Arab World Edition Kotler, Keller, Hassan, Baalbaki, and Shamma Marketing Management Arab World Edition Kotler, Keller, Hassan, Baalbaki, and Shamma Chapter 2 Developing Marketing Strategies and Plans

Chapter Questions How does marketing affect customer value? How is strategic planning carried out at different levels of the organization? What does a marketing plan include? Copyright © 2012 Pearson Education 2-2

Marketing and Customer Value Chapter Question 1: How does marketing affect customer value? Marketing and Customer Value The task of any business is to deliver customer value at a profit. In a competitive market, a company can win only by fine-tuning the value delivery process and choosing, providing, and communicating superior value. Copyright © 2012 Pearson Education 2-3

The Value Delivery Process Chapter Question 1: How does marketing affect customer value? The Value Delivery Process The value creation and delivery sequence can be divided into three phases. Choosing the value. Providing the value. Communicating the value. Copyright © 2012 Pearson Education 2-4

How does marketing affect customer value? Chapter Question 1: How does marketing affect customer value? The Value Chain The value chain is a tool for identifying ways to create more customer value. In the value chain model, every firm is a synthesis of primary and support activities. Copyright © 2012 Pearson Education 2-5

How does marketing affect customer value? Chapter Question 1: How does marketing affect customer value? The Value Chain Copyright © 2012 Pearson Education 2-6

How does marketing affect customer value? Chapter Question 1: How does marketing affect customer value? Core business processes Market-sensing process New-offering realization process Customer acquisition process Customer relationship management process Fulfillment management process Saudi Aramco manages business operations through cross-functional teams. Copyright © 2012 Pearson Education 2-7

How does marketing affect customer value? Chapter Question 1: How does marketing affect customer value? Core Competencies Three characteristics of core competencies: A source of competitive advantage. Applications in a wide variety of markets. Difficult for competitors to imitate. Competitive advantage Copyright © 2012 Pearson Education 2-8

Box 2.1: Becoming a Vigilant Organization Chapter Question 1: How does marketing affect customer value? Box 2.1: Becoming a Vigilant Organization Copyright © 2012 Pearson Education 2-9

The Holistic Marketing Concept Chapter Question 4: How has marketing management changed? The Holistic Marketing Concept Copyright © 2012 Pearson Education 1-10

A Holistic Marketing Orientation and Customer Value Chapter Question 1: How does marketing affect customer value? A Holistic Marketing Orientation and Customer Value Holistic marketing sees itself as integrating the value exploration, value creation, and value delivery activities with the purpose of building long-term, mutually satisfying relationships and prosperity among key stakeholders. The holistic marketing framework is designed to address three key management questions, as follows. 1. Value exploration. How can a company identify new value opportunities? 2. Value creation. How can a company efficiently create more promising new value offerings? 3. Value delivery. How can a company use its capabilities and infrastructure to deliver the new value offerings more efficiently? Copyright © 2012 Pearson Education 2-11

Fig 2.2: A Holistic Marketing Framework Chapter Question 1: How does marketing affect customer value? Fig 2.2: A Holistic Marketing Framework Copyright © 2012 Pearson Education 2-12

How does marketing affect customer value? Chapter Question 1: How does marketing affect customer value? Strategic Planning Copyright © 2012 Pearson Education 2-13

The Central Role of Strategic Planning Chapter Question 1: How does marketing affect customer value? The Central Role of Strategic Planning Fig 2.3: The Strategic Planning, Implementation, and Control Process Copyright © 2012 Pearson Education 2-14

Corporate and Division Strategic Planning Chapter Question 2: How is strategic planning done at different levels of the organization? Corporate and Division Strategic Planning All corporate headquarters undertake four planning activities: 1. Defining the corporate mission. 2. Establishing strategic business units (SBUs). 3. Assigning resources to each SBU. 4. Assessing growth opportunities. We’ll look at each process. Copyright © 2012 Pearson Education 2-15

Defining the Corporate Mission Chapter Question 2: How is strategic planning done at different levels of the organization? Defining the Corporate Mission Good mission statements: Focus on a limited number of goals Stress major policies and values Define major competitive spheres Take a long-term view Are short, memorable and meaningful Copyright © 2012 Pearson Education 2-16

