CH 2

UNDERSTANDING MARKETING
MANAGEMENT
CHAPTER TWO
Developing Marketing Strategies & Plan
PPT Materials from Marketing Management 15ed. Philip Kotler Book

Questions to be answered
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?
Marketing and customer Value
• The value delivery process
• The value chain
• Core competencies
• The central role of strategic planning

The value delivery process
CHOOSING THE VALUE
PROVIDING THE VALUE
COMMUNICATING THE VALUE

The Value chain
• A tool for identifying ways to create more customer value
• Every firm is a synthesis of activities performed to design,

produce, market, deliver, and support its product
Core business processes
• Market-sensing process
• New-offering realization process
• Customer acquisition process
• Customer relationship management process
• Fulfillment management process
Core competencies
• A source of competitive advantage and makes a significant

contribution to perceived customer benefits
• Applications in a wide variety of markets
• Difficult for competitors to imitate
Maximizing Core competencies
• (Re)define the business concept
• (Re)shaping the business scope
• (Re)positioning the company’s brand identity

Central role of strategic planning
• Managing the businesses as an investment portfolio
• Assessing the market’s growth rate and the company’s position in

that market
• Establishing a strategy
Marketing plan
• The central instrument for directing and coordinating the marketing
effort
• Strategic
• Tactical
Strategic Planning, Implementation, and Control Processes
Corporate and division strategic planning
• Defining the corporate mission
• Establishing strategic business units
• Assigning resources to each strategic business unit
• Assessing growth opportunities

Defining the
corporate mission
• 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?
Product Orientation vs. Market Orientation
Company Product Market

Missouri-Pacific We run a railroad We are a people-
Railroad and-goods mover
Xerox We make copying We improve office

Class Exercise
equipment productivity
Standard Oil We sell gasoline We supply energy
Columbia Pictures We make movies We market

entertainment
Good Mission statements
• Focus on a limited number of goals

• Stress the company’s major policies and values
• Define the major competitive spheres within which the company will
operate
• Take a long-term view
• Are as short, memorable, and meaningful as possible
Establishing Strategic Business Units
• A single business or collection of related businesses
• Has its own set of competitors
• Has a leader responsible for strategic planning and profitability

Assigning Resources to Each SBU
• Management must decide how to allocate corporate resources to

each SBU
• Portfolio-planning models
• Shareholder/market value analysis

Assessing growth opportunities
Assessing growth opportunities
• Intensive Growth
• Integrative Growth
• Diversification Growth
• Downsizing and Divesting Older Businesses

Intensive growth
• Corporate management
should first review
opportunities for
improving existing
businesses
ESPN Growth Opportunities
INTEGRATIVE GROWTH
• A business can increase sales and profits through backward, forward,
or horizontal integration within its industry
Diversification growth
• Diversification growth makes sense when good opportunities exist
outside the present businesses
– The industry is highly attractive and the company has the right mix of
business strengths to succeed
Downsizing and Divesting Older Businesses
• Companies must carefully prune, harvest, or divest tired old

businesses to release needed resources for other uses and reduce
costs
Organization and Organizational Culture
• A company’s organization consists of its structures,

policies, and corporate culture, all of which can
become dysfunctional in a rapidly changing business
environment
Organization and Organizational Culture
• Corporate culture: “The shared experiences, stories, beliefs, and

norms that characterize an organization”
Marketing Innovation
• Innovation in marketing is critical
• Employees can challenge company orthodoxy and stimulate new

ideas
• Firms develop strategy by choosing their view of the future

• Scenario analysis
The Business Unit Strategic-planning Process
SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats
External environment
• Marketing opportunity: an area of buyer need and interest that a

company has a high probability of profitably satisfying.
• Environmental threat: challenge posed by an unfavorable trend or

development that, in the absence of defensive marketing action,
would lead to lower sales or profit
Market Opportunity Analysis (MOA)
• Can we articulate the benefits convincingly to a

defined target market(s)?
• Can we locate the target market(s) and reach
them with cost-effective media and trade
channels?
• Does our company possess or have access to the
critical capabilities and resources we need to
deliver the customer benefits?
Market Opportunity Analysis (MOA)
• Can we deliver the benefits better than any
actual or potential competitors?
• Will the financial rate of return meet or exceed

our required threshold for investment?
Opportunity And Threat Matrices
Internal environment
• Strengths
• Weaknesses
Goal formulation (MBO)
• Unit’s objectives must be arranged hierarchically
• Objectives should be quantitative
• Goals should be realistic
• Objectives must be consistent

Strategic formulation: Porter’s Generic Strategies
OVERALL COST LEADERSHIP
DIFFERENTIATION
FOCUS
Strategic formulation: Strategic alliances
• Categories of marketing alliances

• Product or service alliance
• Promotional alliance
• Logistics alliances
• Pricing collaborations
Program Formulation and Implementation
• McKinsey’s Elements of Success
Skills Strategy
Staff Structure
Style Systems
Shared values
Feedback and control
• Peter Drucker: it is more important to “do the right thing”—to be

effective—than “to do things right”—to be efficient
• The most successful companies, however, excel at both

Marketing Plan Contents
 Executive summary
 Table of contents
 Situation analysis
 Marketing strategy
 Marketing tactics
 Financial projections
 Implementation controls
Evaluating a Marketing Plan
 Is the plan simple/succinct?

 Is the plan complete?
 Is the plan specific?
 Is the plan realistic?
Other marketing plan contents
• Marketing research
• Specifications for internal and external relationships
• Action plans and schedules

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UNDERSTANDING MARKETING

Developing Marketing Strategies & Plan

PPT Materials from Marketing Management 15ed. Philip Kotler Book

1. How does marketing affect customer value?

• The value delivery process

• The value chain

• The central role of strategic planning

CHOOSING THE VALUE

PROVIDING THE VALUE

COMMUNICATING THE VALUE

• A tool for identifying ways to create more customer value

• Every firm is a synthesis of activities performed to design,

• A source of competitive advantage and makes a significant

• (Re)shaping the business scope

• (Re)positioning the company’s brand identity

• Assessing the market’s growth rate and the company’s position in

• Defining the corporate mission

• Establishing strategic business units

• Assigning resources to each strategic business unit

• Assessing growth opportunities

Company Product Market

Xerox We make copying We improve office

Standard Oil We sell gasoline We supply energy

Columbia Pictures We make movies We market

• Focus on a limited number of goals

• A single business or collection of related businesses

• Has its own set of competitors

• Has a leader responsible for strategic planning and profitability

• Management must decide how to allocate corporate resources to

• Shareholder/market value analysis

• Downsizing and Divesting Older Businesses

• Companies must carefully prune, harvest, or divest tired old

• A company’s organization consists of its structures,

• Corporate culture: “The shared experiences, stories, beliefs, and

• Innovation in marketing is critical

• Employees can challenge company orthodoxy and stimulate new

• Firms develop strategy by choosing their view of the future

• Marketing opportunity: an area of buyer need and interest that a

• Environmental threat: challenge posed by an unfavorable trend or

• Can we articulate the benefits convincingly to a

• Will the financial rate of return meet or exceed

• Unit’s objectives must be arranged hierarchically

• Objectives should be quantitative

• Goals should be realistic

• Objectives must be consistent

OVERALL COST LEADERSHIP

• Categories of marketing alliances

• Peter Drucker: it is more important to “do the right thing”—to be

• The most successful companies, however, excel at both

 Is the plan simple/succinct?

• Specifications for internal and external relationships

• Action plans and schedules

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