Marketing Chapter 2 Homework Companies Often Partner With Specific Suppliers And

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LEARNING OBJECTIVES

In this chapter, we will address the following questions:

1. How does marketing affect customer value?

2. How is strategic planning carried out at the corporate and divisional levels?

3. How is strategic planning carried out at the business unit level?

4. What does a marketing plan include?

CHAPTER SUMMARY

1. The value delivery process includes choosing (or identifying), providing (or

2. Strong companies develop superior capabilities in managing core business

processes such as new-product realization, inventory management, and customer

3. Market-oriented strategic planning is the managerial process of developing and

maintaining a viable fit between the organization’s objectives, skills, and resources and

4. The corporate strategy establishes the framework within which the divisions and

6. Strategic planning for individual businesses includes defining the business

7. Each product level within a business unit must develop a marketing plan for

achieving its goals. The marketing plan is one of the most important outputs of the

marketing process.

C H A P T E R

DEVELOPING

MARKETING STRATEGIES

AND PLANS

OPENING THOUGHT

This introduces several perspectives on planning and describes how to draw up a formal

marketing plan. The formal marketing plan sample is an excellent resource because it

provides an overview of the types of decisions a marketer might make in an effort to

create customer value. Provide sufficient class time covering the distinctions between

TEACHING STRATEGY AND CLASS ORGANIZATION

PROJECTS

1. For the semester–long project, with this chapter, we continue the formation of groups; first

2. As a group presentation project, have each group present their Pegasus Sports

International marketing plan to the class. Non-presenting groups should be ready to

3. Students should be encouraged to review selected companies’ annual reports to collect

4. Sonic PDA Marketing Plan. Every marketing plan must include the company mission,

analysis of strengths, weaknesses, opportunities, and threats and state the marketing and

financial objectives for the plan period. Sonic is a start-up company that will soon

introduce a new multi-function personal digital assistant (PDA) to compete with

established products made by Palm, Hewlett Packard, Sony, and others. As an assistant to

Jane Melody, Sonic’s chief marketing officer, you have been assigned to:

• Draft a mission statement for Sonic’s senior management to review.

ASSIGNMENTS

Each student is in effect a “product.” Like all products you (they) must be marketed for

success. Have each of your students’ write their own “mission statement” about their career

and a “goal statement” of where they see themselves in 5 years, 10 years, and after 20 years.

Have students read Jon R. Katzenbach and Douglas K. Smith, The Wisdom of Teams:

Creating the High-Performance Organization (Boston: Harvard Business School Press,

1993); Hammer and Champy, Reengineering the Corporation and report on their findings

in a written and/or oral presentation.

1992); Jordan D. Lewis, Partnerships for Profit: Structuring and Managing Strategic

Alliances (New York: The Free Press, 1990); John R. Harbison and Peter Pekar, Smart

Alliances: A Practical Guide to Repeatable Success, (San Francisco, CA: Jossey-Bass, 1998)

and have each group present their findings.

END–OF–CHAPTER SUPPORT

MARKETING DEBATE—What Good Is a Mission Statement?

Mission statements are often the product of much deliberation and discussion. At the

same time, critics claim they sometimes lack “teeth” and specificity, or do not vary much

from firm to firm and make the same empty promises.

Take a position: Mission statements are critical to a successful marketing organization versus

mission statements rarely provide useful marketing value.

Pro: A well-crafted corporate mission statement reflects the values of the firm as they relate to

the community at large, its stakeholders, its employees, and its customers. Once the firm’s

positions are delineated in the mission statement, marketing can begin the process of setting its

MARKETING DISCUSSION

Consider Porter’s value chain and the holistic marketing orientation model. What implications

do they have for marketing planning? How would you structure a marketing plan to

incorporate some of their concepts?

Answer: Michael Porter’s value chain is a tool for identifying ways to create more customer

value. This value chain identifies nine strategically relevant activities that create value and cost

in a business. There are five primary activities and four support activities in this value chain.

The five primary activities are: inbound logistics, operations, outbound logistics, marketing

Marketing Excellence: CISCO

1. How is building a brand in a business-to–business context different from doing so in the

consumer market?

Suggested answer: Building a brand in a business-to–business market involves different

consumers/customers than the consumer market. In the B2B market, you have deciders,

2. Is Cisco’s plan to reach out to consumers a viable one? Why or why not?

Suggested answer: Student’s answers will vary but most may offer that since Cisco is trying to

reach the consumer market by the use of integration, that is, acquiring known consumer

Marketing Excellence: Intel

1. Discuss how Intel changed ingredient-marketing history. What did it do so well in those

initial campaigns?

