Developing Marketing Strategies

and Plans
Facilitator: Prof. N. Bandyopadhyay
 Content Flow in this chapter
• Key Concepts

• Corporate level Planning

• Business Unit Level Planning

• Creation of a Marketing Plan

 Some Key Concepts
• Competitive Advantage

• Porter’s 5 Forces

• Core and Distinctive Competencies

• Value Chain

• Value Creation Cycle

 Competitive Advantage
• Competitive Advantage
– A firm’s profitability is greater than the average profitability
for all firms in its industry.
• Sustained Competitive Advantage
– A firm maintains above average and superior profitability
and profit growth for a number of years.
The Primary Objective of Strategy
is to achieve a
Sustained Competitive Advantage
which in turn results in
Superior Profit and Profit Growth.
 Porter’s 5 forces and
the Macroenvironment

Changes in the
forces in the macro-
environment can
directly impact:
• The Five Forces
• Industry
Attractiveness
 Core and Distinctive Competencies
• A competence becomes a core competence
when the well-performed activity is central to
a company’s competitiveness and profitability

• A distinctive competence is a competitively

significant activity that a company performs
better than its competitors
Strategy, Resources, Capabilities, and
Competencies
Distinctive Competencies and Role of
Resources and Capabilities
Resources
• Tangible (physical) and intangible (non-physical)
• Allow a company to create value for its customers
• Must have skills to take advantage of the resources
• Firm-specific and difficult-to-imitate resources
as well as valuable resources that create strong
demand for a company’s products lead to
distinctive competencies

Capabilities
• Coordinating resources & putting to productive use
• Skills reside in the organization’s rules, routines
and procedures
• Product of its organization, processes & controls
• Firm-specific capabilities to manage its resources
lead to distinctive competencies
 What are the distinctive
competences of….
• Toyota and Honda

• Intel

• Wal-Mart
 The Value Chain
A company is a chain of activities for transforming
inputs into outputs that customers value –
including the primary and support activities.
 List the value chain activities of
• Software-Computer industry

• Pulp and Paper Industry

• Home Appliances industry

• Soft drink industry

Competitive Advantage: The Value
Creation Cycle
 Strategic Planning

Corporate Level

Business Level

Functional Level
Corporate Level Strategic Planning

Defining the Corporate Mission

Establishing SBUs

Assigning resources to each SBU BCG Matrix / GE Matrix

Mkt Penetration
Intensive
Assessing Growth Opportunities: Growth
Mkt Development
Ansoff’s Grid Pdt Development
Integrative Forward
Downsizing and Divesting older Growth Integration
Businesses

Backward
Diversification Integration
Concentric
Horizontal
Conglomerate Integration
Horizontal
 Corporate Mission
• A Mission statement tells us what the company is now. It
concentrates on present; it defines the customers, critical
processes and it informs us about the desired level of
performance.

• Many people mistake vision statement for mission statement.

The Vision describes a future identity and the Mission
describes why it will be achieved. A Mission statement
defines the purpose or broader goal for being in existence or
in the business. It serves as an ongoing guide without time
frame. The mission can remain the same for decades if
crafted well. Vision is more specific in terms of objective and
future state. Vision is related to some form of achievement if
successful.
 Example: Mission Statement
Pfizer Inc.

Pfizer is a research-based, global pharmaceutical company.

We discover and develop innovative, value-added products
that improve the quality of life of people around the world and
help them enjoy longer, healthier, and more productive lives.
The company has three business segments: health care, animal
health and consumer health care. Our products are available in
more than 150 countries.
 eBay

“We help people trade anything on earth.

We will continue to enhance the online
trading experiences of all – collectors,
dealers, small businesses, unique item
seekers, bargain hunters, opportunity
sellers, and browsers.”

2-17
• Mission of TATA Chemicals

Serving society through science

 Establishing SBUs
• Strategic Business Unit or SBU is understood as a within the overall
corporate identity which is distinguishable from other business because it
serves a defined external market where management can conduct strategic
planning in relation to products and markets. When companies become really
large, they are best thought of as being composed of a number of businesses
(or SBUs).

• It has three characteristics:

 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 competitors
 It has a manager who is responsible for strategic planning & performance and
who controls most of the factors that affect profit.

• Eg. TATA CHEMICAL comprises four SBU - Chemical-SBU, Fertilizer- SBU, and
Food Additive-SBU. Each SBU is headed by a chief operating officer (COO) who
is responsible for the revenues and profitability of the particular business.
 Resource Allocation to SBU
• BCG Matrix

• GE Matrix
 Resource allocation to SBUs: BCG Matrix
The BCG matrix is a chart that had been created by Bruce Henderson for
the Boston Consulting Group in 1970 to help corporations with analyzing
their business units or product lines. This helps the company allocate
resources and is used as an analytical tool in brand marketing, product
management, strategic management, and portfolio management.
GE Matrix
 Planning New Businesses: Integrative Strategies
Types of Integration Strategies:

Forward Gain Control over

Integration Distributor

Backward Gain Control over

Integration Supplier
Integration
Strategies

Horizontal Gain Control over

Competitor
Integration
In forward integration, the company sets up subsidiaries that distribute or market products to customers or use the
products themselves. An example of this is a movie studio that also owns a chain of theaters.
Backward Vertical Integration: A form of vertical integration that involves taking control of suppliers
in order to reduce dependency.
A good example would be if a bakery business bought a wheat farm in order to reduce the risk associated
with the dependency on flour.
 Planning New Businesses: Diversification Strategies

Types of Diversification Strategies.

