Marketing plan memo + power points main points

COM5111 Fundamentals of Marketing Communication

Week 2 DEVELOPING MARKETING STRATEGIES AND PLANS

SemB 2019-20

Outlines

1. Recap – previous lecture and assignments

2. How does marketing affect customer value?

3. How is strategic planning carried out at different levels of the organization?

4. What does a marketing plan include?

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Traditional View of Marketing

• The traditional view of marketing is that the firm makes

something and then sells it (sellers’ point of view)

• The traditional view will not work, however, in economies where

people face abundant choices

• New belief: marketing begins with the planning process

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Marketing and Customer Value

• The task of any business is to deliver customer value at a profit

• A company can win only by fine-tuning the value delivery process

and choosing, providing, and communicating superior value

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Value creation and delivery consists of three parts:

1. Choosing the value (segment the market, select target

market, develop “offering”)

2. Providing the value (product features, prices, and

distribution channels)

3. Communicating the value (sales force, internet,

advertising, and communication tools)

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Value Delivery Network (also called a supply chain)

• To be successful, a firm also needs to look for competitive

advantages beyond its own operations, into the value chains

of suppliers, distributors, and customers

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The Value Chain (Porter)

• Michael Porter’s Value Chain identifies nine

strategically relevant activities that create

value and costs in a specific business (five

primary and four support activities)

• The primary activities cover the sequence of

bringing materials into the business (inbound

logistics), converting them into final products

(operations), shipping out final products (

outbound logistics), marketing them (marketing

and sales), and servicing them (service)

• The support activities—procurement, technology

development, human resource management, and

firm infrastructure—are handled in certain

specialized departments, as well as elsewhere

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The firm’s success depends not only on how well each department performs its work but also on how well the various departmental activities are coordinated to conduct core business processes

Application of the Value Chain Model

• The firm’s task is to examine its costs and performance in

each value-creating activity and look for ways to improve it

• The firm should estimate its competitors’ costs and

performances as benchmarks against which to compare

its own costs and performance

• It should go further and study the “best of class” practices

of the world’s best companies

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Core Business Processes

1. The market sensing process (marketing intelligence)

2. The new offering realization process (research and development)

3. The customer acquisition process (defining target markets and consumers)

4. The customer relationship management process (deeper understanding of

consumers)

5. The fulfillment management process (receiving, shipping, and collecting payments)

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Finding capabilities inside and outside the organization (profit or non-profit)

• Strong companies develop superior capabilities in these core business

processes (also slide #38 from Lecture 1)

• Strong companies also re-engineer the workflows and build cross-functional

teams responsible for each process

• Many companies have partnered with suppliers and distributors to create a

superior value delivery network

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Core Competencies

• The key, then, is to own or nurture the resources and

competencies that make up the essence of the business—

outsource if competency is cheaper and available. (E.g Nike

uses Asian manufacturers)

• A core competency has three characteristics

1. Makes a significant contribution to perceived customer

benefits

2. Has applications in a wide variety of markets

3. It is difficult for competitors to imitate

Companies own and control most of the resources that entered their businesses

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Maximizing Core Competencies

• Business realignment (case study: Kodak, 2004, 2011) may

be necessary to maximize core competencies. It has three

steps:

1. (re) defining the business concept or “big idea”;

2. (re) shaping the business scope; and

3. (re) positioning the company’s brand identity

CA ultimately derives from how well the company has fitted its core competencies and distinctive capabilities into tightly interlocking activity systems

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Competitive Advantage

• Competitive advantage also accrues to companies that

possess distinctive capabilities or excellence in broader

business processes

• Three distinctive capabilities:

1. market sensing

2. customer linking

3. channel bonding

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Asian Companies Adopt three Main Strategies (McKinsey) to harness their core competence

• Expand quickly to capture global market opportunities

• Become atomizers

• Become asset light by using intangibles • Fostering human capital, exploiting network effects, creating synergies on reputation

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The Central Role of Strategic Planning

Companies focus on the customer and are organized to respond effectively to

changing customer needs. They have well-staffed marketing departments, and

their other departments also accept the concept that the customer is king

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The Strategic Planning, Implementation, and Control Processes

