Developing Marketing Strategies & Plans

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Marketing and Customer value

Marketing involves satisfying customers needs and wants

Task of any business is to deliver customer value at a profit

The economy is hypercompetitive and buyers are increasingly rational

The buyers have abundant choice

A company can win only by fine tuning the value delivery process

The company has to choose, provide and communicate superior value


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The Value Delivery Process

Traditional view of marketing : Firm makes something and then sells it

Marketing takes place in the second half of the process

The firm knows what to buy and market will buy enough units toproduce profits

This view holds good in such economies marked by product shortageswhere consumers are not fussy about quality, features and style


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The Value Delivery Process

Traditional view of business process will not work in economies where peopleface abundant choices

The mass market is actually splintering into numerous micro markets

Each has its own wants, perceptions, preferences and buying criteria

The Smart Competitor must design and deliver offerings for well defined targetmarkets

This belief is at the core of the new view of business processes

This view places marketing at the beginning of the planning process

Instead of emphasizing marketing and selling, these companies see themselvesas part of a value delivery process


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TRADITIONAL PHYSICAL PROCESS SEQUENCE

Make the product

1. Design product

2. Procure

3. Make

Sell the product

1. Price

2. Sell

3. Advertise/Promote

4. Distribute

5. Service


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VALUE CREATION AND DELIVERY SEQUENCE

Choose the value

1. Customer segmentation

2. Market selection / focus STRATEGIC MARKETING

3. Value Positioning

Provide the value

1. Product development

2. Service development

3. Pricing

4. Sourcing & Making

5. Distributing and Servicing TACTICAL MARKETING

Communicate the value

1. Sales force

2. Sales Promotion

3. Advertising


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The Value Chain

Michael Porter of Harvard has proposed the value chain as a tool for identifyingways to create more customer value

According to this model every firm is a synthesis of activities performed todesign, produce, market, deliver and support its product

Value chain identifies nine strategically relevant activities that create value andcost in a specific business

These value creating activities consist of five primary activities and four supportactivities


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The Value Chain : PRIMARY ACTIVITIES

1. Cover the sequence of bringing materials into the business (Inbound Logistics)

2. Converting them into products (Operations)

3. Shipping out final products (Outbound Logistics)

4. Marketing them to customers (marketing and sales)

5. Providing the service to customers (Service )


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The Value Chain

Task of a firm is to examine the cost and performance in each value and look forways to improve it

The firm should estimate its competitors costs and performances as benchmarksagainst which it can its own costs and performance

The firm can go further and study the best of class practices of the worldsbest companies

The firms success will greatly depend on how well each department performs itswork and coordinates various departmental activities to conduct the corebusiness processes


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The Core Business Processes

The market sensing process : All the activities involved in gathering marketintelligence, disseminating it within the organization, and acting on information

The new offering realization process: All the activities involved in researching,

developing, and launching new high quality offerings quickly and within budget

The customer acquisition process: All the activities involved in the defining targetmarkets and prospecting for new customers

The customer relationship management process: All the activities involved inbuilding deeper understanding, relationships and offerings to individual

customers The fulfillment management process: All the activities involved in receiving and

approving orders, shipping the goods o time and collecting payment

Strong companies develop superior capabilities in managing and linking their core

business processes


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The Core Competencies A company needs resources to carry out its core business processes viz. labour

power, machines, information and energy

Traditionally, companies owned and controlled most of the resources thatentered their businesses

This situation however is changing

Outsourcing of less critical resources if they can be obtained at better quality andlower cost

Key is to own and nurture the resources and competencies that make up theessence of business

Example: Nike does not manufacture its own shoes. Other Asian manufactures morecompetent. Nike nurtures its superiority in shoe design and merchandising


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The Core Competency has three characteristics

1. It is a source of competitive advantage. It makes a significant contribution toperceived customer benefits

2. It has applications in a wide variety of markets

3. It is difficult for competitors to imitate

Competitive advantage also accrues to companies that possesses distinctivecapabilities

Core competencies refer to those areas of special technical & productionexpertise

Distinctive capabilities tend to describe excellence in broader business processes


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Holistic marketing orientation can also provide insight into the process ofcapturing customer value

One conception is ,Integrating the value exploration, value creation and valuedelivery activities

Purpose : Building long term, mutually satisfying relationships and co-prosperityamong key stakeholders

Holistic marketers succeed by managing a superior value chain that delivers a

high level of product quality, service and speed

They achieve profitable growth by expanding customer share, building customerloyalty and capturing customer lifetime value


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THE HOLISTIC MARKETING FRAMEWORK IS DESIGNED TO ADDRESS THREE KEY

MANAGEMENT QUESTIONS

1. Value Exploration : How can a company identify new value opportunities?

2. Value creation: How can a company efficiently create more promising newvalue offerings?

3. Value delivery: How can a company use its capabilities and infrastructure to

deliver the new value offerings efficiently?


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VALUE EXPLORATION Value flows within and across the markets that are themselves dynamic and

competitive

Hence companies need a well defined strategy for value exploration

Developing a strategy requires an understanding of the relationships and

interactions among three spaces

1. Customers cognitive space : This reflects existing and latent needs and includesdimensions such as need for participation, stability, freedom and change

2. The companys competence space : This can be described in terms of breadth broad versus focused scope of business; and depth- physical versus knowledgebased capabilities

3. The collaborators resource space: This involves horizontal partnerships , wherecompanies choose partners based on their ability to exploit related marketopportunities and vertical partnerships


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VALUE CREATION

Value creation skills are required to exploit a value opportunity

Marketers need to

- Identify new customer benefits from the customers view

- Utilize core competencies from its business domain- Select and manage business partners from its collaborative network

To craft new customer benefits marketers must understand what the customerthinks about, wants, does and worries about

Marketers must also observe who customers admire, who they interact with andwho influences them

Business realignment may be necessary to maximize core competencies


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MAXIMIZING CORE COMPETENCIES

This involves three steps

1. Redefining the business concept (The big idea)

2. Reshaping the business scope (The line of business)

3. Repositioning the companys brand identity (How customers should see thecompany)

Example : Kodak - Sales from its traditional core business of film, camera,paper and photo development have sagged

Customers have abandoned film cameras for increasingly cheaper digitalequipment, products and services


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VALUE DELIVERY

This involves substantial investment in infrastructure and capabilities

The company must become proficient in CRM, internal resource managementand business partnership management

CRM allows company to discover who their customers are, how they behave andwhat they need and want

To respond effectively the company requires internal resource management to

integrate major business processes

Finally business partnership management allows the company to handle complexrelationships with its trading partners to source, process and deliver products


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PLANNING

1. Corporate planning

2. Division planning

3. Business planning

4. Product planning

IMPLEMENTING

1. Organizing

2. Implementing

CONTROLLING

1. Measuring results

2. Diagnosing results

3. Taking corrective action


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Divisions and business units prepare their plans by preparing statements ofmission, policy, strategy goals

This is the framework prepared by the headquarters within which divisions and

business operate

Some corporates give their business units lot of freedom to set their own salesand profit goals and strategies

Others set goals for their business units bus let them develop their ownstrategies


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All Corporate Headquarters undertake four planning activities

1. Defining the corporate mission

2. Establishing strategic business units

3. Assigning resources to each business SBU

4. Assessing growth opportunities

Developing Marketing Strategies & Plans

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