Marketing Management

Arab World Edition

Kotler, Keller, Hassan, Baalbaki, and Shamma

Chapter 2
Developing Marketing
Strategies and Plans
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.

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 Chapter Question 1:
How does marketing affect
customer value?
The Value Delivery Process

The value creation and delivery sequence can be

divided into three phases.
[Link] the value.
[Link] the value.
[Link] the value.

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 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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 Chapter Question 1:
How does marketing affect
customer value?
Core business processes
• Market-sensing process
• New-offering realization process
• Customer acquisition process
• Customer relationship management process
• Fulfillment management process

Saudi Aramco manages business

operations through cross-functional teams.

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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.

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 Chapter Question 1:
How does marketing affect
customer value?
Box 2.1: Becoming a Vigilant Organization

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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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 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 Fields
• Take a long-term view
• Are short, memorable and meaningful

Copyright © 2012 Pearson Education 2-14

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

Mission statements define the major competitive Fields

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
Example Mission Statement the organization?

Orbit Company, Iraq

“Orbit Company aims to be the

preferred local partner or service
provider of international companies
as it combines the trading expertise
of the Middle East with the best
products, technology and business
practices of the West to accelerate
Iraq’s economic growth.”
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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
Assigning Resources to Each SBU different levels of 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
Assessing Growth Opportunities different levels of the
organization?

How to fill the strategic planning gap?

• Intensive growth
• Integrative growth
• 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
Assessing Growth Opportunities different levels of 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:
How is strategic planning
Marketing Innovation done at different levels of
the organization?
Innovation in marketing is critical.

Five key strategies for managing change:

1. Avoid the innovation title for the team.
2. Use the buddy system.
3. Set the metrics in advance.
4. Aim for quick hits first.
5. Get data to back up your gut.
Research in Motion fosters a
culture of innovation

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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 behaviours.

Copyright © 2012 Pearson Education 2-32

 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 • Product features
decisions
• Promotion
• Value proposition
• Merchandising
• Analysisof marketing
• Pricing
opportunities
• 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?

Copyright © 2012 Pearson Education 2-36

 Credits

• Slide 1 Corbis: Ali Haider / epa

• Slide 6 Alamy Images: Barry Iverson
• Slide 8 George S. Day and Paul J. H. Schoemaker, Peripheral Vision:
Detecting the Weak Signals That Will Make or Break Your Company
(Boston: Harvard Business School Press, 2006)
• Slide 10 P. Kotler, D. C. Jain, and S. Maesincee, “Formulating a Market
Renewal Strategy,” in Marketing Moves (Part 1), Fig. 1-1 (Boston: Harvard
Business School Press, 2002), p. 29. Copyright © 2002 by President and
Fellows of Harvard College. All rights reserved
• Slide 15 Orbit Company website, [Link]; Mobily Saudi Arabia
company website, [Link]; eBay company website,
[Link]
• Slide 20 Salem Alforaih Photography, [Link]
• Slide 21 Adapted and reprinted by permission, Harvard Business Review.
From “Strategies for Diversification,” by Igor Ansoff, September–October
1957. Copyright © 1957 by the President and Fellows of Harvard College.
All rights reserved
• Slide 23 Getty Images: Justin Sullivan