This document outlines a chapter that discusses business marketing planning and strategic perspectives. It covers several topics: the role of marketing in corporate strategy development; the multifunctional nature of business marketing decision making; components of a business model that can provide competitive advantages; and how smart, connected products are transforming competition. The chapter also presents a framework for detailing strategic processes and systems.

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Chapter 5
Business Marketing Planning: Strategic Perspectives
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12e
Marketing’s strategic role in corporate strategy development
The multifunctional nature of business marketing decision
making
The components of a business model that can be converted into
superior positions of advantage in the business market
Chapter Outline
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The way in which a new class of smart, connected products is
transforming competition
A valuable framework for detailing the processes and systems
that drive strategy success
Chapter Outline (continued)
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3. Market-driven organizations:
Center on customers
Take an outside-in view of strategy
Demonstrate an ability to sense market trends ahead of their
competitors
Marketing’s Strategic Role
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Hierarchy of Strategies
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Corporate strategy
Business-level strategy
Functional strategy
Defines the businesses in which a company competes, in a
manner that uses resources to convert distinctive competence
into competitive advantage
Role of marketing
Assessing market attractiveness and the competitive
effectiveness of the firm
Promoting a customer orientation to the various constituencies
in management decision making
Formulating the firm’s overall value proposition and
articulating it to the market
Corporate Strategy

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Centers on how a firm competes in a given industry and
positions itself against its competitors
Competition is between individual business units
Strategic business unit (SBU): Single business or collection of
businesses that has:
A distinct mission
A responsible manager
Its own competitors and that is relatively independent of other
business units
Business-Level Strategy
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Centers on how resources allocated to the various functional
areas can be used most efficiently and effectively to support the
business-level strategy
Focus of marketing strategy is to allocate and coordinate
marketing resources and activities to achieve the firm’s
objective within a specific product market
Functional Strategy
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Interplay between the three levels of strategic formulation:
Cuts across functional areas
Involves issues related to long term objectives

7. Involves allocating resources across SBUs and/or product
markets
Include decisions about the direction of corporate strategy,
application of technology, and choice of alliance partners
Strategic Formulation and the Hierarchy of Strategies
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Figure 5.1 - Strategic Decision Processes

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Different meanings assigned to a proposed strategy are
motivated by deeper differences in organizational subcultures
Subcultures exist when one subunit shares different values,
beliefs, and goals than another subunit, resulting in different
thought-worlds
Functional managers are likely to resist strategic changes that
threaten their field
Conflicts in Strategy Formulation Process
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Collective decisions emerge from negotiation and compromise
among partisan participants
Choices must be negotiated with each interest group attempting
to achieve its own ends
Results of collective decisions tend to develop incrementally

9. and depend on the partisan values and influence of the various
interest groups
Negotiated Outcomes
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Marketing managers should:
Be sensitive to the likely response it may arouse in other
interest groups
Develop and use a communication network that includes
organizational members who have a major stake in the decision
Be able to use the personal networks to understand the interests
of other stakeholders, communicate their own interests clearly
and sensitively
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Implications for Marketing Managers
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Successful marketing managers know how to integrate
functional areas
Understand the capabilities of manufacturing, R&D, and
customer service
Capitalize on the strengths in developing marketing strategies
Facilitate strategies that are responsive to customer needs
Assume a central role in strategy implementation
Functional Integrated Planning
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11. Approach that can classify decision-making roles and highlight
the multifunctional nature of business marketing decision
making
Responsible (R) - Manager takes initiative, analyzes situation,
develops alternatives, consults with others, makes initial
recommendation
Approve (A) - Manager accepts or rejects decisions
Consult (C) - Manager offers input
Responsibility Charting
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Implement (M) - Manager is accountable for implementing
decision
Inform (I) - Manager is informed of the decision
Responsibility Charting (continued)

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Constitutes members of the organization involved in the
business marketing decision-making process
Representatives may assume more than one role
Roles evolve during the marketing strategy development process
Composition is not strictly prescribed by the organization chart
Needs of a particular strategy situation influence the
composition of the strategy center
Marketing Strategy Center
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Minimizing interdepartmental conflict is a challenge for
marketer
Individual strategy center participants are motivated by personal
and organizational goals
Organizational objectives may be different for different
functional areas
Managing conflict, promoting cooperation, developing and
coordinating strategy is a fundamental responsibility for
marketing managers
Managing Strategic Interdependencies
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14. Figure 5.2 - Components of a Business Model
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Elements of Customer Interface
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Fulfillment and support
Channels a firm uses to reach and support customers
Information and insight
Knowledge captured from customers and the degree to which
this information is used
Relationship dynamics
Nature of the interaction between the firm and its customers
Pricing structure
Pricing choices offered by a business concept