Defining the Corporate Mission Chapter Question 2: How is strategic planning done at different levels of the organization? Defining the Corporate Mission Mission statements define the major competitive spheres in which the company will operate: Industry Market segment Products Geographic Competence Vertical channels Who we are? What we offer? Whom we serve? Copyright © 2012 Pearson Education 2-17

Example Mission Statement Chapter Question 2: How is strategic planning done at different levels of the organization? Example Mission Statement Mayo Clinic: To inspire hope and contribute to health and well-being by providing the best care to every patient through integrated clinical practice, education and research. (24) Sabic: Our mission is to responsibly provide quality products and services through innovation, learning and operational excellence while sustaining maximum value for our stakeholders. Copyright © 2012 Pearson Education 2-18

Vision vs. Mission Vision Statements Mission Statements Chapter Question 2: How is strategic planning done at different levels of the organization? Vision vs. Mission Mission Statements Vision Statements Communicates the organization’s reason for being, and how it aims to serve its key stakeholders Often integrates a summation of the firm’s values Mission statements tend to be longer than vision statements A future-oriented declaration of the organization’s purpose and aspirations. Addresses what a firm wants to become Vision statements tend to be relatively brief Copyright © 2012 Pearson Education 2-19

Business Vision Statement Chapter Question 2: How is strategic planning done at different levels of the organization? Business Vision Statement A statement that clearly defines the firm’s “reason” for being in business Should significantly stretch the resources and capabilities of the farm Should inspire people in the organization to achieve things they never thought possible Should unite people in the organization toward the pursuit of one common goal Copyright © 2012 Pearson Education 2-20

Business Vision Statement A guiding philosophy Chapter Question 2: How is strategic planning done at different levels of the organization? Business Vision Statement A guiding philosophy Consistent with organizational value Influenced by the strengths and weaknesses of the business Copyright © 2012 Pearson Education 2-21

Chapter Question 2: How is strategic planning done at different levels of the organization? Table 2.1: Product-Oriented versus Market-Oriented Definitions of a Business Copyright © 2012 Pearson Education 2-22

Establishing Strategic Business Units Chapter Question 2: How is strategic planning done at different levels of the organization? Establishing Strategic Business Units A single business or collection of related businesses that can be planned separately from the rest of the company, with its own set of competitors and a manager who is responsible for strategic planning and profit performance. Copyright © 2012 Pearson Education 2-23

Establishing Strategic Business Units Chapter Question 2: How is strategic planning done at different levels of the organization? Establishing Strategic Business Units An SBU has three characteristics, as follows. 1. It is a single business, or related businesses, that can be planned separately from the rest of the company. 2. It has its own set of competitors. 3. It has a manager responsible for strategic planning and profit performance. Copyright © 2012 Pearson Education 2-24

Assigning Resources to Each SBU Chapter Question 2: How is strategic planning done at different levels of the organization? Assigning Resources to Each SBU Boston Consulting Group’s Growth-Share Matrix can be used to make investment decisions. Defines four types of SBUs: 1. Stars: high-growth market, high-share product. 2. Cash cows: low-growth market, high-share product. 3. Question marks: low-share product, high-growth market. 4. Dogs: low-share product, low-growth market. Copyright © 2012 Pearson Education 2-25

Assessing Growth Opportunities Chapter Question 2: How is strategic planning done at different levels of the organization? Assessing Growth Opportunities Fig 2.5: Three Intensive Growth Strategies: Ansoff’s Product–Market Expansion Grid Copyright © 2012 Pearson Education 2-26

Assessing Growth Opportunities Chapter Question 2: How is strategic planning done at different levels of the organization? Assessing Growth Opportunities Fig 2.5: Three Intensive Growth Strategies: Ansoff’s Product–Market Expansion Grid Concentric Diversification – leveraging a company’s core technical know-how to diversify its current products into new markets Horizontal Diversification – the introduction of products that are unrelated to a company’s core products to existing markets Conglomerate Diversification – the purchasing of another company in order to diversify Copyright © 2012 Pearson Education 2-27

