THE UNIVERSITY OF DANANG

UNIVERSITY OF ECONOMICS

Chapter 03

STRATEGIC PLANNING
AND MARKETING
STRATEGIES

Marketing Management
Faculty of Marketing
LEARNING OBJECTIVES

LO1. Explain strategic planning levels.

LO2. Explain the essence of targeting.
LO3. Define the principles of strategic and tactical
targeting.
LO4. Explain how to develop strategies to target multiple
market segments.
LO5. Describe how to segment consumer markets.
LO6. Describe how to segment business markets.
LO7. Explain how a company should develop a value
proposition and a positioning strategy.
LO8. Explain the role of brands in creating market value.
LO9. Describe the key principles in designing brand
elements and associations.
Corporate and Business
Unit Planning

Three key areas:

▪ Managing the company’s business as an investment portfolio
▪ Assessing the market’s growth rate and the company’s position in
that market
▪ Developing a viable business model

TL1
Figure 2.1 The Strategic Planning Process
Corporate and business unit planning management

• Marketing planning and management can occur on three different levels:

corporate, business unit, specific market offering.

Strategic planning for each SBU

includes: Five main steps (G-STIC):
Setting a corporate strategy means:
- defining the SBU’s mission - setting a goal
- defining the corporate mission
- analysing external opportunities and - developing the strategy
- building the corporate culture
threats - designing the tactics
- establishing strategic business
- analysing internal strengths and - defining the implementation plan
units
weaknesses - identifying the control metrics to
- assigning resources to each
- crafting market offerings that will measure progress toward the set
strategic business unit
enable the company achieve its goal
mission
 Cấp công ty
(Corporate level)

Cấp đơn vị kinh doanh

chiến lược Chăm sóc cá nhân Chăm sóc nhà cửa Thực phẩm và giải khát
(Strategic Business Unit level) (Personal care) (Home care) (Foods and refreshment)

Cấp sản phẩm/chức năng

(Product level)
 Cấp công ty
(Corporate level)

Chăm sóc sức khoẻ người tiêu

Thiết bị y tế Dược phẩm
dùng
(Medical Devices) (Pharmaceutical Products)
Cấp đơn vị kinh (Consumer Health Products)
doanh
chiến lược
(Strategic Business
Unit level)
Chăm sóc da Chăm sóc cá nhân Chăm sóc sức khoẻ thiết yếu
(Skin Health Products) (Self Care Products) (Essential Health Products)

Cấp sản
phẩm
(Product
level)
Four Planning Activities

• Defining the corporate mission

• Building the corporate culture
• Establishing strategic business units
• Assigning resources
Defining the Corporate Mission
(1 of 2)

A mission is a clear, concise, and enduring statement of the

reasons for an organization’s existence
Often referred to as its core purpose, a company’s mission is a
long-term goal that provides company employees and
management with a shared sense of purpose, direction, and
opportunity

TL1
Defining the Corporate Mission
(2 of 2)

Good mission statements:

▪ Focus on a limited number of specific goals
▪ Stress the company’s major policies and values
▪ Define the major markets that the company aims to serve
▪ Take a long-term view
▪ Are as short, memorable, and meaningful as possible
Building the Corporate Culture

What exactly is a corporate

culture?
– Some define it as “the
shared experiences, stories,
beliefs, and norms that
characterize an
organization.”
Allocating Resources

Assess each SBU’s competitive advantage and the attractiveness

of the market in which it operates
▪ Grow
▪ Harvest
▪ Hold

TL1
 Growth strategies

• Building your market share • International expansion

• Developing committed • Acquisitions, mergers, and
customers and alliances
stakeholders • Building an outstanding
• Building a powerful brand reputation for social
• Innovating new products, responsibility
services, and experiences • Partnering with
government and NGOs
Growing the Core

Make the core of the brand as distinctive

as possible

Drive distribution through both existing

and new channels
Offer the core product in new formats or
versions
Defining Strategic Business
Units (1 of 2)

A strategic business unit (SBU):

▪ Is a single business, or a collection of related businesses, that can
exist separately from the rest of the company
▪ Has its own set of competitors
▪ Has a manager responsible for strategic planning and profit
performance, who controls most of the factors affecting profit

TL1
Defining Strategic Business
Units (2 of 2)