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Corporate and Division Strategic Planning

All corporate headquarters undertake four planning activities:

i. Defining the corporate mission

ii. Establishing strategic business units (SBUs)

iii. Assign resources to each SBU

iv. Assessing growth opportunities

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Defining the Market

• A target market definition tends to focus on selling a product or

service

• Pepsi could define its target market as everyone who drinks a cola

beverage and competitors would therefore be other cola

companies

• A strategic market definition could be everyone who might drink

something to quench his or her thirst

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Establishing Strategic Business Units (SBUs)

• Companies often define themselves in terms of products: They are in the

“auto business” or the “clothing business.”

• Market definitions of a business, however, describe the business are

superior to product definitions

• A business must be viewed as a customer-satisfying process, not a

goods-producing process

• Basic needs and customer groups endure forever. Transportation is a

need: the bicycle, the automobile, the railroad, the airline, and the truck

are products that meet that need

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Strategic Business Units (SBUs) The purpose of identifying the company’s strategic business units is to develop separate strategies and assign appropriate funding

• A business can define itself in terms of three dimensions:

customer groups, customer needs, and technology

• An SBU has three characteristics:

i. It is a single business, or a collection of related businesses,

that can be planned separately from the rest of the company

ii. It has its own set of competitors

iii. It has a manager responsible for strategic planning and profit

performance, who controls most of the factors affecting profit

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Assigning Resources to Each SBU

• Once it has defined SBUs, management must decide how to allocate

corporate resources to each

• Several portfolio-planning models introduced to provide an

analytical means for making investment decisions

• The GE/McKinsey Matrix classifies each SBU according to the extent

of its competitive advantage and the attractiveness of its industry

• Management would want to grow, “harvest” or draw cash from, or

hold on to the business

• Another model, from Boston Consulting Group, called the BCG’s

Growth-Share Matrix, uses relative market share and annual rate of

market growth as criteria to make investment decisions

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Assessing Growth Opportunities

• Assessing growth opportunities involves planning new businesses,

downsizing, and terminating older businesses. If there is a gap

between future desired sales and projected sales, corporate

management will need to develop or acquire new businesses to

fill it

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The Strategic-Planning Gap

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Strategic Options

• The first option is to identify opportunities for growth within

current businesses (intensive opportunities). Improving current

business

• The second is to identify opportunities to build or acquire

businesses related to current businesses (integrative

opportunities). Thru backward, forward or horizontal

integration

• Third is to identify opportunities to add attractive unrelated

businesses (diversification opportunities). Outside the present

business

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Marketing Innovation

• Innovation in marketing is critical. Imaginative ideas on strategy

exist in many places within a company

• Senior management should identify and encourage fresh ideas

from three groups that tend to be underrepresented in strategy

making: employees with youthful perspectives

employees who are far removed from company headquarters

employees who are new to the industry

• Each group is capable of challenging company orthodoxy and

stimulating new ideas

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Business Unit Strategic Planning

5C Five competitive Forces Model

SWOT

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Business Mission and SWOT

The Business Mission

Each business unit needs to define its specific mission within

the broader company mission

SWOT Analysis

The evaluation of a company’s strengths, weaknesses,

opportunities, and threats is called SWOT analysis. It involves

monitoring the external and internal marketing environment

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External Environment (Opportunity and Threat) Analysis

• A business unit must monitor key macroenvironment forces and

significant microenvironment actors that affect its ability to earn

profits

• It should set up a marketing intelligence system to track trends

and important developments and any related opportunities and

threats

• Good marketing is the art of finding, developing, and profiting

from these opportunities

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Marketing Opportunity Analysis

• A marketing opportunity is an area of buyer need and interest in

which there is a high probability that a company can profitably

satisfy that need

• There are three main sources of market opportunities

• The first is to offer something that is in short supply. This requires

little marketing talent, as the need is fairly obvious

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Marketing Opportunity Analysis

• The second is to supply an existing product or service in a

new or superior way. How?

