Module 1

DEVELOPING MARKETING STRATEGIES AND PLANS

INTRODUCTION:

Key ingredients of the marketing management process are insightful, creative marketing strategies,
and plans that can guide marketing activities. Developing the right marketing strategy over time requires a
blend of discipline and flexibility. Firms must stick to a strategy but also find new ways to constantly
improve it. Increasingly, marketing must also develop strategies for a range of products and services within
the organization.

After completion of this module, LEARNERS will be able to:

1. Know how marketing affects customer value

2. Understand how strategic planning is carried out at different levels of the organization
3. Learn what is included in marketing plan

MARKETING AND CUSTOMER VALUE

Marketing involves satisfying consumers’ needs and wants. The task of any business is to deliver
customer value at a profit.

The Value Delivery Process

The traditional view of marketing is that the firm makes something and then sells it.
a. Will not work in economies where people face abundant choice.
b. New belief: marketing begins with the planning process.
c. Value creation and delivery consists of three parts:
1. Choosing the value (segment the market, define target market, develop “offering”).
2. Providing the value (product features, prices, and distribution channels).
3. Communicating the value (sales force, advertising, and promotional tools).
Each of these “values” involves a cost component to the company.
 d. Nirmalya Kumar’s 3 “Vs” approach to marketing:
1. Define the value segment or segments.
2. Define the value proposition.
3. Define the value network.

e. Frederick Webster views marketing in terms of:

1. Value defining process.
2. Value developing processes.
3. Value delivering processes.

The Value Chain

Michael Porter’s Value Chain identifies nine strategically relevant activities that create value and
costs (five primary and four support activities).

a. Primary activities:
1. Inbound logistics (material procurement).
2. Operations (turn into final product).
3. Outbound logistics (shipping and warehousing).
4. Marketing (marketing and sales).
5. Servicing (service after the sale).

b. Support activities:
1. Procurement.
2. Technology development.
3. Human resource management
4. Firm infrastructure.
The firm’s task is to examine its costs and performance in each value-creating activity and to look
for ways to improve performance.
 c. Core business processes
1. The market sensing process (marketing intelligence).
2. The new offering realization process (research and development).
3. The customer acquisition process (defining target markets and consumers).
4. The customer relationship management process (deeper understanding of consumers).
5. The fulfillment management process (receiving, shipping, and collecting payments).
Strong companies develop superior capabilities in these core business processes. Strong
companies also reengineer the workflows and build cross-functional teams responsible for
each process. Many companies have partnered with suppliers and distributors to create a
superior value-delivered network.

d. Value-delivery network (supply chain)

To be successful today, a firm must look for competitive advantages beyond its own operations—to
its suppliers and distributors to create a superior value-delivery network (supply chain).

Core Competencies
a. Companies need resources (labor, materials, energy, etc.)
1. Key is to own or nurture the resources and competencies that make up the essence of the
business—outsource if competency is cheaper and available.
2. Competitive advantage accrues to companies that possess distinctive capabilities (excellence
in broader business processes).
3. Competitive advantage derives from how well the company fits its core competencies and
distinctive capabilities into tightly interlocking “activity systems.”
4. A core competency has three characteristics
 Makes a significant contribution to perceived customer benefits
 Has applications in a wide variety of markets
 It is difficult for competitors to imitate
5. Competitive advantage ultimately derives from how well the company “fits” its core
competencies and distinctive capabilities into tightly interlocking “activity systems.”
A Holistic Marketing Orientation and Customer Value
A holistic marketing orientation can provide help in capturing customer value. Holistic marketing
addresses three key management questions:
1. Value exploration—identify new value opportunities.
2. Value creation—create more promising new value offerings.
3. Value delivery—deliver the new value offerings more efficiently.
Developing strategy requires the understanding of the relationships and interactions among these
three spaces.

Value Exploration
1. Customer’s cognitive space (reflects existing and latent needs and includes participation,
stability, freedom, and change).
2. Company’s competence space (broad versus focused scope of business and depth
physical versus knowledge-based capabilities).
3. The collaborator resource space (horizontal and vertical partnerships).

Value Creation
Marketer’s need to:
1. Identify new customer benefits from the customer’s view.
2. Utilize core competencies.
3. Select and manage business partners from its collaborative networks.

Value Delivery—What Companies Must Become?

