Bus Mktg Planning

8/11/2019 Bus Mktg Planning

1/62

PowerPoint by:Ray A. DeCormier, Ph.D.Central Connecticut State University

Chapter 5:

Business Marketing

Planning: StrategicPerspectives


2/62

Chapter Topics

1. Marketings strategic role in corporate strategy

development

2. The multifunctional nature of business marketing

decision-making

3. Components of a business model that can be

converted into superior positions of advantage in the

business market

4. A valuable framework for detailing the processes and

systems that drive strategy success


3/62

New Strategies

New strategies come from new ideas

New ideas often come from new voices

To meet both domestic and foreign

competition, B2B firms are recognizing the vital

role of marketing in developing andimplementing successful strategies


4/62

Effective Strategies

Effective strategies share a:

A. Responsiveness to market needs

B. Ability to exploit the organizations specialcompetencies

C. Ability to make valid assumptions aboutenvironmental trends

D. Ability to take advantage of competitive behaviorE. Realistic basis for securing and sustaining a

competitive advantage


5/62

Market-driven organizations are:

Centered on customers

Take an outside-in view of strategy

Demonstrate an ability to sense

market trends ahead of theircompetitors

Market-Driven Organizations


6/62

Hierarchy of Strategies3 parts

Corporate Strategy

Business-Level Strategy

Functional Strategy


7/62

Hierarchy of Strategies

Part 1

Corporate Strategy

What businesses are we in? What are our core competencies?

How should we allocate resources?

What businesses shouldwe be in?


8/62

Corporate Strategy

At this level, the role of Marketing is to:

a) Assess market attractiveness andcompetitive effectiveness of the firm

b) Promote customer orientation tomanagement

c) Formulate the companys overall value

proposition that is marketed to thecustomer, management and employees


9/62

Marketing Strategy to Corporate

An important role for marketing

management is to make the firm

understand the Customer is Kingand advocate a set of values and

beliefs that put the customer first in

the firms decision-making process.


10/62

Hierarchy of StrategiesPart 2


How do we compete in a given industry?

How should we position ourselves againstcompetitors?


11/62


The focus is on how firms compete in agiven industry.

Competition is not between large corporations. Itis between individual business units (SBUs) thatcompete in specific markets. Each SBU needs todevelops its own business and marketing plansto answer:

How can we compete?

How and what is the most efficient way to getto the market?

What are our distinctive skills?


12/62

Hierarchy of Strategies Part 3

Functional Strategy

How can we allocate resources to

most efficiently and effectively

support business level strategies?

How can we use resources to meet

the firms objectives within

specific product market?


13/62

The interplay between the three levels ofstrategic formulation:

1. Cuts across functional areas

2. Involves issues related to long term

objectives

3. Involves allocating resources across SBUsand/or product markets

4. Includes decisions about the direction ofcorporate strategy, application oftechnology and choice of alliance partners


14/62

Strategic Decision1. Process involves active participation of several

functional groups with differing opinions about:

a. Appropriateness of certain strategiesb. Corporate goals

2. Altering strategic goals can cause frictionbetween them.

3. However, strategic decision-making representsa bargaining process between competingfunctional factions.


15/62

The Game

There are a number of players within an organizationthat want to change strategy to further their interests.

Certain managers feel their functional areas belong tothem (turf) and if anyone intrudes by changing thestrategy, they are stepping over their bounds.

Further, various groups possess different philosophies,beliefs and incentives resulting in different thought-worlds.

Thus, each subculture has a different agenda.

The bargaining process for arriving at a mutuallyagreeable strategic decision between these competingforces represent the game.


16/62

16

Collective Action Perspective of Strategy Formulation Process


17/62

Corporate Progress Requires a

Meeting of the Minds

Successful cross-functional connections

occur when turf wars, thought-worlds, and

other various interest groups come togetherand develop a workable strategy to deal

with the competitive world.

In order for this to occur, the marketing

group needs to be sensitive toandconnect withthese stakeholders.


