Business Marketing Planning:

Strategic Perspectives
STRATEGY IN BUSINESS MARKETING

 Strategy is defined as the “specification of overall policies and

programs for achieving company objectives, including
allocation of resources and organisation structure”.

 Attempt to match the advantages of a firm to its environment.

 Marketing strategy is a specification of the target markets with

a related marketing mix to satisfy each distinct market.
CHARACTERISTICS OF MARKETING STRATEGY:

• Serves to coordinate the marketing activities of the firm.

• Should respond to current and anticipated future market

conditions.

• Marketing strategy must solve customer’s problems.

• Should enable to beast the competition.

• To contribute to the company’s financial success.

 MARKET-DRIVEN ORGANIZATIONS

• Centered on customers
• Take an outside-in view of strategy
• Demonstrate an ability to sense market
trends ahead of their competitors
 HIERARCHY OF STRATEGIES
 Corporate Strategy What business we should be in:
 What businesses are we in? 1. Market Attractiveness.
 What are our core competencies? 2. Customer Orientation.
 How should we allocate 3. Overall value proposition.
resources?
 What businesses should we be
in?
 Business-Level Strategy SBU – Collection of business with
 How do we compete in a given a specific Mission.
industry? 3M – 40 SBUs one or more product
 How should we position ourselves market units.
against competitors?
 Functional Strategy
 How can we allocate resources to
most efficiently and effectively
support business-level strategies?
 Marketing manages organization-
customer connections.
MARKETING: PERHAPS BEST UNDERSTOOD AS:

1. Customer-product connection—linking the

customer to the focal offering. Connect them to
product design.
2. Customer-service delivery connection—design and
delivery actions involved in providing firm’s goods and
services. Retention - CRM
3. Customer-financial accountability connection--
Activities and processes that link customers to
financial outcomes.
Marketing’s Role in Managing Three Customer
Connections
Customer
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Marketing, Operations
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or ting
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etin h an ion
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Ma sea Sy
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Human Resources,
Operations Accounting
Product Service Delivery Financial Accountability

Accounting, Management
Human Resources
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Information Systems
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Top Management
 Collective Action Perspective of Strategy Formulation Process

This approach applies to

strategic decisions that:
• Cut across functional
areas
• Involve firm’s long-
term objectives
• Involve resource
allocation

1. Turf issues & thought

world views –
subcultures. Functional
Managers resist
strategic changes.
2. Negotiated Outcomes.
Differences in goals,
self-interests. 3 M –
Bullet points plans to
strategic stories.
 Cross-Functional Connections Explore Interrelationships
Between Marketing and Four Business Functions
Formulating Business Marketing Strategy:
Vital Cross-Functional Connections

Both Comstock, GE’s chief Mktg. officer Roles in Decision Making Process
- Agile Creative & Innovative. Responsible Approve
- Large Vs. Startups. Consult Implement inform
 Xerox allowed HP in Printers.

CUSTOMER INTERFACE CORE STRATEGY STRATEGIC RESOURCES VALUE NETWORK

Fulfillment & Support Business Mission Core Competencies Suppliers

Information & Insight Product/Market Scope Strategic Assets Partners –
Relationship Dynamics Basis for Differentiation Core Processes Cisco / GE
Pricing Structure Coalitions

EFFICIENT / UNIQUE / FIT / PROFIT BOOSTERS

Dell Brands Customer Data Channel Patents

Farming
Hunting – Product Margins Methodologies Process which are unique.
Services – Competition Moves FedEx – Delivery Fulfillment

SMB Focus of Dell

Major business concept components tied together

by three important “bridge” elements: customer
benefits, configuration, and company boundaries.
 Fulfillment Information
and support and insight

Customer Interface

Pricing Relationship
structure dynamics

Profit Potential
Gary Hamel
- Business Concept – efficient way of providing customer benefit (Deccan).
- Business Concept is unique – Lookeys
- Degree of Fit or Internal consistency among various business concepts – Dell’s Supply Chain.
- Profit books Customer Lock-in – MS / Intel
- Scale of Economics – Walmart.
 CORE STRATEGY—THREE ELEMENTS

• The business mission describes overall objective of

strategy, sets course of direction, and defines
performance criteria to measure progress.

• Product/market scope defines where firm

competes.

• Basis for differentiation captures essence of how

firm competes differently than its rivals do.

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 STRATEGIC RESOURCES

• Core competencies are set of skills, systems, and

technologies that creates uniquely high value for
customers.
• Strategic assets are more tangible requirements for
advantage. Strategic assets include brands, customer
data, distribution coverage, patents.
• Core processes are methodologies and routines that
companies use to transform competencies, assets, and
other inputs into value for customers.

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 The Balanced Scorecard - Translating Strategy Into Operational Terms
Financial Perspective Kaplan & Norton
Cause-and-Effect Relationships
Long-Term
Shareholder Defines the chain of logic by which
Productivit
Value Revenue
Growth
intangible assets will be
y
transformed to tangible value.
Growth
Sustain
Customer Perspective

Product/Service Attributes Relationship Image

Customer Value Proposition Network
Clarifies conditions that create
Price Quality Time Function Partnership Brand
value for the customer.

