Kotler_MM_13e_Basic_02.ppt

Developing Marketing
Strategies and Plans
Marketing Management, 13th ed
2

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 2-2
Chapter Questions
• How does marketing affect customer
value?
• How is strategic planning carried out at
different levels of the organization?
• What does a marketing plan include?

Value delivery process
The value delivery process involves
choosing (or identifying), providing (or
delivering), and communicating superior
value. The value chain is a tool for
identifying key activities that create value
and costs in a specific business.

The Value Delivery Process
The traditional view of marketing is that the firm makes
something and then sells it.
A) Will not work in economies where people face abundant
choice.
B) New belief: marketing begins with the planning process.
C) Value creation and delivery consists of three parts:
1) Choosing the value (segment the market, define target
market, develop “offering”).
2) Providing the value (product features, prices, and
distribution channels).
3) Communicating the value (sales force, advertising, and
promotional tools).
Each of these “values” involves a cost component to the
company.

Three V’s Approach to Marketing
• Define the value segment
• Define the value proposition
• Define the value network

The four Ps are an essential part of
marketing, but it's not enough to
differentiate products based on the four
Ps. Product, price, place and promotion
can easily be copied by competition. By
focusing on the three Vs, a company can
sustain differentiation.

"Valued customer" is a way to segment and target
customers based on perceived value. "Value
proposition" is how to competitively differentiate
products and services to customers. "Value network" is
how you deliver the value proposition to the target
customer. It's a cross-functional orientation often
referred to as the "value chain."
For example, at Starbucks, it's everything they do from
the beginning of the value network, such as who they
buy their beans from to providing a cup of coffee in the
store.

Value Segment
An innovative system of market segmentation
that goes beyond demographics and
psychographics to explore the values,
mindsets and attitudes that motivate
consumer behavior.

Value Proposition
A value proposition refers to the value a company
promises to deliver to customers . Value
proposition should describe; how the product or
service solves/improves problems, what benefits
customers can expect, and why customers should
buy from you over your competitors. A truly great
value proposition is a statement that paints a
clear picture of what your brand has to offer for
prospects.

Value Network
A value network is a set of connections
between organizations and/or individuals
interacting with each other to benefit the entire
group. A value network allows members to buy
and sell products as well as share information.

What is the Value Chain?
A value chain is a business model that
describes the full range of activities needed to
create a product or service. For companies that
produce goods, a value chain comprises the
steps that involve bringing a product from
conception to distribution, and everything in
between—such as procuring raw materials,
manufacturing functions, and marketing
activities.

What is the Value Chain?
The value chain is a tool for identifying
ways to create more customer value
because every firm is a synthesis of
primary and support activities
performed to design, produce, market,
deliver, and support its product.

The Value Chain
Michael Porter’s Value Chain identifies nine
strategically relevant activities that create value and
costs (five primary and four support activities).
Primary activities:
1) Inbound logistics (material procurement).
2) Operations (turn into final product).
3) Outbound logistics (shipping and
warehousing).
4) Marketing (marketing and sales).
5) Servicing (service after the sale).

The Value Chain
Support activities:
1) Procurement.
2) Technology development.
3) Human resource management.
4) Firm infrastructure.
The firm’s task is to examine its costs and
performance in each value-creating activity and to
look for ways to improve performance.

Primary Activities and Support
Activities
Primary activities are directly concerned with the
creation or delivery of a product or service. They can
be grouped into five main areas: inbound logistics,
operations, outbound logistics, marketing and sales,
and service. Each of these primary activities is linked to
support activities which help to improve their
effectiveness or efficiency. There are four main areas of
support activities: procurement, technology
development (including R&D), human resource manag

Core Business Processes
• Market-sensing process
• New-offering realization process
• Customer acquisition process
• Customer relationship management
process
• Fulfillment management process

Market-sensing Process
Market sensing research would seek to
understand why consumers choose these
brands over conventional brands.
Understanding what the customer really
wants is key for any business to succeed

New offering realization process
New offering realization is a process of
developing new core goods and services,
increasing of market offer and finally
bringing product to the market.

