Marketing Planning and Management Chapter 2 Notes

Corporate and Business Unit Planning and Management

 Marketers must prioritize strategic planning in (3) key areas:
o Managing the company’s business as an investment portfolio
o Assessing the market’s growth rate and the company’s position in the
market
o Developing a viable business model
 Company must develop a game plan for achieving the long-run
objectives of each business unit
 Marketing planning and management occur on (3) different level:
o Corporate
 Responsible for designing a corporate strategic plan to a guide
the whole enterprise
 They allocated resources for business units
o Business Unit
 Each unit develops a plan to carry that business unit into a
profitable future
o Specific market offering
 Each market offering involves a marketing plan for achieving
its objectives
 The Strategic planning processes
o Corporate planning  Business Unit planning  Offering planning
 Companies undertake in (4) planning activities
o Defining the corporate mission
 A mission is a clear, concise, and enduring statement of the
reasons for an organization’s existence
 Often referred to as it’s Core Purpose
o A company’s mission is a long-term goal that
provides company employees and management
with a share sense of purpose, direction and
opportunity
 Good Mission Statement have (5) Major Characteristics:
 They focus on a limited number of specific goals
 They stress the company’s major policies and values
 They define the major markets that the company aims to
serve
 They take a long-term view
  They are short, memorable, and meaningful as possible
o 3 to 4 corporate mantras typically more effective
o Building the Corporate culture
 Corporate culture is the shared experience, stories, beliefs,
and norms that characterize an organization
o Establishing strategic business units (SBU)
 Has (3) characteristics:
 It is a single business, or a collection of related
business, that can exist separately from the rest of the
company
 It has its own set of competitors
 It has a manager responsible for strategic planning and
profit performance, who controls most of the factors
affecting profit
 They make up a company’s portfolio
 Defined as Specialized or Diversified
o Specialized Portfolio involves SBUs with fairly
narrow assortments consisting of one or a few
product lines
 Ex: Ferrari (high-performance sport
cars), Roku (digital media streaming)
and etc.
o Diversified Portfolio involves SBUs with fairly
broad assortments containing multiple product
lines
 Ex: Amazon, J&J and ect.
 Takes advantage of growth opportunities
in areas in which the company has no
presence
 Purpose of the company’s SBU is to develop separate strategies
and assign appropriate funding
o Assigning resources to each strategic business unit
 Assessing each SBU’s competitive advantage and the
attractiveness of the market in which it operates
 Consider existing synergies when assessing an individual BU
 Synergies can be related to company processes
o Ex: R&D, Manufacturing, & Distribution
 Or to personnel
o Ex: experienced management, qualified
engineers, and knowledgeable sales force
 Based on the assessment, decided to either grow, “harvest” (or
draw cash from), or hold on to particular business
 Portfolio Management focuses on (2) types of factors:
 Opportunities presented by a particular industry or
market
o Defined in terms of overall market/industry
attractiveness factors such as
 Size
 Growth
 Profitability
 The company’s resources, which determine its ability to
take advantage of the identified opportunities
o Reflects competitive position in marketplace
o Measured in terms of factor such as
 Strategic assets
 Core competencies
 Market share
 Key aspect in developing portfolio model involves identifying
the metrics underlying the performance of a given business unit
 Metrics can include factors such as
o Return on investment
o Market share
o Industry growth rate
 Newer portfolio-management methods use more
comprehensive approach to assess the potential of business
based on growth opportunities from
 Global expansion
 Repositioning or retargeting
 Strategic outsourcing

Developing Market Offerings

 Identifying target market encompass the (2) key components of a company’s business
model:
o Strategy
 A company’s game plan for achieving its goals
 Involves choosing a well-defined market in which the company will
compete and determine the value it intends to create in this market
 Strategy specifies the target market and the value the company aims to
create in this market
o Tactics (Marketing Mix)
 The marketing mix that makes the company’s strategy come alive and
define the key aspect of the offering developed to create value in a given
market
 Tactics detail the actual attributes of the offering that will create value in
the chosen market