2. Evaluate Intel’s more recent marketing efforts as the industry moves out of the PC era.

What are Intel’s greatest risks and strengths during this changing time?

Suggested answer: Student answers will vary but most might say that Intel has lost brand

resonance and positioning with their dropping the “Intel inside” marketing campaign. One

DETAILED CHAPTER OUTLINE

Opening Vignette: Hewlett-Packard has been challenged in recent years, and is an

example of how firms must constantly improve their strategies to adjust to changes in the

marketplace.

I. Marketing and Customer Value

A) The Value Delivery Process

i. Deliver customer value at a profit by fine-tuning the value delivery

process

ii. The traditional view of marketing where a firm makes something and

sells it only applies in economies with goods shortages

iii. Marketing is placed at the beginning of business planning in

economies with different consumer needs and wants

iv. Three phases to the value creation and delivery sequence:

1. Choosing the value: homework; market segmentation, target

market selection, value positioning

3. Communicating the value: use the Internet, advertising, sales

force and other communication tools

B) The Value Chain

i. Every firm is a synthesis of activities performed to design, produce,

market, deliver and support its product.

ii. Primary activities

1. Inbound logistics: bringing materials into the business

3. Outbound logistics: shipping out final products

5. Service

iii. Support activities

2. Technology development

4. Firm infrastructure

iv. Firms examine costs and performance in each value-creating activity

1. The market-sensing process: gathering and acting upon

information about the product

2. The new-offering realization process: researching, developing,

4. The customer relationship management process: building

C) Core Competencies

i. Three characteristics

1. Sources of competitive advantage that make a significant

contribution to perceived customer benefits

3. Are difficult for competitors imitate

ii. Accompanied by distinctive capabilities, or excellence in broader

business processes

1. Market sensing

3. Channel bonding

iii. Opportunities and threats often begin as weak signals from the

1. Redefine the business concept or big idea

3. Reposition the company’s brand identity

v. Panasonic streamlined business units and emphasized profit, not just

revenue growth, as part of its restructuring efforts

D) Central Role of Strategic Planning

i. Master marketers like Amazon.com and Ritz-Carlton focus on the

customer and are organized to respond effectively to changing needs,

have well-staffed marketing departments, successful CMOs, and other

bottom line and listen to the voice of the customers.

iii. Successful CMOs are risk takers, problem solvers, change agents and

iv. Three driving forces are expected to change CMO role

1. Predictable marketplace trends

3. Uncertainty about the economy and organizational design

v. Five priorities for a successful CMO

2. Build adaptive marketing capabilities.

4. Tighten the alignment with sales.

5. Take accountability for returns on marketing spending.

vi. Marketers must prioritize strategic planning in three key areas

1. Managing the businesses as an investment portfolio

3. Establishing a strategy

vii. Most large companies consist of four organizational levels

2. Division: establishes plan covering allocation of funds to each

business unit

4. Product: each product level develops a marketing plan

viii. A marketing plan operates on a strategic level and a tactical level

ix. The strategic marketing plan lays out the target markets and the firm’s

value proposition, based on an analysis of the best market

opportunities.

II. Corporate and Division Strategic Planning

A) Corporate headquarters undertake four planning activities

i. Define the corporate mission

ii. Establish strategic business units

iii. Assign resources to each strategic business unit

iv. Assess growth opportunities

B) Defining the Corporate Mission

i. Over time, the mission may change to respond to new opportunities or

market conditions

ii. Classic questions: What is our business? Who is the customer? What

is of value to the customer? What will our business be? What should

our business be?

C) Crafting a Mission Statement

i. Developed collaboratively with and shared with managers, employees,

and often customers

ii. Provides a shared sense of purpose, direction, and opportunity

iii. Good mission statements have five major charactertistics

1. They focus on a limited number of goals

3. They define the major competitive spheres within which the

company will operate

5. They are short, memorable and meaningful as possible

iv. Mission statements can be used to define competitive territory and

D) Strategic Business Units

i. Established using three characteristics

1. Single business or collection of related businesses that can be

planned separately from the rest of the company

3. Manager responsible for strategic planning and profit

performance and controls most factors affecting profit

ii. Resources assigned using shareholder value analysis; value assessed

on potential of business based on growth opportunities from global

expansion, positioning or retargeting and strategic outsourcing

v. Intensive growth: within current businesses; product-market expansion

grid is helpful

1. Market-penetration strategy: more market share with current

products in current markets

3. Product-development strategy: develop new products for

current markets

4. Diversification strategy: develop new products for new markets

vi. Integrative growth: acquire related businesses

E) Organization and Organizational Culture

i. A company’s organization is its structures, policies, and corporate

culture, all of which can become dysfunctional in a rapidly changing

business environment.

ii. Corporate culture is “the shared experiences, stories, beliefs, and

norms that characterize an organization.”