The customer acquisition process
Customer acquisition is the process of bringing
new customers to a particular brand, product or
service.
Example:
Apple is constantly re-inventing their products, not
only retaining the customers they already have, but
reaching out to potential new customers, with
better technological specs.

Customer relationship management
process
CRM stands for Customer Relationship
Management. It's a technology used to
manage interactions with customers. A
CRM system helps organizations build
customer relationships and streamline
processes so they can increase sales,
improve customer service, and increase
profitability.

Fulfillment management process
The fulfillment process is what happens in a company
when an order for a product is received -the "fulfillment" of
the order. The process includes logical warehousing of
products, receiving the order, "picking" (finding) the items
ordered in the warehouse, "packing" (packaging) those
items, "shipping" it to the right address, and notifying the
customer that their order is on the way.
Order fulfillment is the process of receiving goods, then
processing and delivering orders to customers. The
process starts with a customer placing an order and ends
once they receive it. However, if the buyer wants to return
a product, order fulfillment manages the return transaction
as well.

Core Business Processes
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 (supply
chain)
To be successful today, a firm must look
for competitive advantages beyond its
own operations—to its suppliers and
distributors to create a superior value-
delivery network (supply chain).

Core Competencies
Companies need resources (labor, materials, energy,
etc.)
1) Key is to own or nurture the resources and
competencies that make up the essence of the
business—outsource if competency is cheaper and
available.
2) Competitive advantage accrues to companies that
possess distinctive capabilities (excellence in broader
business processes).
3) Competitive advantage derives from how well the
company fits its core competencies and distinctive
capabilities into tightly interlocking “activity systems.”

Characteristics of Core Competencies
• A source of competitive advantage
• Applications in a wide variety of markets
• Difficult to imitate

Table 2.1
Becoming a Vigilant Organization
• Can we learn from the past?
• How should the present be evaluated?
• What do we envision for the future?

What is Holistic Marketing?
Holistic marketing sees itself as
integrating the value exploration, value
creation, and value delivery activities
with the purpose of building long-term,
mutually satisfying relationships and
coprosperity among key stakeholders.

A Holistic Marketing Orientation
and Customer Value
A holistic marketing orientation can provide
help in capturing customer value
Holistic marketing addresses three key
management questions:
1) Value exploration—identify new value
opportunities.
2) Value creation—create more promising new
value offerings.
3) Value delivery—deliver the new value
offerings more efficiently.

Value Exploration
A) Customer’s cognitive space (reflects existing
and latent needs and includes participation,
stability, freedom, and change).
B) Company’s competence space (broad
versus focused scope of business and depth
physical versus knowledge-based capabilities).
C) The collaborator resource space (horizontal
and vertical partnerships).

Value Creation
Marketer’s need to:
1) Identify new customer benefits from
the customer’s view.
2) Utilize core competencies.
3) Select and manage business partners
from its collaborative networks.

Value Delivery—What Companies
Must Become?
Often requires an investment in infrastructure and
capabilities.
Proficient at customer relationship management.
1) Who the customers are, and respond to different
customer opportunities.
Internal resource management.
1) Integrate major business processes within a single
family of software modules.
Business partnership management.
1) Allow the company to handle complex relationships
with its trading partners.

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

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

Corporate Headquarters’
Planning Activities
• Define the corporate mission
• Establish strategic business units
(SBUs)
• Assign resources to each SBU
• Assess growth opportunities

Good Mission Statements
• Focus on a limited number of goals
• Stress major policies and values
• Define major competitive spheres
• Take a long-term view
• Short, memorable, meaningful

Major Competitive Spheres
• Industry
• Products
• Competence
• Market segment
• Vertical channels
• Geographic

Major Competitive Spheres
Good Mission Statements define the major competitive spheres within
which the company will operate. Some companies operate in only one
industry; some only in a set of related industries; some only in industrial
goods, consumer goods, or services; and some in any industry.
Example:
Industry:
Caterpillar focuses on the industrial market
Products:
Firms define the range of products they will supply.
Competence:
The firm identifies the range of core competencies it will master and
leverage.
Market segment:
The type of market or customers a company will serve

Mission Statement
A mission statement is used by a
company to explain, in simple and
concise terms, its purpose(s) for being.

