irwin/mcgraw-hill & dr. chen 3-1 jason c. h. chen, ph.d. professor school of business...

Irwin/McGraw-Hill & Dr. Chen3-1

Jason C. H. Chen, Ph.D.Professor

School of Business AdministrationGonzaga UniversitySpokane, WA 99223

[email protected]

Chapter 3Chapter 3 Marketing’s Strategic Role Marketing’s Strategic Role

in the Organizationin the Organization


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.

After studying this chapter, you should be able to:


OPENING VIGNETTE

WWW.DISNEY. COM1. 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?


Planning is everything ...

Products,Services

Customers,market,

competition

Vision

guide

Strategy

create

develop

Tactic

N


IT Planning: The Relationship Between Business, IS,and IT Strategies

Business Strategy• Business Decisions • Objectives and Direction• Change

Supportsbusiness

Direction for business

IS Strategy• Business Based• Demand Orientated• Application Focused

IT Strategy• Activity Based• Supply Orientated• Technology Focused

Where is the business going andwhy

What is required

How it can be delivered

Needs andpriorities

InfrastructureAnd services

ITImpact and potential


Opportunities to be turned Intomarketing strategies and plans

Develop product marketScreening criteria

Focusing marketingStrategy

S.W.O.TAnalysis

Defining genericmarkets and

product-markets

Targeting and

Segmentation

Positioningand

Differentiation

Company mission,

objectives,resources

Competitoranalysis

Trends in externalenvironment:

Technological,Economic,

Political & LegalCultural & Social

Evaluating Opportunities

Focusing Marketing Strategy and Evaluating Market Opportunities


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.


I. Organizational Strategic Planning

Lower-level plans are developed

to execute higher-level plans.

Higher organizational level strategic

plans provide direction for strategic plans at lower levels.


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


Shout and Crème Saver ads


STRATEGYSTRATEGY 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 LevelMission Statement

(Marketing Concept Orientation)

Objectives and Goals

Grand Strategy

Marketing Strategy and Tactics

Target Market(Segments, Position)

Marketing Mix

P P P P

Offering to the Market

--------Feedback of Results---------

Impact of Competitionand otherEnvironmentalItems

PlaceProduct

Price Promotion

C


Types of Strategic Plans (Exhibit 3-1; p.49)

Organizational Level Type of Strategic Plan Key Strategic Decisions

Corporate Corporate strategic Corporate visionplan Objectives & resource

allocationGrowth strategies

Business Business strategic Market scopeplan Competitive advantage

Marketing Marketing strategic Target marketplan Marketing mix

Product marketing Specific target marketplan Specific marketing mix

Execution action plan


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)


A Marketing Strategy

C


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.


A Marketing Strategy – showing the 4 P’s of aMarketing Mix

PlaceProduct

Price Promotion

C


Overview of Marketing Strategy Planning Process

PlaceProduct

Price Promotion

C

External Market EnvironmentTechnologies Political and Legal Cultural and Social Economic

Narrowing down to focused strategy with quantitative and qualitative screening criteria

CustomersNeeds and other

SegmentingDimensions

CompanyObjectives

&Resources

CompetitorsCurrent

&Prospective

Segmentation &Positioning

Segmentation &TargetingS.

W.O.T.


Japanese McDonalds photo


Select target

marketing approach

Single target

marketing approach

Multiple target

marketing approach

Combined target

marketing approach

Allcustomer

needs

Somegenericmarket

Onebroad-productmarket

Homogenous(narrow)product-markets

Segmenting into possible

target markets Narrowing down to

specific product-market

Narrowing Down to Target Markets


The Strategic Role of Brand Loyalty

Generating Market Share

Developing a Strong Customer Base

Customer Equity


The Learning Process

Drive

Cues

Response

Reinforcement


The Strategic Planning Process

Exhibit 3-2 General Strategic Planning

See also Appendix A (p. 501)

Examinecurrent

situation

Identifypotentialthreats &

opportunities

Set objectives

Developstrategies

Execute


IT Planning: Basic four-stage model

Dr. Chen, The Trends of the Information Systems Technology TM -24


The Role of Marketing

1. Strategic Marketing: Marketing activities that affect corporate,

business, and marketing strategic plans.

See also Exhibit 3-3 (p.52)


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.


The Role of Marketing (cont.)

2. Marketing Management: Relates to specific

product marketing strategies.

Develop and execute product marketing plans

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 impact of the Internet

Irwin/McGraw-Hill & Dr. Chen3-29 © 2002 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Basic Marketing

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


II. Corporate Strategy Decisions

Corporate Vision Corporate Objectives & Resource Allocation Corporate Growth Strategies Business-unit Composition


Corporate Vision

Corporate Vision: The basic values of an

organization.

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

Exhibit 3-4 (p.54)


Core Purpose: A Company’s Reason for Being

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.

Exhibit 3-5 (p.54)


Core Purpose

Core Competency: A bundle of skills that are possessed by

individuals across the organization.


