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.UnderstandhowmarketingaffectscustomervalueUnderstandhowstrategicplanningiscarriedoutatdifferentlevelsoftheorganizationUnderstandwhatisincludedinamarketingplanLearningissuesforChapterTwo:.Keyinsightsforthechapter:Akeyingredientofthemarketingmanagementprocessisinsightful,creativemarketingstrategiesandplansthatguidemarketingactivities.Developingtherightmarketingstrategyovertimerequiresablendofdisciplineandflexibility.Firmsmuststicktoastrategybutmustalsofindnewwaystoconstantlyimproveit.Marketingstrategyalsorequiresaclearunderstandingofhowmarketingworks.MARKETINGANDCUSTOMERVALUEMarketinginvolvessatisfyingconsumers’needsandwants.Thetaskofanybusinessistodelivercustomervalueataprofit..ThevaluedeliveryprocessNotethedifferencesbetweenthetraditionalprocess,valuecreation&deliveryprocess.Valuecreationanddeliveryconsistsofthreeparts:Choosingthevalue(segmentthemarket,definetargetmarket,develop“offering”).Providingthevalue(productfeatures,prices,anddistributionchannels).Communicatingthevalue(salesforce,advertising,andpromotionaltools)..TheimplicationsofthevaluedeliveryprocessDiscussion:Howwouldtheseoutcomescontributetohigherlevelsofcustomersatisfaction?Giveexamplestoillustrateyourpoints..ThreeV’sApproachtoMarketing(Kumar)DefinethevaluesegmentDefinethevaluepropositionDefinethevaluenetwork.TheValueChain(Porter).ElementsofthevaluechainTheprimaryactivitiescoverthesequenceofbringingmaterialsintothebusiness(inboundlogistics),convertingthemintofinalproducts(operations),shippingoutfinalproducts(outboundlogistics),marketingthem(marketingandsales),andservicingthem(service).Thesupportactivities—procurement,technologydevelopment,humanresourcemanagement,andfirminfrastructure—arehandledincertainspecializeddepartments,aswellaselsewhere.Severaldepartments,forexample,maydoprocurementandhiring.Thefirm’sinfrastructurecoversthecostsofgeneralmanagement,planning,finance,accounting,legal,andgovernmentaffairs.1-10.Whatmustbedone?Thefirm’staskistoexamineitscostsandperformanceineachvalue-creatingactivityandlookforwaystoimproveit.Thefirmshouldestimateitscompetitors’costsandperformancesasbenchmarksagainstwhichtocompareitsowncostsandperformance.Itshouldgofurtherandstudythe“bestofclass”practicesoftheworld’sbestcompanies..CoreBusinessProcessesStrongcompaniesdevelopsuperiorcapabilitiesinthesecorebusinessprocesses.Strongcompaniesalsoreengineertheworkflowsandbuildcross-functionalteamsresponsibleforeachprocess.Manycompanieshavepartneredwithsuppliersanddistributorstocreateasuperiorvalue-deliverednetwork..CorecompetenciesKeyistoownornurturetheresourcesandcompetenciesthatmakeuptheessenceofthebusiness—outsourceifcompetencyischeaperandavailable.Competitiveadvantageaccruestocompaniesthatpossessdistinctivecapabilities(excellenceinbroaderbusinessprocesses).Competitiveadvantagederivesfromhowwellthecompanyfitsitscorecompetencies&distinctivecapabilitiesintotightlyinterlocking“activitysystems.”.CorecompetenciesAcorecompetencyhasthreecharacteristics:MakesasignificantcontributiontoperceivedcustomerbenefitsHasapplicationsinawidevarietyofmarketsItisdifficultforcompetitorstoimitateCompetitiveadvantageultimatelyderivesfromhowwellthecompany“fits”itscorecompetenciesanddistinctivecapabilitiesintotightlyinterlocking“activitysystems.”..