18/62

Cross-Functional Connections Explore Interrelationships

between Marketing and Four Business Functions


19/62

B2B TOPPERFORMERS

Marketing managers who know how to get the

job done (i.e., facilitate negotiations across

functional areas) possess certain characteristics:

1. Responsive & timely

2. Perspective-taking ability to understand and

anticipate other functional managers priorities

3. Open, frequent and high quality

communication style

4. Their word is their bond and follow through

5.Able to develop a strong network

19


20/62

Successful marketing managers know

how to integrate functional areas.

They:

1. Understand their capabilities2. Capitalize on their strengths

3. Facilitate strategies that are responsive

to customer needs

Successful marketing managers assume

a central role in strategy

implementation.

21


21/62

Inter-Functional Involvement in Marketing Decision Making:

An Illustrative Responsibility Chart

Decision areas Marketing Manufacturing R&D Logistics Tech.Services SBUManager Corp. LevelManager

ProductDesign specifications

Performance character.

Reliability

PriceList/Discount

Tech. ServicesCustomer training

LogisticsInventory

Customer service level

Sales Force

Training

AdvertisingMessage development

ChannelSelection

21

Organizational Function

Decision role: R=Responsibility; A=Approval; C=Consult; M=Implement; I=Inform,

X=No RoleVocabulary


22/62

Roles in Strategic Decision Making

Participants in strategic decision making may assume thefollowing roles:

Responsible (R) - Manager takes initiative, analyzes

situation, develops alternatives, consults with others,

make initial recommendation, & facilitates approval ofdecision

Approve (A) - Manager accepts or rejects decisions

Consult (C) - Manager offers input

Implement (M) - Manager is accountable for

implementing decision

Inform (I) - Manager is informed of the decision


23/62

Marketing Strategy Center (MSC)

Representatives may assume more than

one role

Roles evolve during the marketing

strategy development process

Composition of the MSC is not strictly

prescribed by the organization chart MSC share certain parallels with the

buying center


24/62

One challenge for the business marketer is tominimize interdepartmental conflict.

Conflicts are motivated by personal and

organizational goals. Organizational objectives may be different for

different functional areas. (Example: Various

functional areas are rewarded differently.) Managing conflict, promoting cooperation,

developing and coordinating strategy is a

fundamental responsibility for marketing managers.


25/62

Strategy Success

For a strategy to succeed:

Each firm needs to have a businessconcept that separates them apart

from their competition.

There are 4 components:1. Customer Interface2. Core Strategy3. Strategic Resources4. Value Network

Refer to Figure 5.2


26/62

Major business concept components are tied together bythree important bridge elements: customer benefits,

configuration, and company boundaries.

CUSTOMER INTERFACE

Fulfillment & Support

Information & Insight

Relationship Dynamics

Pricing Structure

CORE STRATEGY

Business Mission

Product/Market Scope

Basis for Differentiation

STRATEGIC RESOURCES

Core Competencies

Strategic Assets

Core Processes

VALUE NETWORK

Suppliers

Partners

Coalitions

EFFICIENT / UNIQUE / FIT / PROFIT BOOSTERS

Fig. 5.2Components of a

Business Model: Bridges to Profits


27/62

Fulfillment

& Support

Information

& Insight

Relationship

Dynamics

Pricing

Structure

1. Customer Interface


28/62

1. CUSTOMERINTERFACE

1. Fulfillment & SupportThey are the channels afirm uses to reach and support customers.

2. Information & InsightInvolves the capture of

knowledge from customers and uses it to provide

enhanced value to customers.3. Relationship DynamicsInvolves the dyadic

nature of the buy/sell relationship in order to

understand customer expectations so it can exceed

them, increase the affiliation and lower

competitive influences.

4. Pricing StructureEmploys a pricing policy and

structure that enhances profits but not at the

expense of curtailing business.


29/62



CUSTOMER INTERFACE




Pricing Structure

CORE STRATEGY

Business Mission



STRATEGIC RESOURCES

Core Competencies

Strategic Assets

Core Processes

VALUE NETWORK

Suppliers

Partners

Coalitions





30/62

The business mission describes overall strategic

objective, sets course direction, and defines

performance criteria to measure progress.

Product/market scope defines wherefirm

competes.

