Mma6e Chapter 02 Final 186602

Marketing Management:
An Asian Perspective,
6th Edition
Instructor Supplements
Created by Geoffrey da Silva
Developing Marketing Strategies and Plans
3 Pearson Education South Asia Pte Ltd 2013. All rights reserved
Learning Issues for Chapter Two
2.1 How does marketing affect customer value?
2.2 How is strategic planning carried out at different levels of

the organization?
2.3 What does a marketing plan include?
Key Insights of the Chapter
Key ingredients of the marketing management process are

insightful, creative 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 constantly improve it.
They must also develop strategies for a range of products

and services within the organization.
Marketing and Customer Value
The task of any business is to deliver customer value at a

profit.
In a hypercompetitive economy with increasingly informed

buyers faced with abundant choices, a company can win only
by fine-tuning the value delivery process and choosing,
providing, and communicating superior value.
Traditional View of Marketing
The traditional view of marketing is that the firm makes

something and then sells it.
Will not work in economies where people each with individual

wants, perceptions, preferences and buying criteria.
New belief: marketing begins with the planning process.
Value creation and delivery consists of three parts:
1. Choosing the value (segment the market, select

target market, develop offering).
2. Providing the value (product features, prices, and

distribution channels).
3. Communicating the value (sales force, internet,

advertising, and communication tools).
The Value Chain (Porter)
Michael Porters Value Chain identifies nine strategically

relevant activities that create value and costs in a specific
business (five primary and four support activities).
The primary activities cover the sequence of bringing

materials into the business (inbound logistics), converting
them into final products (operations), shipping out final
products ( outbound logistics), marketing them (marketing
and sales), and servicing them (service).
The Value Chain (Porter)
The support activitiesprocurement, technology

development, human resource management, and firm
infrastructureare handled in certain specialized
departments, as well as elsewhere.
Application of the Value Chain Model
The firms task is to examine its costs and performance in

each value-creating activity and look for ways to improve it.
The firm should estimate its competitors costs and

performances as benchmarks against which to compare its
own costs and performance.
It should go further and study the best of class practices of

the worlds best companies.
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).
Finding capabilities inside and outside the
organization
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.
Value Delivery Network
To be successful, a firm also needs to look for competitive

advantages beyond its own operations, into the value chains
of suppliers, distributors, and customers.
In an attempt to be more streamlined, Sony restructured its

supply chain by eliminating suppliers who are not efficient.
Core Competencies
The key is to own or nurture the resources and competencies

that make up the essence of the businessoutsource if
competency is cheaper and available.
A core competency has three characteristics
1. Makes a significant contribution to perceived customer

benefits.
2. Has applications in a wide variety of markets.
3. It is difficult for competitors to imitate.
Competitive Advantage
Competitive advantage also accrues to companies that

possess distinctive capabilities or excellence in broader
business processes.
Competitive advantage ultimately derives from how well the

company fits its core competencies and distinctive
capabilities into tightly interlocking activity systems.
Competitive Advantage for SIA
Singapore Airlines has a competitive advantage because competitors find it challenging to

imitate its core competency of service quality.
Maximizing Core Competencies
Business realignment may be necessary to maximize core

competencies. It has three steps:
1. (re) defining the business concept or big idea;
2. (re) shaping the business scope; and
3. (re) positioning the companys brand identity.
Replicating the Core Competencies of MNCs in Asia
Many multinationals find it difficult to replicate their core

competencies in China.
Williamson and Zeng found that multinationals have clear

advantages over local companies in China in two areas
industry-specific technology and managerial competence.
However, such core competencies are handicapped by

several characteristics in the Chinese business landscape:
Challenges in Chinas Business Landscape for MNCs
to Exploit their Core Competencies
Poor infrastructural supportChinas poor infrastructural
support means scarce market research and compromised
supply chains. Toshiba, for instance, spent more than five
years establishing a local supplier for a component that it
needed for laptop computer production.
InflexibilityThe lack of flexibility means higher costs

when integrating local operations.
Challenges in Chinas Business Landscape for MNCs
to Exploit their Core Competencies
Fragmented marketA fragmented Chinese market
suggests that multinationals cannot reap economies of scale.
Otis Elevator, for example, discovered that it needed to
maintain production facilities in several regions in China to
respond to the buying preferences of local authorities.
Less developed marketMany markets in China are still

in an early stage of development. Over one billion of Chinas
consumers can only afford products that serve their basic
needs.
In contrast, Chinese competitors have three
competitive advantages over MNCs:
Better understandingChinese companies have a better
understanding of what will work in the local environment.
Leaner and more flexibleChinese companies tend to be

leaner and more flexible with lower costs. Many successful
Chinese companies are run by highly entrepreneurial people.
Opportunity to catch upThe open global markets allow

