The document discusses key concepts in marketing strategy and planning. It covers customer perceived value, the value delivery process in three stages, value chain analysis, core competencies, corporate and division strategic planning, and Ansoff's product/market matrix. The value delivery process focuses on choosing value for customers, providing that value through the marketing mix, and communicating the value. The document also discusses intensive and integrative growth strategies including market penetration, development, product development, and diversification.
3. Customer Perceived Value
Customer perceived value (CPV) is the
difference between the prospective
customer's evaluation of all the benefits and
all the costs of an offering relative to
perceived alternatives.
Key Elements of cost
Monetary Cost
Energy Cost
Time
Psychic Cost (costs of added stress)
5. Stage 1: Choose The Value …….
Customer Segmentation
according to their likely
behavior and potential
profitability
Customer Profiling
A Competitive economy is
causing decline in customer
loyalty and increasing
customer turnover >>
eroding profit margins
key to understanding your
customers
6. Stage 1: Choose The Value …….
Market
Selection/Focus
tailors marketing mix for
one or more segments
contrasts with mass
marketing
two factors to consider….
attractiveness of
segment
suitability of market
segments to the firm
7. Stage 1: Choose The Value …….
Market
Selection/Focus
(Attractiveness of Segment)
size of the segment
growth rate of the
segment
competition in the
segment
brand loyalty
required market share to
break even
expected profit margins
8. Stage 1: Choose The Value …….
Market
Selection/Focus
(suitability of market segments to
the firm)
whether the firm can offer
superior value to customers
the impact of serving the
segment on the firm’s image
access to distribution channel
The better the firm fit to a market
segment, and the more attractive the
market segment, the greater the
profit potential to the firm.
9. Stage 1: Choose The Value …….
Value Positioning
Value positioning is the
process whereby management
decides how the business is
positioned relative to
competitors and the market
segments it aims to penetrate.
10. Stage 2: Provide the Value…….
Product development
Service development
Pricing
Sourcing/Making
Distributing
11. Stage 2: Provide the Value…….
Product development
Idea Generation
Idea Screening and
evaluations
Business Analysis
Prototype development
Test marketing
12. Stage 2: Provide the Value…….
Service development
Service is..
the prompt delivery of
the product
a customized user or
service manual
knowledgeable, cost-
effective maintenance,
repair, or replacement.
dealer support.
13. Stage 2: Provide the Value…….
Pricing
A well chosen price should
do three things
achieve the financial
goals of the company (e.g.
profitability)
fit the realities of the
marketplace (will customers
buy at that price?)
support a product's
positioning and be
consistent with the other
variables in the marketing
mix
14. Stage 2: Provide the Value…….
Sourcing/Making
Decide whether to source
or make.
Distributing
Channel members
Warehousing
Market Coverage
Location
15. Stage 3: Communicate the Value…
Sales Force
Size of Sales Force.
Sales force management
systems
19. Value Chain
Value Chain is defined as
a chain of activities that a firm operating in a
specific industry performs in order to deliver
something valuable (product or service)
to its customers.
20. Value Chain
This model defines an organization as:
“synthesis of activities performed to
design, produce, market, deliver,
and support its products.”
22. Value Chain cont…
Activities divided into
Primary Activities
Activities involved in the physical creation of the product and
its sale and transfer to the buyer as well as after sales
assistance.
Inbound Logistics, Operations, Outbound Logistics, Marketing
and Sales, Services
Certain activities are vital for specific industry. For Example:
Distributor: Inbound and Outbound Logistics
Service Firm: Operations
Bank Engaged in Corporate Lending: Marketing and Sales
Manufacturer of Heavy Machinery: Operations and Services
23. Value Chain cont…
Secondary Activities - activities that support primary
activities and each other.
Procurement – function of purchasing inputs used in the
firm’s value chain such as raw materials, supplies,
machinery, laboratory equipment, office, equipment, building,
meals and lodging, strategic consultancy.
Technology Development – activities that improve the
product and the process such as know-how, procedures,
preparing documents, transporting goods as well as
technology embodied in products themselves.
24. Human Resource Management – consist of activities involved in
recruiting, hiring, training, development, and compensation. Key for
competitive advantage in many firms such as advertising, consultancy,
accounting etc.
Firm Infrastructure - consist of a number of activities including
management, planning, finance, accounting, legal, government affairs,
and quality management.
Value Chain cont…
25. Value Chain cont…
Linkage - crucial for corporate success. The linkages are flows
of information, goods and services, as well as systems and
processes for adjusting activities. In the result, the linkages are
about seamless cooperation and information flow between the
value chain activities.
Margin - depends upon the ability of the firm to manage the
linkage among the activities.
27. Core Competence
Core competencies are capabilities that
serve as a source of competitive advantage
for a firm over its rivals.
Core competencies lead to the development
of core products. Core products are not
directly sold to end users; rather, they are
used to build a larger number of end-user
products.
28. Core Competence cont...
Firms used to own and control business
Today firms outsource less critical resources for better quality
and low cost
Focus on core business activities.
Rooted in the ability to integrate and coordinate activities
Not necessarily an expensive undertaking
Gained mostly but not exclusively through technology – reliable
process, close relationship with customers/suppliers,
understanding culture etc.
