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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
2
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