Chinese companies to buy much of the technology and
expertise that they need to catch up. In the PC market, the
latest tools and technologies developed in Silicon Valley
arrive in China within months.
Asian Companies Adopt Three Main Strategies
(McKinsey)
Expand quickly to capture global market opportunities
Become atomizers
Become asset light by using intangibles
Strategies by Asian Companies
McKinsey & Company found that many Asian companies such as Taiwan Semiconductor
Manufacturing are successful by becoming singularly focused in a particular area. In
TSMCs case, it becomes an expert in the semiconductor foundry business.
A Holistic Marketing Orientation and Customer Value
Holistic marketers succeed by managing a superior value

chain that delivers a high level of product quality, service, and
speed.
Holistic marketers address three key management questions:

a) Value explorationidentify new value opportunities.
b) Value creationefficiently creates more promising new value
offerings.
c) Value deliverydeliver the new value offerings more efficiently.
Developing strategy requires the understanding of the

relationships and interactions among these three spaces.
A. Value Exploration
1. Customers cognitive space (reflects existing and latent

needs and includes participation, stability, freedom, and
change).
2. Companys competence space (broad versus focused scope

of business and depth physical versus knowledge-based
capabilities).
3. The collaborator resource space (horizontal and vertical

partnerships).
B. Value Creation
Marketers need to:

a. Identify new customer benefits from the customers view.
b. Utilize core competencies.
c. Select and manage business partners from its

collaborative networks.
C. Value DeliveryWhat 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.
A. Business partnership management.

Allow the company to handle complex relationships with its
trading partners.
Core competency and Zaras strategies
In Asia, Zara is perceived as offering better designs. Thus, Asians do not mind paying more for Zara
clothings despite locally made clothes being inexpensive.
Core competency and Zaras strategies
Zara Zaras core competency is its innovative business model of

serving customers fashion needs in a fast and cheap way. In Asia,
where locally made clothes are generally inexpensive and foreign
brands are entering in a decisive way, Zara is well positioned to keep
up with its growth compared to its competitors. Gap owns stores only
in Japan with franchise agreements in other countries. Hennes &
Mauritz (H&M) entered Asia only in 2007 and operates less than 30
stores. Marks & Spencer is more expensive and perceived to have
fewer clothes for young people than Zara. Many Asians view Zaras
clothes as better designed and having higher quality, and thus, do not
mind paying more.
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.
This calls for action in three areas:

I. Managing a companys businesses as an investment portfolio.
II. Assessing each businesss strength by the markets growth rate

and the companys position and fit in that market.
III. Establish strategy.
Levels of Planning in Marketing Organizations
Most large companies consist of four organizational levels:
i. Corporate level.
ii. Division level.
iii. Business unit level.
iv. Product level.
The Marketing Plan
The marketing plan is the central

instrument for directing and
coordinating the marketing effort.
The marketing plan operates on two

levels: strategic and tactical.
A. The strategic marketing plan lays out

target markets and the value proposition.
B. The tactical marketing plan specifies the

product, promotion, merchandising, pricing,
sales channels, and service.
Figure 2.1: The Strategic Planning, Implementation,
and Control Processes
Corporate and Division Strategic Planning
All corporate headquarters undertake four planning activities:
i. Defining the corporate mission.
ii. Establishing strategic business units (SBUs).
iii. Assign resources to each SBU.
iv. Assessing growth opportunities.
Defining the Corporate Mission
Key questions to ask in defining the corporate mission:
A. What is our business?
B. Who is the customer?
C. What is of value to the customer?
D. What will our business be?
E. What should our business be?
Purpose of Mission Statements:
Organizations develop mission statements to share with

managers, employees, and
(in many cases) customers.
A clear, thoughtful mission statement provides employees

with a shared sense of purpose, direction, and opportunity.
Amazons mission is to be the worlds

largest online store.
Characteristics of Good Mission Statements
1. They focus on a limited number of goals. The statement We

