Transcript Document

Chapter 3
Marketing’s Strategic Role in
the Organization
Jason C. H. Chen, Ph.D.
Professor
School of Business Administration
Gonzaga University
Spokane, WA 99223
[email protected]
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After studying this chapter,
you should be able to:
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
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.
Irwin/McGraw-Hill & Dr. Chen
After studying this chapter,
you should be able to:
 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.
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OPENING VIGNETTE
WWW.DISNEY. COM
1. What are the four business segments of
Disney?
2. What are the long run objectives of Disney’s?
3. Can the development of a marketing strategy
help Disney? How?
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Planning is everything ...
develop
Customers,
market,
competition
Vision
guide
Strategy
create
Tactic
Products,
Services
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IT Planning: The Relationship Between Business, IS,
and IT Strategies
IT
Impact
and
potential
Business Strategy
• Business Decisions
• Objectives and Direction
• Change
Supports
business
Direction for
business
IS Strategy
• Business Based
• Demand Orientated
• Application Focused
Infrastructure
And services
• Activity Based
• Supply Orientated
• Technology Focused
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What is
required
Needs and
priorities
IT Strategy
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Where is the
business
going and
why
How it
can be
delivered
Focusing Marketing Strategy and Evaluating Market
Opportunities
Opportunities to be turned Into
marketing strategies and plans
Evaluating Opportunities
Focusing marketing
Strategy
Defining generic
markets and
product-markets
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Targeting
and
Segmentation
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S.W.O.T
Analysis
Positioning
and
Differentiation
Company
mission,
objectives,
resources
Develop product market
Screening criteria
Competitor
analysis
Trends in external
environment:
Technological,
Economic,
Political & Legal
Cultural & Social
Organizational Levels
The Corporate Level is the
highest level in any organization.
The Business Level consists of units within the
overall organization that are generally managed
as self-contained businesses.
The Functional Level includes all the
various functional areas within a business unit.
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I. Organizational Strategic Planning

Higher organizational level strategic
plans provide direction for strategic
plans at lower levels.

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Lower-level plans are developed
to execute higher-level plans.
Competitive Advantage
• Competitive advantage: the firm has a marketing
mix that the target market sees as better than a
competitor's mix
– A better marketing mix offers target customers
better customer value
– Note: customers who are not in the target market
may not see the marketing mix as offering better
value
• Requires that the firm:
– understand current competitors' offerings
– anticipate competitors' likely plans
– monitor effects of changes in competition
– REALLY understand the target customers' needs
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Shout and Crème Saver ads
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STRATEGY
How to cope with a dynamic environment, capitalizing on opportunities and handling threat … How to adopt
an integrated system orientation … How to be a market driven organization = STRATEGIC PLANNING.
Company-Wide Level
Mission Statement
(Marketing Concept Orientation)
Objectives and Goals
Grand Strategy
Impact of
Competition
and other
Environmental
Items
Marketing Strategy and Tactics
Target Market
(Segments, Position)
Marketing Mix
P
P
P
Product
Place
P
C
Offering to the Market
--------Feedback of Results---------
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Price
Promotion
Types of Strategic Plans (Exhibit 3-1; p.49)
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Organizational Level
Type of Strategic Plan
Key Strategic Decisions
Corporate
Corporate strategic
plan
Corporate vision
Objectives & resource
allocation
Growth strategies
Business
Business strategic
plan
Market scope
Competitive advantage
Marketing
Marketing strategic
plan
Target market
Marketing mix
Product marketing
plan
Specific target market
Specific marketing mix
Execution action plan
Irwin/McGraw-Hill & Dr. Chen
Marketing Strategy Planning Process
• Narrowing down from broad market opportunities that a firm
might pursue to a specific strategy
– Marketing strategy specifies a specific target market and a
specific marketing mix
– Not just “some” strategy, but one that will offer target
customers superior value
• Segmentation helps pinpoint a specific target market
• Differentiation helps pinpoint a marketing mix that is different
from and better than what is available from a competitor
• Screening criteria make it clear why you select a specific
strategy (and why others are “screened out”)
• S.W.O.T. analysis identifies and lists a firm’s strengths and
weaknesses and its opportunities and threats
– S.W.O.T helps identify relevant screening criteria (what is
needed to get a competitive advantage)
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A Marketing Strategy
C
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Marketing Strategy
 Marketing
strategy can be defined as the
firm’s identification of desirable market
segments and the development of
appropriate marketing mixes to appeal to
these segments.
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A Marketing Strategy – showing the 4 P’s of a
Marketing Mix
Product
Place
C
Price
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Promotion
Overview of Marketing Strategy Planning Process
Narrowing down to focused strategy with quantitative and qualitative screening criteria
Customers
Needs and other
Segmenting
Dimensions
Company
Objectives
&
Resources
S.
W.
O.
T.
Segmentation &
Targeting
Segmentation &
Positioning
Current
&
Prospective
External Market Environment
Technologies Political and Legal Cultural and Social Economic
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Place
C
Competitors
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Product
Price
Promotion
Japanese McDonalds photo
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Narrowing Down to Target Markets
Select
target
marketing
approach
Segmenting
into possible
target markets
Narrowing down to
specific product-market
All
customer
needs
Some
generic
market
One
broadproduct
market
Homogenous
(narrow)
productmarkets
Single
target
marketing
approach
Multiple
target
marketing
approach
Combined
target
marketing
approach
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The Strategic Role of Brand Loyalty
Generating
Market Share
Developing a Strong
Customer Base
Customer Equity
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The Learning Process
Drive
Cues
Reinforcement
Response
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The Strategic Planning Process
Exhibit 3-2
Examine
current
situation
General Strategic Planning
Identify
potential
threats &
opportunities
See also Appendix A (p. 501)
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Set
objectives
Develop
strategies
Execute
IT Planning: Basic four-stage model
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Chen, The Trends of the Information
Systems Technology
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& Dr. Chen
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The Role of Marketing

