Chapter 2 discusses the development of marketing strategies and plans, emphasizing the importance of delivering customer value, the value delivery process beginning at planning, and the phases of value creation and delivery. It outlines the value chain model, core business processes, marketing plans, and strategic business unit planning, detailing critical processes such as market sensing, customer acquisition, and fulfillment management. Additionally, it covers competitive strategies, the significance of technology and systems in gaining competitive advantage, and the role of external and internal analyses in formulating strategic marketing plans.

1. Developing Marketing
Strategies and Plans
Chapter 2

2. Chapter Outline
 Marketing and Customer Value
 The Value Delivery Process
 Phases of Value Creation and Delivery
 The Value Chain
 Core Business Processes/Essential Activities
 Characteristics of Core Competencies
 What is a Marketing Plan?
 Corporate Headquarters’ Planning Activities
 Business Unit Strategic Planning
 Product Planning: The Nature and Contents of a Marketing Plan
 Marketing Plan Contents

3. Marketing and Customer Value
 The task of a business is to deliver customer
value at a profit.
 In a hypercompetitive economy with
increasingly informed buyers faced with many
choices, a company can only win by fine-tuning
the value delivery process and choosing,
providing, and communicating superior value.

4. The Value Delivery Process
Traditional view: The value
delivery process takes place
during the selling process.
New view: The value delivery
process begins at the beginning
of planning.

5. Phases of Value Creation and
Delivery
 Choosing the value-Segment the market,
select target markets, develop the offering's
value positioning. (before the product exists)
 Providing the value-Determine specific
product features, prices, and distribution.
 Communicating the value-Using the sales
force, Internet, advertising to announce and
promote the product.
 Each phase has cost implications.

6. The Value Chain
The value chain is a tool for
identifying was to create more
customer value because every firm is
a combination of primary and
support activities performed to
design, produce, market, deliver, and
support its products.
These activities create value and cost.

7. The Value Chain
 Primary Activities
1. Inbound Logistics- Bringing the material to the
business
2. Operations- Converting the material into final
products
3. Outbound Logistics- Shipping out the final
product
4. Marketing –Which includes sales
5. Service

8. The Value Chain
 Support Activities (Specialized departments)
1. Procurement- is the acquisition of goods and
services. (Buying)
2. Technology Development
3. Human Resource Management
4. Firm Infrastructure- Covers the costs of
general management, planning, finance,
accounting, legal, and government affairs.

9. Core Business Processes/Essential Activities
 1. Market-sensing process-All activities in gathering and acting
upon information about the market.
 2. New-offering realization process-Researching, developing,
and launching new high-quality offerings quickly and within
budget.
 3. Customer acquisition process-Defining target markets and
prospecting for new customers.
 4. Customer relationship management process-Building deeper
understanding, relationships, and offerings to individual
customers.
 5. Fulfillment management process-Receiving and approving
orders, shipping the goods on time, and collecting payment.
 Use cross-functional teams (is a group of people with different functional
expertise working toward a common goal) to manage core processes.

10. Characteristics of Core Competencies
Core Competencies- The main
strengths or strategic advantages of
a business.
A source of competitive advantage
Applications in a wide variety of markets
Difficult to imitate
 Companies must also posses distinctive abilities or
broader business process such as customer linking,
market-sensing, and channel bonding.

11. The Strategic Planning, Implementation,
and Control Processes

12. What is a Marketing Plan?
The Marketing Plan is the
central instrument for
directing and coordinating
the marketing effort.
It operates at strategic and
tactical level.

13. Levels of a Marketing Plan
 Strategic
 Target
marketing
decisions
 Value
proposition
 Analysis of
marketing
opportunities
 Tactical
 Product
features
 Promotion
 Merchandising
 Pricing
 Sales channels
 Service

14. Corporate Headquarters’ Planning
Activities
1. Define the corporate mission
2. Establish strategic business units
(SBUs)
3. Assign resources to each SBU
4. Assess growth opportunities

15. 1. Define the corporate mission
Good Mission Statements should:
Focus on a limited number of goals
Stress major policies and values
Define major competitive sphere
where the company will operate
Take a long-term view
Short, memorable, and meaningful

16. 2. Establishing Strategic Business Units (SBUs)
 Market definition of a
business :Customer satisfying process
Products change, needs stay
Target market definition-Focus on
selling product to current market.
Strategic market definition-Focus on
selling product to current and potential
markets.