Basis for differentiation captures essence of howfirm competes differently than its rivals do.

Core StrategyThree Elements


31/62

Differentiation of Products and Services

A business is differentiated when its value-

adding activities are perceived as superior and

profitable.

Value-added features need to motivate

customers to pay a higher premium than the

cost of superior performance.


32/62

Provide superior performance through:

Speed

Responsiveness to complex orders

Customized to solve customer problems

Provide superior quality by:

Reducing customer costs

Improving performance

Offer innovative product features that employnew technologies


33/62



CUSTOMER INTERFACE




Pricing Structure

CORE STRATEGY

Business Mission



STRATEGIC RESOURCES

Core Competencies

Strategic Assets

Core Processes

VALUE NETWORK

Suppliers

Partners

Coalitions





34/62

Competitive Advantage

Employing superior strategic resourcesand skillscan gain a competitiveadvantage.

Core competenciesare set of skills,

systems, and technologies that createuniquely high value for customers.

Strategic assetsare more tangiblerequirements for advantage; includesbrands, customer data, distribution

coverage, patents. Core processesare methodologies and

routines that companies use to transformcompetencies, assets, and other inputs into

value for customers.


35/62



CUSTOMER INTERFACE




Pricing Structure

CORE STRATEGY

Business Mission



STRATEGIC RESOURCES

Core Competencies

Strategic Assets

Core Processes

VALUE NETWORK

Suppliers

Partners

Coalitions





36/62

Value Network

A value network includes those who complement and

enrich the organization.

Do we have good relations with suppliers,

partners, vendors and other supporters?

Can we partner with others in such a way that we

can use their assets as if they were our own?

Example: Using UPS as shipping service


37/62

Competitive positioning is about beingdifferent and competing in a distinct wayby using a unique mix of customer values.

Michael Porter states there are sixfundamentals principles that a companyshould employ for establishing andmaintaining a distinct strategic position.


38/62

Michael Porter Asks: What is Strategic Positioning?


39/62

Michael Porter & Strategic Positioning

Right goal: Superior long term ROI instead of

performance goals (i.e., % share market) Create and deliver a good customer value proposition

Create a distinctive value chain by offering orperforming similar features but in a different way

Accept trade-offs: You cant be everything to everyone,therefore give up some things and reinforce others thatenhance the distinctions

Emphasize those element that facilitate the strategic fitand reinforce them

Continuity of direction means to define a distinctivevalue proposition and build strong customer relations bystaying consistent to that plan


40/62

Building the Strategic Plan

Companies need to do many things well.

However, underperformance is caused by a breakdown

between strategy and operations.

Kaplan & Norton contend that successful strategic

execution involves two rules:

a. Understand the Management cycle that links

strategy and operations, and

b. Know what tools to apply at each stage of the cycle.


41/62

This system allowsmanagement to plan,coordinate and monitorthe links betweenstrategy and operations.

The Management System


42/62

The Management System

Involves 5 stages:

1. Strategy development

2. Translate strategy into objectives

3. Design key processes4. Monitor performance

5. Adapt the strategy

2 Key tools for successful strategy implementation are:1. Balanced Scorecard

2. Strategy Map


43/62

Balanced Scorecard

Developed by Kaplan and Norton.

We know measures are central to any

strategy.

The Balanced Scorecard is a comprehensivesystem for converting a companys vision

and strategy into a tightly connected set ofperformance measures.


44/62

Balanced Scorecard

Examines the performance of a businessunit from four perspectives:

1. Financial2. Customer

3. Internal Business

4. Learning and growth

The Balanced Scorecard Translating Strateg Into


45/62

The Balanced Scorecard- Translating Strategy Into

Operational Terms

4. Learning and Growth Perspective

3. Internal Process Perspective

1. Financial Perspective

Productivity

Long-Term

Shareholder

Value Revenue

Growth

2. Customer Perspective

Product/Service Attributes Relationship Image

Price Quality Time Function Partnership Brand

ManageOperations

ManageCustomers

ManageInnovation

Manage

Regulatory

and Social

Processes

Human

Capital

Information

Capital

Organization

Capital+ +

Cause-and-Effect Relationships

Defines the chain of logic by which

intangible assets will be

transformed to tangible value.