want to produce the highest-quality products, offer the most
service, achieve the widest distribution, and sell at the
lowest prices claims too much.
2. They stress the companys major policies and values. They

narrow the range of individual discretion so employees act
consistently on important issues.
Characteristics of Good Mission Statements
3. They define the major competitive spheres within which the

company will operate. Table 2.1 summarizes some key
competitive dimensions for mission statements.
4. They take a long-term view. Management should change the

mission only when it ceases to be relevant.
5. They are as short, memorable, and meaningful as possible.
Table 2.1: Defining Competitive Territory and
Boundaries in Mission Statements (part one)
Table 2.1: Defining Competitive Territory and
Boundaries in Mission Statements (part two)
Vague versus Clear Mission Statements
Establishing Strategic Business Units (SBUs)
Companies often define themselves in terms of products: They are

in the auto business or the clothing business.
Market definitions of a business, however, describe the business as

a customer-satisfying process.
Products are transient; basic needs and customer groups endure

forever. Transportation is a need: the horse and carriage,
automobile, railroad, airline, ship, and truck are products that meet
that need.
Viewing businesses in terms of customer needs can suggest

additional growth opportunities.
Table 2.2: Product-oriented versus Market-oriented
Definitions of a Business
Defining the Market
A target market definition tends to focus

on selling a product or service to a current
market.
Pepsi could define its target market as

everyone who drinks carbonated soft
drinks, and competitors would therefore be
other carbonated soft drink companies.
A strategic market definition, however,

also focuses on the potential market.
Strategic Business Units
A business can define itself in terms of three dimensions: customer

groups, customer needs, and technology.
An SBU has three characteristics:
i. It is a single business, or a collection of related businesses, that

can be planned separately from the rest of the company.
ii. It has its own set of competitors.
iii. It has a manager responsible for strategic planning and profit

performance, who controls most of the factors affecting profit.
Strategic Business Units
The purpose of identifying the companys strategic business

units is to develop separate strategies and assign appropriate
funding.
Managing the Business Portfolio
Liz Claiborne has put more emphasis on some of its younger businesses such as Juicy Couture,
Mexx, and Kate Spade while selling businesses such as Ellen Tracy that do not have the same buzz.
Assigning Resources to Each SBU
Once it has defined SBUs, management must decide how to

allocate corporate resources to each.
The 1970s saw several portfolio-planning models introduced

to provide an analytical means for making investment
decisions.
The GE/McKinsey Matrix classifies each SBU according to the

extent of its competitive advantage and the attractiveness of
its industry.
Assigning Resources to Each SBU
Management would want to grow, harvest or draw cash

from, or hold on to the business.
Another model, from Boston Consulting Group, called the

BCGs Growth-Share Matrix, uses relative market share and
annual rate of market growth as criteria to make investment
decisions.
Shareholder Value Analysis
Portfolio-planning models have fallen out of favor as

oversimplified and subjective.
More recent methods firms use 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 (whether it is sold or spun off).
These value calculations assess the potential of a business

based on potential growth opportunities from global
expansion, repositioning or retargeting, and strategic
outsourcing.
Assessing Growth Opportunities
Assessing growth opportunities includes planning new

businesses, downsizing, and terminating older businesses. If
there is a gap between future desired sales and projected
sales, corporate management will need to develop or acquire
new businesses to fill it.
See Figure 2.2.
Figure 2.2: The Strategic Planning Gap
Strategic Options
The first option is to identify opportunities

for growth within current businesses
(intensive opportunities).
The second is to identify opportunities to

build or acquire businesses related to
current businesses (integrative
opportunities).
Third is to identify opportunities to add

attractive unrelated businesses
(diversification opportunities).
Intensive Growth
Corporate managements first course of action should be a

review of opportunities for improving existing businesses.
One useful framework for detecting new intensive-growth
opportunities is a product-market expansion grid.
i. The company first considers whether it could gain more market

share with its current products in their current markets, using a
market-penetration strategy.
ii. Next it considers whether it can find or develop new markets

for its current products, in a market-development strategy.
Intensive Growth
iii. Then it considers whether it can develop new products of potential

interest to its current markets with a product-development strategy.
iv. Later the firm will also review opportunities to develop new products
for new markets in a diversification strategy.
These intensive growth strategies offer several ways to grow. Still,