17. Characteristics of SBUs
It is a single business or collection
of related business that can be
planned for separately from the
rest of the company.
It has its own set of competitors.
It has a leader responsible for
strategic planning and profitability.

18. 3. Assigning Resources to each SBU
Management must decide how
to allocate resources to each
SBU.
Is the market value of a
company greater with or
without the SBU?

19. 4. Assessing Growth Opportunities
1. Planning new businesses
2. Downsizing businesses
3. Terminating older
business

20. 1. Planning new businesses
If there is a gap between
desired sales and projected
sales
Develop or acquire new
businesses to fill the gap

21. The Strategic Planning Gap

22. Intensive Growth Strategies/ Improve existing
businesses
Ansoff’s Product-Market Expansion Grid

23. Intensive Growth/Improve existing
businesses
 Market-penetration strategy- Gain more
market share with current products in current
markets.
 Market-development strategy- Find or develop
new markets for current products.
 Product-development strategy- Develop new
products of potential interest to current markets.
 Diversification strategy - Develop new products
for new markets.

24. Integrative growth / Build or acquire businesses related to current
businesses
Backward integration-Example:
acquire supplier.
Forward integration-Example:
acquire wholesaler or retailer.
Horizontal integration-
Example: acquire one or more
competitors.

25. The Supply Chain
 Supplier(raw material or components)
 Transportation(inbound logistics)
 Manufacturer
 Transportation (outbound logistics)
 Warehousing
 Wholesaler
 Retailer
 Final consumer

26. Diversification growth /Add attractive unrelated businesses
 Concentric strategy-Seek new products that
have technological or marketing synergies with
existing product lines that appeal to a different
group of customers.
 Horizontal strategy-Search for unrelated new
products that appeal to current customers.
 Conglomerate strategy-Seek new businesses
that have no relationship to current
technology, products, or markets.

27. 2. Downsizing businesses
3. Terminating older businesses
 Downsizing- Whereby a company reduces its
size and operations to increase its efficiency and
profitability. Reduce employees and company
activities.
 Terminating older businesses- Sell off old
unprofitable businesses to reduce costs.

28. Business Unit Strategic Planning
 1. The Business Mission
 2. SWOT Analysis
 3. Goal Formulations
 4. Strategic Formulation
 5. Program Formulation and Implementation
 6. Feedback and Control

29. 1. The Business Mission
2.External Environment (Opportunity and Threat) (SWOT Analysis)
 Each Business unit needs to define its specific mission
within the broader company mission.
 Marketing opportunity is an area of buyer needs and
interest that a company has a high probability of
profitably satisfying.
 1. Offer something that is in short supply
 2. Supply an existing product or service in a new or
superior way:
 a. problem detection method-Ask consumers for suggestions.
 b. ideal method-Ask consumers to imagine an ideal version of the product.
 c. consumption chain method-Ask consumers to chart the steps in
acquiring , using, and disposing of a product.

30. External Environment (Opportunity and
Threat) (SWOT Analysis)
 Environmental threat is a challenge posed by
an unfavorable trend or development that in the
absence of defensive marketing action would
lead to lower sales or profit.

31. Internal Environment (Strengths and Weaknesses) (SWOT
Analysis)
Evaluate strengths and weaknesses
Find new strengths

32. 3. Goal Formulations
 Develop specific goals for the planning period.
 Businesses units usually pursue a mix of
objectives :
 Profitability
 Sales Growth
 Market share improvement
 Risk containment
 Innovation
 Reputation

33. 4. Strategic Formulation
 A strategy is a game plan for getting there.
Marketing Strategies
 Overall cost leadership-achieve the lowest production
and distribution to underprice competitors and win market
share.
 Differentiation-achieve superior performance in an
important customer benefit area valued by a large part of
the market.
 Focus-Focus on one or more narrow market segments and
pursue either cost leadership or differentiation.
 Firms directing the same strategy to the same target market constitute a
strategic group.

34. 5. Program Formulation and Implementation
6. Feedback and Control
 Program Formulation and
Implementation:
 Estimate cost
 Sufficient results to justify cost
 Feedback and Control:
 It is critical for organizations to examine the
changing environment and adopt new goals
and behaviors.

