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CHAPTERCHAPTERCHAPTER

ELEMENTS OF MARKETING STRATEGY AND PLANNING

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Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reservedMcGraw-Hill/Irwin

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LEARNING OBJECTIVES

Examine the concept of value and the elements and role of the value chain

Understand the conditions required for successful marketing planning, that marketing planning is focused on the value proposition, and that marketing planning is a dynamic process

Identify various types of organizational strategies

Conduct a situation analysis

Use the framework provided for marketing planning, along with the content in future chapters, to build a marketing plan

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VALUE IS AT THE CORE OF MARKETINGValue is a ratio of benefits to costs, as

viewed from the eyes of the beholder (the customer).

Form utility

Time utility

Place utility

Ownership utility

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VALUE IS AT THE CORE OF MARKETINGValue proposition is the firm’s

communication of the unique value of its products to its customers.

The value message may include the whole bundle of benefits the company promises to deliver – not just the benefits of the product itself.

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VALUE IS AT THE CORE OF MARKETINGA firm’s value proposition must be

strong enough to move customers past satisfaction.

Customers Satisfaction Customer Loyalty

Customer Retention

Customer Switching

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VALUE IS AT THE CORE OF MARKETINGThe Value Chain serves as a means

for firms to identify ways to create, communicate, and deliver more customer value within a firm.

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PORTER’S VALUE CHAINEXHIBIT 2.1

Source: Michael E. Porter, Competitive Advantage (New York: Simon & Schuster, 1985).

SupportActivities

Primary Activities

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VALUE-CREATING ACTIVITIES

Primary activities

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VALUE-CREATING ACTIVITIES

Support activities

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MARKETING PLANNING

Marketing planning is the ongoing process of developing and implementing market-driven strategies for an organization.

The resulting document that records the marketing planning process in a useful framework is the marketing plan.

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MARKETING PLANNING IS BOTH STRATEGIC AND TACTICALMarketing (Big M) serves as a core

driver of business strategy.

marketing (little m) represents the specific programs and tactics aimed at customers and other stakeholder groups.

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FOR EFFECTIVE MARKETING PLANNINGEveryone in an organization must

understand and support the concept of customer orientation.

All internal organizational processes and systems must be aligned around the customer.

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FRAMEWORK FOR MARKETING PLANNINGMarketing plan is connected to the

firm’s business plan

Perform any needed market research

Establish marketing goals and objectives

Develop marketing strategies

Marketing mix strategies

Develop implementation plans

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CONNECTING THE MARKETING PLAN TO THE FIRM’S BUSINESS PLAN

Market-driven strategic planning is often used to describe the process at the corporate or strategic business unit (SBU) level of marshaling the various resource and functional areas of the firm toward a central purpose around the customer.

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ELEMENTS OF MARKETING PLANNINGPortfolio analysis views SBUs and

sometimes even product lines as a series of investments from which it expects maximization of returns.

◦ Boston Consulting Group (BCG) Growth-Share Matrix

◦ GE Business Screen

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BOSTON CONSULTING GROUP GROWTH-SHARE MATRIXEXHIBIT 2.3

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GE BUSINESS SCREENEXHIBIT 2.4

“GE Business Screen,” Business Resource Software Online, www.brs-inc.com/pwxcharts.asp?32, accessed May 16, 2008.

High Med LowH

igh

Med

Low

Market Attractiveness

Bu

sin

ess

Posit

ion

Invest/Grow

SelectiveInvestme

nt

Harvest/Divest

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ELEMENTS OF MARKETING PLANNINGMarketing planning does not occur in a

vacuum

◦ A mission statement articulates an organization’s purpose, or reason for existence.

◦ Most mission statements also include a discussion of what the company would like to become in the future – its strategic vision.

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ELEMENTS OF MARKETING PLANNINGGoals eventually become refined into

specific, measurable, and (hopefully) attainable objectives for the firm.

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ELEMENTS OF MARKETING PLANNINGOrganizational Strategies

◦ A strategy is a comprehensive plan stating how the organization will achieve its mission and objectives.

◦ A firm’s generic strategy is its overall directional strategy at the business level.

