Chương 3-Organizing for Advertising and Promotion The Role of Ad Agencies and Other Marketing Communication

Select target marketing approach Single target marketing approach Multiple target marketing approach Combined target marketing All customer needs Some generic market One broa[r]

Jason C H Chen, Ph.D.

Professor School of Business Administration

Gonzaga University

Chapter 3

Marketing’s Strategic Role

in the Organization

After studying this chapter,

you should be able to:

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

 Understand the different general business strategies and their relationship to

business marketing, product marketing, and international marketing strategies.

After studying this chapter,

you should be able to:

OPENING VIGNETTE

WWW.DISNEY COM

1 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

Customers, market, competition

Vision

guide

Strategy

create develop

Tactic

IT Planning: The Relationship Between Business, IS,

Direction for business

What is required

How it can be delivered

Needs and priorities

Infrastructure And services

IT

Impact and potential

Opportunities to be turned Into marketing strategies and plans

Develop product market Screening criteria

Focusing marketing

Strategy

S.W.O.T Analysis

Defining generic Targeting Positioning Company Trends in external

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

 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

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 Level

Mission 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

Impact of Competition and other Environmental Items

Place

Product

Price Promotion

C

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

Organizational Level Type of Strategic Plan Key Strategic Decisions

Organizational Level Type of Strategic Plan Key Strategic Decisions

Corporate Corporate strategic Corporate vision

plan Objectives & resource

allocation Growth strategies

Business Business strategic Market scope

plan Competitive advantage

Marketing Marketing strategic Target market

plan Marketing mix

Corporate Corporate strategic Corporate vision

plan Objectives & resource

allocation Growth strategies

Business Business strategic Market scope

plan Competitive advantage Marketing Marketing strategic Target market

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 a

Overview of Marketing Strategy Planning Process

Place

Product

Price Promotion

C

External Market Environment

Technologies Political and Legal Cultural and Social Economic

Narrowing down to focused strategy with quantitative and qualitative screening criteria

Customers

Needs and other

Segmenting Dimensions

Japanese McDonalds photo

Select target marketing approach

Single target marketing approach

Multiple target marketing approach

Combined target marketing approach

All customer

needs

Some generic market

One broad- product market

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

The Learning Process

Drive

Cues

Response

Reinforcement

The Strategic Planning Process

Exhibit 3-2 General Strategic Planning

Examine

current

situation

Identify potential threats &

opportunities

Set objectives

Develop strategies Execute

IT Planning: Basic four-stage model

The Role of Marketing

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

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

II Corporate Strategy Decisions

 Corporate Vision

 Corporate Objectives & Resource Allocation

 Corporate Growth Strategies

 Business-unit Composition

What Comprises Corporate Vision?

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.

 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.

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?

What will be the basis for your

Exhibit 3-6 (p.55)

Corporate Objectives and Resource Allocation

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

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

2) Providing guidance for the development and Implementation of marketing strategies.

New or Existing Customers

 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 capability

 Customer-linking capability

Corporate Growth Strategies

Market Penetration

Product Expansion

Diversification

Market Expansion

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

III Business Strategy Decisions

 The basic objective of a business strategy is

to determine how the business unit will compete successfully.

 The basic objective of a business strategy is

to determine how the business unit will compete successfully.

Business Strategy Decisions

 Competitive advantage.

 Competitive Advantage:

 The way a business tries to get consumers

to purchase its products over those offered by

competitors.

General Business Strategies

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

Functional strategies

are 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

• 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

• 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

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.

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.”

Environmental Drivers

Environmental

Drivers

Time compression

Globalization

Technology Integration

Framework for Global Competition:

Alignment of Global Vision with IT using Global Drivers

Global Vision and Strategy

Global Drivers

Information Technology

• Data

Globalization

Network Organization

V Executing Strategic Plans with Teamwork

Business Function Orientations

Function Basic Orientation

Marketing To attract and retain customers

Production To produce products at lowest cost

Accounting To standardize financial reports

Purchasing To purchase products at lowest cost

Engineering To design product specifications

A Systematic Approach

Vision Strategy Tactics Business Plan

Vision Strategy Tactics Business Plan

 Competitive Options

 Roles and Relationships

 Redefine/ Define

 Telecommunications as the Delivery Vehicle

 Success Factor Profile

Business Systems Planning (BSP) Approach

(Top-Down)

Organizational databases Data classes

Business processes Applications

Business strategies

IT Planning: Stages, Methods, and Outputs