29. Core Competence cont...
Characteristics of Core Competencies
Source of competitive advantage
Application in a wide array of markets
Difficult for competitors to imitate
32. Core Competence cont...
Benefits of Core Competencies
Form the basis for launching new businesses
Bonds business units into a coherent portfolio
Transcend the traditional brand market share to
core product share
34. Corporate and Division Strategic Planning
STRATEGIC PLANNING is an organization's
process of defining its long term strategy, or
direction, and making decisions on allocating
its resources to pursue this strategy.
In doing so, the organization tries to achieve
its mission.
35. Corporate and Division Strategic Planning…
Four Planning Activities
1. Define the Corporate Mission
2. Establish Strategic Business Unit
3. Assigning Resources to each SBU
4. Assessing Growth Opportunities
36. Corporate and Division Strategic Planning…
Corporate Mission
What is our business?
Who is the customer?
What is of value/benefit to the customer?
What will our business be?
What is our business’s philosophy?
37. Corporate and Division Strategic Planning…
Examples of Mission Statements
1. Ford: “We are a global family with a proud heritage,
passionately committed to providing personal mobility for
people around the world. We anticipate consumer need and
deliver outstanding products and services that improve people's
lives”
2. Proctor & Gamble “We will provide branded products and
services of superior quality and value that improve the lives of
the world's consumers. As a result, consumers will reward us
with leadership sales, profit, and value creation, allowing our
people, our shareholders, and the communities in which we live
and work to prosper”
38. Corporate and Division Strategic Planning…
Establish SBUs and Assign Resources
An SBU has three characteristics
1. It is a single business or collection of businesses that can be
planned separately from the rest of the company
2. It has its own set of competitors
3. It has a manager who is responsible for strategic planning and
profit performances and who controls most of the factors
affecting profit.
40. Intensive Growth
Market Penetration
Aim
Increase share of the current market (segment) with current
products
Secure dominance in growth market
Restructure a mature market by driving out competition
Achieved through slightly adjusting the marketing mix – decrease
price, better quality, increasing the number of salespersons, increasing
advertising, offering extensive sales promotion items, or increasing
publicity efforts.
41. Intensive Growth
How Market Penetration is Achieved?
Increase usage by existing customers
Attract customers away from rivals
Devise and encourage new applications
Encourage non buyers to buy
42. Intensive Growth
Use Market Penetration When…
the market is not saturated
market shares of the major competitors is declining while the
total share is increasing
increased volumes lead to economies of scale
historical relationship between dollar promotion expenditure and
dollar sales has been positive
43. Intensive Growth
Market Development
Selling the same product to different markets
OR
Entering new markets or segments with same products
Entering overseas markets
Will require major changes into marketing strategy
New distribution channels
Different pricing policy
New promotional strategy
44. Intensive Growth
Use Market Development When…
channels of distribution are available or could be built
an organization has a strong marketing department
new untapped and unsaturated markets exists
firm has excess capacity
45. Intensive Growth
Product Development
Developing new products for existing markets
Entails large research and development expenditure
New products come in the form of
New products to replace current products
New innovative products
New products to complement existing products
46. Intensive Growth
Use Product Development When…
Organization has successful products in the maturity stage
Competes in an industry characterized by rapid technological
development
Organization has strong R&D department
47. Integrative Growth
Forward Integration
Gaining ownership or increased control over distributors
or retailers
Use Forward Integration When….
Present distributors are expensive, unreliable, or
incapable of meeting firm’s needs.
Have the capital and Human Resource
Distributors are few in number
When distributor’s margins are very high.
Company can gain a competitive advantage
48. Integrative Growth
Backward Integration
Seeking ownership or increased control over
firm’s suppliers.
Use Backward Integration When….
A firm’s suppliers are expensive or unreliable.
Number of suppliers is small and number of
competitors is large
Company can gain a competitive advantage
49. Integrative Growth
Horizontal Integration
Seeking ownership of firm’s competitors
M&As
Use Horizontal Integration When….
Firm can gain monopolistic characteristics
Organization competes in a growing industry
When competitors are faltering due to lack of
managerial expertise or a resource that your
firm has.
50. Diversification
Diversification
New products sold to new markets
In the past, pursued to diversify the risk of failure
Today on a retreat
Famous examples
General Electric
Viacom
Samsung
51. Diversification
Concentric Diversification
results in new product lines or services that have
technological and/or marketing synergies with
existing product lines
For example; Dell Computers, News Corporation.
52. Diversification
Conglomerate Diversification
New unrelated products for new wide array of markets
For example; Nishat Group, GE, Hashoo Group, Dewan Group.
Nishat Group Hashoo Group Dewan Group
1 Nishat Mills
2 D.G. Khan Cement
3 MCB Bank Limited
4 Adamjee Insurance
5 Nishat Power Limited
6 Pakgen Power Limited
7 Nishat Chunian Limited
8 Nishat Hotels and
Properties Limited
9 Nishat Dairy
1 Hotels and resorts
2 Tours and travels
3 Information technology
4 Oil and gas
5 Minerals
6 Pharmaceuticals
7 Ceramics
8 Investments
9 Trading companies
10 Welfare
1 Automobile
manufacturing
2 Polyester staple fibre
manufacturing
3 Sugar manufacturing
4 Textile manufacturing
5 Cement manufacturing
6 Petroleum
54. Ansoff’s Product/Market Matrix Cont...
Developed in 1957 by Igor Ansoff
A framework for identifying corporate growth opportunities
Two dimensions determine the scope of options – product
and market
Four Generic Strategies
Market Penetration (existing products, existing markets)
Market Development (existing products, new markets)
Product Development (new products, existing markets)
Diversification (new products, new markets)