Customer Value Proposition

Clarifies conditions that create

value for the customer.

Value-Creating Processes

Defines processes that transform

intangible assets into customer

and financial outcomes.

Clustering Assets and Activities

Defines intangible assets to be

aligned and integrated to create

value.


46/62

Cause & Effect Relationship defines the logicthat transforms intangible assets intotangible assets.

Consideration is give to:1. Productivity

2. Long-term shareholder value

3. Revenue growth


47/62

Balanced Scorecard seeks to match financialobjectives with business units growth andother life cycle stages.

Growth stage: Operation: This stage is where the company needs

to commit resources for new product or service.

Financial objectives:

Know sales growth rate by segment

Know % of revenue from new product, services andcustomers


48/62

Sustain Stage: Operation: This stage represents majority of

business where the strategy is to maintain andgrow slowly.

Financial objectives:

Focus on share of target customers and account

Know customer and product line profitability


49/62

Harvest Stage: Mature SBUs or products

Operations: Provide only enough investment tomaintain product equipment and capabilities.

Financial Objectives:

Goal is payback

Know customer and product-line profitability

The Balanced Scorecard Translating Strategy Into


50/62


Operational Terms




Productivity

Long-Term

Shareholder

Value Revenue

Growth




ManageOperations

ManageCustomers

ManageInnovation

Manage

Regulatory

and Social

Processes

Human

Capital

Information

Capital

Organization

Capital+ +















value.


51/62


52/62

2. CUSTOMERPERSPECTIVE: COREMEASURES

Market Share Proportion of business in a particular market by:

a. % share of market

b. Total number of customers

c. Dollars spent or unit volume sold

Customer Acquisition Tracks in absolute or relative terms rate at which SBU

attracts and/or wins new customers

Customer Retention Tracks in absolute or relative terms rate at which SBU

retains new customers

Customer Satisfaction Matches the satisfaction level of customers on specific

performance criteria such as quality, service, delivery,reliability, etc.

Customer Profitability Assesses the net profit on each customer, or a segment,

after deducting unique expenses allocated to support

that customer or segment52


53/62


This highlights the value-creating processes

that define the other processes that will

transform intangible assets into tangible

assets. It considers:

1. Operations management

2. Customer management

3. Innovation management

4. Regulatory & social processes management

3 Aligning Internal Business Processes


54/62

Key Value Propositions & Customer Strategy The Focus of Internal Business Processes

Operations Management Customer Relationship Management Innovation Management

Low Total Cost Strategy Highly Efficient Operating Ease of Customer Access Seek Process Innovations

Processes Superb Post-Sales Service Gain Scale Economies

Efficient, Timely Distribution

Product Leadership Flexible Manufacturing Capture Customer Ideas for Disciplined, High-Performance

Strategy Processes New Offering Product Development

Rapid Introduction of Educate Customers about Complex First-to-Market

New Products New Products/Services

Complete Customer Deliver Broad Product/ Create Customized Solutions Identify New Opportunities

Solutions Strategy Service Line for Customers to Serve Customers

Create Network of Suppliers Build Strong Customer Anticipate Future Customer

for Extended Product/ Relationships Needs

Service Capabilities Develop Customer Knowledge

Lock-in Provide Capacity for Create Awareness Develop and Enhance

Strategies Proprietary Product/ Influence Switching Costs of Proprietary ProductService Existing and Potential Increase Breadth/

Reliable Access and Customers Applications of

Standard

Ease of Use

Source: Adapted from Robert S. Kaplan and David P. Norton, Strategy Maps: Converting Intangible Assets into Tangible Outcomes(Boston: Harvard

Business School Publishing Corporation, 2004), pp. 322-344.

3. Aligning Internal Business Processes

The Balanced Scorecard - Translating Strategy Into


55/62


Operational Terms




Productivity

Long-Term

Shareholder

Value Revenue

Growth




ManageOperations

ManageCustomers

ManageInnovation

Manage

Regulatory

and Social

Processes

Human

Capital

Information

Capital

Organization

Capital+ +















value.