Often requires an investment in infrastructure and capabilities.
a. Proficient at customer relationship management – Who the customers are, and
respond to different customer opportunities.
b. Internal resource management – Integrate major business processes within a single
family of software modules.
c. Business partnership management – Allow the company to handle complex
relationships with its trading partners.
The Central Role of Strategic Planning

Successful marketing thus requires companies to have capabilities such as: understanding
customer value, creating customer value, delivering customer value, capturing customer value, and
sustaining customer value.
a. Calls for action in three areas:
1. Managing a company’s businesses as an investment portfolio.
2. Assessing each business’s strength by the market’s growth rate and the company’s
position and fit in that market.
3. Establish strategy.

b. Most large companies consist of four organizational levels:

1. Corporate level.
2. Division level.
3. Business unit level.
4. Product level.

c. The marketing plan is the central instrument for directing and coordinating the
marketing effort. The marketing plan operates on two levels: strategic and tactical.
1. The strategic marketing plan lays out target markets and the value proposition.
2. The tactical marketing plan specifies the product, promotion, merchandising, pricing, sales
channels, and service.

CORPORATE AND DIVISION STRATEGIC PLANNING

All corporate headquarters undertake four planning activities:
a. Defining the corporate mission.
b. Establishing strategic business units (SBUs).
c. Assign resources to each SBU.
d. Assessing growth opportunities.
Defining the Corporate Mission
a. Key questions to ask:
1. What is our business?
2. Who is the customer?
3. What is of value to the customer?
4. What will our business be?
5. What should our business be?

b. Mission statements are best when guided by a “vision” that provides direction for the
company. Good mission statements have three major characteristics:
1. Focused on a limited number of goals.
2. Stresses the company’s major policies and values.
3. Defines the major competitive spheres within which the company will operate by defining the:
 Industry.
 Products and applications.
 Competence.
 Market-segment.
 Vertical.
 Geographical.
c. Establishing Strategic Business Units
1. Must see their companies as a customer-satisfying process
2. A target market definition tends to focus on selling a product or service (Pepsi® and all who
drink cola sodas).
3. A strategic market definition is broader and more encompassing (Pepsi redefines its strategy to
everyone who has a “thirst”). A business can be defined in terms of three dimensions:
 Customer groups.
 Customer needs.
 Technology.
 d. Assigning Resources to Each SBU
More recent methods used by firms to make internal investment decisions are based on
shareholder value analysis, and whether the market value of a company is greater with an SBU or
without it.

e. Assessing Growth Opportunities

1. Involves planning for new businesses.
2. Downsizing or terminating old businesses.
3. Intensive Growth

Corporate manager’s first course of action should be a review of opportunities for improving
existing businesses.
 Market-penetration strategy (gain more market share).
 Market-development strategy (new markets for current products).
 Product-development strategy (new products for current markets).
 Diversification strategy (new products for new markets).

Integrative Growth
Sales and profits may be increased through:
a. Backward integration.
b. Forward integration.
c. Horizontal integration.

Diversification Growth
When opportunities are found outside the present business and the company has the right mix of
business strengths to be successful.

a. Several types are possible:

1. New products that have technological or marketing synergies with existing product lines.
2. New products unrelated to the current industry.
 3. New businesses unrelated.
b. Downsizing and Divesting Older Businesses
1. Focus on businesses that provide growth opportunities.
2. Weak businesses require a disproportionate amount of managerial time/talent.

Organization and Organizational Culture

Organization consists of:
a. Structures.
b. Policies.
c. Corporate culture defined as “the shared experiences, stories, beliefs, and norms that characterize
an organization.”Sometimes corporate culture develops organically and is transmitted by the CEOs
personality.

Marketing Innovation
Innovation in marketing is critical. Five key strategies for managing change in an organization:
1. Avoid the innovation title 4. Aim for quick hits first
2. Use the buddy system 5. Get date to back up your gut
3. Set the metrics in advance
BUSINESS UNIT STRATEGIC PLANNING
The Business Mission
a. Each business unit needs to define its specific mission within the broader company mission.
b. SWOT Analysis
c. The evaluation of a company’s strengths, weaknesses, opportunities, and threats is called SWOT
analysis. It involves monitoring the external and internal marketing environment.
d. Use market opportunity analysis (MOA)
e. Environmental threat unfavorable trend or development
f. Internal Environment (Strengths/Weaknesses) Analysis

It is one thing to find attractive opportunities and another to be able to take advantage of them. Each firm
must evaluate its internal strengths and weaknesses. George Stalk suggests that winning companies are
those that have achieved superior in-company capabilities, not just core competencies. Stalk calls this
capabilities-based competition.
Goal Formulation
Once the company has performed a SWOT analysis, it can proceed to develop specific goals for
the planning period. This stage of the process is called goal formulation. Managers use the term “goals” to
describe objectives that are specific with respect to magnitude and time. The firm sets objectives, and then
manages by objectives (MBO). For MBOs to work they must meet four criteria:
 They must be arranged hierarchically, from the most to least important.
 Objectives should be stated quantitatively whenever possible.
 Goals should be realistic.
 Objectives must be consistent.