Developing the Marketing Strategy

o Incorporates (2) key components:
 Target Market in which the company will compete
 Tarket market is the market in which a company aims to create and
capture value
 (5) Factors:
o Customers
 Whose needs the company intends to fulfill
o Competitors
 That aim to fulfill the same needs of the same target
customers
o Collaborators
 That help the company fulfil the needs of customers
o Company
 That develops and manages the offering
o Context
 That will affect how the company develops and
manages the offering
 The 5-C Framework
o Target customers are in the center
 Reflects their defining role in the market
 Individuals or organizations whose needs the
company plans to fulfill
 Business-to-consumer market typically has
the customer as the end users of the offering
  Business-to-business are other businesses
that use the company’s offerings
 (2) key principles determine the choice of target
customers:
 The company and its collaborators must be
able to create superior value for target
customers relative to the competition
 The target customers chosen should be able
to create value for the company and its
collaborators
 Key component is selection of target customer,
which determines all other aspects of the market:
 Specifying the competition
 Choosing collaborators
 Defining the company resources needed to
develop a superior offering for the customer
 Outlining the context in which the company
will create market value
o Collaborators, Competitors and Company in the middle
 Collaborators works to create value for the target
customers
 Involves outsourcing rather than developing
the resources
 Ex: Supplies, manufactures, distributors, R&
entities, service providers, external sales
forces, etc.
 Competitors aim to fulfill the same needs of the
same customers that the company is targeting
 A company should examine the main
competitors and their strategies
 Company develops and manages a given market
offering
 For organization with diverse strategic
competencies and market offering, the term
company typically refers to the particular
BU that manages a specific offering
o Viewed as separated company that
requires its own business model
o Context on the outside
  Defines the environment in which customers, the
company, collaborators, and competitors operate
 (5) Factors:
 Sociocultural context
o Characterized by social and
demographic trends, value systems,
religion, language, lifestyle, attitudes
and beliefs
 Technological context
o Consist of new techniques, skills,
methods, and processes for
developing, communicating, and
delivering market offerings
 Regulatory context
o Includes taxes, import tariffs, and
embargoes, as well as product
specification and pricing,
communication regulations, and
intellectual property laws
 Economic context
o Made up of economic growth,
money supply, inflation, and interest
rates
 Physical context
o Comprises natural resources,
geographic location, topography,
climate trends, and health conditions
 Context has a dramatic impact on a company’s
ability to create market value
 Value Proposition for the relevant market entities---the company, its
target customers, and its collaborators
 Customer Value is the worth of an offering to its customers and
hinges on customer’s assessment of how well an offering fulfills
their needs
 Value an offering creates is based on (3) main
factors:
 The needs of the target customers
 The benefits customers receive and the cost
they incur when they purchase the
company’s offering
  The benefits and cost of the alternative
means—competitive offering—that target
customer can use to fulfill their needs
 Collaborator value is the worth of an offering to the company’s
collaborators
 It sums up all the benefits and costs that an offering
creates for collaborators and reflects how attractive
an offering is to collaborators
 Company value is the worth of the offering to the company
o An offering defined relative to all benefits and costs
associated with it, its affinity with the company’s goals, and
the value of other opportunities that could be pursued by
the company
 Market principles also known as 3-V principle
o Defines the viability of a business model by posing (3)
sets of questions that must be addressed:
 What value does the offering create for target
customers? Why would target customers choose this
offering? What makes this offering superior to the
alternative options?
 What value does the offering create for the
company’s collaborator (suppliers, distributors, and
co-developers)? Why would collaborators partner
with the company instead of with other entities?
 What value does the offering create for the
company? Why would the company invest
resources in this offering rather than pursuing other
options?
 Optimal value propositions the value an offering creates for
customers, collaborators, and the company
o Used to prioritize which value to focus on
o The term optimal value as used here means that the
value of the offering is connected across the three
entities, such that it creates value for target customers
and collaborators in a way that enables the company to
achieve its strategic goals
o Failure to create superior value for any of the three market
entities inevitably leads to an unsustainable business model
and dooms the business venture
 Designing The Marketing Tactics
 The marketing offering is the actual good that the company deploys in order to
fulfill a particular customer need
o Only reflects the company’s tactics—the specific way the company will create
value in the market in which it competes
o Marketing managers have (7) tactics
 Also called the Marketing Mix which are the (7) attributes that define
the company’s offering
 Product is a marketable commodity that aims to create value for
target customers
o Can be tangible or intangible
o Gives customers ownership rights
 Service also aims to create value for its customers, but it does so
without entitling them to ownership
 Brand is to identify the product and services produced by the
company and differentiate them from those of the competition, in
the process creating unique value over and above the product and
service aspects of the offering
 Price is the monetary charge that customers and collaborators incur
to receive the benefits provided by the company’s offering
 Incentives are targeted tools designed to enhance the value of the
offering by reducing its costs or increasing its benefits
 Communication apprises target customers, collaborators, and the
company stakeholders of the specifics of the offering and where to
acquire it
 Distribution encompasses the channel (s) used to deliver the
offering to target customers and company collaborators
 The (7) marketing tactics can be regarded as a process of designing,
communicating, and delivering customer value
 Designing value: product, services, brand, price, and incentive
 Communication value: communication
 Delivering value: distribution
 This is the company’s perspective of value creation
 Customers perspective of value creation is in terms of
attractiveness, awareness, and availability of the offering
o Attractiveness reflects on benefits and cost that target
customer associated with product, service, brand, price and
incentives
 o Awareness highlights the methods through which target
customer are informed about the specific of the offering
o Availability consists of the way in which the target
customer can acquire the offering.

