1

2
Developing Marketing
Strategies and Plans

Chapter Questions

How does marketing affect customer value?

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

Copyright 2012 Pearson Education

2-2

Phases of Value Creation and

Delivery
Choosing the value
Providing the value
Communicating the value

Copyright 2012 Pearson Education

2-3

What is Customer Value?

What do customers say about value?

Drivers of Value Equity

Roland T. Rust, Valerie A. Zeithaml, Katherine N. Lemon

The customers define value in

four ways:

Quality

Value is low price

Value is whatever I want in a
product
Value

Price

Value is the quality I get for the

price I pay

Value is what I get for what I

give up, including time and
effort

Convenience

Concept of Customer Value

Monroe (1991)

Customer-perceived value =

Perceived benefits
----------------------Perceived sacrifice

Monroe, K.B. (1991), Pricing Making Profitable Decisions, McGraw-Hill, New York, NY.

Quality
Customer-perceived value = ------------- creates Convenience
Price

Customer Equity Defined

Roland T. Rust, Valerie A. Zeithaml, Katherine N. Lemon

Value
Equity

Customer
Equity

Brand
Equity

Retention
Equity

Marketing and Customer Value

The task of business is to deliver customer
value at a profit
The Customer Value Exchange Subsystem
Customers
Or
clients

Value

The

firm

Lee, Richard and William F. Lewis, A Stakeholder Approach to Marketing

Management Using the Value Exchange Models, European Journal of Marketing
Vol. 25 No. 8, 1991, pp. 55-68

Marketing and Customer Value

cont..

The Value Delivery Process

(a) Traditional Physical Process Sequence
Make the product
Design
product

Procure

Sell the product

Make

Price

Sell

Advertise/
promote

Distribute

Service

(b) Value Creation and Delivery Sequence

Choose the value

Customer
segmentation

Market
Value
Selection/ positioning
focus

Strategic Marketing

Provide the value

Product/
development

Service/
development

Pricing

Communicate the value

Sourcing Distributing

Sales force
Servicing Servicing

Tactical Marketing

Sales
promotion

Advertising

Marketing and Customer Value

cont..
The Japanese deliver more values and further refined this view with the following
concepts:

Zero customer feedback time. Customer feedback should be collected

continuously after purchase to learn how to improve the product and its marketing
Zero product improvement time. The company should evaluate all improvement
ideas and introduce the most valued and feasible improvements as soon as
possible
Zero purchasing time. The company should receive the required parts and
supplies continuously through just-in-time arrangements with suppliers. By
lowering its inventories, the company can its costs
Zero setup time. The company should be able to manufacture any of its products
as soon as they are ordered, without facing high setup time or costs
Zero defects. The products should be of high quality and free flaws

What is the Value Chain?

The value chain is a tool for identifying was
to create more customer value because
every firm is a synthesis of primary and
support activities performed to design,
produce, market, deliver, and support its
product.

Copyright 2012 Pearson Education

2-16

The Generic Value Chain

Firm infrastructure
Human resource management

Support
Activities

Technology development
Procurement

Inbound
logistics

Operations

Outbound
logistics

Marketing
and values

Service

Primary Activities

The firms task is to examine its cost and performance in

each value-creating activity and to look for ways to improve it

The Value Chain: Core Business

Process

The market sensing process. All the activities involved in gathering

market intelligence, disseminating it within the organization, and acting
on the information

The new offering realization process. All the activities involved in

researching, developing, and launching new high-quality offerings quickly
and within budget
The customer acquisition process. All the activities involved in
defining target markets and prospecting for new customers
The customer relationship management process. All the activities
involved in building deeper understanding, relationships, and offering to
individual customers

The fulfillment management process. All the activities involved in

receiving and approving orders, shipping the goods on time, and
collecting payment

Characteristics of
Core Competencies

A source of competitive advantage

Applications in a wide variety of markets
Difficult to imitate

Copyright 2012 Pearson Education

2-19

Maximizing Core Competencies

(Re)define the business concept

(Re)shaping the business scope
(Re)positioning the companys brand identity

Copyright 2012 Pearson Education

2-22

What is Holistic Marketing?

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 co-prosperity among key
stakeholders.

Copyright 2011 Pearson Education

2-23

Questions to Address in
Holistic Marketing
What value opportunities are available?

How can we create new value offerings

efficiently?
How can we delivery the new offerings
efficiently?