Business Unit Strategic Planning Chapter Question 3: What does a marketing plan include? Chapter Question 2: How is strategic planning done at different levels of the organization? Business Unit Strategic Planning Business unit strategic-planning involves the steps shown in Fig 2.6 Fig 2.6: The Business Unit Strategic-Planning Process Copyright © 2012 Pearson Education 2-28

Step 1: The Business Mission Chapter Question 2: How is strategic planning done at different levels of the organization? Step 1: The Business Mission Each business unit needs to define its specific mission within the broader company mission. Step 2: SWOT Analysis Strengths, Weaknesses, Opportunities, Threats - For monitoring the external and internal marketing environment Copyright © 2012 Pearson Education 2-29

SWOT Analysis Chapter Question 2: How is strategic planning done at different levels of the organization? SWOT Analysis Albert S. Humphrey in the 1960s Copyright © 2012 Pearson Education 2-30

Step 1: The Business Mission Chapter Question 2: How is strategic planning done at different levels of the organization? Step 1: The Business Mission Copyright © 2012 Pearson Education 2-31

Step 3: Goal Formulation Chapter Question 2: How is strategic planning done at different levels of the organization? Step 3: Goal Formulation Unit’s objectives must be hierarchical Objectives should be quantitative Goals should be realistic Objectives must be consistent Copyright © 2012 Pearson Education 2-32

Step 4: Strategic Formulation Chapter Question 2: How is strategic planning done at different levels of the organization? Step 4: Strategic Formulation Porter’s Generic Strategies Copyright © 2012 Pearson Education 2-33

(Step 4: Strategic Formulation) Chapter Question 2: How is strategic planning done at different levels of the organization? (Step 4: Strategic Formulation) Strategic Alliances There are four major categories of marketing alliances: Product or service alliances Promotional alliances Logistics alliances Pricing collaborations Copyright © 2012 Pearson Education 2-34

Step 5: Program Formulation and Implementation Chapter Question 2: How is strategic planning done at different levels of the organization? Step 5: Program Formulation and Implementation Depends on: Clear formulation of marketing programs Accurate cost planning Competent implementation Step 6: Feedback and Control The key to organizational health is willingness to examine the changing environment and adopt new goals and behaviors. Copyright © 2012 Pearson Education 2-35

Chapter Question 3: What does a marketing plan include? Marketing Plan A marketing plan is the central instrument for directing and coordinating the marketing effort. It operates at a strategic and tactical level. Copyright © 2012 Pearson Education 2-36

Levels of a Marketing Plan Chapter Question 3: What does a marketing plan include? Levels of a Marketing Plan Strategic Target marketing decisions Value proposition Analysis of marketing opportunities Tactical Product features Promotion Merchandising Pricing Sales channels Service Copyright © 2012 Pearson Education 2-37

Marketing Plan Contents Chapter Question 3: What does a marketing plan include? Marketing Plan Contents Executive summary Table of contents Situation analysis Marketing strategy Financial projections Implementation controls Copyright © 2012 Pearson Education 2-38

Evaluating a Marketing Plan Chapter Question 3: What does a marketing plan include? Evaluating a Marketing Plan Copyright © 2012 Pearson Education 2-39

Credits Slide 1 Corbis: Ali Haider / epa Slide 6 Alamy Images: Barry Iverson Slide 8 George S. Day and Paul J. H. Schoemaker, Peripheral Vision: Detecting the Weak Signals That Will Make or Break Your Company (Boston: Harvard Business School Press, 2006) Slide 10 P. Kotler, D. C. Jain, and S. Maesincee, “Formulating a Market Renewal Strategy,” in Marketing Moves (Part 1), Fig. 1-1 (Boston: Harvard Business School Press, 2002), p. 29. Copyright © 2002 by President and Fellows of Harvard College. All rights reserved Slide 15 Orbit Company website, www.orbit-iq.com; Mobily Saudi Arabia company website, www.mobily.com.sa; eBay company website, www.ebay.com Slide 20 Salem Alforaih Photography, photographersdirect.com Slide 21 Adapted and reprinted by permission, Harvard Business Review. From “Strategies for Diversification,” by Igor Ansoff, September–October 1957. Copyright © 1957 by the President and Fellows of Harvard College. All rights reserved Slide 23 Getty Images: Justin Sullivan