1. Strategic Marketing:

Marketing activities that affect corporate,
business, and marketing strategic plans.
See also Exhibit 3-3 (p.52)
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The Role of Marketing (Activities)
Marketers orient everyone in the organization
toward markets and customers.
Marketers analyze the current situation,
identify trends in the marketing environment,
and assess the potential impact of these trends.
Marketers development corporate, business,
and marketing strategic plans.
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The Role of Marketing (cont.)

2. Marketing
Management:


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Relates to specific
product marketing
strategies.
Develop and execute
product marketing
plans
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
3. Networks:

Comprise strategic
alliances among
suppliers, distributors,
and the marketing firm.
Marketing Strategy and the Internet
 After
the failure of many dot com companies
Rewrite the rules of business
 Lessons firms should learn

 Three
basics of business success
Customers
 Capabilities
 Competitive advantages

 Future
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impact of the Internet
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Three Ways to Develop Market-Oriented Strategies
• Single Target Market Approach
– select one homogeneous segment as the target
• Multiple Target Market Approach
– select two or more target segments
– develop a different marketing mix for each
segment
• Combined Target Market Approach
– combine submarkets into a single target market
– develop one marketing mix for the combined
target
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© 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Basic Marketing
II. Corporate Strategy Decisions
Corporate Vision
 Corporate Objectives & Resource Allocation
 Corporate Growth Strategies
 Business-unit Composition

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Corporate Vision

Corporate Vision:

The basic values of an
organization.

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The vision specifies what
the organization stand for,
where it plans to go, and
how it plans to get there.
What Comprises Corporate Vision?
Markets
 Products and services
 Geographic domain
 Core competencies
 Organizational objectives
 Organizational philosophy
 Organizational self-concept
 Desired public image

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Exhibit 3-4 (p.54)
Core Purpose: A Company’s Reason for Being
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
3M: To solve problems innovatively.

Hewlett-Packard: To make technical contributions for the
advancement and welfare of humanity.

Mary Kay Cosmetics: To give unlimited opportunity to women.

Merck: To preserve and improve human life.

