HAPTER 3: ELEMENTS OF MARKETING STRATEGY AND

PLANNING
Part 1: Discover Marketing Management

Learning Objectives
 Examine the concept of value and the elements and role of the value chain.
 Understand the conditions required for successful marketing planning, that marketing
planning is focused on the value. proposition, and that marketing planning is a dynamic
process.
 Identify various types of organizational strategies. Conduct a situation analysis.
 Use the framework provided for marketing planning, along with the content in future
chapters, to build a marketing plan.

Value and Utility

Value is a ratio of benefits to costs, as viewed from the eyes of the customer.
The four major types of utility are:
 Form utility: is created when the company converts raw materials into finished products.
 Time utility: product is available on the right time
 Place utility: product is available at convenient location
 Ownership utility: transfer product ownership through exchange process.

Value Is at the Core of Marketing

Value proposition is the firm’s communication of the unique value of its products to its
customers.
The value message may include the whole bundle of benefits the company promises to deliver
– not just the benefits of the product itself. The value might expand to include level of
innovativeness, style, and degree of dependability ( example Mobile).
The Value Proposition
A firm’s value proposition must be strong enough to move customers past satisfaction.

Customer
Customer Customer Loyalty Customer
Switching
satisfaction Retention Increases
Decreases

The Value Chain

The value chain serves as a means for firms to identify ways to create, communicate, and deliver
more customer value within a firm. It is a useful approach to bring together and understanding
,customer value, satisfaction and loyalty. The value chain concept represents some activities
involved in designing, producing, marketing, delivering and supporting its products.
The value chain identifies nine relevant strategic activities the organization can engage in benefit
and cost equation.
The nine activities include five primary and four support activities.

EXHIBIT 3.1: Porter’s Value Chain

Value Creating: Primary Activities
Primary activities

Inbound Logistics

Operations

Outbound Logistics

Marketing and Sales

Service

Value Creating: SupportActivities

Support activities

Firm Infrastructure

Human Resource Management

Technology Development

Procurement

The value chain activities

The five primary activities:
 Inbound logistics: how the firm goes about sourcing raw materials for production.
 Operations: how the firm converts raw materials into final products.
 Outbound logistics: how the firm transports and distributes the product to the marketplace.
 Marketing and sales: how the firm communicates its value proposition to the marketplace.
 Service: how the firm supports customers during and after the sale.
The value chain activities
The four support activities:
 Firm infrastructure : how the firm is set up for doing business
 Human resources management: how the firm ensures it has the right people, train them and
keep them
 Technology development: how the firm applies technology for the benefit of customers.
 Procurement: how the firm deals with vendors and quality issues.
 Margin: refers to profits made by the firm. The investment in primary and support activities
within the value chain

Marketing Planning
Marketing planning is the ongoing process of developing and implementing market-driven
strategies for an organization.
The resulting document that records the marketing planning process in a useful framework is the
marketing plan.

Marketing Planning Is Both Strategicand Tactical

Marketing (Big M) serves as a core driver of business strategy. Big M serves as a core driver of
strategy by understanding markets, competitors, and other external forces, coupled with attention
capabilities.
marketing (little m) represents the specific programs and tactics aimed at customers and other
stakeholder groups, and includes every thing from brand image, to the message ads deliver, to
customer service, to packaging and product features.
Marketing managers must be able to grasp both the big picture of strategy formulation and details
of tactical implementation
Effective Marketing Planning Must Be Customer-Centric
Everyone in an organization must understand and support the concept of
customer orientation.
All internal organizational processes and systems must be aligned around
the customer.
( customer centric)

Framework for Marketing Planning

Marketing plan is connected to the firm’s business plan. Conduct a situation analysis.
Perform any needed market research.
Establish marketing, mission, vision, goals and objectives. Develop marketing strategies.
Marketing mix strategies.
Develop implementation plans.( programs, action plan for each strategy)
Provide for contingency planning.

Connecting the Marketing Plan to the Firm’s Business Plan

Market-driven strategic planning is often used to describe the process at the corporate or
strategic business unit (SBU) level of arranging the various resource and functional areas of the
firm toward a central purpose around the customer.

Elements of Marketing Planning: Portfolio Analysis

Portfolio analysis views SBUs and sometimes even product lines as a series of investments from
which it expects maximization of returns.
• Boston Consulting Group (BCG) Growth-Share Matrix
EXHIBIT 3.3: Boston Consulting Group Growth-Share Matrix

EXHIBIT 3.4: GE Business Screen

Market
High Med Low
Invest/
High
Business Position

Grow

Selective
Med

Investment

Harvest/
Low

Divest

Elements of Marketing Planning: Mission Statement and Vision

Marketing planning does not occur in a vacuum.

• A mission statement articulates an organization’s purpose, or reason for existence.
• Most mission statements also include a discussion of what the company would like to become in
the future–its strategic vision.
Elements of Marketing Planning: Goals
Goals eventually become refined into specific, measurable, and (hopefully)
attainable objectives for the firm.
Jet Blue’s goal “to fly new planes” may be refined into an objective “to purchase
15 new aircraft over two years.”