Internal Process Perspective Value-Creating Processes

Manage Defines processes that transform
Manage
Operations
Manage
Customers
Manage
Innovation
Regulatory
and Social
intangible assets into customer
Processes and financial outcomes.

Clustering Assets and Activities

Learning and Growth Perspective
Defines intangible assets to be
aligned and integrated to create
Human Information Organization
Capital + Capital + Capital value

Skills & Talent IT Culture Leadership

Teamwork.
 Aligning Internal Business Processes to the Customer Strategy

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

Innovation Sony
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

IBM
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 CISCO
Lock-in Provide Capacity for Create Awareness Develop and Enhance
Strategies Proprietary Product/ Influence Switching Costs of Proprietary Product
Service Existing and Potential Increase Breadth/
Reliable Access and Customers Applications of
Standard
Ease of Use
Market Share, Customer Acquisition, Customer Retention, Relative Emphasis vary of Strategy – Shaded
Customer Satisfaction, Customer Profitability Processes work together to reinforce the value proposition.

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.
 Strategy Map Template: Product Leadership

Long-Term Shareholder Value Productive

Financial
Perspective Productivity Strategy Revenue Growth Strategy
Strategy

Manage Total Life-Cycle

Product Costs
Revenues from
New Products
Gross Margins:
New Products
Revenue
Strategy
“Products and Services That Expand Existing Performance Boundaries into the Highly Desirable”
Customer
Perspective
High-Performance Products: Smaller,
Faster, Lighter, Cooler, More New Customer
First to market Segments
Accurate, More Storage, Brighter…

Operations Management Customer Management Innovation Regulatory and Social

Value is created
Rapid Educate Disciplined, Minimize
Flexible
Robust
Introduction Customers about High-Performance Product Liability Aligning the critical
of New Complex New Product And
Internal Processes
Products Products/Services Development Environmental processes to
Perspective Impact create and
Supply In-line
Capture Customer
Product deliver
Capacity Experimentation Development Contribute to
for Rapid
and Ideas for New
Time: From Idea Communities
customer value.
Improvement Products/Services
Growth to Market

“Find, Motivate, Grow, and Retain the Best Talent”

Intangible Assets
A Capable, Motivated and Technologically Enabled Workforce
Learning and
aligned to
Human Capital Information Capital Organization Capital
Growth Customer
Perspective Deep Creative, Versatile Virtual Product
Computer-Aided
Design and
Strategy.
Functional Employees: Cross- Prototyping and Manufacturing
Creativity,
Expertise functional Teamwork Simulation (CAD/CAM) Innovation

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 Strategies vs Tactics :
– Tactics are short-term, action-oriented moves that seek to achieve a fairly
narrow, immediately goal.

• Types of Marketing Strategies

– In large organisations, it makes sense to design strategies around strategic
business units (SBUs).

– Suitability, Validity, Consistency, Feasibility, Vulnerability, Potential rewards.

– Three Approaches to classify strategies:

Product-Programs

Markets Existing New

Existing Market Product

Penetration Development
Market
Development Diversification
New
 Market Potential

Sales Industry Sales

Primary Demand

Selective Demand Company Sales

Time
Primary Demand Strategy : Number of users and the usage rate per customer can be
increased by focusing on either the willingness or the ability of the customers to pay.

Selective demand strategies can be offensive (taking market share from competitors )
or defensive (maintaining current customers).
 Strategic Advantage
Uniqueness Low Cost Position

Industry-guide Differentiation Overall Cost Leadership

Strategic Target

Focus/Niche Marketing
Particular

Segment only.

• Overall Cost Leadership : Price Leader. Efficiency in operations. Economies of

scale.
• Differentiation : Customers must perceive significant differences among
competitors on a particular factor, and the factor must be meaningful to customers.
• Niche : Specialization . Focus Strategy based on Low cost or differentiation but
for select markets.
• The three frameworks are not independent.

• Same company could simultaneously be pursuing a strategy from each

framework.

• Selective demand Strategy (eg. Capture Customers from Competitors)

and does so by developing new services ( a product development
strategy) and differentiating these new services based on technical
leadership.
 Global Competitive Advantages

• Cost Advantages
- Lower operating costs
- Lower capital investment requirements
• Market Access Advantage
- Access to fast-growing RDE (Rapidly Developing
Economies) markets
• Capabilities Advantage
- Improve research and development
- Address unmet customer needs
- Tailor products to local RDE markets
 Determining Which Products to Outsource
And Which to Keep in-House: Selected Criteria
Maintain Home-Based Relocate to RDEs
Manufacturing

Labor Contract Low High

Growth of Demand in Home Market Low High

Size of RDE Market Low High

Degree of Standardization Low High

Intellectual Property Content High Low

Logistical Requirements High Low

Source: Adapted from Arindam Bhattacharya et al., “Capturing Global Advantage: How Leading Industrial Companies Are
Transforming Their Industries by Sourcing and Selling in China, India, and Other Low-Cost Countries,” The Boston Consulting
Group, Inc., April 2004, accessed at http://www.bcg.com, pp. 26-30.
 Spectrum of Involvement in International Marketing
• First step in developing effective international marketing
strategy: understand alternative ways that firms can
participate in international markets.
• Entry mode selected should consider firm’s level of
experience overseas and its evolutionary stage in its
international involvement.

