Chapter 2
DEVELOPING MARKETING
STRATEGIES AND PLANS
Dr. Nu Nu Lwin
Professor
Dept. of Management Studies
Yangon University of Economics
Learning Objectives
1. How does marketing affect customer value?
2. How is strategic planning carried out at the corporate and
divisional levels?
3. How is strategic planning carried out at the business unit level?
4. What does a marketing plan include?
Marketing and Customer Value
The value delivery process
The value chain
Core competencies
The central role of strategic planning
Value Delivery Process
Consists of choosing (or identifying), providing (or delivering) &
communicating superior customer value
Choosing the value Providing the value Communicating the value
Customer Product/service Sale force
segmentation development Sale promotion
Market selection Pricing Advertising
Value positioning Distribution
The Value Delivery Process
CHP: 2&11-5
The Value Chain
A tool for identifying ways to create more customer value
Synthesis of activities performed to design, produce, market,
deliver, and support a firm’s products
Value Chain Process
Firm’s Main Task
To examine costs & performance of each value-creating activity & to look for ways to improve it
Core Business Process
Firm’s success depends on well coordination of departmental activities in
conducting core business processes
1. The market-sensing process: Gathering & acting upon information about
the market
2. The new-offering realization process: Researching, developing, & launching
new high-quality offerings quickly & within
budget
3. The customer acquisition process: Defining target markets & prospecting
for new customers
4. The customer relationship management process: Building deeper
understanding, relationships, & offerings to
individual customers
5. The fulfillment management process: Receiving & approving orders,
shipping goods on time, & collecting payment
Core Business Process
Value delivery network (supply chain)
Company, suppliers, distributors, and ultimately customers who partner
with each other to improve performance of the entire system
Core Competencies
A source of competitive advantage & makes a significant contribution to
perceived customer benefits
Competitive advantage: Distinctive capabilities or excellence in broader
business processes
Areas of special technical & production expertise & applications in a wide
variety of markets
To own and nurture the resources & competencies that make up the
essence of business
Core Competencies
Three Characteristics
A source of competitive advantage in that it makes a significant
contribution to perceived customer benefits
Applications in a wide variety of markets
Difficult for competitors to intimate
Distinctive capabilities
Excellence in broader business processes (market sensing, customer linking,
channel bonding)
Both are sources of competitive advantage
Core Competencies
Business realignment for maximizing core competencies
(Re)defining the business concepts
(Re)shaping the business scope
(Re)positioning the brand identity
Central Role of Strategic Planning
Managing the businesses as an investment portfolio
Assessing the market’s growth rate & the company’s position in that
market
Establishing a strategy
COPYRIGHT © 2016 PEARSON EDUCATION, INC. 1-13
Central Role of Strategic Planning
Strategic planning
The process of developing and maintaining a strategic fit between the
organization’s goals and capabilities and its changing marketing
opportunities
Three Key Areas of Strategic Planning
Managing businesses
Assessing each business’s strength
Establishing strategy
Four organization levels
Corporate level, division level, business unit level, product level
Central Role of Strategic Planning
Marketing plan
Central instrument for directing & coordinating the marketing effort
Operates at two level: strategic & tactical
Strategic Marketing plan
Lay out the target markets & the value proposition the firm will offer
Tactical Marketing plan
Specify the marketing tactics: Product feature, merchandising
pricing, promotion, sales channels & services
Central Role of Strategic Planning
Corporate & Division Strategic Planning
All corporate headquarters undertake four planning activities
Defining the Corporate Mission
Establishing Strategic Business Units (SBUs)
Assigning resources to each SBU
Planning new businesses, downsizing, or terminating older businesses
Defining the Corporate Mission
Mission statement
The organization’s purpose, what it wants to accomplish in the larger
environment
What is our business?
Who is the customer?
What is of value to the customer?
What will our business be?
What should our business be?