Elements of Marketing Planning: Strategy

Organizational strategies
• A strategy is a comprehensive plan stating how the organization will achieve its mission and
objectives.
• A firm’s generic strategy is its overall directional , each must decide to be with any strategy(grow
or survive or downsize) at the business level. all firms must decide whether they wish to grow and
if not how they can survive through stability or retrenchment. The choice of generic strategy is
usually driven by resources capabilities of the firm as well as the competitive landscape

Generic Business Strategies

Growth Stability Retrenchment

• Concentration via • Continue current • A weak competitive

vertical or horizontal activities. position may force.
integration.
• Useful short-term • Focuses assets where
• Diversification via strategy. there is greater
concentric or potential.
• Dangerous in the
conglomerate means.
long-run if
competition changes.
Elements of Marketing Planning: Strategy Categories
Three primary categories of competitive strategy:
 Cost leadership—the firm strives to have lowest costs
 Differentiation: competes on the basis of providing unique products with features that
perceive as different, customers are willing to pay premium price.
 Focus (or niche): firm can focus on cost or differentiation advantage but in a limited
customer groups.

Generic Business Strategies

Growth

Retrench- Concent-
ment ration
Generic
Business
Strategies

Diversi-
Stability
fication

EXHIBIT 3.7 : Competitive Strategy Options

Competitive Advantage
Lower Cost Differentiation
Target
Broad
Competitive Scope

Cost Leadership Differentiation

Narrow

Focus
Target

Cost Focus
Differentiation
Elements ofMarketing Planning: Competencies
Core competencies: Activities the firm does well.
Distinctive competencies: Core competencies that are superior to competitors.
Sustainable competitive advantage: Cannot be easily duplicated by competitors.

Miles and Snow’s Strategy Types

Prospectors

Reactors Strategic
Analyzers
Types

Defenders

Strategy Types

 prospector: firms exhibit continual innovation by finding and exploring new products and
markets opportunities. (example Etihad Airways, with high quality customer service a and
high flight experience.)
 analyzer: firms relies on analysis and imitation of successes of other firms especially
prospectors.
 defender: firms search for market stability and production of only limited product line.
 reactor: firms lacks any coherent strategic plan and do well to survive in the competitive
marketplace.
Situation Analysis: Macro-Level External Environment

Macro-Level External
Environment
Political, Socio-
Legal, and Cultural/ Technological Economic Natural
Ethical Demographic

Situation Analysis: Competitive Environmental Factors

Competitive
Environmental Factors
Rivalry
Threat of Threat of Bargaining Bargaining
among
new substitute power of power of
existing
entrants products buyers suppliers
firms

EXHIBIT 3.9:Forces Driving Industry Competition

Potential
entrants
(Threat of
mobility)
Industry
Supplier Buyers
competitors
(Supplier (Buyer
(Segment
power) power)
Substitutes
(Threat of
substitutes)
Situation Analysis: Internal Environmental Factors

Internal Environmental Factors

Firm
Firm Firm
structure Firm culture
leadership resources
and systems
Internal Environmental Forces
*Firm structure and system: to what degree does the firm structure facilitate successful market –
driven strategic planning? Are the firm systems set up and able to serve customers effectively?
*Firm culture: successful marketing planning requires culture includes customer orientation
approach.
•Firm leadership: the CEO must believe in and continuously support the structure systems
(JetBlue employees are passengers friendly)
* Firm resources: internal analysis involves looking at all financial and operational resources
(marketing, financial, operational, human, and information system capabilities, R&D and
technological capabilities

Elements of Marketing Planning: SWOT Analysis

Summarize the situation analysis into a SWOT analysis:

• A convenient way to summarize key findings into a matrix of strengths, weaknesses,
opportunities, and threats.
• Internal analysis reveals strengths and weaknesses, while external analysis points to potential
opportunities and threats.
EXHIBIT 3.10 : SWOT Analysis Template

Elements of Marketing Planning: Market Research

Perform any needed market research. Establish marketing goals and objectives.
• Goals are qualitative.
• Objectives are quantitative.
Elements of Marketing Planning: Additional Aspects
Additional aspects of marketing planning.
Develop marketing strategies.
• Market penetration strategies • Product development strategies
• Market development strategies • Diversification strategies
EXHIBIT 3.11: Product – Market Combinations
Elements of Marketing Planning: Implementation

Implementation Plan

Forecast

Budget

Appropriate Marketing Metrics

Elements of Marketing Planning: Control and Plans

Marketing control: Process of measuring marketing results and adjusting the marketing plan as
needed.
Action plans: Implementation strategy that describes specific tasks and the resources needed, who
is responsible, and metrics to track success.
Contingency plans: Plans that can be implemented should something happen that negates the
viability of the marketing plan. A separate plan for a worst – case, best case, and expected case
performance against the forecast to meet any unexpected events and drastic changes in external
environment.

Tips for Successful Marketing Planning

1.Stay flexible
2.Utilize input, but don’t become paralyzed by information and analysis
3.Doesn’t underestimate the implementation part of the plan
4.Stay strategic, but also stay on top of the tactical
5.Gives people room to fail and try again.