16. Determines how the firm chooses to compete
Elements
Business mission: Describes overall strategic objective, sets
course direction, and defines performance criteria to measure
progress
Product/market scope: Defines where the firm competes
Basis for differentiation: Captures the essence of how firm
competes differently than its rivals do
Core Strategy
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17. system for classroom use.
Business is differentiated when its value-adding activities are
perceived as superior and profitable
Value-added features need to motivate customers to pay a
higher premium than the cost of superior performance
Differentiation of Products and Services
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Core competencies
Set of skills, systems, and technologies that create uniquely
high value for customers
Strategic assets
Tangible requirements for advantage that enable a firm to
exercise its capabilities
Core processes
Methodologies and routines that companies use

18. Strategic Resources
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Complements and enriches the firm’s research base
Includes:
Suppliers
Strategic alliance partners
Coalitions
Value Network
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Figure 5.3 - Strategic Positioning
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Cloud computing: Scalable and elastic IT-related capabilities
are provided as a service to external customers using Internet
technologies
Internet of Things (IoT): Connects devices such as everyday
consumer objects and industrial equipment onto the network

20. Big Data: Massive amounts of data collected over time that are
difficult to analyze and process using common database
management tools
Smart, Connected Products
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Big Data Analytics: Process of examining large data sets
containing a variety of data types
To uncover hidden patterns, unknown correlations, market
trends, customer preferences, and other useful information
Smart, Connected Products (continued)
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Continuous monitoring of a product’s condition, operation,
usage, and external environment through sensors and external
data sources
Control through remote commands or algorithms that are
incorporated into the device or reside in the product cloud
Application of algorithms and analytics to product usage data to
enhance product performance
Capabilities of Smart, Connected Products
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Preventative maintenance when failure is imminent and
completes repairs remotely
Smart, connected products:
Operate autonomously
Self-diagnose their own service needs
Adapt to users’ preferences
Self-coordinate with other products and systems

22. Capabilities of Smart, Connected Products (continued)
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Marketing strategists can secure new insights into how products
create value for customers by gathering and analyzing product
usage data
By capitalizing on the rich data flows from customers, managers
can:
Create product and service bundles that provide greater value to
each segment
Price the bundles to capture a greater share of that value
Effect of Smart, Connected Products on Marketing Strategies
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Product usage and performance data offer improvements in
predictive maintenance and service productivity
Product data can signal existing and future problems and enable
firms to make timely equipment repairs
Effect of Smart, Connected Products on Marketing Strategies
(continued)
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Figure 5.4 - The Management System
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Comprehensive system for converting a company’s vision and
strategy into a tightly connected set of performance measures
Combines financial measures of past performance with measures
of the drivers of performance
Balanced Scorecard
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25. Figure 5.5 - Balanced Scorecard
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Market shareRepresents the proportion of business in a given
market (in terms of number of customers, dollars spent, or unit
volume sold) that a business unit sells.Customer
acquisitionTracks, in absolute or relative terms, the rate at
which a business unit attracts or wins new customers or
business. Customer retentionTracks, in absolute or relative
terms, the rate at which a business unit retains customers.
Customer satisfactionMatches the satisfaction level of
customers on specific performance criteria such as quality,
service, or on-time delivery reliability. Customer
profitabilityAssesses the net profit of a customer, or segment,
after deducting the unique expenses required to support that
customer or segment.
35
Customer Perspective: Core Measures
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Aligning Internal Business Processes to the Customer
StrategyCustomer StrategyThe Focus of Internal Business
ProcessesOperations ManagementCustomer Relationship
ManagementInnovation ManagementLow-total-cost
strategyHighly efficient operating processes efficient, timely
distributionEase of access for customers; superb post-sales
serviceSeek process innovations gain scale economiesProduct
leadership strategyFlexible manufacturing processes rapid
introduction of new productsCapture customer ideas for new
offering educate customers about complex new product/services
Disciplined, high-performance product development first-to-
market

