MARKETING MANAGEMENT
DEVELOPING MARKETING
STRATEGIES & PLANS
SESSION 3
“ In today’s fast-changing marketing world,
identifying the best long-term strategies is crucial -
“
but challenging!
“ Developing the right marketing strategies requires a “
blend of discipline and flexibility.
“ Firms must stick to a strategy but also constantly
improve it.
“
TECH PIONEEER IN TROUBLE IN 2012!
WHY…?
SERIES OF PROBLEMS AT HP!
1. In 2008, HP bought a company called Electronic Data
Systems (EDS), for S13.9 billion, to enter into computer
systems business, led by IBM.
• High cost of acquisition & adverse external factors led to
ineffective integration.
• RESULT: HP had to write-down the value of it’s IT
services business by $ 8billion in in 2012!
SERIES OF PROBLEMS AT HP!
2. MORE PROBLEMS FOR HP:
a) Legal battle with Oracle over underperforming Itanium
chips hurt HP sales of large servers.
b) Drop in HP printer and ink sales& profit as consumers
started to print less.
c) New CEO revealed other oversights, such as HP also had
no clear strategy for Mobile phones, a rapidly growing
high-potential area for HP.
THE TASK OF ANY BUSINESS…
“ The task of any business is to deliver customer value
at a profit.
A company can only win by fine-tuning the value
delivery process, and choosing, providing, and
communicating superior value to increasingly well- “
informed buyers.
….PHILIP KOTLER
THE VALUE DELIVERY PROCESS
• Traditional view of Marketing: Firms make products to
sell. Marketing takes place at the time of sale.
• In economies today, with diverse customer types, each with
individual wants, perceptions, preferences & buying criteria,
the old rules no longer apply.
THE VALUE DELIVERY PROCESS
• Contemporary business practice places Marketing at
the beginning of the planning process.
• Instead of putting primary emphasis on making and
selling, companies need to engage in the “value
delivery process”.
THREE PHASES OF
VALUE CREATION & DELIVERY
1) Choosing the value by going through the STP process
(Segmentation, Targeting, & Positioning).
2) Providing the value by identifying product features,
pricing, & distribution to satisfy customers.
3) Communicating the value through the sales force,
advertising & customer.
THE VALUE CHAIN
Harvard Professor Michael Porter proposed the idea of
a “Value Chain” in 1985, in his book titled “Competitive
Advantage”…
…as a tool for identifying ways to create more
customer value.
MICHAEL PORTER’S VALUE
CHAIN…
• …a set of activities that a firm, operating in any
specific industry needs to perform, in order to
deliver value to the end customer.
• Porter’s value chain consists of:
• 5 PRIMARY ACTIVITIES &
• 4 SUPPORTING ACTIVITIES.
Explaining Five Primary Activities
1. Inbound Logistics: how materials and other goods are
brought into a company.
2. Operations: managing the inner workings of
a business.
3. Outbound Logistics: demand side of the supply-
demand equation.
4. Marketing & Sales
5. Service: before, during & after sales.
Explaining Four Support Activities
1. Procurement: system of purchase of materials.
2. Technology Development: state of technology applied
by a firm & its progress.
3. HR Management: hiring, training, career path etc.
4. Firm’s infrastructure: facilities, structure, services to
support the rest of the business.
TWO CRITICAL THINGS TO KEEP AN EYE
ON…
• …during the process of value creation & value
delivery:
1. Cost
2. Level of performance.
USE OF BENCHMARK FOR VALUE
CREATION
• Companies often used benchmarking in their value creation
process.
• Purpose: to improve and succeed by adopting practices of a
“best in class” company/ business.
• Limitation: Used indiscriminately, it could act as a ceiling,
& prevent company from “going beyond”!
TWO CRITICAL SUCCESS FACTORS FOR VALUE
CREATION…
… for companies today:
1. UNIQUE CORE COMPETENCIES &
2. COORDINATION BETWEEN DEPARTMENTS.
CRITICAL SUCCESS FACTOR #1:
UNIQUE CORE COMPETENCIES
…ARE SKILLS & PROFICIENCIES THAT:
1. Make a significant contribution towards building
company and brand perception.
2. Can be applied across diverse markets.
3. Are difficult for competition to imitate.
The advantage: Core competencies help company
achieve & maintain lead.
EXAMPLES OF CORE COMPETENCIES: Southwest
Airline…
…the world's largest low-cost carrier with highly efficient
operations, low cost structure, outstanding customer service, and
innovative HR management practices.
EXAMPLES OF CORE COMPETENCIES: Walmart – world’s
largest retailer!
Competencies: Massive buying power, Efficient supply chain
management & Logistical superiority.
Operating: chain of hypermarkets, discount stores offering Every
Day Low Price (EDLP)!
EXAMPLES OF CORE COMPETENCIES:
Ikea: Low Cost Leader in H/H products
Originally, a tiny Swedish mail-order catalogue business, now one
of the world's largest seller of furniture.
Sales (2021): EUR 41.9 billion/ US$40.6 billion.
CRITICAL SUCCESS FACTOR #2:
COORDINATION BETWEEN DEPARTMENTS
FIVE CORE BUSINESS PROCESSES
1. Market-sensing: gathering and acting upon information
about market.