A specialized portfolio involves S B Us with fairly narrow

assortments consisting of one or a few product lines
A diversified portfolio involves S B Us with fairly broad
assortments containing multiple product lines

TL1
 Identifying Target Customers

Targeting
–The process of
identifying
customers for
whom the company
will optimize its
offering

LO2
The Logic of Targeting (1 of 3)

Mass marketing
▪ the firm ignores segment differences and goes after the whole
market with one offer

TL1 LO2
The Logic of Targeting (2 of 3)

Targeted marketing
▪ Sell different products to all the different segments of the market
• One-to-one approach

TL1 LO2
The Logic of Targeting (3 of 3)

Mass customization
–The ability of a company to
meet each customer’s
requirements—to prepare
on a mass basis individually
designed products, services,
programs, and
communications

LO2
Strategic v s Tactical Targeting
ersu

(1 of 2)

Strategic targeting
▪ Focuses on customers whose needs the company can fulfill by
ensuring that its offerings are customized to their needs

TL1 LO3
Strategic v s Tactical Targeting
ersu

(2 of 2)

Tactical targeting
▪ identifies the ways in which the company can reach these
strategically important customers

TL1 LO3
Strategic Targeting

Target compatibility
▪ Can the company create superior value for target customers?
Target attractiveness
▪ Can these customers create superior value for the company?

TL1 LO3
Target Compatibility (1 of 3)

Target compatibility
▪ A reflection of the company’s ability to outdo the competition in
fulfilling the needs of target customers

TL1 LO3
Target Compatibility (2 of 3)

• Business infrastructure
• Access to scarce resources
• Skilled employees
• Technological expertise
• Strong brands
• Collaborator networks

TL1 LO3
Target Compatibility (3 of 3)

Core competency
▪ A source of competitive advantage and makes a significant
contribution to perceived customer benefits
▪ Has applications in a wide variety of markets
▪ Is difficult for competitors to imitate

TL1 LO3
Target Attractiveness (1 of 3)

Target attractiveness
▪ The ability of a market segment to create superior value for the
company
• Monetary value
• Strategic value

TL1 LO3
Target Attractiveness (2 of 3)

Monetary value
▪ Customer revenues
▪ Costs of serving customers

TL1 LO3
Target Attractiveness (3 of 3)

Strategic value
▪ Social value
▪ Scale value
▪ Information value

TL! LO3
Tactical Targeting (1 of 3)

Defining the customer profile

▪ Demographic factors
▪ Geographic factors
▪ Behavioral factors
▪ Psychographic factors

TL1 LO3
Tactical Targeting (2 of 3)

Aligning customer value and customer profile

▪ Effectiveness
▪ Efficiency

TL! LO3
Tactical Targeting (3 of 3)

Bringing segments to life

▪ Personas
• Detailed profiles of one, or perhaps a few, hypothetical target consumers,
imagined in terms of demographic, psychographic, geographic, or other
descriptive attitudinal or behavioral information

TL1 LO3
Single-Segment Targeting

Niche marketing

LO4
 Targeting Multiple Segments

• Product specialization
• Market specialization
Segmenting Consumer Markets

Market segmentation
▪ Divides a market into well-defined slices

TL1 LO5
Demographic Segmentation (1 of 4)

Age
Life-cycle stage
Gender
Income
Race and culture

TL1 LO4
Demographic Segmentation (2 of
4)

Age
▪ Our wants and abilities change with age
Life cycle stage
▪ A person’s major concern (e.g., divorce)

TL! LO5
 Demographic Segmentation (3 of 4)

• Gender
– Men and women have different
attitudes and behave differently
Demographic Segmentation (4 of
4)

Income
▪ Income segmentation is a long-standing practice
Race and culture
▪ Hispanic Americans
▪ Asian Americans
▪ African Americans

TL1 LO5
 Geographic Segmentation (1 of 2)

• Geographical segmentation
– Divides the market into geographic units such as nations, states, regions,
counties, cities, or neighborhoods
Geographic Segmentation (2 of 2)

Combining geographic data with demographic data

▪ Nielsen Claritas’ PRIZM
• Education and affluence
• Family life cycle
• Urbanization
• Race and ethnicity
• Mobility

TL1 LO5
Behavioral Segmentation

Marketers divide buyers into groups on the basis of their actions

▪ User status
▪ Usage rate
▪ Buyer-readiness stage
▪ Loyalty status
▪ Occasions

TL1 LO5
 Psychographic Segmentation

• Buyers are divided into groups on the basis of psychological traits,

lifestyle, or values
Segmenting Business Markets

• Demographic factors
• Operating variables
• Purchasing approaches
• Situational factors
• Personal characteristics

TL! LO6
Discussion Questions (1 of 2)

Consider the choices you make when you buy an airline ticket.
▪ Think about options such as boarding group, seat assignment, cabin
class, baggage charges, and so on.
▪ Why do airlines use a mass customization strategy rather than a
mass marketing strategy?