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Aligning Internal Business Processes to the Customer Strategy
(continued)Customer StrategyThe Focus of Internal Business
ProcessesOperations ManagementCustomer Relationship
ManagementInnovation ManagementComplete customer
solutions strategyDeliver broad product/ service line create
network of suppliers for extended product/ service
capabilitiesCreate customized solutions for customers build
strong customer relationships develop customer
knowledgeIdentify new opportunities to serve customers
anticipate future customer needsLock-in strategiesProvide
capacity for proprietary product/service reliable access and ease
of useCreate awareness influence switching costs of existing
and potential customersDevelop and enhance proprietary
product increase breadth/applications of standard
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28. system for classroom use.
Tool for visualizing a firm’s strategy as a chain of cause-and-
effect relationships among strategic objectives
Enables an organization to describe and illustrate its objectives,
initiatives, and targets
Strategy Map
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Figure 5.6 - Strategy Map
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0
Chapter 7
Managing Products for Business Markets
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12e
How to build a strong business-to-business brand
The way in which sustainability strategies are transforming the
competitive landscape
The strategic importance of providing competitively superior
value to customers
Chapter Outline
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The various type of industrial product lines and the strategic
choices that smart, connected products present
A strategic approach for managing products across the stages of
the technology adoption life cycle
Chapter Outline (continued)
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31. Established through brand, products, and services
Brand is one of the firm’s most valuable intangible assets
Branding has emerged as a priority to marketing executives,
CEOs, and the financial community
Marketplace Identity
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Brand
Name, sign, symbol, or logo that identifies and differentiates
the product from competitors
Brand equity
Set of brand assets and liabilities linked to a brand, its name,
and symbol
Brand and Brand Equity
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Differential effect that customer’s brand knowledge has on their
response to market activities and programs for the brand
Brand power relies on what customers have learned, felt, seen,
and heard about the brand over time
Customer-Based Brand Equity (CBBE)
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Brand-Building Steps
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Develop deep brand identity
Establish unique brand identity by highlighting differences
Employ marketing programs to elicit positive brand responses
Build brand relationships with loyal customers

34. Figure 7.1 - CBBE Model
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To achieve brand identity, marketers must create brand salience
Brand salience: Tied directly to brand awareness
Brand awareness: Customer’s ability to recall or recognize the
brand under different conditions
Marketers need to create a clear connection between the product
and the brand name in markets where the product competes

35. Brand Identity
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Establishes unique association in the customer’s mind that
differentiates the brand and creates competitive superiority
Types of brand associations
Brand performance: Way in which the product/service meets
customers’ functional needs
Brand imagery: Ways in which the brand meets customers’
psychological or social needs
Should incorporate points of parity and differences
Brand Positioning
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Brand Response: Consumer Judgments
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Quality
Customer’s attitude towards brand’s perceived quality and their

37. perceptions of value and satisfaction
Credibility
Extent to which customer perceives brand to be credible with
respect to expertise, trustworthiness, and likeability
Consideration set
Degree to which customer finds brand a viable option and worth
consideration
Superiority
Extent to which customer believes that brand offers advantages
over competitive brands

38. Brand resonance
Strength of the psychological bond that a customer has with a
brand
Degree to which this connection translates into loyalty,
attachment, and active engagement with the brand
Forging Brand Relationships
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Percentage of organizational buyers who have a positive image
of a company minus those with a negative opinion
Component and indicator of brand equity
Building brand attitude for high-technology firms increases the
firm’s value
Firms that have developed strong brands create value for their
shareholders by yielding greater returns
13
Brand Attitude

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13
Many international companies insist that suppliers meet quality
standards set out by the Geneva-based International Standards
Organization (ISO)
ISO-9000 standards
Certification requires a supplier to thoroughly document its
quality-assurance program
Has become a seal of approval to compete for business overseas
and in the United States
Affects the entire supply chain
Product Quality

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Stage one - Centers on conformance to standards or success in
meeting specifications
Stage two - Emphasizes that quality is more than a technical
specialty
Stage three - Examines a firm’s quality performance relative to
that of competitors
Analyses customer perceptions of the value of competing
products
Stages of Quality Movement
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Emerging mega-trend that forces companies to change the way
they think about products, processes, and business models

41. Involves the integration of economic, environmental, and
societal considerations into business decision making
Integral part of value creation
Sustainability
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Distinct segments
Cautious adopters - View sustainability as a vehicle for cost
cutting, resource efficiency, and risk management
Embracers - Recognize that sustainability strategies provide a
means for gaining competitive advantage
Through innovation, process improvements, brand building, and
access to new markets
Sustainability (continued)

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Figure 7.2 - Sustainability
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Figure 7.3 - Benefits and Sacrifices

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Core - Requirements a product must possess for a relationship
to exist
Add-ons - Attributes that create differentiation and provides
more value than competition
Forms of Customer Benefits
0
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with a certain product or service or otherwise on a password-
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Involves the set of all decisions concerning the products and
services that the company offers
Business marketing firms attempt to satisfy customer needs and
build a sustainable competitive advantage by capitalizing on

44. core competencies
Product Policy
0
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Proprietary or catalog products : Offered only in certain
configurations and produced in anticipation of orders
Custom-built products: Offered as a set of basic units, with
numerous accessories and options
Custom-designed products: Created to meet the needs of one or
a small group of customers
Industrial services: Buyer is purchasing a company’s capability
in an area rather than an actual product
Types of Product Lines Defined