CorecompetenciesCompetitorsfindithardtoimitatecompaniessuchasSingaporeAirlines,Dell,orIKEAbecausetheyareunabletocopytheiractivitysystems.Businessrealignmentmaybenecessarytomaximizecorecompetencies.Itinvolvesthreesteps: (1)(re)definingthebusinessconcept(the“bigidea”);(2)(re)shapingthebusinessscope(thelinesofbusiness);and(3)(re)positioningthecompany’sbrandidentity(howcustomersshouldseethecompany)..AsianbusinesslandscapessometimesarestraddledwithcertainhandicapsPoorinfrastructuralsupportLessdevelopedmarketsFragmentedmarketsInflexibility.ChinesecompetitorshavecertaincompetitiveadvantagesoverMNCsBetterunderstandingofthelocalmarkets;strongnetworksLeanerandmoreflexible;entrepreneurialOpportunitytocatchupTheopenglobalmarketsallowChinesecompaniestobuymuchoftechnologyandexpertisethattheyneedtocatchup.Figure2.3AHolisticMarketingFramework.ValueExplorationCustomer’scognitivespace(reflectsexistingandlatentneedsandincludesparticipation,stability,freedom,andchange).Company’scompetencespace(broadversusfocusedscopeofbusinessanddepthphysicalversusknowledge-basedcapabilities).Thecollaboratorresourcespace(horizontalandverticalpartnerships)..ValueCreationMarketer’sneedto:Identifynewcustomerbenefitsfromthecustomer’sview.Utilizecorecompetencies.Selectandmanagebusinesspartnersfromitscollaborativenetworks..ValueDeliveryWhatCompaniesMustBecome?Oftenrequiresaninvestmentininfrastructureandcapabilities.Proficientatcustomerrelationshipmanagement.Whothecustomersare,andrespondtodifferentcustomeropportunities.Internalresourcemanagement.Integratemajorbusinessprocesseswithinasinglefamilyofsoftwaremodules.Businesspartnershipmanagement.Allowthecompanytohandlecomplexrelationshipswithitstradingpartners..BreakthroughMarketingRelateshowIntelcreatedhistorybychoosingatrademarkablename–Pentium_andlaunchedthe“IntelInside”marketingcampaigntobuildawarenessofthebrandtogetitsnameoutsidethePCandintothemindsoftheconsumer..ThecentralroleofStrategicPlanningCallsforactioninthreeareas:Managingacompany’sbusinessesasaninvestmentportfolio.Assessingeachbusiness’sstrengthbythemarket’sgrowthrateandthecompany’spositionandfitinthatmarket.Establishstrategy.24.TheMarketingPlanThemarketingplanisthecentralinstrumentfordirectingandcoordinatingthemarketingeffort.Themarketingplanoperatesontwolevels:strategicandtactical.Thestrategicmarketingplanlaysouttargetmarketsandthevalueproposition.Thetacticalmarketingplanspecifiestheproduct,promotion,merchandising,pricing,saleschannels,andservice..LevelsofaMarketingPlanStrategicTargetmarketingdecisionsValuepropositionAnalysisofmarketingopportunitiesTacticalProductfeaturesPromotionMerchandisingPricingSaleschannelsService.Figure2.4TheStrategicPlanning,Implementation,
andControlProcesses.CorporateandDivisionStrategicPlanningAllcorporateheadquartersusuallyundertake4planningactivities:Definingthecorporatemission.Establishingstrategicbusinessunits(SBUs).AssigningresourcestoeachSBU.Assessinggrowthopportunities..DefiningtheCorporateMissionKeyquestions:Whatisourbusiness?Whoisthecustomer?Whatisofvaluetothecustomer?Whatwillourbusinessbe?Whatshouldourbusinessbe?..GoodmissionstatementsGoodmissionstatementshavethreemajorcharacteristics:Focusedonalimitednumberofgoals.Stressesthecompany’smajorpoliciesandvalues.Definesthemajorcompetitivesphereswithinwhichthecompanywilloperate..Majorcompetitivesphereswithinwhichthecompanywilloperate:IndustryProductsMarketsegmentGeographicalCompetenceVerticalchannels.Comparingvagueandclearmissionstatements(Google)GoogleVague.EstablishingStrategicBusinessUnitsCompaniesshouldbealignedascustomer-satisfyingprocessAtargetmarketdefinitiontendstofocusonsellingaproductorservice(Pepsiandallwhodrinkcolasodas).Astrategicmarketdefinitionisbroaderandencompassesmore.