The Seven Ts and The Four Ps

 4-P framework identifies (4) key decisions that managers must make when designing an
offering:
o The product
o The price of the product
o The best way to promote the product
o The retail outlets in which to place the product
 Limitations of the 4-P
o Fails to distinguish between the product and service aspect of the offering
 Key drawback in today’s service-oriented business environment, where a
growing number of companies are switching from product-based to
service-base business model
o It does not regard the brand as a separate factor, instead viewing the brand as part
of the product
o Comes up short in its treatment of the term promotion
 Promotion comprises (2) distinct promotional activities:
 Incentives, which includes price promotions, coupons, and trade
promotions
o Enhance an offering value
 Communication, which encompasses advertising, public relations,
social media, and personal selling
o Serves to inform customers about the offering but does not
necessarily enhance the offering value
 The (4) Ps can easily be mapped onto the 7-T framework
o First P (product) comprises product, service, and brand
o Price remains the second P
o Third P(promotion) is expanded to incentives and communication
o Distribution replaces the fourth P (Place)
 o Thus, 7-T marketing mix presents a more refined version of 4-P framework,
offering a more accurate and actionable approach to designing a company’s
offering

Creating A Market Value Map

 The ultimate purpose of the value map is to facilitate the development of viable
business model that enable the company to achieve market success
o Visual presentation of the key components of a company’s business model
 Contain (3) key components that define the company’s strategy and tactics:
o The target markets
 Defined by the (5) Cs—customers, collaborators, company, competitors,
and context
o The value propositions
 (3) types of value that the company must create customer value,
collaborator value and company value
o The market offering
 The (7) key attributes—product, service, brand, price, incentives,
communication and distribution—that present the tactical aspect of a
company’s business model
 Manage might benefit from developing three single value maps:
o Customer value map captures the ways in which the company’s offering will
create value for its target customers and outlines the strategic and tactical aspects
of the customer-focus aspect of the company’s business model
o Collaborator value map delineates the strategic and tactical aspect of the ways in
which the company’s offering will create value for collaborators
o Company value map outlines the ways in which the offering will create value for
the company’s stakeholders

Setting A Goal
 (2) key decisions are involved in setting a goal:
o Identifying the focus of the company’s actions
 o Specifying the performance benchmarks to be achieved
 Based on their focus, goal can be monetary or strategic
o Monetary goals are based on such outcomes as net income, profit margins,
earnings per share, and return on investment
 For profit firms use monetary goals as their primary performance metric
o Strategic goals are centered on nonmonetary outcomes that are of strategic
importance to the company
 Most common strategic goals are increase sales volume, brand awareness,
and social welfare, as well as enhancing the corporate culture and
facilitating employee recruitment and retention
 Nonprofit companies and for-profit companies looking to support items
that are bigger revenue producers than the focal offering have strategic
goals are their main performance metric
 Quantitative and temporal performance benchmarks work in tandem to provide the
measurement that track the progress of the company toward reaching its established goal
o Quantitative benchmarks set out the specific milestones to be achieved as the
company moves towards its ultimate goal
 Quantify the company’s focal goal
 Can be stated in relative terms or absolute terms
o Temporal benchmarks identify the time frame for achieving a specific quantitative
or qualitative benchmark
 The timeline set for achieving a goal is a key decision that can affect the
type of strategy used to implement the goal, the number of people
involved, and even cost
 Implementing the company goal requires (3) main objectives be specified
o What the company aims to achieve (goal focus)
o How much the company wants to achieve (quantitative benchmark)
o When the company wants to achieve it (temporal benchmark)

