rate of return meet or exceed our required threshold for investment?
Environmental threat: is a challenge posed by an unfavorable trend or development that would lead – in the absenceof defensive marketing action, to lower sales or profit.
Internal environment (strengths & weaknesses) analysis:
Each business needs to evaluate its internal strengths & weaknesses; it could do that through using a checklist for performing strengths / weaknesses analysis so that the company could correct its lethal weaknesses & take advantage of its strengths to find new opportunities.
c-Goal formulation:
After performing SWOT analysis the company can proceed to develop its goals for the planning period.
The unit’s objective should have four criteria:
1-They must be arranged hierarchally, from the most to the least important.
2-Objectives should be quantitative whenever possible.
3-Goals should be realistic.
4-Objective must be consistent.
d-Strategic formulation:
Each business must design a strategy for achieving its goals, consisting of a marketing strategy & a compatible technology strategy & sourcing strategy.
Porter’s generic strategies:
These strategies provide a good starting point for strategic thinking:
1-Overall cost leadership: the lower your costs are the lower your prices are, so you can beat your competitor & win large market share.
2-Differentiation: the business concentrates on uniquely achieving superior performance in an important customer benefit area valued by a large part of the market.
3-Focus: the business focuses on one or more narrow market segments. The firm gets to know these segments intimately & pursues either cost leadership or differentiation within the target segments.
Strategic alliances:
Major categories of strategic alliances:
1-Product or service alliances: when a company licenses another to produce its product or to join together to make a new product.
2-Promotional alliances: one company agrees to carry a promotion for another company.
3-Logistics alliances: one company offers logistical services for another company’s product
4-Pricing collaborations: one or more companies join in a special pricing collaboration.
e-Program formulation & implementation:
A successful business practice has seven elements; strategy is only one of them:
1-Strategy2- structure3- system
4- Style5- skills6- staff7- shared values
These entire elements combine together to formulate the program & affects its success. So the company has tobe careful when picking its staff & has to make sure that they are skilled enough, the shared values it wants them to have to make it work.
f-Feedback & control:
A company’s strategic fit with the environment will inevitably erode, because the market environment changes faster that the seven Ss of a company. Thus a company might remain efficient while it losses its effectiveness. The most successful companies excel at both.
Product planning: the nature content of a marketing plan:
1-Executive summary & table of content.
2-Situation analysis.
3-Marketing strategy.
4-Financial projections.
5-Implementation controls.