2. NPD/or New-Offering development: researching,
developing, launching quickly & within budget.
3. Customer acquisition: defining customers/ prospecting
for customers.
CRITICAL SUCCESS FACTOR #2:
COORDINATION BETWEEN DEPARTMENTS
FIVE CORE BUSINESS PROCESSES
4. Customer relationship management (CRM): building
deeper understanding, & relationships with customers.
5. Order fulfillment: receiving, approving, shipping orders
on time/ collecting payment.
CRITICAL SUCCESS FACTOR #2:
COORDINATION BETWEEN DEPARTMENTS
WHICH COMPANY IN THE WORLD DOES THIS BEST?
THE STRATEGIC PLANNING
PROCESS
DIRECTING &
COORDINATING THE
MARKETING EFFORT!
DEFINING THE TERM ‘STRATEGIC’
The term “strategic” is often associated with the time
dimension; in practice it is “TWO dimensional.
The TWO dimensions of ‘strategic’ are:
1. Time dimension: could be long- & short-term.
2. Impact dimension: effect on business outcome.
PURPOSE OF A STRATEGIC MARKETING
PLAN
The strategic marketing plan identifies the target
market, and lays out the firm’s relevant value
proposition, based on an analysis of the best
market opportunities available.
STRATEGIC PLANNING:
3 PRIORITY AREAS OF FOCUS
1. Managing company’s investment portfolio
2. Assessing market & company growth rate
3. Establishing a strategy – the game plan for achieving
business objectives.
4-STEP CORPORATE STRATEGIC
PLANNING PROCESS
The FOUR focal areas:
1. Defining the corporate mission
2. Establishing strategic business units (SBUs)
3. Assessing growth opportunities
4. Assigning resources to SBUs.
FOCAL AREA - 1
COMPANY MISSION STATEMENT
What makes a GOOD MISSION STATEMENT?
1. Focus on a limited number of goals
2. Stressing company’s policies & values - discouraging
individual discretion.
3. Defining major competitive spheres
4. Taking a long-term view of business
5. Keeping it short, memorable, & meaningful.
WHICH COMPANY MISSION IS BETTER?
Company Product-based
#1 Market-based
#2
Xerox We make copying We help improve office
equipment. productivity.
Standard Oil We sell gasoline. We supply energy.
Columbia We make movies. We make entertainment.
Pictures
Carrier We make air-conditioners. We provide climate control
in the home.
FOCAL AREA - 2
STRATEGIC BUSINESS UNIT [SBU]
What is a strategic business unit [SBU]?
1. It is a single business, or a collection of related businesses,
operating separately from the rest of the company, but
within its overall domain.
2. It has its own set of competitors.
3. It has a manager having control over its strategic
planning, and responsibility for its profit performance.
UNILEVER
STRATEGIC BUSINESS UNITs [SBU]
FOOD & DRINKS HOME CARE PERSONAL CARE
EVERY SBU HAS ITS OWN UNIQUE MARKET
DYNAMICS, ITS UNIQUE WAY OF WORKING IN THE
MARKET!
FOCAL AREA - 3
ASSESSING GROWTH OPPORTUNITIES:
LOCATING STRATEGIC PLANNING GAP
• The Strategic Planning Gap [between desired sales & current sales]
• Three Planning Models: Intensive, Integrative, Diversification.
FOCAL AREA - 3
ASSESSING GROWTH OPPORTUNITIES
1. MODEL ONE: Intensive Growth by growing existing business.
Strategy options:
EXAMPLE: ASSESSING GROWTH OPPORTUNITIES
Example of Intensive Growth: Starbucks
Current Products New Products
1. Market-penetration Strategy 3. Product-development strategy
Howard Schultz (CEO in 2000) Starbuck started in-store merchandising, issued a
‘Current’
Markets
recognized potential of Starbucks – Starbucks Duetto Visa Card – offered reward
started opening stores across Seattle. points that allowed internet access to Starbucks
‘HotSpots’.
2. Market-development Strategy 4. Diversification strategy
Starbucks opened similar stores across Starbucks Frappuccino in bottle-packs appeared
Markets
other cities in the US. in sandwich shops; Starbucks ice cream sold at
New
supermarkets.
FOCAL AREA - 3
ASSESSING GROWTH OPPORTUNITIES
2. MODEL TWO: Integrative Growth: increasing sales and profits
through backward and forward integration e.g.
Chenab Textiles and ChenOne Stores;
Gul Ahmad and ‘Ideas’.
FOCAL AREA - 3
ASSESSING GROWTH OPPORTUNITIES
3. MODEL THREE: Diversification Growth:
Extending sales to new customer segments.
HOW?
By developing new products or establishing new business in a
related or unrelated field e.g.
Engro Fertilizers to Engro Foods.
Virgin Records to Virgin Airlines + 50 other businesses.
STRATEGIC PLANNING REFLECTS
ORGANIZATION CULTURE
What is organizational culture?
Shared experiences, beliefs & norms reflected by the way
people interact with one another or their business partner/
customers.
A company’s organizational structure, policies, & corporate
culture are reflected in its planning.
END OF SESSION 3