that growth may not be enough and management must also look
for integrative growth opportunities.
The Product Market Expansion Grid (Ansoff)
Intensive Growth Strategy
Case of Starbucks
Case of Starbucks
StarbucksStarbucks is a company that has achieved growth in
many different ways. When Howard Schultz joined the company in
1982, he recognized an unfilled niche for cafes serving gourmet coffee
directly to customers. This became Starbucks market-penetration
strategy, and helped the company attain a loyal customer base in
Seattle. The market-development strategy marked the next phase in
Starbucks growth: it applied the same successful formula that had
worked wonders in Seattle, first to other cities in the Pacific
Northwest, then throughout North America, and finally, worldwide.
Once the company established itself as a presence in thousands of
cities internationally, Starbucks sought to increase the number of
purchases by existing customers with a product-development strategy
that led to new in-store merchandise, including compilation CDs.
Case of Starbucks
StarbucksStarbucks pursued diversification into grocery store aisles
with Frappuccino bottled drinks, Starbucks brand ice cream, and the
purchase of tea retailer Tazo Tea. Starbucks introduced instant coffee
VIA in its stores. The encouraging sales gave Starbucks an easier time
convincing the trade to carry the brand. Starbucks is drafting off its
stores into ubiquitous channels of distribution and then integrating
that into the same capability and discipline that it had with the social
and digital media. Starbucks has also ventured into the beer business.
To target at the health-conscious market, Starbucks offer Refreshers
beverages made with real fruit juice and fruit pieces.
Integrative Growth
A business can increase sales and profits through backward,

forward, or horizontal integration within its industry.
An example of horizontal integration is the purchase of Volvo

from Ford by Geely, Chinas largest private-run automobile
maker.
This acquisition will allow Geely to boost its technology and

move into Western markets where its brand recognition has
been low.
Geelys Acquisition Strategy
Geely, Chinas largest private-run automobile maker, acquired Volvo to enhance its technology and
expand into the Western markets.
Diversification Growth
Diversification growth makes sense when good opportunities

exist outside the present businessesthe industry is highly
attractive and the company has the right mix of business
strengths to succeed.
Several types of diversification are possible:

New products that have technological or marketing synergies with
existing product lines.
New products unrelated to the current industry.
New businesses unrelated.
Downsizing and Divesting Older Businesses
Companies must not only develop new businesses, they must

also carefully prune, harvest, or divest tired old businesses to
release needed resources and reduce costs.
Weak businesses require a disproportionate amount of

managerial attention.
Managers should focus on growth opportunities, not dissipate

energy and resources trying to salvage loss-making
businesses.
Organization and Organization Culture
Strategic planning happens within the context of the

organization.
A companys organization consists of its structures, policies,

and corporate culture, all of which can become dysfunctional
in a rapidly changing business environment.
Whereas structures and policies can be changed (with

difficulty), the companys culture is very hard to change.
Yet changing a corporate culture is often the key to

successfully implementing a new strategy.
What is Corporate Culture?
Corporate culture defined is the shared experiences, stories,

beliefs, and norms that characterize an organization.
Sometimes corporate culture develops organically and is

transmitted by the CEOs.
Corporate culture in Asian companies
Corporate culture varies markedly among

Asian companies.
Overseas Chinese businesses are

characterized by fast, autocratic,
experience-based, and action-oriented
decision making. These businesses seem
to invest and risk their capital without
much analysis.
Corporate culture in Asian companies
In reality, the overseas Chinese collect

and analyze data tirelessly to make rapid
decisions. Many leverage their core
competencies in hoarding information and
erecting barriers to outsiders acquisition
of such information.
However, their corporate culture may

change as a new generation of Western-
trained managers assumes leadership of
their parents businesses.
Asian Corporate Cultures
Overseas Chinese companies are constantly collecting soft data to make fast decisions based on
experience. They do not share information readily. This may change as state-owned enterprises
become privatized and as more Asian managers are Western-trained.
Corporate Culture at Samsung
Samsung changed its corporate culture to one that encourages more communication and cooperation
across hierarchy and divisions; and gives product managers more autonomy.
Clash of Corporate Cultures:
Joint Ventures and Mergers
What happens when companies with clashing cultures enter a
joint venture or merger?
In a study by Coopers & Lybrand of 100 companies with