To share the sense of purpose, direction & opportunity with managers,
employees, customers
E.g. Google: “To organize the world’s information and make it universally
accessible and useful”
4-18
Good Mission Statements
Focus
Focus on
on limited
limited number
number of
of goals
goals
Stress
Stress major
major policies
policies and
and values
values
Define
Define major
major competitive
competitive
spheres
spheres
Take
Take aa long-term
long-term view
view
As
As short,
short, memorable,
memorable, &&
meaningful
meaningful as
as possible
possible
Product-Oriented vs. Market-Oriented Definitions of a Business
Market definitions of a business are superior to product definitions
Company Product Definition Market Definition
Union-Pacific Railroad We run a railroad We are a people-and-goods mover
We make copying We help improve office
Xerox
equipment productivity
Hess Corporation We sell gasoline We supply energy
Paramount Pictures We make movies We market entertainment
Encyclopedia We sell encyclopedias We distribute Information
We make air conditioners We provide climate control in the
Carrier
and furnaces home
4-20
Establishing Strategic Business Units
Purpose of identifying SBU: To develop separate strategies and assign
appropriate funding
Target Market Definition: Focus on selling a product or service to a
current market
Strategic Market Definition: Focus on both current & potential market
Three characteristics of SBUs
Single business or collection of related businesses that can be planned for
separately
Has its own set of competitors
Has a manager who is responsible for strategic planning and profit
performance
4-21
Assigning Resources to Each SBU
Decide how to allocate corporate resources to each SBU
Portfolio-planning models
GE/McKinsey Matrix
Competitive advantage of the firm
Attractiveness of the industry
BCG Growth-Share Matrix
Market share
Market growth rate
Shareholder Value Analysis
Assess the potential of a business based on potential growth opportunities
from global expansion, repositioning, & strategic outsourcing
4-22
Assessing Growth Opportunities
Planning new businesses, downsizing & terminating older businesses
Strategic Planning Gap
Gap between future desired sales & projected sales, need to develop or acquire
new business to fill it
Intensive opportunities
To identify opportunities to achieve further growth within current
businesses
Integrative opportunities
To identify opportunities to build or acquire businesses that are related to
current businesses
Diversification opportunities
To identify opportunities to add attractive businesses unrelated to current
businesses 4-23
Assessing Growth Opportunities
1-24
Assessing Growth Opportunities
Intensive Growth
Market penetration: A growth strategy increasing
sales to current market segments
without changing the product
Market development: A growth strategy that identifies and develops new market
segments for current products
Product development: A growth strategy that offers new or modified products to
existing market segments
Diversification: A growth strategy through starting up or acquiring businesses
outside the company’s current products & markets
4-25
ESPN Growth Opportunities
Assessing Growth Opportunities
Integrative Growth
To increase sales & profits through backward, forward or horizontal integration
within its industry
Diversification Growth
When good opportunities exist outside the present businesses – the industry is highly
attractive & the company has the right mix of business strengths to succeed
Downsizing & Divesting Older Businesses
The reduction of the business portfolio by eliminating products or business units that
are not profitable or that no longer fit the company’s overall strategy
To release needed resources for other uses or to reduce costs
4-27
Organization & Organizational Culture
Organization:
Consists of its structures, policies, and corporate culture, all of which can
become dysfunctional in a rapidly changing business environment
Corporate Culture
The shared experiences, stories, beliefs, and norms that characterize an
organization.”
E.g. The way people dress, talk to one another, and greet customers.
Marketing Innovation
Critical in any marketing organization
Employees can challenge company orthodoxy and stimulate new ideas
Need to identify and encourage fresh ideas from three generally
underrepresented groups:
Employees with youthful or diverse perspectives,
Employees far removed from company headquarters, &
Employees new to the industry
Firms develop strategy by choosing their view of the future
Marketing Innovation
Scenario analysis:
Developing plausible representations of a firm’s possible future using
assumptions about forces driving the market and different uncertainties
Managers need to think through each scenario with the question:
“What will we do if it happens?,”
Adopt one scenario as the most probable, &
Watch for signposts that might confirm or disconfirm it.
Business Unit Strategic Planning
1-31
Business Unit Strategic Planning
Business Mission
Define specific mission within the broader company mission
SWOT Analysis Strengths
Weaknesses
Opportunities
Threats
CHP: 2&11-32 4-32
External Environment Analysis
Marketing Opportunity: An area of buyer need and interest that a
company has a high probability of profitably
satisfying
Sources of Marketing Opportunity
Supplying something that is short supply
Supplying an existing product or service in a new or superior way
Supplying a totally new product or service
Environmental Threat: Challenge posed by an unfavorable trend or
development that, in the absence of defensive
marketing action, would lead to lower sales or profit
CHP: 2&11-33 4-33
Market Opportunity Analysis (MOA)
Can we articulate the benefits convincingly to a defined target market?
