MARKETING MANAGEMENT13th edition

2 Developing

Marketing Strategies and Plans

Kotler Keller

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Strategic Planning

Strategic Planning is the Process of Developing and Maintaining a Strategic Fit

Between the Organization’s Goals and Capabilities and Its Changing Marketing

Opportunities.

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The Value Delivery Process

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Improving Value Delivery the Japanese Way

0 customerfeedback time

0 product improvement time

0 setup time

0 defects0

purchasing time

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Porter’s Value Chain

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Core Business Processes

Market sensing

Fulfillmentmanagement

Customer acquisition

New offering realization

Customer relationship management

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Characteristics of Core Competencies

• A source of competitive advantage

• Applications in a wide variety of markets

• Difficult to imitate

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What Is Strategy?

Strategy is creation of a unique and valuable position, involving a different set of activities.

Choosing to perform activities differently than rivals do.

Essence of strategy is choosing what not to do.

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What Is Strategy?

Serving few needs of many customersServing broad needs of few customersServing broad needs of many customers in a

narrow market

Trade-offs create need for choiceTrade-offs protect against imitators

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Levels of a Marketing Plan

• Strategic– Target marketing

decisions– Value proposition– Analysis of

marketing opportunities

• Tactical– Product features– Promotion– Merchandising– Pricing– Sales channels– Service

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The Strategic Planning, Implementation, and Control Processes

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Elements of a Strategy Statement

–OBJECTIVE: Ends

–SCOPE: Domain

–ADVANTAGE: Means

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Elements of a Strategy Statement: Objective

OBJECTIVEDefinition of ends that strategy is designed to achieve.

Mission:

Statements of ultimate purpose

Underlying motivation for being in business

Values:

Ethical values under which company operates

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Elements of a Strategy Statement: Scope

SCOPEDomain of business.

Boundaries beyond which company will not venture.

Customers: Who is / Who is not

Offerings: What is / What is not

Geography: Where is / Where is not

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Elements of a Strategy Statement: Advantage

ADVANTAGEMeans by which company will achieve stated objectives.

Value proposition: Why should customers buy from us?

Competitive advantage: What makes us distinctive?

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Strategy Statement

1) Detailed understanding of customer needs

2) Segmenting customers

3) Choosing segments to serve

4) Creating value for the targeted segment

Analyze and monitor competitors’ current strategies Predict how they might change

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Steps in Strategic Planning

Defining theCompanyMission

Defining theCompanyMission

Setting CompanyObjectivesand Goals

Setting CompanyObjectivesand Goals

Designingthe Business

Portfolio

Designingthe Business

Portfolio

Planning, marketing,and other functionalStrategies

Planning, marketing,and other functionalStrategies

Corporate LevelBusiness unit,

product,and market

level

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Corporate headquarters’ planning activities

Define the corporate missionEstablish SBUsAssign resources to each SBUAssess growth opportunities

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Good Mission Statements

Focus on limited number of goalsFocus on limited number of goals

Stress major policies and valuesStress major policies and values

Define major competitive spheresDefine major competitive spheres

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Market OrientedMarket Oriented

RealisticRealistic

Fit Market EnvironmentFit Market Environment

Distinctive CompetenciesDistinctive Competencies

MotivatingMotivating

Specific

Characteristics of a Good Mission

Statement:

A Mission Statement is a Statement of the Organization’s Purpose.

Defining the Company’s Business and Mission

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Major Competitive Spheres

Industry

Products

Marketsegment

Geographical

CompetenceVerticalchannels

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Product Orientation vs. Market Orientation

Company Product Market

Missouri-Pacific Railroad

We run a railroad We are a people-and-goods mover

Xerox We make copying equipment

We improve office productivity

Standard Oil We sell gasoline We supply energy

Columbia Pictures We make movies We entertain people

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Characteristics of SBUs

• It is a single business or collection of related businesses

• It has its own set of competitors

• It has a leader responsible for– Strategic planning– Profitability– Efficiency

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Analyzing Current SBU’sThe Boston Consulting Group’s Growth-Share Matrix

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Business Strength

High

Medium

Low

Strong Average Weak

A

B

C

D

Ind

ustr

y

Att

racti

ven

ess

Analyzing Current SBU’s:GE’s Strategic Business-Planning Grid

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Five Forces Determining Segment Structural Attractiveness

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Five Competitive Forces

Not all forces are always present or equally critical.

Strongest Force Profitability

Example: Starbucks (specialty coffee retailing)Which threat is most critical?Force is the threat not whether it actually occurs.

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Ansoff’s Product-Market Expansion Grid

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The Business Unit Strategic Planning Process

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SWOT Analysis

Strengths

Weaknesses

Opportunities

Threats

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Market Opportunity Analysis (MOA)• Can the benefits involved in the opportunity

be articulated convincingly to a defined target market?