failed or troubled mergers, 85 percent of executives polled
said that differences in management style and practices were
the major problem.
Conflict was certainly the case when Danone and Wahaha

ended their partnership.
Clashing of Corporate Cultures
The joint venture between Chinas Wahaha and Danone is a classic example of clashing cultures that
resulted in animosity in the partnership. While Wahaha claimed that it was in Chinas national
interests to establish competing businesses outside the joint venture, Danone did not think so.
Corporate Cultures Vary between Asian countries
Asian companies display a myriad of corporate cultures. While Chinese companies are more
entrepreneurial, Japanese companies are less so, placing more emphasis on consensual decision
making. Thai companies are also quite consensual because of their Buddhist heritage, while Indian
companies have to content with the legacy of central economic planning.
Marketing Innovation
Innovation in marketing is critical. Imaginative ideas on

strategy exist in many places within a company.
Senior management should identify and encourage fresh

ideas from three groups that tend to be underrepresented in
strategy making: employees with youthful perspectives;
employees who are far removed from company headquarters;
and employees who are new to the industry.
Each group is capable of challenging company orthodoxy and

stimulating new ideas.
Scenario Analysis
Firms develop strategy by identifying

and selecting among different views of
the future.
The Royal Dutch/Shell Group pioneered

scenario analysis. A scenario analysis
consists of developing plausible
representations of a firms possible
future that make different assumptions
about forces driving the market and
include different uncertainties.
Scenario Analysis
Managers think through each scenario

with the question: What will we do if it
happens?
They adopt one scenario as the most

probable and watch for signposts that
might confirm or disconfirm that
scenario.
Figure 2.3: Business Unit Strategic Planning
Business Mission and SWOT
The Business Mission

Each business unit needs to define its specific mission within the
broader company mission.
SWOT Analysis
A. The evaluation of a companys strengths, weaknesses,
opportunities, and threats is called SWOT analysis. It involves
monitoring the external and internal marketing environment.
B. Use market opportunity analysis (MOA).
C. Environmental threatunfavorable trend or development .
External Environment (Opportunity and Threat)
Analysis
A business unit must monitor key macro-environment forces
and significant micro-environment factors that affect its
ability to earn profits.
It should set up a marketing intelligence system to track

trends and important developments and any related
opportunities and threats.
Good marketing is the art of finding, developing, and profiting

from these opportunities.
Marketing Opportunity Analysis
A marketing opportunity is an area of buyer need and interest

that a company has a high probability of profitably satisfying.
There are three main sources of market opportunities.
The first is to offer something that is in short supply. This

requires little marketing talent, as the need is fairly obvious.
Marketing Opportunity Analysis
The second is to supply an existing product or service in a

new or superior way. How?
The problem detection method asks consumers for their
suggestions, the ideal method has them imagine an ideal version
of the product or service, and the consumption chain method
asks them to chart their steps in acquiring, using, and disposing of
a product.
This last method often leads to a totally new product or

service.
OpportunitiesHow to Spot Them
A company may benefit from converging industry trends and

introduce hybrid products or services that are new to the market.
Example: Major mobile phone manufacturers have released phones
with MP3 players and Global Positioning System.
A company may make a buying process more convenient or

efficient. Example: Consumers can now use the Internet to find
more books than ever and search for the lowest price with a few
clicks.
A company can meet the need for more information and advice.
Example: Zuji.com facilitates finding travel information by providing
several flight and hotel alternatives.
A company can customize a product or service that was formerly

offered only in a standard form. Example: National Bicycles
Panasonic Order System manufactures custom-made bicycles fitted
to the preferences and anatomy of individual buyers.
A company can introduce a new capability. Example: Consumers

can create and edit digital iMovies with iMac and upload them to
an Apple Web server to share with friends around the world.
A company may be able to deliver a product or a service faster.

Example: Taiwanese contract manufacturers excel in speedy design,
manufacture, and delivery of a variety of computer-related products
and components.
A company may be able to offer a product at a much lower price.