— The problem detection method asks consumers for their

suggestions, the ideal method has them imagine an ideal version

of the product or service, and the consumption chain method

asks them to chart their steps in acquiring, using, and disposing

of a product

• This last method often leads to a totally new product or

service

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Environmental Threats

• An environmental threat is a challenge posed by an unfavorable

trend or development

• That would lead, in the absence of defensive marketing action, to

lower sales or profit

• Threats should be classified according to seriousness and

probability of occurrence

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Internal Environment (Strengths and Weaknesses) Analysis

• It is one thing to find attractive opportunities and another to be

able to take advantage of them

• Each firm must evaluate its internal strengths and weaknesses

• See the Marketing Memo: Checklist for Performing Strengths and

Weaknesses Analysis

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Checklist for Assessing Strengths and Weaknesses (1/2)

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Checklist for Assessing Strengths and Weaknesses (2/2)

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Goal Formulation

• Once the company has performed a SWOT analysis, it can proceed

to develop specific goals for the planning period

• This stage of the process is called goal formulation

• Managers use the term “goals” to describe objectives that are

specific with respect to magnitude and time

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Goal Formulation

The firm sets objectives, and then manages by objectives

(MBO). For MBOs to work they must meet four criteria:

1. They must be arranged hierarchically, from the most to least

important

2. Objectives should be stated quantitatively whenever possible

3. Goals should be realistic

4. Objectives must be consistent

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Strategy Formulation

• Goals indicate what a business unit wants to achieve; strategy is a

game plan for getting there

• Every business must design a strategy for achieving its goals,

consisting of a marketing strategy and a compatible technology

strategy and sourcing strategy

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Porter’s Generic Strategies

1. Overall cost leadership—The business work hard to achieve the lowest

production and distribution costs so that it can price lower than its

competitors and win a large market share

Firms pursuing this strategy must be good at engineering,

purchasing, manufacturing, and physical distribution

They need less skill in marketing

The problem with this strategy is that other firms will usually

compete with still lower costs and hurt the firm that rested its

whole future on cost

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Porter’s Generic Strategies

2. Differentiation—The business concentrates on achieving superior

performance in an important customer benefit area valued by a large part

of the market

The firm cultivates those strengths that will contribute to the intended

differentiation

Thus, the firm seeking quality leadership, for example, must make

products with the best components, put them together expertly,

inspect them carefully, and effectively communicate their quality

3. Focus—The business focuses on one or more narrow market segments.

The firm gets to know these segments intimately and pursues either cost

leadership or differentiation within the target segment

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Application of Porter Generic Strategies

• According to Porter, firms pursuing the same strategy directed to the same target

market constitute a strategic group

• The firm that carries out that strategy best will make the most profits

• Firms that do not pursue a clear strategy and try to be good on all strategic

dimensions do the worst

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Program Formulation and Implementation

• A great marketing strategy can be sabotaged by poor implementation

• Marketing must estimate its costs

• In implementing strategy, companies must not lose sight of the multiple

stakeholders involved and their needs

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Feedback and Control

• As it implements its strategy, the firm needs to track the results and monitor new

developments

• A company’s strategic fit with the environment will inevitably erode because the

market environment changes faster than the company’s 7 S

• It is more important to “do the right thing” (effectiveness) than “to do things right”

(efficiency). The most successful companies excel at both

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Feedback and Control

1. Haier stands by its quality products. It was

prepared to destroy its products if they do not

meet quality standards as they come off the

production line.

2. Today, Haier is the second largest refrigerator

manufacturer in the world.

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Product Planning: The Nature and Contents of a Marketing Plan

• Working within the plans set by the levels above them, product managers come up

with a marketing plan for individual products, lines, brands, channels, or customer

groups

• Each product level (product line, brand) must develop a marketing plan for

achieving its goals

• A marketing plan is a written document that summarizes what the marketer has

learned about the marketplace and indicates how the firm plans to reach its

marketing objectives

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Marketing Plans

• A marketing plan is one of the most important outputs of the marketing process. It

provides direction and focus for a brand, product, or company

• Nonprofit organizations use marketing plans to guide their fund-raising and

outreach efforts, and government agencies use them to build public awareness of

nutrition and to stimulate tourism

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Marketing Plan Criteria

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The Marketing Plan

• The marketing plan is the central instrument for directing and coordinating

the marketing effort

• The marketing plan operates on two levels: strategic and tactical

A. The strategic marketing plan lays out target markets and the value proposition. (What?;

defines marketing and competitive positions => the best marketing opportunities. E.g.

segmentation)

B. The tactical marketing plan specifies the product, promotion, merchandising, pricing,

sales channels, and service. (How and Who?; defines day to day marketing activities.

