CH-6-DEVELOPING MARKETING STRATEGIES & PLANS.ppt

Developing market strategies and plans

1. Marketing and Customer value
Marketing involves satisfying customers’ needs and wants
Task of any business is to deliver customer value at a profit
The economy is hypercompetitive and buyers are increasingly
rational
The buyers have abundant choice
A company can win only by fine tuning the value delivery process
The company has to choose, provide and communicate superior
value

2. The Value Delivery Process
Traditional view of marketing : “Firm makes something and then
sells it”
Marketing takes place in the second half of the process
The firm knows what to sell and market will buy enough units to
produce profits
This view holds good in such economies marked by product
shortages where consumers are not fussy about quality, features
and style

3. The Value Delivery Process
 Traditional view of business process will not work in economies where
people face abundant choices
 The mass market is actually splintering into numerous micro markets
 Each has its own wants, perceptions, preferences and buying criteria
 The “Smart Competitor” must design and deliver offerings for well defined
target markets
 This belief is at the core of the new view of business processes
 This view places marketing at the beginning of the planning process
 Instead of emphasizing marketing and selling, these companies see
themselves as part of a value delivery process

4. TRADITIONAL PHYSICAL PROCESS SEQUENCE
 Make the product
1.Design product
2.Procure
3.Make
 Sell the product
1.Price
2.Sell
3.Advertise/Promote
4.Distribute
5.Service

5. VALUE CREATION AND DELIVERY SEQUENCE
 Choose the value
1. Customer segmentation
2. Market selection / focus STRATEGIC MARKETING
3. Value Positioning
 Provide the value
1. Product development
2. Service development
3. Pricing
4. Sourcing & Making
5. Distributing and Servicing TACTICAL MARKETING
 Communicate the value
1. Sales force
2. Sales Promotion
3. Advertising

6. The Value Chain
 “Michael Porter” of Harvard has proposed the value chain as a tool for
identifying ways to create more customer value
 According to this model every firm is a synthesis of activities performed to
design, produce, market, deliver and support its product
 Value chain identifies nine strategically relevant activities that create value
and cost in a specific business
 These value creating activities consist of five primary activities and four
support activities

7. THE VALUE CHAIN
SUPPORT
ACTIVITIES
PRIMARY
ACTIVITIES
FIRM’S INFRASTRUCTURE
HUMAN RESOURCE MANAGEMENT
TECHNOLOGY DEVELOPMENT
PROCUREMENT
INBOUND
LOGISTICS
OPERA-
TIONS
OUTBOUND
LOGISTICS
MARKETIN
G
& SALES
SERVICES

8. The Value Chain : PRIMARY ACTIVITIES
1.Cover the sequence of bringing materials into the business (Inbound
Logistics)
2.Converting them into products (Operations)
3.Shipping out final products (Outbound Logistics)
4.Marketing them to customers (marketing and sales)
5.Providing the service to customers (Service )

9. The Value Chain : SUPPORT ACTIVITIES
1.Procurement
2.Technology Development
3.Human Resource Management
4.Firm Infrastructure
 Several departments, for example, may do procurement and hiring
 The firm’s infrastructure covers the costs of general management, planning,
finance, accounting, legal and government affairs
 Firm’s task is to examine costs and performance in each value creating
activity
 Should look for ways o improving it
 Company should benchmark with that of competitors. Best practices. Best
coys.

10. The Value Chain
Success of a firm will greatly depend on
1.How well each department performs its work and
2.How well various departmental activities are coordinated to conduct
the CORE BUSINESS PROCESSES

11. The Core Business Processes
 The market sensing process : All the activities involved in gathering market
intelligence, disseminating it within the organization, and acting on
information
 The new offering realization process : All the activities involved in researching,
developing, and launching new high quality offerings quickly and within
budget
 The customer acquisition process : All the activities involved in the defining
target markets and prospecting for new customers
 The customer relationship management process : All the activities involved in
building deeper understanding, relationships and offerings to individual
customers
 The fulfillment management process : All the activities involved in receiving
and approving orders, shipping the goods o time and collecting payment
Strong companies develop superior capabilities in managing and linking their
core
business processes

12. MANAGING & LINKING THE CORE BUSINESS PROCESSES
Wal-Mart
Has superior strength in stock replenishment process
Flow of sales information
Supplier’s ability to ship replacement merchandise to stores at the
rate it moves out of the shelf
Manage flow of goods and not stocks of goods
Wal- Mart : Delegated this responsibility to its leading vendors in a
system known as (VMI) “Vendor-Managed Inventories”
XEROX
Customer Operations Group links sales, shipping , installation,
service and billing so these activities flow smoothly into one
another

13. VALUE CHAIN
Winning Companies are those that excel in managing core
business processes through cross functional teams
Successful companies look for competitive advantages beyond
its own operations: value chain of suppliers, distributors,
customers and competitors
Many companies have partnered with specific suppliers and
distributors to create a superior “value delivery network” also
known as a “supply chain.”