Example: Pharmaceutical firms like Ranbaxy sell generic versions of
brand-name drugs.
Identifying and Converting Opportunities
Opportunities can take many forms, and marketers have to

be good at spotting them. Consider the following:
1. A company may benefit from converging industry trends

and introduce hybrid products or services that are new to
the market. Major mobile phone manufacturers have released
phones with multimedia capabilities and apps.
2. A company may make a buying process more convenient

or efficient. Consumers can now use the Internet to search for
the lowest price for several products with a few clicks. In India,
banks are expanding to the rural population by employing
roving tellers. These roving tellers use a laptop, a wireless
modem, and a fingerprint scanner to open accounts, take
deposits, and process money transfers for farmers and migrant
workers in small towns; thus, making the buying process more
convenient and accessible.
Making a Service More Accessible
In a bid to reach 50 percent of the rural households without bank accounts, Indian banks have
roving tellers who take fingerprints of first-time customers in villages. This makes the banking
process more accessible.
3. A company can meet the need for more information and

advice. Zuji.com facilitates finding travel information by
providing several flight and hotel alternatives.
4. A company can customize a product or service that was

formerly offered only in a standard form. National Bicycles
Panasonic Order System manufactures custom-made bicycles
fitted to the preferences and anatomy of individual buyers.
5. A company can introduce a new capability. Apples iPad

allowed consumers to access emails, play games, and watch
movies on a convenient-to-carry touch pad.
6. A company may be able to deliver a product or a service

faster. Taiwanese contract manufacturers excel in the speedy
design, manufacture, and delivery of a variety of computer-
related products and components.
7. A company may be able to offer a product at a much lower

price. Pharmaceutical firms like Ranbaxy sell generic versions
of brand-name drugs.
Evaluating Opportunities
Using Market Opportunity Analysis (MOA)
Key questions to ask:
a.Can the benefits involved in the opportunity be articulated convincingly to a
defined target market(s)?
b.Can the target market(s) be located and reached with cost-effective media
and trade channels?
c.Does the company possess or have access to the critical capabilities and
resources needed to deliver customer benefits?
d.Can the company deliver the benefits better than any actual or potential
competitors?
e.Will the financial rate of return meet or exceed the companys required
threshold for investment?
Figure 2.4: Opportunity Matrix
Environmental Threats
An environmental threat is a challenge posed by an

unfavorable trend or development
that would lead, in the absence of defensive marketing

action, to lower sales or profit.
Threats should be classified according to seriousness and

probability of occurrence.
See the Threat Matrix in Figure 2.4.
Figure 2.4: Threat Matrix
Internal Environment (Strengths and 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.
See the Marketing Memo: Checklist for Performing Strengths

and Weaknesses Analysis.
Checklist for Assessing Strengths and Weaknesses
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.
Goal Formulation
The firm sets objectives, and then manages by objectives

(MBO). For MBOs to work they must meet four criteria:
1. They must be arranged hierarchically, from the most to least

important.
2. Objectives should be stated quantitatively whenever possible.
3. Goals should be realistic.
4. Objectives must be consistent.
Strategy Formulation
Goals indicate what a business unit wants to achieve;

strategy is a game plan for getting there.
Every business must design a strategy for achieving its goals,

consisting of a marketing strategy and a compatible
technology strategy and sourcing strategy.
Porters Generic Strategies
1. Overall cost leadershipThe business work hard to achieve the

lowest production and distribution costs so that it can price lower
than its competitors and win a large market share. Firms pursuing
this strategy must be good at engineering, purchasing,
manufacturing, and physical distribution. They need less skill in
marketing. The problem with this strategy is that other firms will
usually compete with still lower costs and hurt the firm that rested
its whole future on cost.
Porters Generic Strategies
2. DifferentiationThe business concentrates on achieving superior

performance in an important customer benefit area valued by a
large part of the market. The firm cultivates those strengths that
will contribute to the intended differentiation. Thus, the firm
seeking quality leadership, for example, must make products with
the best components, put them together expertly, inspect them
carefully, and effectively communicate their quality.
3. FocusThe business focuses on one or more narrow market

segments. The firm gets to know these segments intimately and
pursues either cost leadership or differentiation within the target
segment.
Application of Porter Generic Strategies
According to Porter, firms pursuing the same strategy directed to

the same target market constitute a strategic group.
The firm that carries out that strategy best will make the most
profits.
Firms that do not pursue a clear strategy and try to be good on all
strategic dimensions do the worst.
Strategy versus Operational Effectiveness
Porter draws a distinction between operational effectiveness and

strategy.
Competitors can quickly copy the operationally effective company

using benchmarking and other tools, thus diminishing the
advantage of operational effectiveness.
Porter defines strategy as the creation of a unique and valuable

position involving a different set of activities.
A company can claim that it has a strategy when it performs

different activities from rivals or performs similar activities in
different ways.
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:
i. Product or service alliances.
ii. Promotional alliances.
iii. Logistics alliances.
iv. Pricing collaborations.