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ELEMENTS OF MARKETING PLANNINGThree primary categories of

competitive strategy:

1. Low Cost

2. Differentiation

3. Focus (or Niche)

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GENERIC BUSINESS STRATEGIES

Generic Business

Strategies

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COMPETITIVE STRATEGY OPTIONSEXHIBIT 2.7

Source: Michael E. Porter, Competitive Advantage (New York: Simon & Schuster, 1985).

Cost Leadership Differentiation

Cost FocusFocus

Differentiation

Lower Cost Differentiation

Competitive Advantage

Narr

ow

Targ

et

Com

peti

tive S

cop

e

Bro

ad T

arg

et

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ELEMENTS OF MARKETING PLANNINGCore competencies

Distinctive competencies

Sustainable competitive advantage

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MILES AND SNOW’S STRATEGY TYPES

Strategic Types

Prospectors

Analyzers

Defenders,

Reactors

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SITUATION ANALYSIS

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SITUATION ANALYSIS

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FORCES DRIVING INDUSTRY COMPETITIONEXHIBIT 2.9

Source: Michael E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors (Boston: The Free Press, 1980).

Potential entrants(Threat ofmobility)

Supplier(Supplierpower)

Industrycompetitors

(Segment rivalry)

Buyers(Buyerpower)

Substitutes(Threat of

substitutes)

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SITUATION ANALYSIS

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ELEMENTS OF MARKETING PLANNINGSummarize the situation analysis into

a SWOT analysis:

◦ A convenient way to summarize key findings into a matrix of strengths, weaknesses, opportunities, and threats.

◦ Internal analysis reveals strengths and weaknesses, while external analysis points to potential opportunities and threats.

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SWOT ANALYSIS TEMPLATEEXHIBIT 2.10

Source: J. David Hunger and Thomas H. Wheelen, Essentials of Strategic Management, 4th ed. (Upper Saddle River, NJ: Prentice Hall, 2007).

Strengths (S)

List 5–10 internalstrengths here

Weaknesses (W)

List 5–10 internalweaknesses here

Threats (T)

List 5–10 externalthreats here

INTERNALFACTORS

(IFAS)

EXTERNALFACTORS(EFAS)

S/O Based Strategies

Generate strategies herethat use strengths to takeadvantage of opportunities

W/O Based Strategies

Generate strategies herethat take advantage ofopportunities byovercoming weaknesses

S/T Based Strategies

Generate strategies herethat use strengths toavoid threats

Opportunities (O)

List 5–10 externalopportunities here

W/T Based Strategies

Generate strategies herethat minimize weaknessesand avoid threats

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ELEMENTS OF MARKETING PLANNINGAdditional Aspects of Marketing

Planning

◦ Perform Any Needed Market Research

◦ Establish Marketing Goals and Objectives

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ELEMENTS OF MARKETING PLANNINGAdditional Aspects of Marketing

Planning

◦ Develop Marketing Strategies Market penetration strategies

Product development strategies

Market development strategies

Diversification strategies

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PRODUCT – MARKET COMBINATIONSEXHIBIT 2.11

Source: H. Igor Ansoff, The New Corporate Strategy (New York: John Wiley & Sons, 1988).

Strategy =Market

Penetration

Seek to increasesales of existingproducts toexisting markets

Strategy =Market

Development

Create growthby selling newproducts inexisting markets

Strategy =Market

Development

Introduce existingproducts to newmarkets

Strategy =Diversification

Emphasize bothnew products andnew markets toachieve growth

Existing Products New Products

Product Emphasis

ExistingMarkets

NewMarkets

MarketEmphasis

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ELEMENTS OF MARKETING PLANNINGImplementation Plan

Forecast

Budget

Appropriate Marketing Metrics

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ELEMENTS OF MARKETING PLANNINGMarketing Control

◦ Process of measuring marketing results and adjusting the marketing plan as needed.

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ELEMENTS OF MARKETING PLANNINGDevelop Contingency Plans

◦ Plans that can be implemented should something happen that negates the viability of the marketing plan.

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TIPS FOR SUCCESSFUL MARKETING PLANNING1. Stay flexible

2. Utilize input, but don’t become paralyzed by information and analysis

3. Don’t underestimate the implementation part of the plan

4. Stay strategic, but also stay on top of the tactical

5. Give yourself and your people room to fail and try again

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