35. Product Planning: The nature and contents of a Marketing Plan
 A marketing plan is written document that
summarizes what the marketer has learned
about the marketplace and indicates how the
firm plans to reach its marketing strategies.

36. Marketing Plan Contents
 Executive summary and table of contents-A table of
contents and a brief summary for top managers of the
main goals and recommendation.
 Situation analysis-Background data on sales, costs, the
market, the competitors, and the various forces in the
marcroenviroment.
 Marketing strategy-Define the mission, marketing and
financial objectives, and the needs that the market offering
intends to satisfy plus the competitive positioning.
 Financial projections-Includes a sales forecast, an
expense forecast, and a break-even analysis.
 Implementation controls-Outlines the controls for
monitoring and adjusting the implementation of the plan.

37. References
 Kotler, Philip and Kevin Lane Keller . Marketing
Management. Pearson Education Limited, 2012.

38. Porter’s Generic Strategies
 Cost: Compete by offering the lowest prices.
 Differentiation: Product or service that offers
unique value.
 Focus: Narrow or Large, focus on an entire
industry or a small market segment.

39. Generic Strategies
Samsung
Galaxy
Walmart
Big 5
REI

40. The Value Chain

41. Value Chain (contd.)
 Inbound Logistics: raw materials brought into
the company
 Operations: any part of the business that
converts raw materials into products and
services
 Outbound Logistics: Getting the products
and services to the customers.

42. Value Chain (contd.)
 Sales/Marketing: Entire buyers to purchase
products and services.
 Service: Support of products and services that
customers have purchased.
 Firm Infrastructure: All the organizational
functions that support the business.
Technology connected/supported.
 Human Resources Management: Recruiting
hiring, and retaining employees.

43. Value Chain (contd.)
 Technology Development: Advances and
innovations adopted to add value to the
company.
 Procurement: Acquiring raw materials for
production/operations.

44. The Value Chain Model & CRM
Graphic from Docstock.com
Enterprise
Resources
Planning
Supply
Chain
Management
Customer
Relationship
Management

45. Porter’s 5 Force Model
Industry
Rivalry
Threat of
New
Entrants
Threat of
Substitute
Products
Bargaining
Power of
Suppliers
Bargaining
Power of
Buyers
Government
Regulation

46. 5 Forces
 Bargaining Power of Buyers (customers): Ability of the
customers to put the firm under pressure to reduce
prices.
 Bargaining Power of Suppliers: Power of suppliers to
control prices.
 Intra-Industry Rivalry: Competitiveness of a given
industry. Threat of New Entrants: Profitable industries
attract new competitors. (Amazon producing TV shows)
 Threat of substitute products and services:
Other entities that consumers can use,
instead of your product. (bike instead of car)

47. Entry Barriers
 Creating a barrier to entry to would be
competitors.
 Southern California Edison
 Utility, captive market
 To open an electric company would require a
massive infrastructure
 Bar
 Liquor license is a cost that might prohibit
entrants
 Online mega-store like Amazon
 New entrants cannot compete with branding,
infrastructure and supply chain

48. Switching Costs
 Switching Cost – The cost of a customer to switch
to another product or service.
 Used to reduce the threat of new entrants and
substitute products.
 Increasing Switching Costs
 Deals for Staying with You (loyalty programs)
 Memberships
 Contracts

49. Strategies and Forces

50. Using Information Systems for Competitive
Advantage
 Business Process Management Systems
 Control of processes gives competitive advantage
because ___.
 Electronic Data Interchange
 Automation of the value chain gets products to
market quicker.
 Allows for integration of partners in the value
chain.
 Allows for flexible value chain because of
automation.

51. Competitive Advantage (contd.)
 Collaborative Systems – Easier ways for people to
collaborate in work and processes.
 Google Drive
 MS SharePoint
 Cisco WebEx
 Atlassian Confluence
 IBM Lotus Notes

52. Competitive Advantage (contd.)
 Decision Support Systems
 Assist with decision making at all levels,
particularly semi-structured.
 Data Analytics
 Internally: Having centralized data can give
opportunities to see what the data is telling you.
 Externally: Data sources can inform
strategic decisions about new technologies
and your industry.