Sony: To experience the joy of advancing and applying technology
for the benefit of the public.

Wal-Mart: To give ordinary folks the chance to buy the same things
as rich people.
Irwin/McGraw-Hill & Dr. Chen
Exhibit 3-5 (p.54)
Core Purpose

Core Competency:

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A bundle of skills that are possessed by
individuals across the organization.
Irwin/McGraw-Hill & Dr. Chen
Questions Leading to an Effective Corporate Vision
1.
2.
3.
4.
5.
6.
7.
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Which customers will you be serving
in the future?
Through which channels will you
reach customers in the future?
Who will be your competitors in the
future?
Where will your margins come from
in the future?
In what end-product markets will
you participate in the future?
What will be the basis for your
competitive advantage in the future?
What skills or capabilities will make
you unique in the future?
Irwin/McGraw-Hill & Dr. Chen
Exhibit 3-6 (p.55)
Corporate Objectives and Resource Allocation
 Corporate
objectives specify the
achievement of desired levels of
performance during particular time
periods.
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Corporate Objectives and Resource Allocation
Corporate objectives and
resource allocation affect
marketers in 2 basic ways:
2) Providing guidance
for the development
and Implementation of
marketing strategies.
1) In setting the
objectives for different
organizational levels.
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New or Existing Customers
 Which
one is more important
Growth and new-customer generation, or
 Retain existing customer

Two important capabilities of successful
market-oriented firms

Market
sensing capability
Customer-linking capability
By George Day, Wharton School of Business
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Corporate Growth Strategies
(Four Basic Types of Opportunities)
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Present
New
Present
Market
Penetration
Product
Expansion
New
Markets
Products
Market
Expansion
Diversification
Irwin/McGraw-Hill & Dr. Chen
Examples of Different Types of Opportunities
• Market Penetration
– Arm & Hammer promotes new uses of its baking soda
• Market Development
– Marriott Hotels target families for weekend "getaways" to rent rooms filled by business travelers during
the week
• Product Development
– Microsoft develops a new version of its Windows
operating system to appeal to the people who bought an
earlier version but now want more features
• Diversification
– RJR, the cigarette producer, adds baked goods to its
product line to appeal to new customers
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Business-Unit Composition

Strategic Business Unit
(SBU):

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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 or related
needs, and the unit’s
management is responsible
for all (or most) of the basic
business functions”
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Business-Unit Composition

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Companies often organize around
competency-based SBUs to
establish Sustained Competitive
Advantage.
Irwin/McGraw-Hill & Dr. Chen
III. Business Strategy Decisions

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The basic objective of a business strategy is
to determine how the business unit will
compete successfully.
Irwin/McGraw-Hill & Dr. Chen
Business Strategy Decisions

Dimensions of
Strategy:

Market scope.
 How broadly the
business views its
target market.

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Competitive
advantage.
Irwin/McGraw-Hill & Dr. Chen

Competitive
Advantage:

The way a business
tries to get consumers
to purchase its
products over those
offered by
competitors.
General Business Strategies
Market Scope
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Low price
Differentiation
Competitive Advantage
Focused
Irwin/McGraw-Hill & Dr. Chen
• Easyjet
Broad
• Southwest
• Jet Blue
• Conair
• Alaskan Airlines
• Midwest
• American
Global carriers
• Delta
• United Jet Blue
The Rule of Three

The Rule of Three:

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Naturally occurring
competitive forces will
create a consistent
structure in many
mature markets.
Irwin/McGraw-Hill & Dr. Chen