Types of Marketing Alliances
1. Product or service alliancesOne company licenses another to produce

its product, or two companies jointly market their complementary products
or a new product. For instance, in the disc format war, Warner Brothers has
an alliance to release its movies in high-definition DVD in Sonys Blu-ray
format; while Paramount, Universal, and Dreamworks signed on exclusively
with HD DVD by Toshiba.
2. Promotional alliancesOne company agrees to carry a promotion for

another companys product or service. In India, Pepsi built strategic
alliances with adidas and Microsoft to tap Indian cricket fans during the
World Cup. adidas retails its Men-in-Blue cricket accessories, Microsoft
features Pepsi in its XBox 360 games, while Yahoo! maintains its Web site.
Types of Marketing Alliances
3. Logistics alliancesOne company offers logistical services for

another companys product. For example, Hong Kongs Li & Fung
manages Avons supply chain.
4. Pricing collaborationsOne or more companies join in a special

pricing collaboration. Hotel and rental car companies often offer
mutual price discounts.
Promotional Alliances
An example: The Cricket World Cup in India
Companies make strategic alliances to help them tap on opportunities. In India, the opportunity to
reach to the large cricket fans during the World Cup saw Pepsi entering into a promotional alliance
with adidas and Microsoft.
Partner Relationship Management
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).
Some of the key success factors for such partnerships include the
following (see Marketing InsightSame Bed, Different Dreams):
Strategic Fit
A focus on the Long-Term
Flexibility
Program Formulation and Implementation
A great marketing strategy can be sabotaged by poor

implementation.
Marketing must estimate its costs.
In implementing strategy, companies must not lose sight of the

multiple stakeholders involved and their needs.
According to McKinsey & Company, strategy is only one
of seven elements in successful business practice.
The first threestrategy, structure, and systems are considered the

hardware of success.
The next fourstyle, skills, staff, and shared values are the software.
a. Style means company employees share a common way of thinking
and behaving.
b. Skills means employees have the skills needed to carry out the
companys strategy.
c. Staffing means the company has hired able people, trained them
well, and assigned them to the right jobs.
d. Shared values, means the employees share the same guiding value.
Feedback and Control
As it implements its strategy, the firm needs to track the

results and monitor new developments.
A companys strategic fit with the environment will inevitably

erode because the market environment changes faster than
the companys 7 Ss.
Organizations are subject to inertia and are set up as efficient

machines and it is difficult to change one part without
adjusting everything else.
Feedback and Control
Haier stands by its quality products. It was prepared to destroy its products if they do not meet
quality standards as they come off the production line. Today, Haier is the second largest refrigerator
manufacturer in the world.
Product Planning: The Nature and Contents of a
Marketing Plan
Working within the plans set by the levels above them,
product managers come up with a marketing plan for
individual products, lines, brands, channels, or customer
groups.
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
Marketing plans are becoming more customer and competitor

orientated. The plan draws more input from all the business
functions and is team developed.
Marketing Plan Criteria
Marketing Plan Contents
Executive summary
Table of contents
Situation analysis
Marketing strategy
Financial projections
Implementation controls
Marketing Plan Contents (1)
1. Executive summary and table of contentsThe marketing

plan should open with a brief summary of the main goals
and recommendations.
2. Situation analysisThis section presents relevant

background data on sales, costs, the market, competitors,
and the various forces in the macro-environment. How is the
market defined, how big is it, and how fast is it growing?
What are the relevant trends and critical issues? All this
information is used to carry out on a SWOT (strengths,
weaknesses, opportunities, and threats) analysis.
3. Marketing strategyHere the product manager defines the

mission, and marketing and financial objectives.
The manager also defines those groups and needs which the
market offerings are intended to satisfy as well as its competitive
positioning. All this is done with inputs from other organizational
areas, such as purchasing, manufacturing, sales, finance, and
human resources.
4. Financial projectionsFinancial projections include a sales

forecast, an expense forecast, and a break-even analysis.
On the revenue side, the projections show the forecasted sales

volume by month and product category.
On the expense side, the projections show the expected costs of