If Britannia is trying to diversify into wheat flour > Concentric Diversification
If Britannia is trying to diversify into Ice Cream industry > Horizontal Diversification

Concentric New / Related

Diversification Products or Services
For new customer base.

Horizontal New / Unrelated

Diversification Products or Services
Diversification For current customers
Strategies

Conglomerate New / Unrelated

Products or Services
Diversification For new customers

If Britannia is trying to enter into the

manufacturing of Bicycles > Conglomerate Diversification
 Downsizing older businesses

• Harvesting

• Divesting
 Business Unit strategic Planning
PEST Analysis
Analysis of Competitive Forces: Porter’s 5 forces
Analysis of Strategic Groups Porter’s generic Strategies / Alliances
Macro & Micro environmental factors Cost leadership Product or service
Promotion
External Differentiation Logistics
Pricing
Analysis (OT) Focus

Short & Long Term

Program formulation
Goal Strategy & Evaluation
Mission Formulation Formulation Implementation

Strategic Alliance
Internal(SW)
Analysis

Strength & Weakness of resources

& capabilities
Core & Distinctive competencies
 External (OT) Analysis
 A MARKETING OPPORTUNITY is an area of buyer need in which a company can perform profitably.
Opportunities can be classified according to their attractiveness and their success probability. The
company’s success probability depends on whether its business strengths not only match the key
success requirements for operating in the target market but also exceed those of its competitors.
Mere competence does not constitute a competitive advantage. The best-performing company will be
the one that can generate the greatest customer value and sustain it over time.

 An ENVIRONMENTAL THREAT is a challenge posed by an unfavorable trend or development that

would lead, in the absence of defensive marketing action, to deterioration in sales or profit. Threats
should be classified according to their seriousness and probability of occurrence. Figure (a)
illustrates the threat matrix facing the TV-lighting-equipment company. The threats in the
upper-left cell are major threats, since they can seriously hurt the company and have a
high probability of occurrence. To deal with these threats, the company needs to prepare
contingency plans that spell out what changes the company can make before or during the
threat’s occurrence. The threats in the lower-right cell are very minor and can be ignored.
The threats in the upper-right and lower-left cells do not require contingency planning but
need to be carefully monitored in the event that they grow more serious.
Fig. a : Opportunity & Threat Matrix faced by a TV Lighting Company
 Internal (SW) Analysis

• Look at the resource strength & Weaknesses.

 Goal (Objective) Formulation

• Hierarchical, SMART & Communicable

• Long Term & Short Term

 Strategy Formulation

• OCL Michael Porter’s Competitive Strategies

• Differentiation
• Focus (with cost leadership / with Differentiation)

• Alliance (for, Product/Service, Promotion, Logistics, Pricing)

Product/ Service Alliance: HUL + PepsiCo (India)>Bottle and market Lipton Ice Tea

Promotion Alliance: P&G + Bombay Dyeing> Promotion of Ariel Detergent powder.

Logistics Alliance: TCI + Mitsui Co. Ltd (Japan)>Toyota Kirloskar motors for their automotive plant

Pricing Collaboration: Airlines, Hotels & Car rental companies, joining hands to offer attractive rates.
 Developing a Marketing Strategy
• Target Market Selection
– Defining/understanding the target market by
• focusing on specific profitable customer groups/market
segments.
• recognizing changes occurring in the market.
• Creating the Marketing Mix
• Analyze customer needs, preferences,
and behavior
• Have the skills and resources required for product
design, pricing, distribution, and promotion
• Maintain strategic consistency and
flexibility in marketing mix decisions
 Creating the Marketing Plan
• Marketing Planning
– The process of assessing opportunities and
resources, determining objectives, defining
strategies, and establishing guidelines for
implementation and control of the marketing
program
– Planning time periods
• Short-range: one year or less
• Moderate-range: one to five years
• Long-range: more that five years
 What is a Marketing Plan?
• A marketing plan is a written document that
summarizes what he marketer has learned
about the marketplace and indicates how the
firm plans to reach its marketing objectives. It
contains tactical guidelines for the marketing
programs and financial projections over the
planning period.
The Marketing Planning Cycle
 Marketing Plan Contents
(refer to sample marketing plan: Kotler Pp 57)

 Executive summary
Situation analysis
 Marketing strategy
 Financial projections
 Implementation controls
• Using the Marketing Plan
– Putting effort and creative thought into the plan is
essential.
– Having a good marketing information system is critical.
– Exercising sound managerial judgment is necessary.
– Following the plan while maintaining adaptive flexibility in
adjusting to changing market environment conditions is
required.