Marketing business
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MAR5409_PPT_ch05.pptx0
Chapter 5 Business Marketing Planning: Strategic Perspectives
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Marketing’s strategic role in corporate strategy development
The multifunctional nature of business marketing decision making
The components of a business model that can be converted into superior positions of advantage in the business market
Chapter Outline
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The way in which a new class of smart, connected products is transforming competition
A valuable framework for detailing the processes and systems that drive strategy success
Chapter Outline (continued)
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Market-driven organizations:
Center on customers
Take an outside-in view of strategy
Demonstrate an ability to sense market trends ahead of their competitors
Marketing’s Strategic Role
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Hierarchy of Strategies
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Corporate strategy
Business-level strategy
Functional strategy
Defines the businesses in which a company competes, in a manner that uses resources to convert distinctive competence into competitive advantage
Role of marketing
Assessing market attractiveness and the competitive effectiveness of the firm
Promoting a customer orientation to the various constituencies in management decision making
Formulating the firm’s overall value proposition and articulating it to the market
Corporate Strategy
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Centers on how a firm competes in a given industry and positions itself against its competitors
Competition is between individual business units
Strategic business unit (SBU): Single business or collection of businesses that has:
A distinct mission
A responsible manager
Its own competitors and that is relatively independent of other business units
Business-Level Strategy
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Centers on how resources allocated to the various functional areas can be used most efficiently and effectively to support the business-level strategy
Focus of marketing strategy is to allocate and coordinate marketing resources and activities to achieve the firm’s objective within a specific product market
Functional Strategy
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Interplay between the three levels of strategic formulation:
Cuts across functional areas
Involves issues related to long term objectives
Involves allocating resources across SBUs and/or product markets
Include decisions about the direction of corporate strategy, application of technology, and choice of alliance partners
Strategic Formulation and the Hierarchy of Strategies
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Figure 5.1 - Strategic Decision Processes
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Different meanings assigned to a proposed strategy are motivated by deeper differences in organizational subcultures
Subcultures exist when one subunit shares different values, beliefs, and goals than another subunit, resulting in different thought-worlds
Functional managers are likely to resist strategic changes that threaten their field
Conflicts in Strategy Formulation Process
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Collective decisions emerge from negotiation and compromise among partisan participants
Choices must be negotiated with each interest group attempting to achieve its own ends
Results of collective decisions tend to develop incrementally and depend on the partisan values and influence of the various interest groups
Negotiated Outcomes
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Marketing managers should:
Be sensitive to the likely response it may arouse in other interest groups
Develop and use a communication network that includes organizational members who have a major stake in the decision
Be able to use the personal networks to understand the interests of other stakeholders, communicate their own interests clearly and sensitively
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Implications for Marketing Managers
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Successful marketing managers know how to integrate functional areas
Understand the capabilities of manufacturing, R&D, and customer service
Capitalize on the strengths in developing marketing strategies
Facilitate strategies that are responsive to customer needs
Assume a central role in strategy implementation
Functional Integrated Planning
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Approach that can classify decision-making roles and highlight the multifunctional nature of business marketing decision making
Responsible (R) - Manager takes initiative, analyzes situation, develops alternatives, consults with others, makes initial recommendation
Approve (A) - Manager accepts or rejects decisions
Consult (C) - Manager offers input
Responsibility Charting
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Implement (M) - Manager is accountable for implementing decision
Inform (I) - Manager is informed of the decision
Responsibility Charting (continued)
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Constitutes members of the organization involved in the business marketing decision-making process
Representatives may assume more than one role
Roles evolve during the marketing strategy development process
Composition is not strictly prescribed by the organization chart
Needs of a particular strategy situation influence the composition of the strategy center
Marketing Strategy Center
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Minimizing interdepartmental conflict is a challenge for marketer
Individual strategy center participants are motivated by personal and organizational goals
Organizational objectives may be different for different functional areas
Managing conflict, promoting cooperation, developing and coordinating strategy is a fundamental responsibility for marketing managers
Managing Strategic Interdependencies
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Figure 5.2 - Components of a Business Model
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Elements of Customer Interface
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Fulfillment and support
Channels a firm uses to reach and support customers
Information and insight
Knowledge captured from customers and the degree to which this information is used
Relationship dynamics
Nature of the interaction between the firm and its customers
Pricing structure
Pricing choices offered by a business concept
Determines how the firm chooses to compete
Elements
Business mission: Describes overall strategic objective, sets course direction, and defines performance criteria to measure progress
