Chapter 2: Elements of Marketing Strategy, Planning, and Completion

2 categories of growth strategies

1. Concentration: via vertical or horizontal integration 2. Diversification: via concentric or conglomerate means

Strategy occurs at multiple levels in the firm

1. Corporate level 2. SBU (or business) level 3. Functional level (marketing, finance, operations)

Form utility

Created when the firm converts raw materials into finished products that are desired by the market.

Action plans/programs

Discuss timing, assign persons responsible for various aspects of implementation, and assign resources necessary to make the strategy happen. Forecasts and accompanying budgets must be provided. Appropriate metrics must be identified to assess along the way to what degree the plan is on track and the strategies are contributing to achievement of the stated marketing objectives.

Retrenchment

Essentially, involves pulling assets out of underperforming parts of the business and reinvesting in aspects of the business with greater future performance potential.

Prospector

Firm exhibits continual innovation by finding and exploiting new product and market opportunities.

Analyzer

Firm heavily relies on analysis and imitation of the successes of other organizations, especially prospectors.

Reactor

Firm lacks any coherent strategic plan or apparent means of effectively competing; reactors do well to merely survive in the competitive marketplace.

Defender

Firm searches for market stability and production of only a limited product line directed at a narrow market segment, focusing on protecting established turf.

Strategic type

Firms of a particular strategic type have a common strategic orientation and a similar combination of structure, culture, and processes consistent with that strategy.

Market attractiveness (high, medium, and low)

For the market, assess size, growth, customer satisfaction levels, competition (quantity, types, effectiveness, commitment), price levels, profitability, technology, governmental regulations, sensitivity to economic trends.

Goals

General statements of what the firm wishes to accomplish in support of the mission and vision.

Stars

High share and high growth. Important to building the future of the business and deserving any needed investment

Cash cows

High share, low growth. Key sources of internal cash generation for the firm.

Marketing and sales

How the firm communicates the value proposition to the marketplace.

Operations

How the firm converts the raw materials into final products.

Procurement

How the firm deals with vendors and quality issues.

Technology development

How the firm embraces technology usage for the benefit of customers.

Human resource management

How the firm ensures it has the right people in place, trains them, and keeps them.

Inbound logistics

How the firm goes about sourcing raw materials for production.

Firm infrastructure

How the firm is set up doing business. Are the internal processes aligned and efficient?

Service

How the firm supports customers during and after the sale.

Outbound logistics

How the firm transports and distributes the final products to the marketplace.

Internal environmental factors

Include the firm's structure and systems, culture, leadership, and various resources, all of which are under the firm's control.

Customer retention

Low propensity among a firm's customer base to consider switching to other providers.

Problem children/question marks

Low share and high growth. High cash needs that, if properly nurtured, can convert into stars.

Dogs

Low share and low growth. Potential high cash users and prime candidates for liquidation.

Strategic vision

Often included within a firm's mission statement, it is a discussion of what the company would like to become in the future.

SBU-level strategic plan

Planning that occurs within each of the firm's strategic business units (SBUs) designed to meet individual performance requirements and contribute satisfactorily to the overall corporate plan.

Functional-level plans

Plans for each business function that makes up one of the firm's strategic business units (SBUs). These include core business functions within each SBU such as operations, marketing, finance, as well as other pertinent operational areas.

Margin

Profit made by the firm.

Objectives

Specific, measurable, and potentially attainable milestones necessary for a firm to achieve its goals.

Market development strategies

Strategies designed to allow for expansion of the firm's product line into heretofore untapped markets, often internationally.

Market penetration strategies

Strategies designed to involve investing against existing customers to gain additional usage of existing products.

Product development strategies

Strategies designed to recognize the opportunity to invest in new products that will increase usage from the current customer base.

Diversification strategies

Strategies designed to seize on opportunities to serve new markets with new products.

Core competencies

The activities a firm can do exceedingly well.

Benefit

The advantageous outcome from the advantage found in a product feature. Some type of utility that a company and its product (and services) provide its customers.

Customer satisfaction

The level of liking an individual harbors for an offering.

Marketing planning

The ongoing process of developing and implementing market-driven strategies for an organization.

Differentiation

The organization competes on the basis of providing unique goods or services with features that customers value, that they perceive as different, and for which they are willing to pay a premium.

Focus (or Niche)

The organization pursues either a cost or differentiation advantage, but in a limited (narrow) customer group. A focus strategy concentrates on serving a specific market niche.

Cost Leadership

The organization strives to have the lowest costs in its industry and produces goods or services for a broad customer base. Emphasis on cost, not prices.

Market-driven strategic planning

The process at the corporate or strategic business unit (SBU) level of a firm that acts to marshal the various resource and functional areas toward a central purpose around the customer.

Marketing control

The process of measuring marketing results and adjusting the firm's marketing plan as needed.

Sustainable competitive advantage

The resulting advantage a firm has when it invests in distinctive competencies.

Marketing plan

The resulting document that records the marketing planning process in a useful framework.

Value chain

The synthesis of activities within a firm involved in designing, producing, marketing, delivering, and supporting its products or services.

Mission statement

The verbal articulation of an organization's purpose, or reason for existence. A well conceived mission statement defines the fundamental, unique purpose that sets a company apart from other firms of its type and identifies the scope of a company's operations, products, and markets.