• Can the target market be located and reached with cost-effective media and trade channels?

• Does the company possess or have access to the critical capabilities and resources needed to deliver the customer benefits?

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Market Opportunity Analysis (MOA)-2• Can the company deliver the benefits better

than any actual or potential competitors?

• Will the financial rate of return meet or exceed the company’s required threshold for investment?

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Executive Summary

Current Marketing Situation

Threats and Opportunity Analysis

Objectives and Issues

Marketing Strategy

Action Programs

Budgets

Controls

Contents of a Marketing Plan

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Evaluating a Marketing Plan

Is the plan simple? Is the plan specific? Is the plan realistic? Is the plan complete?

MARKETING MANAGEMENT13th edition

11 Dealing with Competition

Kotler Keller

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Industry Concept of Competition

• Number of sellers and degree of differentiation

• Entry, mobility, and exit barriers

• Cost structure

• Degree of vertical integration

• Degree of globalization

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Industry Concept of Competition

Pure MonopolyPure Monopoly

OligopolyOligopoly

Monopolistic CompetitionMonopolistic Competition

Pure CompetitionPure Competition

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Steps in Analyzing Competitors

Identifying the company’scompetitors

Assessing competitor’s objectives, strategies,strengths and weaknesses,and reaction patterns

Selecting whichcompetitors toattack or avoid

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Competitor Map

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Analyzing Competitors

Share of marketShare of market

Share of mindShare of mind

Share of heartShare of heart

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Overall CostLeadership

Overall CostLeadership

DifferentiationDifferentiation

FocusFocus

Middle ofthe RoadMiddle ofthe Road

Porter’s Generic Competitive Strategies

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Competitive Strategies: Value Disciplines

Operational Excellence

Customer Intimacy

Product Leadership

Companies Gain Leadership Positions by Delivering Superior Value to their Customers Through These Strategies:

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Value Disciplines: Operational Excellence

Operational ExcellenceProviding products at competitive pricesDelivering with minimal difficulty or inconvenience

Lead industry in PriceConvenience

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Value Disciplines: Customer Intimacy

Customer IntimacySegmenting and targeting precisely and tailoring offerings to match exactly what is demanded.Continuous tailoring and shaping of products to fit increasingly fine definition of customer.

Detailed customer knowledgeOperational flexibilityQuick responseLifetime value vs transaction

Extreme Loyalty

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Value Disciplines: Product Leadership

Product LeadershipOffering leading-edge productsEnhance customer’s use or application of the productThus, make rivals’ goods obsolete

Continuous stream of state-of-the-art products requires:CreativityQuick commercializationRelentlessly pursuing new solutions

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Choosing Value Disciplines vsChoosing Customers

Choice of business discipline and customer category is a single choice.

Customer Categories:Defines value by price, convenience, quality matrix (price dominant)Concerned with obtaining precisely what they wantNew, different, unusual products count most

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Hypothetical Market Structure

10%

Market

Nichers

20%

Market

Follower

30%

Market

Challenger

40%

Market

Leader

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Firm With the Largest Market Share

Firm With the Largest Market Share

Expand theTotal MarketExpand theTotal Market

Protecting Market ShareProtecting

Market Share

Expanding Market ShareExpanding

Market Share

Competitive Marketing Strategies

Runner-Up Firms that Fightto Increase Market Share

Runner-Up Firms that Fightto Increase Market Share

Attack theMarket Leader

Attack theMarket Leader

Avoid the Market Leader

Avoid the Market Leader

Acquire SmallerFirms

Acquire SmallerFirms

Attack OtherFirms

Attack OtherFirms

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Specific Attack Strategies

• Price discounts• Lower-priced goods• Value-priced goods• Prestige goods• Product proliferation

• Product innovation• Improved services• Distribution innovation• Manufacturing-cost

reduction• Intensive advertising

promotion

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Runner-Up Firms that Wantto Hold Their Share Without

Rocking the Boat

Runner-Up Firms that Wantto Hold Their Share Without

Rocking the Boat

Follow CloselyFollow Closely

Follow at aDistance

Follow at aDistance

Competitive Marketing Strategies

Firms that Serve Small Segments Not Pursued by Other Firms

Firms that Serve Small Segments Not Pursued by Other Firms

End-UserSpecialistEnd-UserSpecialist

Customer-SizeSpecialist

Customer-SizeSpecialist

ServiceSpecialistService

Specialist

Quality-Price

Specialist

Quality-Price

Specialist

GeographicMarket

Specialist

GeographicMarket

Specialist

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Market Follower Strategies

Counterfeiter

Cloner

Imitator

Adapter

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Market Nicher Strategies

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Executive Summary

Current Marketing Situation

Threats and Opportunity Analysis

Objectives and Issues

Marketing Strategy

Action Programs

Budgets

Controls

Contents of a Marketing Plan