TL1
Discussion Questions (2 of 2)

Grocery stores rely on market segmentation. Compare and

contrast how and why different chains use segmentation as they
target their customers.
▪ How have Whole Foods and Trader Joe’s used segmentation?
▪ How does the approach used these companies compare to more
traditional grocery chains like Kroger?

TL1
 Developing a Value Proposition (1 of 5)

• Create value across three domains:

– Functional value
– Psychological value
– Monetary value
Developing a Value Proposition (2 of 5)
• Total customer benefit
– The perceived value of the bundle of functional,
psychological, and monetary benefits customers expect from
a given market offering because of the product, service, and
image
Developing a Value Proposition (3 of 5)
• Total customer cost
– The perceived bundle of functional, psychological, and
monetary costs customers will incur in evaluating, obtaining,
using, and disposing of the given market offering
Developing a Value Proposition (4 of 5)
• Customer value proposition
– Based on the difference between benefits the customer gets
and the costs he or she assumes for different choices
Developing a Value Proposition (5 of 5)
• Customer value analysis
– Reveals the company’s strengths and weaknesses relative to
those of various competitors
Customer Value Analysis
• Identify the relevant attributes and benefits that customers
value
• Assess the relative importance of these attributes and benefits
• Assess the company’s and competitors’ performance on the
key attributes/benefits
• Monitor customer value over time
 Developing a Positioning Strategy

• Positioning
– The act of designing a company’s offering and image to
occupy a distinctive place in the minds of the target market
Choosing a Frame of Reference
• Frame of reference
– Serves as a benchmark against which customers can evaluate
the benefits of a company’s offering
Points of Difference and Points of Parity (1 of 5)
• Points of difference (P ODs)
– Attributes/benefits that consumers strongly associate with a
brand, positively evaluate, and believe they could not find to
the same extent with a competitive brand
Points of Difference and Points of Parity (2 of 5)

• POD criteria
– Desirable
– Deliverable
– Differentiating
Points of Difference and Points of Parity (3 of 5)
• Points of parity (POPs)
– Attribute/benefit associations that are not necessarily
unique to the brand but may in fact be shared with other
brands
Points of Difference and Points of Parity (4 of 5)

• POP forms
– Category
– Correlational
– Competitive
 PO P v s PO D
ers u

• Multiple Frames of Reference

• Straddle Positioning
Points of Difference and Points of Parity (5 of 5)
• Perceptual maps
– Visual representations of consumer perceptions and
preferences
 Creating a Sustainable Advantage (1 of 2)

• Competitive advantage
– The ability to perform in
one or more ways that
competitors cannot or
will not match
• Leverageable
advantage
Creating a Sustainable Advantage (2 of 2)
• Three core strategies:
– Differentiate on an existing attribute
– Introduce a new attribute
– Build a strong brand
Communicating the Positioning (1 of 5)
• Positioning statement
– Communicating an offering’s category membership along
with points of parity and points of difference, and
developing a narrative to convey the offering’s positioning
Communicating the Positioning (2 of 5)
• Crafting a positioning statement
– Attributes that describe the offering v s benefits delivered by
ers u

the attributes
 Communicating the Positioning (3 of 5)

• Communicating category membership

– Announce category benefits
– Compare to exemplars
– Rely on the product descriptor
Communicating the Positioning (4 of 5)
• Communicating conflicting benefits
– Challenge: consumers want to maximize both of the
negatively correlated attributes or benefits
• Develop a product or service that performs well on both
dimensions
• Launch two different marketing campaigns
 Communicating the Positioning (5 of 5)