Questions Leading to an Effective Corporate Vision

1. Which customers will you be serving in the future?

2. Through which channels will you reach customers in the future?

3. Who will be your competitors in the future?

4. Where will your margins come from in the future?

5. In what end-product markets will you participate in the future?

6. What will be the basis for your competitive advantage in the future?

7. What skills or capabilities will make you unique in the future?

Exhibit 3-6 (p.55)


Corporate Objectives and Resource Allocation

Corporate objectives specify the achievement of desired levels of performance during particular time periods.


Corporate Objectives and Resource Allocation

Corporate objectives and resource allocation affect marketers in 2 basic ways:

1) In setting the objectives for different organizational levels.

2) Providing guidance for the development

and Implementation of marketing strategies.


New or Existing Customers

Which one is more important Growth and new-customer generation, or Retain existing customer

By George Day, Wharton School of Business

Two important capabilities of successful market-oriented firms

Market sensing capabilityCustomer-linking capability


Corporate Growth Strategies

MarketPenetration

ProductExpansion

DiversificationMarketExpansion

ProductsPresent New

Mar

kets

New

Pre

sent

(Four Basic Types of Opportunities)


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 "get-

aways" 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


Business-Unit Composition

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 or related needs, and the unit’s management is responsible for all (or most) of the basic business functions”


Business-Unit Composition

Companies often organize around competency-based SBUs to establish Sustained Competitive Advantage.


III. Business Strategy Decisions

The basic objective of a business strategy is to determine how the business unit will compete successfully.


Business Strategy Decisions

Dimensions of Strategy: Market scope.

How broadly the business views its target market.

Competitive advantage.

Competitive Advantage: The way a business

tries to get consumers to purchase its products over those offered by competitors.


General Business Strategies

• Easyjet

• Jet Blue

• Conair• Alaskan Airlines• Midwest

• American• Delta• United Jet Blue

• Southwest

Market ScopeFocused Broad

Com

petit

ive

Adv

anta

ge

Diff

eren

tiatio

nLo

w p

rice

Global carriers


The Rule of Three

The Rule of Three: Naturally occurring

competitive forces will create a consistent structure in many mature markets.

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.

Operating strategies are at the product level.

Functional strategiesare at the

business-unit level.


Business & Product Marketing Strategies

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 General emphasis on marketing Specific marketing communications communications tools communications program

Decision Area Business Marketing Strategy Product Marketing Strategy

4P’s= Product + Price + Promotion + Place Exhibit 3-11, p.63


• One ideal competitive position in the industry

• Benchmarking of all activities and achieving best practice

• 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

• Unique competitive position for the company

• Activities tailored to strategy

• 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

The implicit Strategy Model of the Past Decade

Sustainable Competitive Advantage

Alternative Views of Strategy


International Marketing Strategies

Entry Strategy: The approach used

to market products in an international market.

The Basic Options: Exporting Joint Ventures Direct Investment

International Strategic Orientation: Selection of a

(international) strategic orientation.


International Marketing Strategies

Customized Marketing Strategy:A different marketing mix for each

target market country.

Standardized Marketing Strategy:The same product, price, distribution, & promotion

programs in all international markets.

Global strategy vs. Multinational strategy


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


“… 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


Environmental Drivers

EnvironmentalDrivers

Timecompression

Globalization

TechnologyIntegration


Framework for Global Competition:Alignment of Global Vision with IT using Global Drivers

Global Visionand Strategy

Global Drivers

Information Technology

• Data • Application• Infrastructure

Globalization

NetworkOrganization

N


V. Executing Strategic Plans with Teamwork

1. Cross-Functional Teamwork

2. Marketing Teamwork

3. Co-Marketing Alliances


Business Function Orientations

Function Basic Orientation

Marketing To attract and retain customersProduction To produce products at lowest costFinance To keep within budgetsAccounting To standardize financial reportsPurchasing To purchase products at lowest costR&D To develop newest technologiesEngineering To design product specifications


Management vs. Leader Management

Planning Budgeting Organizing Staffing Controlling Problem-solving

Leadership Establishing direction Aligning people Motivating Inspiring Empowering Problem-preventing

•Working with conflict•Relationship building•Understanding how to work effectively in teams•Knowing when to say NO!

•Effective communication•Deep listening•Facilitating•Negotiating

“Soft” Interpersonal Skills

TM -58Dr. Chen, Information, Organization, and Control


Business Drivers

Organization

Market Technology

Regulation Employees/Work

Business Processes

Solution to Business Requirements

Dr. Chen, Information, Organization and Control


A Systematic Approach

VisionStrategyTactics

Business Plan

Competitive OptionsRoles and RelationshipsRedefine/ DefineTelecommunications as the Delivery VehicleSuccess Factor Profile


Business Systems Planning (BSP) Approach(Top-Down)

Organizational databases

Information architecture

Data classes

Business processes Applications

Business strategies

IT Planning: Stages, Methods, and Outputs

NDr. Chen, IT Operations and Management Processes TM -62

irwin/mcgraw-hill & dr. chen 3-1 jason c. h. chen, ph.d. professor school of business...

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