(Pepsiredefinesitsstrategytoeveryonewhohasa“thirst”)..ProductversusMarketOrientedDefinitionsofaBusiness.DimensionsThatDefineaBusinessCustomergroupsTechnologyCustomerneeds.AssigningResourcestoEachSBUMorerecentmethodsusedbyfirmstomakeinternalinvestmentdecisionsarebasedonshareholdervalueanalysis,andwhetherthemarketvalueofacompanyisgreaterwithanSBUorwithoutit.AssessingGrowthOpportunitiesInvolvesplanningfornewbusinesses.Downsizingorterminatingoldbusinesses1-37StrategicDecisions.Figure2.5TheStrategicPlanningGap.Figure2.6ThreeIntensiveGrowthStrategies:Ansoff’sProduct-MarketExpansionGrid.IntensiveGrowthCorporatemanager’sfirstcourseofactionshouldbeareviewofopportunitiesforimprovingexistingbusinesses.Market-penetrationstrategy(gainmoremarketshare).Market-developmentstrategy(newmarketsforcurrentproducts).Product-developmentstrategy(newproductsforcurrentmarkets).Diversificationstrategy(newproductsfornewmarkets)..Starbucks.IntegrativeGrowthSalesandprofitsmaybeincreasedthrough:Backwardintegration.Forwardintegration.Horizontalintegration..DiversificationGrowthWhenopportunitiesarefoundoutsidethepresentbusinessandthecompanyhastherightmixofbusinessstrengthstobesuccessful.Severaltypesarepossible:Newproductsthathavetechnologicalormarketingsynergieswithexistingproductlines.Newproductsunrelatedtothecurrentindustry.Newbusinessesunrelated..OrganizationandOrganizationCultureOrganizationconsistsof:Structures.Policies.Corporateculturedefinedas“thesharedexperiences,stories,beliefs,andnormsthatcharacterizeanorganization.”SometimescorporateculturedevelopsorganicallyandistransmittedbytheCEOspersonality..TheInternetistransformingthecorporatecultureofoverseasChinesebusinessesbyenhancingefficiency,loweringbarrierstoentry,andprovidingmoretransparency..Samsunghasundergoneremarkablechangesincorporatecultureinresponsetothechangingmarketingenvironment.Today,itisrankedinthetop20brandsbyInterbrand.1-46.MarketingInnovationInnovationinmarketingiscritical.5keystrategiesformanagingchangeinanorganization:1-47.Figure2.7TheBusinessUnit
StrategicPlanningProcess.SWOTAnalysisTheevaluationofacompany’sstrengths,weaknesses,opportunities,andthreatsisknownasSWOTanalysis.Itinvolvesmonitoringtheexternalandinternalmarketingenvironment.Usemarketopportunityanalysis(MOA)Environmentalthreatunfavorabletrendordevelopment.Opportunitiesandhowtospotthem.EvaluatingOpportunitiesCanthebenefitsinvolvedintheopportunitybearticulatedconvincinglytoadefinedtargetmarket(s)?Canthetargetmarket(s)belocatedandreachedwithcost-effectivemediaandtradechannels?Doesthecompanypossessorhaveaccesstothecriticalcapabilitiesandresourcesneededtodelivercustomerbenefits?Canthecompanydeliverthebenefitsbetterthananyactualorpotentialcompetitors?Willthefinancialrateofreturnmeetorexceedthecompany’srequiredthresholdforinvestment?.Figure2.8OpportunityMatrix.Figure2.8ThreatMatrix.InternalEnvironmentStrengthsandWeaknessesAnalysisItisonethingtofindattractiveopportunitiesandanothertobeabletotakeadvantageofthem.Eachfirmmustevaluateitsinternalstrengthsandweaknesses.SeeMarketingMemo(checklist)..GoalFormulationOncethecompanyhasperformedaSWOTanalysis,itcanproceedtodevelopspecificgoalsfortheplanningperiod.Thisstageoftheprocessiscalledgoalformulation.Managersusetheterm“goals”todescribeobjectivesthatarespecificwithrespecttomagnitudeandtime..GoalFormulationThefirmsetsobjectivesbeforemanagingthemintoobjectives(MBO).ForMBOstoworktheymustmeet4criteria:Theymustbearrangedhierarchically,fromthemosttoleastimportant.Objectivesshouldbestatedquantitativelywheneverpossible.Goalsshouldberealistic.Objectivesmustbeconsistent..Porter’sGenericStrategiesOverallCostLeadershipDifferentiationFocus.Porter’sGenericStrategies.CategoriesofMarketingAlliancesProductorServiceAlliancesPromotionalAlliancesLogisticsAlliancesPricingCollaborations.MarketingAlliancesTokeepstrategicalliancesthriving,corporationshavebeguntodeveloporganizationalstructuresforsupportandhavecometoviewtheabilitytoformandmanagepartnershipsascoreskills(calledPartnerRelationshipManagement,PRM)..ProgramFormulationandImplementationAgreatmarketingstrategycanbesabotagedbypoorimplementation. Marketingmustestimateitscosts.Inimplementingstrategy,companiesmustnotlosesightofthemultiplestakeholdersinvolvedandtheirneeds..McKinsey’s7-SFrameworkThefirstthree—strategy,structure,andsystemsareconside
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