14. The Core Competencies
 A company needs resources to carry out its core business processes viz.
labour power, machines, information and energy
 Traditionally, companies owned and controlled most of the resources that
entered their businesses
 This situation however is changing
 Outsourcing of less critical resources if they can be obtained at better
quality and lower cost
 Frequently outsourced resources include : manufacturing, consultancy,
service management, human resource management
Eg. Nike outsourced it’s manufacturing activities to other competent Asian
manufactures. Nike nurtures its superiority in shoe design and
merchandising
Kodak has even turned over the management of its data processing department
to IBM
 Key is to own and nurture the resources and competencies that make up the
essence of business

15. The Core Competency has three characteristics
1.It is a source of competitive advantage. It makes a significant contribution
to perceived customer benefits
2.It has applications in a wide variety of markets
3.It is difficult for competitors to imitate
• Competitive advantage also accrues to companies that possesses distinctive
capabilities
• Core competencies refer to those areas of special technical & production
expertise
• Distinctive capabilities tend to describe excellence in broader business
processes

16.  Holistic marketing orientation can also provide insight into the process of
capturing customer value
 One conception is ,”Integrating the value exploration, value creation and
value delivery activities”
 Purpose : “Building long term, mutually satisfying relationships and co-
prosperity among key stakeholders”
 Holistic marketers succeed by managing a superior value chain that delivers
a high level of product quality, service and speed
 They achieve profitable growth by expanding customer share, building
customer loyalty and capturing customer lifetime value

17. THE HOLISTIC MARKETING FRAMEWORK IS DESIGNED TO ADDRESS THREE KEY
MANAGEMENT QUESTIONS
1.Value Exploration : How can a company identify new value opportunities?
2.Value creation: How can a company efficiently create more promising new
value offerings?
3.Value delivery: How can a company use its capabilities and infrastructure to
deliver the new value offerings efficiently?

18. VALUE EXPLORATION
 Value flows within and across the markets that are themselves dynamic and
competitive
 Hence companies need a well defined strategy for value exploration
 Developing a strategy requires an understanding of the relationships and
interactions among three spaces
1.Customer’s cognitive space : This reflects existing and latent needs and
includes dimensions such as need for participation, stability, freedom and
change
2.The company’s competence space : This can be described in terms of
breadth – broad versus focused scope of business; and depth- physical
versus knowledge based capabilities
3.The collaborator’s resource space: This involves horizontal partnerships ,
where companies choose partners based on their ability to exploit related
market opportunities and vertical partnerships

19. VALUE CREATION
 Value creation skills are required to exploit a value opportunity
 Marketers need to
- Identify new customer benefits from the customer’s view
- Utilize core competencies from its business domain
- Select and manage business partners from its collaborative network
 To craft new customer benefits marketers must understand what the
customer thinks about, wants, does and worries about
 Marketers must also observe who customers admire, who they interact with
and who influences them
 Business realignment may be necessary to maximize core competencies

20. VALUE CREATION : MAXIMIZING CORE COMPETENCIES
This involves three steps
1.Redefining the business concept (The big idea)
2.Reshaping the business scope (The line of business)
3.Repositioning the company’s brand identity (How customers should see the
company)
• Example : Kodak - Sales from its traditional core business of film, camera,
paper and photo development have sagged
• Customers have abandoned film cameras for increasingly cheaper digital
equipment, products and services

21. VALUE DELIVERY
• This involves substantial investment in infrastructure and capabilities
• The company must become proficient in CRM, internal resource
management and business partnership management
• CRM allows company to discover who their customers are, how they behave
and what they need and want
• To respond effectively the company requires internal resource management
to integrate major business processes
• Finally business partnership management allows the company to handle
complex relationships with its trading partners to source, process and
deliver products

22. • Successful marketing requires companies to have capabilities to understand
1.customer value
2.delivering customer value
3.capturing customer value and
4.sustaining customer value
• Senior management priorities have to be addressed to in improving
marketing
• Handful of companies turn out to be master marketers : Procter & gamble,
HUL, NIKE, McDonalds etc
• This is because of strategic planning processes

23. • PLANNING
1.Corporate planning
2.Division planning
3.Business planning
4.Product planning
• IMPLEMENTING
1.Organizing
2.Implementing
• CONTROLLING
1.Measuring results
2.Diagnosing results
3.Taking corrective action

24. • Divisions and business units prepare their plans by preparing statements of
mission, policy, strategy goals
• This is the framework prepared by the headquarters within which divisions
and business operate
• Some corporates give their business units lot of freedom to set their own
sales and profit goals and strategies
• Others set goals for their business units bus let them develop their own
strategies

25. All Corporate Headquarters undertake four planning activities
1. Defining the corporate mission
2.Establishing strategic business units
3.Assigning resources to each business SBU
4.Assessing growth opportunities

26. DEFINING THE CORPORATE MISSION
 An organization exists to accomplish something : What is it.
1. To make cars
2. Lend money
3. Provide a night’s lodging
4. Provide health care service
 Specific mission should be clear when the business starts. Mission
statement.
 Peter Drucker’s classic questions:
1. What is our business?
2. Who is the customer?
3. What is of value to the customer?
4. What will our business be?
5. What should our business be?
 Mission may change over a period of time depending on opportunities or
new market conditions

27. Mission statements should define major competitive spheres within which the
company will operate

 Industry : Range of Industries in which the companies will operate .
Consumer goods, Industrial products, Service sector etc.
 Products and applications: The range of products and applications a
company will supply
 Competence : The range of technological and other core competencies that
a company will master and leverage
 Market Segment : The type of market or customers the company will serve
 Vertical : The number of channel levels from raw materials to the final
product and distribution in which he company will participate in
 Geographical : The range of regions, countries, or country groups in which a
company will operate