• Positioning as storytelling
– Narrative branding
• Setting
• Cast
• Narrative arc
• Language
– Primal branding
Discussion Questions (1 of 2)
• Discuss the positioning strategies of CVS and Walgreens.
– What value do they offer consumers?
– How might the two chains define their frame of reference?
– How would you describe their points of difference and
points of parity relative to the competition?
Discussion Questions (2 of 2)
• Consider your college or university’s positioning statement.
– How does your college or university describe its attributes
and the benefits it provides to the buyer (in this case the
student)?
– How would you describe your college or university’s
competitive advantage?
How Does Branding Work?
• American Marketing Association
– A brand is “a name, term, sign,
symbol, or design, or a
combination of them, intended to
identify the goods or services of
one seller or group of sellers and
to differentiate them from those
of competitors”
The Essence of Branding
• Branding
– The process of endowing products and services with the
power of a brand
The Role of Brands (1 of 2)
• Brands’ role for consumers
– Set and fulfill expectations
– Reduce risk
– Simplify decision making
– Take on personal meaning
– Become part of identity
The Role of Brands (2 of 2)
• Brands’ role for firms
– Simplify product handling
– Organize inventory and
accounting
– Offer legal protection
– Create brand loyalty
– Secure competitive
advantage
Brand Equity
• Brand equity
– The monetary value of a brand
• Goodwill
– The monetary value of all intangible assets of a
company
Measuring Brand Equity
• Gauging brand equity
– Cost approach
– Market approach
– Financial approach
Brand Power
• Brand power
– The ancillary value contributed by the brand to a product or
a service
• Customer-based brand equity
Measuring Brand Power
• Brand audit
– Focused series of procedures to assess the health of the
brand, uncover its sources of brand equity, and suggest ways
to improve and leverage its equity
• Brand tracking
– Brand audit is used as input to collect quantitative data from
consumers over time, providing consistent, baseline
information
Designing the Brand (1 of 3)
• Brand mantra
– A three- to five-word articulation of the heart and soul of the
brand
• Communicate brand’s uniqueness
• Simplify brand essence
• Inspire
Designing the Brand (2 of 3)
• Choosing brand elements:
– Memorable
– Meaningful
– Likable
– Transferable
– Adaptable
– Protectable
Designing the Brand (3 of 3)
• Brand characters
– A special type of brand symbol—one with human
characteristics that both enhance likability and tag the brand
as interesting and fun
Choosing Secondary Associations
• Brand personality
– The specific mix of human traits that we can attribute to a
particular brand
Figure 10.1 Secondary Sources of Brand Knowledge
Brand Hierarchy
• Brand hierarchy
– Reflects the way in which a company’s brands are related to
a company’s products and services, as well as to one another
Managing Brand Portfolios (1 of 2)
• Brand portfolio
– The set of all brands and brand lines a particular firm offers
for sale in a particular category or market segment
Managing Brand Portfolios (2 of 2)
• Three strategies:
– House-of-brands strategy
– Branded-house strategy
• Flagship product
• Branded variants
– Sub-brand strategy
Cobranding
• Cobranding aka dual branding
– Two or more brands marketed together
• Same company cobranding
• Joint venture cobranding
• Ingredient cobranding
Figure 10.2 Brand Value Chain
Brand Dynamics (1 of 2)
• Brand repositioning
– Back to basics
strategy
– Reinvention strategy
Brand Dynamics (2 of 2)
• Brand extension
– Advantages
– Disadvantages
• Brand dilution
Managing a Brand Crisis
• Guidelines
– Empathy
– Value
– Strategy
– Innovation
Luxury Branding (1 of 2)
• Characteristics:
– Quality
– Uniqueness
Luxury Branding (2 of 2)
• Managing luxury brands
– Finding the right balance
Figure 10.3 A Hypothetical Example of a Starbucks
Brand Positioning Bull’s-Eye
Discussion Questions (1 of 2)
• BMW, aka “the ultimate driving machine,” has built its brand
by differentiating it from the competition and suggesting,
through its message, that it is superior to everything else on
the market.
– Consider how BMW has built its brand. How do the brand’s
elements create brand equity?
– How has the brand evolved?
Discussion Questions (2 of 2)
• The Rolling Stones, considered by many to be the greatest
rock-n-roll band in the world, is not only the band’s name, but
also its brand.
– Discuss the Rolling Stones as a brand. What image is it trying
to convey? How is the brand reinforced?
– How does the tongue logo used across its merchandise line,
tickets, and so on reinforce the brand created by the band?