marketing, broken down into finer categories.
The break-even analysis shows how many units must be sold

monthly to offset the monthly fixed costs and average per-unit
variable costs.
5. Implementation controlsThe last section of the

marketing plan outlines the controls for monitoring and
adjusting the implementation of the plan.
Typically, it spells out the goals and budget for each month or
quarter, so management can review each periods results and
take corrective action as needed.
Some organizations include contingency plans.
The Role of Research
As the plan is put into effect,

marketers use research to measure
progress toward objectives and
identify areas for improvement.
Marketing research helps marketers

learn more about their customers
requirements, expectations,
perceptions, satisfaction, and
loyalty.
The Role of Research
The marketing plan should outline

what marketing research will be
conducted and when, as well as how
the findings will be applied.
The Role of Relationships
Marketing plans also affects both internal and external

relationships:
A. First, it influences how marketing personnel work with each
other and with other departments to deliver value and satisfy
customers.
B. Second, it affects how the company works with suppliers,

distributors, and partners to achieve the plans objectives.
C. Third, it influences the companys dealings with other

stakeholders, including government regulators, the media, and
the community at large. Marketers must consider all these
relationships when developing a marketing plan.
From Marketing Plans to Marketing Action
As each action program begins, marketing managers will monitor ongoing

results, investigate any deviation from plans, and take corrective steps as
needed.
Some companies prepare contingency plans.
Marketers must be ready to update and adapt marketing plans at any time.
The marketing plan should define how progress toward objectives will be
measured.
Managers typically use budgets, schedules, and marketing metrics for

monitoring and evaluating results.
Schema for Chapter Two
Thank you

Mma6e Chapter 02 Final 186602

Încărcat de

Informații document

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Mma6e Chapter 02 Final 186602

Încărcat de

Drepturi de autor:

Formate disponibile

Marketing Management:

2.1 How does marketing affect customer value?

2.2 How is strategic planning carried out at different levels of

2.3 What does a marketing plan include?

Key ingredients of the marketing management process are

Developing the right marketing strategy over time requires a

Firms must stick to a strategy but also constantly improve it.

They must also develop strategies for a range of products

The task of any business is to deliver customer value at a

In a hypercompetitive economy with increasingly informed

The traditional view of marketing is that the firm makes

Will not work in economies where people each with individual

New belief: marketing begins with the planning process.

1. Choosing the value (segment the market, select

2. Providing the value (product features, prices, and

3. Communicating the value (sales force, internet,

Michael Porters Value Chain identifies nine strategically

The primary activities cover the sequence of bringing

The support activitiesprocurement, technology

The firms task is to examine its costs and performance in

The firm should estimate its competitors costs and

It should go further and study the best of class practices of

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

4. The customer relationship management process (deeper

5. The fulfillment management process (receiving, shipping, and

Strong companies also reengineer the workflows and build

Many companies have partnered with suppliers and

To be successful, a firm also needs to look for competitive

In an attempt to be more streamlined, Sony restructured its

The key is to own or nurture the resources and competencies

A core competency has three characteristics

1. Makes a significant contribution to perceived customer

2. Has applications in a wide variety of markets.

3. It is difficult for competitors to imitate.

Competitive advantage also accrues to companies that

Competitive advantage ultimately derives from how well the

Singapore Airlines has a competitive advantage because competitors find it challenging to

Business realignment may be necessary to maximize core

1. (re) defining the business concept or big idea;

2. (re) shaping the business scope; and

3. (re) positioning the companys brand identity.

Many multinationals find it difficult to replicate their core

Williamson and Zeng found that multinationals have clear

However, such core competencies are handicapped by

InflexibilityThe lack of flexibility means higher costs

Less developed marketMany markets in China are still

Leaner and more flexibleChinese companies tend to be

Opportunity to catch upThe open global markets allow

Become asset light by using intangibles

Holistic marketers succeed by managing a superior value

Holistic marketers address three key management questions:

Developing strategy requires the understanding of the

1. Customers cognitive space (reflects existing and latent

2. Companys competence space (broad versus focused scope

3. The collaborator resource space (horizontal and vertical

Marketers need to:

b. Utilize core competencies.

c. Select and manage business partners from its

Often requires an investment in infrastructure and capabilities.

B. Internal resource management.

A. Business partnership management.

Zara Zaras core competency is its innovative business model of