Copyright 2012 Pearson Education

2-24

Figure 2.1 The Strategic Planning,

Implementation, and
Control Processes

Copyright 2012 Pearson Education

2-25

Table 2.1 Master Marketers

Copyright 2012 Pearson Education

2-26

What is 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.

Copyright 2012 Pearson Education

2-27

Levels of a Marketing Plan

Strategic

Target marketing
decisions
Value proposition
Analysis of
marketing
opportunities

Tactical

Copyright 2012 Pearson Education

2-28

Product features
Promotion
Merchandising
Pricing
Sales channels
Service

Corporate Headquarters
Planning Activities

Define the corporate mission

Establish strategic business units (SBUs)
Assign resources to each SBU
Assess growth opportunities

Copyright 2012 Pearson Education

2-29

Good Mission Statements

Focus on a limited number of goals

Stress major policies and values
Define major competitive spheres
Take a long-term view
Short, memorable, meaningful

Copyright 2012 Pearson Education

2-30

Google

Copyright 2012 Pearson Education

2-31

Table 2.2
Major Competitive Spheres

Industry
Products
Competence
Market segment
Vertical channels
Geographic

Copyright 2012 Pearson Education

2-32

Product Orientation vs.

Market Orientation
Company

Product

Market

Missouri-Pacific
Railroad

We run a railroad

We are a peopleand-goods mover

Xerox

We make copying
equipment

We improve office
productivity

Standard Oil

We sell gasoline

We supply energy

Columbia Pictures

We make movies

We entertain
people

Copyright 2012 Pearson Education

2-33

Dimensions Define a Business

Customer Groups

Customer Needs

Technology

Copyright 2012 Pearson Education

2-34

Characteristics of SBUs

It is a single business or collection of related

businesses
It has its own set of competitors
It has a leader responsible for strategic
planning and profitability

Copyright 2012 Pearson Education

2-35

Copyright 2012 Pearson Education

2-36

Figure 2.2 The Strategic Planning

Gap

Copyright 2012 Pearson Education

2-37

The Strategic Planning Gap

cont.

Intensive Growth:
Three Intensive Growth Strategies: Ansoffs
Product-Market Expansion Grid
Integrative Growth:
Increasing businesss sales and profits through
backward, forward, or horizontal integration within
its industry
Diversification Growth:
New Products for New Markets

Three Intensive Growth Strategies:

Ansoffs Product-Market Expansion Grid

Current
Products

New
Products

Current
Markets

1. Market-penetration 3. Product-development
strategy
strategy

New
Markets

2. Market-development
strategy

(Diversification
Strategy)

Back to Corporate Strategic Planning

What is Corporate Culture?

Corporate culture is the
shared experiences, stories, beliefs,
and norms that
characterize an organization.

Copyright 2012 Pearson Education

2-40

Figure 2.3 The Business Unit

Strategic Planning Process

Copyright 2012 Pearson Education

2-41

SWOT Analysis
Strengths

Weaknesses

Opportunities

Threats

Copyright 2012 Pearson Education

2-42

Market Opportunity Analysis

(MOA)

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?

Copyright 2012 Pearson Education

2-43

Market Opportunity Analysis

(MOA)

Can the company deliver the benefits better

than any actual or potential competitors?
Will the financial rate of return meet or exceed
the companys required threshold for
investment?

Copyright 2012 Pearson Education

2-44

Figure 2.4
Opportunity and Threat Matrices

Copyright 2012 Pearson Education

2-45

Goal Formulation and MBO

Units objectives must be hierarchical

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

Copyright 2012 Pearson Education

2-46

Porters Generic Strategies

Overall cost leadership

Differentiation

Focus

Copyright 2012 Pearson Education

2-47

Categories of Marketing Alliances

Product or service alliance

Promotional alliance
Logistics alliances
Pricing collaborations

Copyright 2012 Pearson Education

2-48

McKinseys Elements of Success

Skills

Strategy

Staff

Structure

Style

Systems

Shared values

Copyright 2012 Pearson Education

2-49

Marketing Plan Contents

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

Copyright 2012 Pearson Education

2-50

Evaluating a Marketing Plan

Is the plan simple?

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

Copyright 2012 Pearson Education

2-51

For Review

How does marketing affect customer value?

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

Copyright 2012 Pearson Education

2-52