Rubbermaid Commercial Products, Inc.
“Our vision is to be the Global Market Share
Leader in each of the markets we serve. We
will earn this leadership position by
providing to our distributor and end-user
customers innovative, high-quality, cost-
effective and environmentally responsible
products. We will add value to these products
by providing legendary customer service
through our Uncompromising Commitment
to Customer Satisfaction.”

Motorola
“The purpose of Motorola is to honorably
serve the needs of the community by providing
products and services of superior quality at a
fair price to our customers; to do this so as to
earn an adequate profit which is required for
the total enterprise to grow; and by doing so,
provide the opportunity for our employees and
shareholders to achieve their personal
objectives.”

eBay
“We help people trade anything on earth.
We will continue to enhance the online
trading experiences of all—collectors,
dealers, small businesses, unique item
seekers, bargain hunters, opportunity
sellers, and browsers.”

Product Orientation vs. Market
Orientation
A market orientated company is one that
organizes its activities, products and
services around the wants and needs of
its customers.
A product-orientated firm has its primary
focus on its product and on the skills,
knowledge and systems that support that
product.

Table 2.3
Product Orientation vs. Market Orientation
Company Product Market
Missouri-Pacific
Railroad
We run a railroad We are a people-
and-goods mover
Xerox We make copying
equipment
We improve office
productivity
Standard Oil We sell gasoline We supply energy
Columbia Pictures We make movies We entertain
people

Dimensions that Define a Business
• Customer groups
• Customer needs
• Technology

Strategic Business Unit
A strategic business unit, known as SBU, is a fully-
functional unit of a business that has its own vision and
direction. Typically, a strategic business unit operates
as a separate unit, but it is also an important part of the
company.
Example:
The best example of SBU are companies like Proctor
and Gamble etc. These companies have different
product categories under one roof. For example, LG as
a company makes consumer durables. It makes
refrigerators, washing machines, air-conditioners as
well as televisions.

Characteristics of SBUs
• It is a single business or collection of
related businesses
• It has its own set of competitors
• It has a leader responsible for strategic
planning and profitability

Ansoff’s Product-Market
Expansion Grid
• Market penetration strategy
• Market development strategy
• Product development strategy
• Diversification strategy

What is Corporate Culture?
Corporate culture is the shared
experiences, stories, beliefs, and norms
that characterize an organization.

Tactics for Managing Change
• Avoid the innovation title for the team
• Use the buddy system
• Set the metrics in advance
• Aim for quick hits first
• Get data to back up your gut

SWOT Analysis
• Strengths
• Weaknesses
• Opportunities
• Threats

Market Opportunity Analysis (MOA)
• Can the benefits involved in the opportunity
be articulated convincingly to a defined target
market?
• Can the target market be located and
reached with cost-effective media and trade
channels?
• Does the company possess or have access
to the critical capabilities and resources
needed to deliver the customer benefits?

Market Opportunity Analysis (MOA)
(cont.)
• Can the company deliver the benefits
better than any actual or potential
competitors?
• Will the financial rate of return meet or
exceed the company’s required
threshold for investment?

Goal Formulation and MBO
• Unit’s objectives must be hierarchical
• Objectives should be quantitative
• Goals should be realistic
• Objectives must be consistent

Porter’s Generic Strategies
• Overall cost leadership
• Differentiation
• Focus

Categories of Marketing Alliances
• Product or service alliance
• Promotional alliance
• Logistics alliances
• Pricing collaborations

Marketing Plan Contents
 Executive summary
 Table of contents
 Situation analysis
 Marketing strategy
 Financial projections
 Implementation controls

Evaluating a Marketing Plan
 Is the plan simple?
 Is the plan specific?
 Is the plan realistic?
 Is the plan complete?

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