Utility

The want-satisfying power of a good or service.

Value proposition

The whole bundle of benefits a company promises to deliver to the customer, not just the benefits of the product itself.

External environment factors

Those a firm must be mindful of and plan for, yet has little or no direct ability to impact or change.

First-mover advantages

When a firm introduces a new market offering, thus defining the scope of the competitive marketplace.

External analysis reveals

opportunities and threats

Internal analysis reveals

strengths and weaknesses

SWOT analysis

A convenient framework used to summarize key findings from a firm's situational analysis into a matrix of strengths, weaknesses, opportunities, and threats.

Customer loyalty

A customer's commitment to a company and its products and brands for the long run.

Distinctive competencies

A firm's core competencies that are superior to those of their competitors.

Framework for Marketing Planning

1. Ensure the marketing plan is connected to the firm's business plan including organizational-level mission, vision, goals, objectives and strategies. 2. Conduct a situation analysis (macro-level external environment, competitive environment, internal environment) 3. Perform any needed market research. 4. Establish marketing goals and objectives. 5. Develop marketing strategies (product-market combinations, market-segmentation, target marketing, positioning, marketing mix strategies: product/branding strategies, service strategies, pricing strategies, supply chain strategies, integrated marketing communications strategies; develop implementation plans: programs/action plans for each strategy including timetable, assignment of responsibilities, and resources required, forecasts and budgets, metrics for marketing control; provide for contingency planning)

The following must be in place for effective marketing planning to occur

1. Everyone in an organization (regardless of roles) must understand and support the concept of customer orientation. 2. All internal organizational processes and systems must be aligned around the customer. 3. The CEO and others at the top of the organization must consistently set the tone for market-driven strategic planning through the customer-centric business philosophy.

4 support activities in the value chain

1. Firm infrastructure 2. Human resource management 3. Technology development 4. Procurement

Internal environment factors

1. Firm structure and systems 2. Firm culture 3. Firm leadership 4. Firm resources (marketing capabilities, financial capabilities, R&D and technological capabilities 5. Operations and production capabilities 6. Human capabilities 7. Information system capabilities

4 types of utility

1. Form 2. Time 3. Place 4. Ownership

2 key phases of strategy

1. Formulation or development 2. Execution

3 types of generic strategies

1. Growth 2. Stability 3. Retrenchment

5 primary activities in the value chain

1. Inbound logistics 2. Operations 3. Outbound logistics 4. Marketing and sales 5. Service

Porter's 3 primary categories of competitive strategy

1. Low cost 2. Differentiation 3. Focus (or niche)

Product-market combinations

1. Market penetration strategies 2. Product development strategies 3. Market development strategies 4. Diversification strategies

Additional aspects of marketing planning

1. Perform any needed market research 2. Establish marketing goals and objectives 3. Develop marketing strategies 4. Create an implementation plan including forecast, budget, and appropriate marketing metrics 5. Develop contingency plans

Major categories for analysis within the external environment

1. Political, legal, and ethical 2. Sociocultural/demographic 3. Technological 4. Economic 5. Natural

Forces driving industry competition

1. Potential entrants (threat of mobility) 2. Supplier (supplier power) 3. Industry competitors (segment rivalry) 4. Buyers (buyer power) 5. Substitutes (threat of substitutes)

Miles and Snow's 4 strategic types

1. Prospectors 2. Analyzers 3. Defenders 4. Reactors

Tips for having a successful marketing planning experience

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

Competitive environment factors

1. Threat of new entrants 2. Rivalry among existing firms 3. Threat of substitute products 4. Bargaining power of buyers 5. Bargaining power of suppliers 6(ish). Relative power of other stakeholders

Strategy

A comprehensive plan stating how the organization will achieve its mission and objectives.

GE Business Screen

A popular approach for in-firm portfolio analysis that categorizes business units' level of contribution to the overall firm based on two factors: business position and market attractiveness.

Boston Consulting Group (BCG) Growth-Share Matrix

A popular approach for in-firm portfolio analysis that categorizes business units' level of contribution to the overall firm based on two factors: market growth rate and competitive position. Classifies SBUs as either: Stars, Problem children, cash cows, or dogs.

Portfolio analysis

A tool used in strategic planning for multi-business corporations that views SBUs and sometimes even product lines, as a series of investments from which it expects maximization of returns.

Value-creating activities

Activities within a firm's value chain that act to increase the value of its products and services for its customers. These can take the form of either primary activities or support activities.

Situation analysis

An analysis of the macro- an micro-level environment within which a firm's marketing plan is being developed. The situation includes elements of the macro-level external environment within which the firm operates, its industry or competitive environment, and its internal environment.

Competitive strategy

An organization-wide strategy designed to increase a firm's performance within the marketplace in terms of its competitors.

Generic strategy

An overall directional strategy at the business level. Choice of generic strategy is usually driven by resource capabilities of the firm, as well as the competitive landscape.

Corporate-level strategic plan

An umbrella plan for the overall direction of the corporation developed above the strategic business unit (SBU) level.

Business position (high, medium, and low)

Assess the firm's ability to compete. Factors include organization, growth, market share by segment, customer loyalty, margins, distribution, technology skills, patents, marketing, and flexibility.