2. Adapting the culture is often the key to successfully

implementing a new strategy

3. Customer-centric culture can affect all aspects of an

organization

F) Marketing Innovation

i. Senior management should identify and encourage fresh ideas from

three generally underrepresented groups: employees with youthful or

III. Business Unit Strategic Planning

A. Develop a specific mission for the strategic business unit

B. Conduct a SWOT analysis

a. External environment (opportunity and threat) analysis: monitor key

macroenvironmental forces

i. Opportunity: area of buyer need and interest that a company

has a high probability of satisfying

2. Supply existing product or service in a superior way

a. Problem detection: ask consumers for

3. Benefit from converging industry trends/introduce

hybrid products or services to the market

5. Meet the need for more information and advice

7. Introduce a new capability

9. Offer product at a much lower price

ii. Market opportunity analysis questions

1. Can we articulate the benefits convincingly to a defined

target market(s)?

3. Does our company possess or have access to the critical

capabilities and resources we need to deliver the

customer benefits?

4. Can we deliver the benefits better than any actual or

potential competitors?

5. Will the financial rate of return meet or exceed our

required threshold for investment?

C. Goal formulation

a. Goals are objectives that are specific with respect to magnitude and

time

b. Management by objectives meets four criteria

i. They must be arranged hierarchically, from most to least

important

ii. Objectives should be quantitative whenever possible

iii. Goals should be realistic

iv. Objectives must be consistent

D. Strategic formulation

a. Strategy is a game plan for getting what you want to achieve

b. Porter’s generic strategies

i. Overall cost leadership

ii. Differentiation

iii. Focus

c. Competing firms directing the same strategy to the same target market

constitute a strategic group

d. There is a distinction between operational effectiveness and strategy:

operationally effectiveness can be copied; strategy develops a unique

and valuable position

e. Strategic alliances complement a firm’s capabilities and resources

i. Product or service alliances

E. Program Formulation and Implementation

a. Marketers must estimate their costs

b. Businesses need to nurture other stakeholders

c. Strategy is one of seven elements of business success:

i. Hardware: strategy, structure, and systems

ii. Software: style, skills, staff and shared values

F. Feedback and Control

IV. The Nature and Contents of a Marketing Plan

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

has learned about the marketplace and indicates how the firm plans to meet its

marketing objectives

B) The most frequently cited shortcomings of current marketing plans, according

to marketing executives, are lack of realism, insufficient competitive analysis,

and a short-run focus

C) Here are some questions to ask in evaluating a marketing plan.

i. Is the plan simple and succinct? Is it easy to understand and act on?

Does it communicate its content clearly and practically? Is it not

unnecessarily long?

ii. Is the plan complete? Does it include all the necessary elements? Does

it have the right breadth and depth? Achieving the right balance

between completeness and lots of detail and simplicity and clear focus

is often the key to a well-constructed marketing plan.

iii. Is the plan specific? Are its objectives concrete and measurable? Does

it provide a clear course of action? Does it include specific activities,

each with specific dates of completion, specific persons responsible,

and specific budgets?

iv. Is the plan realistic? Are the sales goals, expense budgets, and

milestone dates realistic? Has a frank and honest self-critique been

conducted to raise possible concerns and objections?

D) Smaller businesses may create shorter or less formal marketing plans;

corporations generally require highly structured documents.

E) A marketing plan usually contains the following sections

i. Executive summary and table of contents

iv. Marketing tactics (marketing activities that will be undertaken to

execute the marketing strategy)

1. The product or service offering section describes the key

attributes and benefits that will appeal to target customers.

2. The pricing section specifies the general price range and how it

4. The communications section usually offers high-level guidance

about the general message and media strategy. Firms will often

v. Financial projections include a sales forecast, an expense forecast, and

a break-even analysis.

1. The break-even analysis estimates how many units the firm

2. Risk analysis obtains three estimates (optimistic, pessimistic,

and most likely) for each uncertain variable affecting

vi. Implementation controls

1. Outlines the controls for monitoring and adjusting

implementation of the plan

2. 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.

F) The Role of Research

i. Up–to-date information is needed about the environment, competition

and selected market segments

ii. Research helps marketers learn about customers’ requirements,

expectations, perceptions, satisfaction and loyalty

G) The Role of Relationships

Sample Marketing Plan: Pegasus Sports International