Marketing’s Strategic Role in the Organization

1. 3 Marketing’s StrategicRole in theOrganization

2. Learning Objectives • After studying this chapter, you should be able to: • Discuss the three basic levels in an organization and the types of strategic plans developed at each level. • Understand the organizational strategic planning process and the role of marketing in this process. • Describe the key decisions in the development of corporate strategy. • Understand the different general business strategies and their relationship to business marketing, product marketing, and international marketing strategies. • Realize the importance of relationships and teamwork in executing strategic plans.

3. Disney • Disney’s long-run objective is to become the world’s premier family entertainment company through the ongoing development of its powerful brand and character franchises. Its business is “making people happy by turning fantasy into reality.”

4. Organizational Levels Corporate Level The highest level in any organization. Business Level Units within the organization that are generally managed as self-contained businesses. Functional Level Includes all of the various functional areas within a business unit.

5. Organizational Strategic Planning • Strategic planning for multibusiness, multiproduct organizations typically occurs at each organizational level. Strategic plans at higher organizational levels provide direction for strategic plans at lower levels.

6. Brand Loyalty Name Awareness Competitive Advantage Perceived Quality Brand Assets Cognitive Associations The Strategic Role of Brand Loyalty Brand Equity

7. The Strategic Planning Process • This process applies to strategic planning at every level. In the business world, most organizations are involved in different stages of the process simultaneously and do not necessarily follow such a step-by-step approach. Exhibit 3-2

8. The Role of Marketing Exhibit 3-2

9. Marketing Strategy and the Internet • The failure of many dot-com companies has raised many important questions regarding the lessons firms should learn from Internet business. • Internet usage continues to grow globally, and many traditional firms have found viable applications of Web technology. • Internet selling direct to consumers is frequently employed as another channel of communication and interaction. • One of the primary effects of the Internet has been the increased availability of information and the emphasis on price.

10. Corporate Strategy Decisions Vision Corporate Strategy Decisions Business Unit Composition Objectives & Resource Allocation Growth Strategy

11. Corporate Vision • A corporate vision represents the basic values of an organization. The vision specifies what the organization stands for, where it plans to go, and how it plans to get there. Corporate Vision Components: • Markets • Products and services • Geographic domain • Core competencies • Organizational objectives • Organizational philosophy • Organizational self-concept • Desired public image

12. Core Values and Purpose • Core values are the small set of guiding principles that represent the enduring tenets of an organization. Core purpose reflects the company’s reason for being or its idealistic motivation for doing work.

13. Unilever’s Mission Statement • Unilever's mission is to add Vitality to life. We meet everyday needs for nutrition, hygiene and personal care with brands that help people feel good, look good and get more out of life. • Our deep roots in local cultures and markets around the world give us our strong relationship with consumers and are the foundation for our future growth. We will bring our wealth of knowledge and international expertise to the service of local consumers — a truly multi-local multinational. • Our long-term success requires a total commitment to exceptional standards of performance and productivity, to working together effectively, and to a willingness to embrace new ideas and learn continuously. • To succeed also requires, we believe, the highest standards of corporate behaviour towards everyone we work with, the communities we touch, and the environment on which we have an impact. • This is our road to sustainable, profitable growth, creating long-term value for our shareholders, our people, and our business partners.

14. Corporate Vision • Core competency reflects a bundle of skills that are possessed by individuals across the organization.

15. Corporate objectives specify the achievement of desired levels of performance during particular periods. Corporate objectives are established for many areas, but the most visible tend to be financial objectives. Objectives and Resource Allocation Exhibit 3-7

16. Customer Relationship Management • Customer Relationship Management (CRM) initiatives are designed to achieve a continuing dialogue with customers, across all contact and access points, with personalized treatment of the most valuable customers designed to increase customer retention and the effectiveness of marketing strategies.

17. Corporate Growth Strategies • Corporate growth strategies describe the general approach for achieving corporate growth objectives. • Exhibit 3-8

18. more Corporate Growth Strategies Market Penetration A market penetration strategy represents a decision to achieve corporate growth objectives with existing products within existing markets. Market Expansion A market expansion strategy entails marketing existing products to new markets. Product Expansion A product expansion strategy calls for marketing new products to the same market.

19. Corporate Growth Strategies (con’t) Diversification A diversification strategy requires the firm to expand into new products and new markets. Unrelated diversification means that the new products and markets have nothing in common with existing operations. Related diversification occurs when the new products and markets have something in common with existing operations.

20. Business Unit Composition • A strategic business unit (SBU) focuses on: • a single product or brand • a line of products, or • mix of related products that meets a common market need or a group of related needs, • The unit’s management is responsible for all (or most) of the basic business functions.

21. SBU Evaluation • SBUs can be evaluated in terms of market share and market growth using some variation of the Boston Consulting Group growth share matrix. • Exhibit 3-9

22. Business Strategy Decisions Market Scope Market scope refers to how broadly the business views its target market. Two basic strategies exist: Focused or Broad. Competitive Advantage Competitive advantage refers to the way a business tries to get consumers to purchase its products over those offered by competitors. Two basic strategies exist:Differentiation or Low Price

23. General Business Strategies • Combining the market scope and competitive advantage decisions produce four general business strategies. Exhibit 3-10

24. Marketing Strategy Decisions • Developed as functional strategies at the business unit level and as operating strategies at the product level. • Business strategy decisions provide direction for all business-level marketing activities. • Product strategy decisions guide the execution of marketing activities for individual products.

25. Social Responsibility as a Strategy • The principles underlying socially responsible corporate and marketing strategy include the following: • Treating customers with fairness, openness, and quick response to inquiries and complaints. • Treating employees, suppliers, and distributors with fairness. • Caring about the environmental impact of the firm’s activities and supply chain. • Behaving in a consistently ethical manner.

26. International Entry Strategies • An entry strategy is the approach used to market products in an international market. Exporting Exporting is a method of selling products to buyers in international markets. Direct Investment Direct investment iswhere the marketer invests in production, sales, distribution, or other operations in the foreign country. Joint Ventures Joint ventures include any arrangement between two or more organizations to market products internationally.

27. International Strategic Orientation • Firms operating in international markets can use two different orientations toward marketing strategy. Standardized Marketing Strategy With a standardized marketing strategy, a firm develops and implements the same product, price, distribution, and promotion programs in all international markets. Customized Marketing Strategy With a customized marketing strategy, a firm develops and implements a different marketing mix for each target market country.

28. Executing Strategic Plans Cross- Functional Teamwork Routes to Effective Execution Marketing Teamwork Comarketing Alliances

29. Summary • After studying this chapter, you should be able to: • Discuss the three basic levels in an organization and the types of strategic plans developed at each level. • Understand the organizational strategic planning process and the role of marketing in this process. • Describe the key decisions in the development of corporate strategy. • Understand the different general business strategies and their relationship to business marketing, product marketing, and international marketing strategies. • Realize the importance of relationships and teamwork in executing strategic plans.