Designing the Tactics

 After the strategy is translated into a set of tactics, it is converted into an implementation
plan that spells out the activities that will give life to the business model
 o Implementation consists of (3) key components:
 Development of the company resources
 Resource development entails securing the competencies and
assets needed to implement the company’s offering
o Securing reliable suppliers
o Creating products, services, and brand that serve as a
platform for the new offering
 Development of the offering
 Transforms the company’s strategy and tactics into an actual good
that will be offered to target customers
o Includes designing the product (procurement, inbound
logistics, and production)
 Commercial deployment of the offering
 It is the logical outcome of offering development and establishes
the company’s offering in the market

Identifying Controls
 Controls have (1) primary function:
o To inform the company whether it should stay with its current course of action
o Modify the underlying strategy and tactics,
o Or completely abandon its current course of action and develop an offering that
better reflects the realities of the market
 Controls have (2) key components:
o Evaluating the company’s performance
 Means using benchmarks to track the company’s progress towards its goal
 Some common performance measures
 Sales metrics
 Customer readiness-to-buy metrics
 Customer value metrics
 Distribution metrics
 Communication metrics
o Monitoring the market environment
 Allows early identification of changes in the market context that have
implications for the company
 Enables the company to take advantage of opportunities such as
 o Favorable government regulations
o Decrease in competition
o Or an increase in consumer demand

Developing a Marketing Plan

 The marketing plan serves (3) main functions:
o It describes the company’s goal and proposed course of action
o Informs the relevant stakeholders about the goal and action plan
o Persuades the relevant decision makers of the viability of the goal and the
proposed course of action
 Organization of the Marketing Plan
o Executive Summary Situation Overview Goal  Strategy Tactics
Implementation  Control  Exhibits
 Executive Summary
o Can be regarded as the “elevator pitch” for the marketing plan
o It presents a streamlined and succinct overview of the company’s goal and the
proposed course of action
 Situation Overview
o Provides an overall evaluation of the environment in which the company operates,
as well as of the markets in which the company competes and/or will compete
o Composed of (2) sections:
 The company overview that outlines the company’s history, culture, and
resources (competencies, assets, and offerings)
 The market overview that outlines the market in which the company
currently manages offerings and those that the company could potentially
target for future offerings
 G-STIC sections
o forms the core of the marketing plan
o It includes
 The goal the company aims to achieve
 The strategy, which defines the offerings target market and value
proposition
 The tactics defining the product service, brand, price, incentives,
communication, and distribution aspects of the offering
 The implementation, which lays out the aspects of executing an offering’s
strategy and tactics
 Control procedures that evaluate the performance of the company’s
offering and analyze the environment in which the company operates
 Exhibits
o Streamline the marketing plan by keeping tables, charts, and appendices in a
distinct section to separate the less important and/or more technical aspect of the
plan from the essential information

Modifying the Marketing Plan

 A common reason for updating a company’s marketing plan is in response to changes in
the target market
o Market modifications can take place in one or more of the (5) Cs:
 Change in the demographics, buying power, needs, and preferences of
target customers
 Changes in the competitive environment, such as a new competitor, price
cuts, an aggressive advertising campaign or expanded distribution
 Changes among company collaborators, such as a threat of backward
integration from distributors, increase trade margins, or retailer
consolidation
 Changes in the company, such as the loss of strategic assets and
competencies
 Changes in the market context that can include economic recession,
development of anew technology, and new or revised regulations

Conducting A Marketing Audit

 A marketing audit is a comprehensive examination of the marketing aspect of an offering
or a company’s marketing department
 An effective marketing audit should be:
o Comprehensive
 Should cover all major marketing activities of a business, not just a few
trouble spots (these are covered by functional audits, which focus on a
particular aspect of marketing activity, such as pricing, communication or
distribution)
 A comprehensive marketing audit can locate the real root of problems
and can suggest solutions to effectively address these problems
o Systematic
 Should examine the operating environments of the organization in an
orderly manner—from the company’s marketing objectives and strategies
to its specific activities
 Should follow the G-STIC guidelines to analyze the soundness of the
company’s goals, strategy, tactics, implementation, and controls
o Unbiased
 It may be more beneficial to make marketing audits conducted by an
external entity
 Third-party auditors can offer the needed objectivity, cross-category, and
cross-industry experience, and undivided time and attention to ensure a
thorough look into marketing activities
o Periodic
 Many firms consider marketing audits only when the encounter a problem,
which often presents itself in terms of the company’s inability to reach its
goals
 Waiting until an audit is necessarily has (2) main drawbacks
o Focusing solely on existing problems precludes early
identification of potential issues
o Concentrating only on problems can cause the company to
overlook promising opportunities that could represent
fruitful areas for growth
 Bottom line: A periodic marketing audit can benefit companies in good
health as well as those in trouble