Marketing and corporate strategies

Kinds of organizations

• Profit organizations. A privately owned organization that serves its customers in order to earn a profit

• Nonprofit organizations. A nongovernmental organization that serves its customers but does not have a profit as an organizational goal.

Levels in organizations

• Corporate level. Where top management directs overall strategy for the entire organization.

• Business Unit Level. Level at which business unit managers set direction for their products and markets.

• Functional level. Is where groups of specialists create value for the organization. (i.e. departments)

Three levels of strategy in an organizationThree levels of strategy in an organization

Research &development

Informationsystems

Finance Marketing

Manufacturing

Human resources

Business unit strategy• Mission• Business goals• Competencies

Business unit strategy• Mission• Business goals• Competencies

Corporate strategy• Vision• Corporate goals• Philosophy and culture

Corporate strategy• Vision• Corporate goals• Philosophy and culture

Functional strategy

Combination of Customer Relationships

TheOrganization’s

Success

Quality

CustomerRelationships

Efficiency

Innovation

Strategy at the corporate level

Corporate vision is . . . . Corporate vision is . . . .

a clear word picture of the organization’s future, often with an inspirational theme.

It sets the overall direction for the

organization, describing what it strives to be--

stretching the organization, but not beyond

reason.

a clear word picture of the organization’s future, often with an inspirational theme.

It sets the overall direction for the

organization, describing what it strives to be--

stretching the organization, but not beyond

reason.

A goal is . . . . A goal is . . . .a targeted level of performance set in advance of work. Therefore, corporate goals provide strategic performance targets that the entire organization must reach to pursue its vision.

a targeted level of performance set in advance of work. Therefore, corporate goals provide strategic performance targets that the entire organization must reach to pursue its vision.

Corporate goals may be articulated in terms of:

- profits - quality

- sales revenue - employee welfare

- market share

- social responsibility

- unit sales

Corporate Philosophy and Corporate Philosophy and CultureCulture

Corporate philosophy establishes the values and “rules of conduct” for running the organization.

Corporate culture refers to a system of shared attitudes and behaviors held by the employees that distinguish it from other organizations.

Strategy at the Business Unit Level

Business Unit Mission and Business Unit Mission and GoalGoal

The business unit mission is a statement that specifies the markets and product lines in which a business will compete. It communicates the scope of a business unit.

A business unit goal is a performance target the business unit seeks to reach in an effort to achieve its mission. Goals that are more specific, measurable and quantifiable are called objectives.

Boston Consulting Group Growth-Share Boston Consulting Group Growth-Share MatrixMatrix

Mar

ket

gro

wth

rat

e

10x High 1x Low 0.1xRelative market share

(share relative to largest competitor)

?

Cashcow

Star

Dog

Questionmark

B

C

D

A

20%

High

10%

Low

0%

Objectives for each SBU

• Build. Increase market share through cash injection. Make Starts out of Question marks.

• Hold. Maintain market share. Often used for Cash Cows which are already generating large amounts of cash

• Harvest. Increase short-term cash output of the SBU. Pump cash from Dogs or Cash Cows into Stars or Question Marks.

• Divest. Sell the SBU. Question Marks and Dogs are ideal candidates

Specifying the SBU’s Competencies: Specifying the SBU’s Competencies: Some Important DefinitionsSome Important Definitions

benchmarking is . . . . benchmarking is . . . .

quality is . . . quality is . . .

competitive advantage is . . .competitive advantage is . . .

Strategy at the Functional Level

Marketing and other functional departments create their own functional goals –really extensions of corporate and business unit goals.

The Strategic Marketing Process

• Where are we now?• Where do we want to go?• How do we allocate our resources to get

where we want to go?• How do we convert our plans into action?• How do our results compare with our plans,

and do deviations require new plans and actions?

Marketing Plan

• The strategic marketing process is usually formalized in a Marketing Plan, which is a road map for the marketing activities of an organization for a specified future period of time.

The strategic marketing processThe strategic marketing process

Marketing plan

Market-product focusand goal setting

Situation (SWOT)analysis

Marketingprogram

ImplementationPhase

ControlPhase

Results

Planning phase

Corrective A

ction

Market-product focusand goal setting

Situation (SWOT)analysis

Marketingprogram

Planning phase

StrengthsWeaknessesOpportunities

Threats

•Market Penetration / New Markets•Product Development•Diversification

Market-product focusand goal setting

Situation (SWOT)analysis

Marketingprogram

Planning phase

•Market Segmentation. Aggregating prospective buyers into groups, or segments that have: common needs and will respond similarly to a marketing action.

•Selecting the target markets.

•Finding points of difference for the product. (Competitive advantage)

Market-product focusand goal setting

Situation (SWOT)analysis

Marketingprogram

Planning phase

•Developing the marketing mix (4 Ps)•Developing the budget

Elements of the marketing mix that compose a cohesive Elements of the marketing mix that compose a cohesive marketing programmarketing program

PlaceOutletsChannelsCoverageTransportationStock level

PlaceOutletsChannelsCoverageTransportationStock level

PromotionAdvertisingPersonal sellingSales promotionPublicity

PromotionAdvertisingPersonal sellingSales promotionPublicity

PriceList priceDiscountsAllowancesCredit itemsPayment period

PriceList priceDiscountsAllowancesCredit itemsPayment period

ProductFeaturesBrand namePackagingServiceWarranty

ProductFeaturesBrand namePackagingServiceWarranty

Marketingmanager

Marketingmanager

Cohesive marketing mix

PromotionPlace

Price

PromotionPlace

Product

• The implementation phase involves executing the marketing plan and putting it into effect:– Obtaining resources (money and

personnel)– Designing the marketing organization– Developing schedules– Executing the marketing program (strategy

and tactics)

ImplementationPhase

Organization of a Typical Manufacturing Organization of a Typical Manufacturing Firm, Showing a Breakdown of the Firm, Showing a Breakdown of the

Marketing DepartmentMarketing Department

President

Vice President Research and Development Department

Vice PresidentManufacturingDepartment

Vice PresidentMarketingDepartment

Vice PresidentAccount andFinanceDepartment

Vice PresidentHumanResourcesDepartment

Manager Product Planning

Manager Marketing Research

Manager Sales

ManagerAdvertising &Sales Promotion

Sales Regionsand

Representatives

Strategy versus Tactics

• Strategy means by which a goal is to be achieved, characterized by a specific target market and a marketing program to reach it

• Tactics are detailed day-to-day operational decisions essential to the overall success of marketing strategies

• Comparing results with plans to identify deviations– Finding the planning gap

• Acting on deviations– Performance less than expected –

Corrective action– Performance greater than expected –

Uncover the reason

ControlPhase