Chapter : 2

1. Chapter : 2 Developing Marketing Strategies and Plans

2. Value delivery process Traditional: Make the product: Design-Procure-Make Sell the product: Price-Sell-Promote-Distribute-Service Value creation and delivery sequence: Choose the value:Segmentation-market selection(targeting)-value positioning – essence of strategic marketing Modern: Provide the value: Product development-service development-pricing-sourcing/making-distributing Communicate the value: Sales force-sales promo-advertising Tactical marketing

3. Value Chain By Michael Porter It is a tool for identifying ways to create more customer value. According to this model, every firm is a synthesis of activities performed to design, produce, market, deliver and support its product.

4. Value chain Firm Infrastructure Human Resource Management margin Technological Development Procurement – Quality of Material Inbound OperationsOutboundMarketing Service margin logistics logistics and sales Primary Activities Supporting Activities

5. Core Competency • For its core business – firms need labour,materials,machines, information and energy • Firms may outsource less critical resources if they can be obtained at better quality or lower cost • The key is to own and nurture the resources and competencies that make up the essence of the business

6. Core Competency • Core competency has three characteristics 1.It is a source of competitive advantage in that it makes a significant contribution to perceived customer benefits 2. It has applications in a wide variety of markets 3. It is difficult to imitate

7. Holistic market orientation and customer value Holistic market orientation:- “It is integrating the value exploration, value creation and value delivery activities with the purpose of building long term mutually satisfying relationships and co-prosperity among key stakeholders”

8. Holistic marketing framework • It is designed to address key management questions 1. Value exploration: How can a company identify new value opportunities 2. Value creation: How can a company efficiently create more promising new value offerings 3. Value delivery: How can a company use its capabilities and infrastructure to deliver new value offerings more efficiently

9. Value Exploration • Firms need to have a well defined strategy and interaction between three spaces • 1. Customer’s cognitive space – which reflects existing and latent needs and includes dimensions such as need for participation, stability, freedom and change • 2. Company’s competency: which is the breadth – broad v/s focused scope of business and depth-physical v/s knowledge based capabilities • 3. Collaborator’s resource space: involves horizontal partnership where firms choose partners based on their ability to exploit related market opportunities and vertical partnerships

10. Value Creation Firms need to identify new customer benefits from the customer’s point of view, utilize core competencies and select and manage business partners from its collaborative networks Has three steps: • Redefine the business concept • Reshape business scope-lines of business • Reposition the company’s identity

11. Value delivery • It involves customer relationship management, internal resource management and business partnership management

12. Strategic Planning Creating, providing and communicating value requires different marketing activities – and for them to be executed – Strategic planning is required ! Strategic planning calls for actions in three areas • Managing a firm’s business as an investment portfolio • Assessing each business strength by considering the market growth rate and the company’s position and fit in that market • Establishing a strategy

13. Understanding strategic planning Large firms have four organisational levels • Corporate level • Divisional level • Business unit level • Product level

14. Corporate and Divisional strategic planning • Defining the corporate mission • Establishing strategic business units • Assigning resources to each SBU • Assessing growth opportunities

15. Defining the corporate mission It can be understood by answering Management Guru Peter Drucker’s questions 1.What is our business 2. Who is the customer ` 3. What is of value to the customer 4. What will our business be

16. Mission Statements • It is something that provides employees with a shared sense of purpose, direction and opportunity • It guides geographically dispersed employees to work independently and yet collectively toward realizing the organizational goals • Mission statements are best when they reflect a ‘vision’ – an almost impossible dream that provides direction for the company for the next 10 to 20 years • Good mission statements have three things 1. Focus on limited number of goals 2. Stress on company’s values and policies 3. Define major competitive spheres within which the firm will operate – industry, product and applications, competence, market segment, vertical and geographical

17. Defining business • Business is defined as a customer satisfying process • Has three important parameters – customer groups, customer needs and technology • Large firms manage different businesses which are known as SBUs – Strategic Business Units

18. What is a Strategic Business Unit • It is a single business or collection of related businesses that can be planned separately from the rest of the company • It has its own set of rivals • It has a manager who is responsible for strategic planning and profit performance and who controls most of the factors affecting profit

19. Assessing growth opportunities Diversification growth Integrative growth Sales Intensive growth Time in years

20. Igor Ansoff’s product market expansion grid Three intensive growth strategies Current products New products Current Markets New Markets Market penetration strategy Product development strategy Market development Diversification strategy Strategy

21. Intensive growth • Penetrating current markets with current products • Develop new markets for its current products • Develop new products for current markets

22. Integrative growth • Forward integration • Backward integration • Horizontal integration

23. Diversification • Concentric diversi. – new products that have technological or marketing synergies with existing product lines for new group of customers • Horizontal diversification: Develop product that are technologically unrelated to existing products but will appeal to existing consumers • Conglomerate divers.: Seeking new opportunities having no relation to existing products or existing customers

24. Business Unit planning Business mission  SWOT  Goal formulation  Strategy formulation  Program formulation  Implementation  Feedback and control

25. S.W.O.T. • Strength and Weakness – Internal analysis • Opportunity and threat – External analysis

26. Goal formulation • Goals should be arranged hierarchically, from most to least important • Objectives should be stated quantitatively • Objectives should be realistic • Objectives should be consistent

27. Strategy formulation Porter’s generic strategies: • Overall cost leadership : Firms achieve lowest production and distribution costs so that they can price lower than its competitors and win large market share • Differentiation: Firms concentrate on achieving superior performance in an important customer benefit area valued by a large part of the market • Focus: Firms focus on one or more narrow market segments and pursue cost leadership or differentiation within it

28. Strategic alliances • Product or service alliance – one company licenses its product manufacturing to another firm • Promotional alliance: One firm agrees to promote another firm’s product or service • Logistics: One company offers logistical services for another company’s product • Pricing collaboration: One firm joining other firms in a special pricing collaboration