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 Contractual Entry Modes

 Licensing
- Use Intellectual property in exchange for royalties or some other form of payment.
- Less Control on Licensee – Competition
- Time Limit

 Management Contracts.
- Total Solution
- Contract Manufacturers (China)
 Strategic Alliances: Stumbling Blocks

• Partners’ different organization structures may

create problems, making marketing and product
design decisions.
• Partners that combine best skill sets in one
country may be poorly equipped to support
partners in other countries.
• Quick technological change often guarantees that
most attractive partner today may not be most
attractive partner tomorrow.

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 The Value Chain: Upstream and Downstream Activities

Firms that compete in

international markets
must decide how to
spread their activities
among countries. ircr
a ft
r A
fo
hina sion.
Central to this – C
GE ne Div
i
i
decision: need to Eng

distinguish upstream
from downstream
activities.

Closely tied to buyer’s location.

Joint Venture
-Open / Better relationship
-Downside – ambitious plans. Caterpillar – few factories to produce.

-Multi-domestic strategy and global HP – Few Factories.

strategy. ODMs in IN - Dell
 Purest global strategy concentrates as many activities as possible in one
country, serves the world market from this home base, and closely
coordinates the activities that must be performed near the buyer.

Dell in
China
Global
Strategy Vs.
Lenovo
IDEAL
Types of
International Standardisation

Strategy Processes

Similar activities performed in

different countries concepted
together.

Caterpillar Vs. Komatsu

Each Activity is performed including

number of locations.
 Framework For Global Strategy
Build on foundation of Unique Competitive
Position

Emphasize Consistent Positioning Strategy

across International Markets

Global Establish Clear Home Base for Each Distinct

Strategy Business

Leverage Product-Line Home Bases at Different

Locations
Source: Adapted from
Michael E. Porter,
“Competing Across
Locations: Enhancing Disperse Activities to Extend Home Base
Competitive Advantage
through a Global Strategy,”
Advantages
in Michael E. Porter (ed.),
On Competition (Boston:
Harvard Business School Coordinate and Integrate Dispersed Activities
Press, 1998), pp. 309-350.
 Extending Firm’s Competitive Position

 Capture competitive advantages in

purchasing

 Securing or improving market access

Investment in China / India

 Selectively tapping competitive advantages

at other locations Honda – US Styling.
Germany Transfer to Japan.

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Global Competitors Achieve Unified Action By:

• Establishing a clear global strategy

• Developing consistent information and
accounting systems on a worldwide basis
• Encouraging personal relationships and
learning transfer among managers
• Carefully designing incentive systems to
ensure that rewards accrue to truly value-
driven actions

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• Pittfalls of Strategic Planning : Planning can actually inhibit
successful marketing performance.
– Poor Planning Motivation.
– Poor Planning Ability
– Unanticipated environment change.
• Conceptual Planning Tools :
1. Product Life Cycle (PLC) : Intuitive appeal & direct implications.

Rapid Competitive Saturation

Market Turbulence
Developmen Growth (Maturity)
t (Normal
Sales (Introductory pattern for
period for low learning Decline
high learning products)
products.)

Low Learning products

Time
• S shaped curve is not smooth and different for virtually every product.
• Determining current position in the Life cycle.
• PLCs shorter for Industrial products. Not a deterministic function.

2. Product Portfolios :
– BCG’s growth-share matrix

Growing
Rapidly Stars Question Marks
Market
Growth
Rate
Growing
slowly Dogs
Cash Cows

Large Percentage Small Percentage

Relative Market Share Field

 • Move away from narrow product mentality and towards considering the roles of
products within a larger strategic framework.
• Effective use of resources across products.

3. Business Screens : Portfolio developed by General Electric.

GE Portfolio Approach
Business Strengths
High Medium Low

High 4 A B C
Industry
Attractiveness F
Medium 3 D G
Low 2

E
1

• Upper Left-hand : Invest for long-term.

•Diagonal cells from top right to bottom mark products. Medium priority.
• Remaining cells in the lower right hand corner : Dogs not attractive and

few real strengths.

• Position of a product/Line/SBU can be quantified.

• Determine importance weight for each of the strategically important

factors on Industry Attractiveness Dimension.

• Weights should add to 1.0. Products are evaluated on each of the

weighted factors, using a five-point rating scale.

• Importance weights multiplied by evaluation scores.

• Results added together across the factors to determine an overall score

for the industry attractiveness dimension.

• Process repeated for company strengths dimension.

Industry Attractiveness Company Strengths

Overall Market Size Market Share

Market Growth Rate Share Growth
Historic Profit Margins Product Quality
Competitive Intensity Brand Reputation
Technological Intensity Distribution Network
Inflation Vulnerability Promotional Effectiveness
Energy Requirements Productive Capacity
Environment Impact Unit Costs
Social/ Political /Legal Materials

R&D Performance

Managerial Performance