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Fundamental to a sound product policy decision
Attention must be given to the alternative ways to satisfy
customer needs
Product strategists can be in touch with the market by including
products and technology that compete for the same end-user
needs
Defining the Product Market
0
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46. Dimensions of a Market Definition
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Customer function
Benefits that are provided to satisfy the needs of organizational
buyers
Technological function
Alternative ways in which a particular function can be
performed
Customer segment
Customer groups have distinct needs that must be served

47. Value-added system
Competitors serving the market can operate along a sequence of
stages
Planning for today
Requires clear, precise definition of the business
Focuses on shaping up the business to meet the needs of today’s
customers with excellence
Planning for Today and Tomorrow
Planning for tomorrow
Centers on how the business should be redefined for the future
Entails reshaping the business to compete more effectively in
the future

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or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-
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Nonconsumers - May lack the specialized skills, training, or
resources to purchase the product or service
Undershot customers - For whom existing products are not good
enough
Overshot customers - For whom existing products provide more
performance than they can use
Important Customer Groups
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Require companies to build technology stack that includes:
Operating system embedded in the product and hardware

49. Software applications and network communications to provide
connectivity
Product cloud that provides a platform for developing software
applications
Smart, Connected Products
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Identify features that will deliver real value to target customers
relative to their cost
Tailor for target segments the company elects to serve
Develop and incorporate those capabilities and features that
reinforce its competitive positioning
Choosing Product Capabilities and Features to Offer

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Response time - Feature that demands a fast response, requires
that the software be incorporated directly in the physical
product
Automation - Fully-automated products require functionality
that is embedded into the device
Factors in Deciding the Enabling Technology
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Network availability, reliability, and security
Embedding software in the product lowers the risk that
confidential data will be compromised during transmission
Frequency of service or product upgrades
Companies can make product changes and upgrades easily and
automatically by hosting functionality in the product cloud
Factors in Deciding the Enabling Technology (continued)

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Product data is vital to competitive advantage for smart,
connected products
Costs and complexities are related to securing the rights to the
data and in transmitting, storing, and analyzing it
Firms must determine how each type of data creates tangible
value for functionality
Types of data that a firm decides to collect and analyze depends
on its core strategy
Capturing Data
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52. or in part, except for use as permitted in a license distributed
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Risks Involved in Choosing Smart, Connected Products
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Adding product features that customers do not need or value
Underestimating security and privacy risks
Failing to anticipate or recognize new competitive threats
Moving slowly and allowing competitors to gain a foothold
Overestimating internal skills and capabilities

53. Represents the place that a product occupies in a particular
market
Found by measuring buyers’ perceptions and preferences in
relation to competitors
Product Positioning
0
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54. Figure 7.4 - Positioning Process
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Discontinuous innovations
New products or services that require the end-user and the
marketplace to change their past behavior, with the promise of
gaining equally dramatic new benefits
Common in computer-electronics industry
Technology Adoption Life Cycle
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55. duplicated, or posted to a publicly accessible website, in whole
or in part, except for use as permitted in a license distributed
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Types of Customers in Technology Adoption Life
CycleCustomerProfileTechnology enthusiasts
(innovators)Interested in exploring the latest innovation, these
consumers possess significant influence over how products are
perceived by others in the organization but lack control over
resource commitmentsVisionaries
(early adopters)Desiring to exploit the innovation for a
competitive advantage, these consumers are the true
revolutionaries in business and government who have access to
organizational resources but frequently demand special
modifications to the product that are difficult for the innovator
to provide
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or in part, except for use as permitted in a license distributed
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Types of Customers in Technology Adoption Life Cycle
(continued)CustomerProfilePragmatists (early majority)Making

56. the bulk of technology purchases in organizations, these
individuals believe in technology evolution, not revolution, and
seek products from a market leader with a proven track record
of providing useful productivity improvementsConservatives
(late majority)Pessimistic about their ability to derive any value
from technology investments, these individuals represent a
sizable group of customers who are price sensitive and
reluctantly purchase high-tech products to avoid being left
behindSkeptics (laggards) Rather than potential customers,
these individuals are ever-present critics of the hype
surrounding high-technology products
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or in part, except for use as permitted in a license distributed
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Bowling alley - Push from hitting one segment successfully
carries over into surrounding segments
Product gains acceptance from mainstream market segments but
is yet to be adopted widely
Tornado - Technical or infrastructure buyers in organizations
who focus on the vast number of new customers entering the
market at the same time
Strategies for the Technology Adoption Life Cycle

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Main street
Represents a period of aftermarket development
Focuses on developing niche-specific extensions to the basic
platform for existing customers
Aims to develop value-based strategies targeted to particular
end-user segments
Strategies for the Technology Adoption Life Cycle (continued)
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58. system for classroom use.