56/62

4. Learning & Growth

Intangible assets must be aligned to long termstrategy to achieve long term growth.

Intangible assets represent the capabilities of

the companys employees to satisfy customerneeds.

They include:

Human capital

Information capital Organization capital


57/62

4. Learning & Growth (continued)

To implement strategy, the organization needs:

1. Human Capital: Availability of employeeswith skills & talent

2. Information Capital: Availability ofinformation systems and infrastructure

3. Organization Capital: The culture,leadership, incentives and teamwork


58/62

Benefit of the Balanced Scorecard

The Balanced Scorecard helps align thefirms tangible and intangible assets withthe organizations strategic goals.

See next frame:


3 Aligning Internal Business Processes


59/62

Key Value Propositions & Customer Strategy The Focus of Internal Business Processes

Operations Management Customer Relationship Management Innovation Management

Low Total Cost Strategy Highly Efficient Operating Ease of Customer Access Seek Process Innovations

Processes Superb Post-Sales Service Gain Scale Economies

Efficient, Timely Distribution

Product Leadership Flexible Manufacturing Capture Customer Ideas for Disciplined, High-Performance

Strategy Processes New Offering Product Development

Rapid Introduction of Educate Customers about Complex First-to-Market

New Products New Products/Services

Complete Customer Deliver Broad Product/ Create Customized Solutions Identify New Opportunities

Solutions Strategy Service Line for Customers to Serve Customers

Create Network of Suppliers Build Strong Customer Anticipate Future Customer

for Extended Product/ Relationships Needs

Service Capabilities Develop Customer Knowledge

Lock-in Provide Capacity for Create Awareness Develop and Enhance

Strategies Proprietary Product/ Influence Switching Costs of Proprietary ProductService Existing and Potential Increase Breadth/

Reliable Access and Customers Applications of Standard

Ease of Use

Source: Adapted from Robert S. Kaplan and David P. Norton, Strategy Maps: Converting Intangible Assets into Tangible Outcomes(Boston: Harvard

Business School Publishing Corporation, 2004), pp. 322-344.



60/62

Strategy Map

The cause & effect components of the BalancedScorecard template is transformed into visualmodel called the strategy map.

The strategy map allows the company to describeand illustrate its:

Objectives, initiatives & targets

Measurements used to assess performance

Linkages which are the foundation of the strategicdirection


61/62

Strategy Map

The next frame illustrates a firms strategic map forpursuing a product leadership strategy.

To start the company emphasize: Productivity strategy &

Revenue Growth strategy

Refer to Strategy Map Template

Balanced ScorecardS M T l P d L d hi


62/62

Strategy Map Template: Product Leadership

Financial

Perspective

Customer

Perspective

Internal

Perspective

Learning and

Growth

Perspective

Products and Services That Expand Existing Performance Boundaries into the Highly Desirable

A Capable, Motivated and Technologically Enabled Workforce

Long-Term Shareholder Value

Manage Total Life-Cycle

Product Costs

Revenues from

New Products

Gross Margins:

New Products

Productivity Strategy Revenue Growth Strategy

High-Performance Products: Smaller,

Faster, Lighter, Cooler, More

Accurate, More Storage, BrighterFirst to market

New Customer

Segments

Operations Management Customer Management Innovation Regulatory and Social

Flexible

Robust

Processes

Rapid

Introduction

of New

Products

Supply

Capacity

for RapidGrowth

In-line

Experimentation

and

Improvement

Educate

Customers about

Complex New

Products/Services

Capture Customer

Ideas for NewProducts/Services

Disciplined,

High-Performance

Product

Development

Product

Development

Time: From Ideato Market

Minimize

Product Liability

And

Environmental

Impact

Contribute to

Communities

Find, Motivate, Grow, and Retain the Best Talent

Human Capital Information Capital Organization Capital

Deep

Functional

Expertise

Creative, Versatile

Employees: Cross-

functional Teamwork

Virtual Product

Prototyping and

Simulation

Computer-Aided

Design and

Manufacturing

(CAD/CAM)

Creativity,

Innovation

Bus Mktg Planning

Documents

Transcript of Bus Mktg Planning