E.g. price discounting)

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Marketing Plan Contents

 Executive summary

 Situation analysis

 Market Summary

 Marketing strategy

 Financial projections

 Implementation controls

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Marketing Plan Contents (1)

1. Executive summary—The marketing plan should open with a brief summary of the

main goals and recommendations

2. Situation analysis—This section presents relevant background data on sales, costs,

the market, competitors, and the various forces in the macro-environment

○How is the market defined, how big is it, and how fast is it growing? What are the relevant

trends and critical issues? All this information is used to carry out on a SWOT (strengths,

weaknesses, opportunities, and threats) analysis Marketing Analysis Toolkit: Situation Analysis (HBR) http://comercializa.weebly.com/uploads/3/3/6/8/3368095/analisis_situacional__toolkit_hbr.pdf

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Marketing Plan Contents (2)

3. Marketing strategy—Here the product manager defines the mission, and marketing

and financial objectives

The manager also defines those groups and needs which the market offerings are intended

to satisfy as well as its competitive positioning. All this is done with inputs from other

organizational areas, such as purchasing, manufacturing, sales, finance, and human

resources

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Marketing Plan Contents (3)

4. Financial projections—Financial projections include a sales forecast, an expense

forecast, and a break-even analysis

○ On the revenue side, the projections show the forecasted sales volume by month and

product category

○ On the expense side, the projections show the expected costs of marketing, broken

down into finer categories

○ The break-even analysis shows how many units must be sold monthly to offset the

monthly fixed costs and average per-unit variable costs

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Marketing Plan Contents (4)

5. Implementation controls—The last section of the marketing plan outlines the

controls for monitoring and adjusting the implementation of the plan

– Typically, it spells out the goals and budget for each month or quarter, so management

can review each period’s results and take corrective action as needed

– Some organizations include contingency plans

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Situation Analysis

1. 5C’s Analysis

2. Porter’s Five Forces Analysis

3. SWOT analysis (slide#33-34)

–Strengths, Weaknesses, Opportunities and Threats

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5C’s Analysis

1. Company

2. Customers

3. Competitors

4. Context (Macro‐environment)

5. Collaborators/Complementers*

*These include suppliers, distributors and retailers, and companies

selling products complementary to the firm’s

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Using Five Forces to Analyze Industry Competitiveness (i.e. attractiveness)

1. Supplier Power

2. Buyer Power

3. Industry Competitors

4. Potential Entrants

5. Threats of Substitutes

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1

4

2

5

3

From Marketing Plans to Marketing Action

• As each action program begins, marketing managers will monitor ongoing results,

investigate any deviation from plans, and take corrective steps as needed

• Some companies prepare contingency plans

• Marketers must be ready to update and adapt marketing plans at any time

• The marketing plan should define how progress toward objectives will be measured

• Managers typically use budgets, schedules, and marketing metrics for monitoring

and evaluating results

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Conclusion

• Key ingredients of the marketing management process are

insightful, creative strategies and plans that can guide marketing

activities

• Developing the right marketing strategy over time requires a

blend of discipline and flexibility

• Firms must stick to a strategy but also constantly improve it

• In today’s fast-changing marketing world, identifying the best

long-term strategies is crucial but challenging

Marketing strategy also requires a clear understanding of how marketing works

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References

Kotler, P., Keller, K. L., Ang, S.H., Tan, C.T., & Leong, S.M. (2017). Marketing

Management: An Asian perspective (7th ed.). Harlow, United Kingdom:

Pearson Education Limited.

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