Three major players often
compete by offering a wide
range of related products
and services and serve
most major market
segments.
IV. Marketing Strategy Decisions
A Marketing
Strategy Addresses:
• Selection of a
target market.
• Development of a
marketing mix.
Functional strategies
are at the
business-unit level.
Operating strategies
are at the product level.
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Business & Product Marketing Strategies
Decision Area
Business Marketing Strategy
Product Marketing Strategy
Target market
Segmented or mass approach
Specific definition of target market
Product
Number of different products
Specific features of each product
Price
General competitive price level
Specific price
Distribution
General distribution policy
Specific distributions
Marketing
communications
General emphasis on marketing
communications tools
Specific marketing
communications program
4P’s= Product + Price + Promotion + Place
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Exhibit 3-11, p.63
Alternative Views of Strategy
The implicit Strategy Model of
the Past Decade
• One ideal competitive position in the
industry
• Unique competitive position for the
company
• Benchmarking of all activities and
achieving best practice
• Activities tailored to strategy
• Aggressive outsourcing and partnering
to gain efficiencies
• Advantages rest on a few success
factors, critical resources, core
competencies
• Flexibility and rapid responses to all
competitive and market changes
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Sustainable Competitive
Advantage
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• Clear trade-offs and choices vis-à-vis
competitors
• Competitive advantage arises from fit
across activities
• Sustainability comes from the activity
system, not the parts
• Operational effectiveness a given
International Marketing Strategies

Entry Strategy:


The Basic Options:



3-50
The approach used to
market products in an
international market.
Exporting
Joint Ventures
Direct Investment
Irwin/McGraw-Hill & Dr. Chen

International
Strategic
Orientation:

Selection of a
(international)
strategic orientation.
International Marketing Strategies
Standardized Marketing Strategy:
The same product, price, distribution, & promotion
programs in all international markets.
Customized Marketing Strategy:
A different marketing mix for each
target market country.
Global strategy vs. Multinational strategy
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Effective Global Branding
 Four
common ideas about effective global
branding:
Stimulate the sharing of insights and best practices
across countries
 Support a common global brand-planning process
 Assign managerial responsibility for brands in order to
create cross-country synergies and to fight local bias
 Execute brilliant brand-building strategies

A study of 35 countries in Japan, Europe, and the US
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“… In turbulent times, an enterprise has to be
managed both to withstand sudden blows and to
avail itself of sudden unexpected opportunities.
This means that in turbulent times the
fundamentals have to be managed, and managed
well.”
Source: P. Drucker, Managing in Turbulent Times, 1980
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Environmental Drivers
Globalization
Environmental
Drivers
Time
compression
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Technology
Integration
Framework for Global Competition:
Alignment of Global Vision with IT using Global Drivers
Globalization
Global Vision
and Strategy
Global
Drivers
Network
Organization
Information
Technology
• Data
• Application
• Infrastructure
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V. Executing Strategic Plans with Teamwork
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1.
Cross-Functional Teamwork
2.
Marketing Teamwork
3.
Co-Marketing Alliances
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Business Function Orientations
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Function
Basic Orientation
Marketing
Production
Finance
Accounting
Purchasing
R&D
Engineering
To attract and retain customers
To produce products at lowest cost
To keep within budgets
To standardize financial reports
To purchase products at lowest cost
To develop newest technologies
To design product specifications
Irwin/McGraw-Hill & Dr. Chen
Management vs. Leader

Management






Planning
Budgeting
Organizing
Staffing
Controlling
Problem-solving

Leadership






Establishing direction
Aligning people
Motivating
Inspiring
Empowering
Problem-preventing
“Soft” Interpersonal Skills
•Effective communication •Working with conflict
•Deep listening
•Relationship building
•Facilitating
•Understanding how to work
•Negotiating
effectively in teams
•Knowing when to say NO!
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Chen, Information, Organization,
Control
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& Dr. and
Chen
TM -58
Business Drivers
Market
Technology
Regulation
Employees/
Work
Organization
Business Processes
Solution to Business Requirements
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Chen, Information, Organization
Control
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& Dr.and
Chen
A Systematic Approach
Vision
Strategy
Tactics
Business Plan
Competitive Options
Roles
and Relationships
Redefine/ Define
Telecommunications as the Delivery Vehicle
Success Factor Profile
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Business Systems Planning (BSP) Approach
(Top-Down)
Business strategies
Business processes
Data classes
Applications
Organizational databases
Information architecture
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IT Planning: Stages, Methods, and Outputs
Dr. Chen, IT Operations and Management Processes
TM -62
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