Strategic Formulation
Every business must design a strategy for achieving its goals, consisting of a marketing strategy,
and a compatible technology strategy, and sourcing strategy.
a. Porter’s Generic Strategic
Michael Porter has proposed three generic strategies that provide a good starting point for strategic
thinking:
 1. Overall cost leadership.
2. Differentiation.
3. Focus.
According to Porter, firms pursuing the same strategy to the same target market constitute a
strategic group.

Strategic Alliances
Companies are discovering that there is a need for strategic partners if they hope to be effective.
Many strategic alliances take the form of marketing alliances. These fall into four major categories:
1. Product or service alliances.
2. Promotional alliances.
3. Logistics alliances.
4. Pricing collaborations.
To keep strategic alliances thriving, corporations have begun to develop organizational structures for
support and have come to view the ability to form and manage partnerships as core skills (called Partner
Relationship Management, PRM).

Program Formulation and Implementation

a. A great marketing strategy can be sabotaged by poor implementation.
b. Marketing must estimate its costs.
c. In implementing strategy, companies must not lose sight of the multiple stakeholders involved and
their needs.
d. According to McKinsey & Company, strategy is only one of seven elements in successful business
practice.
1. The first three—strategy, structure, and systems are considered the “hardware” of success.
2. The next four—style, skills, staff, and shared values are the “software”
e. “Style” means that company employees share a common way of thinking and behaving.
f. “Skills” means that the employees have the skills necessary to carry out the company’s strategy.
g. “Staffing” means that the company has hired able people, trained them well, and assigned them to
the right jobs.
h. “Shared values,” means that the employees share the same guiding values.
Feedback and Control
As it implements its strategy, the firm needs to track the results and monitor new developments. A
company’s strategic fit with the environment will inevitably erode because the market environment changes
faster than the company’s 7Ss. Organizations are subject to inertia and are set up as efficient machines
and it is difficult to change one part without adjusting everything else.

PRODUCT PLANNING: THE NATURE AND CONTENTS OF A MARKETING PLAN

Each product level (product line, brand) must develop a marketing plan for achieving its goals. A
marketing plan is a written document that summarizes what the marketer has learned about the
marketplace and indicates how the firm plans to reach its marketing objectives.
Marketing plans are becoming more customer and competitor orientated. The plan draws more
input from all the business functions and is team developed. Contents of the marketing plan:
 Executive summary and table of contents.
 Situation analysis.
 Marketing strategy.
 Financial projections.
 Implementation controls.

ASSIGNMENTS/TASKS

1. Marketing Memo: Marketing Plan Criteria

Illustrates the four most important questions that marketers must ask and answer in developing a
marketing plan: Is the plan simple? Is the plan specific? Is the plan realistic? Is the plan complete?
Sample Marketing Plan: Pegasus Sports International
 http://www.mplans.com/inline_skating_marketing_plan/situation_analysis_fc.php, 05 Sep 2018

2. Case Study - Counseling on the Internet: a new innovation

Cannon Counseling is amongst the most highly regarded counseling practices in Western Australia. It
employs three full-time, and17 part-time, counselors. All are qualified and experienced. They work with
 all types of clients, both directly and via referral from doctors. It is a successful company. However, it is
not growing and is looking for an innovative way to expand its enterprise.

The Australian government is offering substantial sums of money to organizations that want support in
marketing their products or services via the internet. This is called the 'E-commerce for the Millennium
Project'. The owner of Cannon Counseling, Steve Bull, is very interested in this opportunity to expand
his business in such a progressive way.

Your task:
You work for the E-commerce for the Millennium Project. Steve Bull has asked you to help him prepare
a marketing plan for Cannon Counseling’s expansion onto the Internet. Use the AOSTC to write an
outline marketing plan.
ANALYSIS.
OBJECTIVES.
STRATEGIES.
TACTICS.
CONTROLS.

CHAPTER ASSESSMENT
1. Proceed to EDMODO for taking an assessment for this chapter. (TBA)

PRIMARY REFERENCE BOOK:

 Dawn Iacobucci, Marketing Management, Latest Edition. Cengage Learning. 2015
 Kotler, Philip, and Keller, Kevin Lane (2009), Marketing Management, 13 th Ed., Pearson Education,
Inc.
 Paul J. Peter, Marketing Management: Knowledge and Skills
 Business Marketing Management: A Strategic View of Industrial and Organizational Markets,
Michael Hut

SECONDARY REFERENCE(S):
 The Internet