Can we locate the target market and reach them 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 we deliver the benefits better than any actual or potential
competitors?
Will the financial rate of return meet exceed the required threshold for
investment?
Opportunity and Threat Matrices
Internal Environment Analysis
Strengths & Weaknesses
Need to evaluate internal strengths & weaknesses to find attractive
opportunities and to take advantage of them
Not necessarily correct all weaknesses nor should it gloat all strengths
Question
Whether the firm should limit itself to those opportunities for which it
possess the required strengths or consider those that might require it to
find or develop new strengths
4-36
Goal Formulation
To develop goals for the planning period
E.g.: Profitability, sale growth, market share improvement, risk
containment, innovation, reputation
Requirements for using MBO
Objectives must be hierarchical in order of importance
Objectives should be quantitative
Goals should be realistic
Objectives must be consistent
Strategic Formulation
To design a strategy for achieving the goals
Marketing strategy
Compatible technology strategy
Sourcing strategy
1) Porter’s Generic Strategies
Overall cost leadership
Differentiation
Focus
Strategic group
Firms pursuing same strategy directed to the same target market
Strategic Formulation
2) Strategic Alliances
Forming alliances with domestic or multinational companies that
complement or leverage their capabilities & resources
Product or Service Alliances
Promotional Alliances
Logistics Alliances
Pricing collaborations
Partner Relationship Management (PRM)
Forming and managing partnerships
Program Formulation & Implementation,
Preparing marketing programs based on marketing strategy
Cost estimation & justification of costs & benefits
Nurture stakeholders’ benefits (Be careful not violate any stakeholder group’s
sense of fairness)
Successful implementation need 7Ss (McKinsey)
Hardware (3Ss): Strategy, structure, systems
Software (4Ss):
Style: Share a common way of thinking & believing
Skills: Having the skills needed to carry out the strategy
Staff: Hiring able people, training them well & assigning the right jobs
Shared value: Sharing the same guiding values
Feedback & Control
Inevitable erosion of the company’s strategic fit with the environment
Due to changes on market environment faster than the 7Ss
Key to success:
Willingness to examine the changing environment and adopt new goals &
behaviors
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
Marketing Plan
A written document that summarizes what the marketers has learned
about the marketplace & indicates how the firm plans to reach its
marketing objectives
Contents
Executive summary & table of contents
Situation analysis
Marketing strategy
Financial projections
Implementation controls
Marketing Plan
1. Executive Summary and Table of Contents
2. Situation Analysis
Relevant background data on sales, costs, the market, competitors, and
the macroenvironment
How do we define the market, how big is it, and how fast is it growing?
What are the relevant trends and critical issues?
Use all information to carry out a SWOT analysis.
3. Marketing Strategy
Define mission, marketing and financial objectives, and needs the market
offering is intended to satisfy, & its competitive positioning.
Require inputs from other areas, such as purchasing, manufacturing,
sales, finance, and human resources.
Marketing Plan
4. Marketing Tactics
Outline the marketing activities that will be undertaken to execute the
marketing strategy.
Product or service: Key attributes & benefits that will appeal to
target customers.
Pricing: General price range & how it might vary across different
types of customers or channels, including any incentive
or discount plans.
Channel: Different forms of distribution, such as direct or indirect
Communications: General message and media strategy.
Often develop a separate communication plan to provide the detail
necessary for agencies and other media partners to effectively design
the communication program.
Marketing Plan
5. Financial projections
Sales forecast, an expense forecast, and a break-even analysis
Forecasted sales volume by month & product category
Expected costs of marketing, in details
Break-even analysis: Estimate how many units the firm must sell monthly
(or how many years it will take) to offset its monthly
fixed costs and average per-unit variable costs.
Estimating profit through risk analysis
Optimistic, pessimistic, & most likely for each uncertain variable affecting
profitability, under an assumed marketing environment & marketing
strategy for the planning period
May use simulation programs
Marketing Plan
6. Implementation controls
Outline the controls for monitoring & adjusting implementation of the plan.
Spell out the goals and budget for each month or quarter
(For management to review each period’s results and take corrective action
as needed)
Evaluating a Marketing Plan
Is the plan simple/succinct?
Is the plan complete?
Is the plan specific?
Is the plan realistic?
End of Lecture 2
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