Product/market scope: Defines where the firm competes
Basis for differentiation: Captures the essence of how firm competes differently than its rivals do
Core Strategy
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Business is differentiated when its value-adding activities are perceived as superior and profitable
Value-added features need to motivate customers to pay a higher premium than the cost of superior performance
Differentiation of Products and Services
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Core competencies
Set of skills, systems, and technologies that create uniquely high value for customers
Strategic assets
Tangible requirements for advantage that enable a firm to exercise its capabilities
Core processes
Methodologies and routines that companies use
Strategic Resources
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Complements and enriches the firm’s research base
Includes:
Suppliers
Strategic alliance partners
Coalitions
Value Network
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Figure 5.3 - Strategic Positioning
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Cloud computing: Scalable and elastic IT-related capabilities are provided as a service to external customers using Internet technologies
Internet of Things (IoT): Connects devices such as everyday consumer objects and industrial equipment onto the network
Big Data: Massive amounts of data collected over time that are difficult to analyze and process using common database management tools
Smart, Connected Products
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Big Data Analytics: Process of examining large data sets containing a variety of data types
To uncover hidden patterns, unknown correlations, market trends, customer preferences, and other useful information
Smart, Connected Products (continued)
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Continuous monitoring of a product’s condition, operation, usage, and external environment through sensors and external data sources
Control through remote commands or algorithms that are incorporated into the device or reside in the product cloud
Application of algorithms and analytics to product usage data to enhance product performance
Capabilities of Smart, Connected Products
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Preventative maintenance when failure is imminent and completes repairs remotely
Smart, connected products:
Operate autonomously
Self-diagnose their own service needs
Adapt to users’ preferences
Self-coordinate with other products and systems
Capabilities of Smart, Connected Products (continued)
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Marketing strategists can secure new insights into how products create value for customers by gathering and analyzing product usage data
By capitalizing on the rich data flows from customers, managers can:
Create product and service bundles that provide greater value to each segment
Price the bundles to capture a greater share of that value
Effect of Smart, Connected Products on Marketing Strategies
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Product usage and performance data offer improvements in predictive maintenance and service productivity
Product data can signal existing and future problems and enable firms to make timely equipment repairs
Effect of Smart, Connected Products on Marketing Strategies (continued)
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Figure 5.4 - The Management System
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Comprehensive system for converting a company’s vision and strategy into a tightly connected set of performance measures
Combines financial measures of past performance with measures of the drivers of performance
Balanced Scorecard
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Figure 5.5 - Balanced Scorecard
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| Market share | Represents the proportion of business in a given market (in terms of number of customers, dollars spent, or unit volume sold) that a business unit sells. |
| Customer acquisition | Tracks, in absolute or relative terms, the rate at which a business unit attracts or wins new customers or business. |
| Customer retention | Tracks, in absolute or relative terms, the rate at which a business unit retains customers. |
| Customer satisfaction | Matches the satisfaction level of customers on specific performance criteria such as quality, service, or on-time delivery reliability. |
| Customer profitability | Assesses the net profit of a customer, or segment, after deducting the unique expenses required to support that customer or segment. |
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Customer Perspective: Core Measures
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Aligning Internal Business Processes to the Customer Strategy
| Customer Strategy | The Focus of Internal Business Processes | ||
| Operations Management | Customer Relationship Management | Innovation Management | |
| Low-total-cost strategy | Highly efficient operating processes efficient, timely distribution | Ease of access for customers; superb post-sales service | Seek process innovations gain scale economies |
| Product leadership strategy | Flexible manufacturing processes rapid introduction of new products | Capture customer ideas for new offering educate customers about complex new product/services | Disciplined, high-performance product development first-to-market |
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Aligning Internal Business Processes to the Customer Strategy (continued)
| Customer Strategy | The Focus of Internal Business Processes | ||
| Operations Management | Customer Relationship Management | Innovation Management | |
| Complete customer solutions strategy | Deliver broad product/ service line create network of suppliers for extended product/ service capabilities | Create customized solutions for customers build strong customer relationships develop customer knowledge | Identify new opportunities to serve customers anticipate future customer needs |
| Lock-in strategies | Provide capacity for proprietary product/service reliable access and ease of use | Create awareness influence switching costs of existing and potential customers | Develop and enhance proprietary product increase breadth/applications of standard |
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Tool for visualizing a firm’s strategy as a chain of cause-and-effect relationships among strategic objectives
Enables an organization to describe and illustrate its objectives, initiatives, and targets
Strategy Map
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Figure 5.6 - Strategy Map
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