Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Developed by Cool Pictures and MultiMedia Presentations 1 Chapter Six Business Marketing Planning: Strategic Perspectives

Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Developed by Cool Pictures and MultiMedia Presentations 2 Centered on customers Take an outside-in view of strategy Demonstrate an ability to sense market trends ahead of their competitors Market-Driven Organizations

Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Developed by Cool Pictures and MultiMedia Presentations 3 Hierarchy of Strategies Corporate Strategy  What businesses are we in?  What are our core competencies?  How should we allocate resources?  What businesses should we be in? Business-Level Strategy  How do we compete in a given industry?  How should we position ourselves against competitors? Functional Strategy  How can we allocate resources to most efficiently and effectively support business-level strategies?  Marketing manages organization-customer connections.

Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Developed by Cool Pictures and MultiMedia Presentations 4 Marketing: Perhaps Best Understood as: 1.Customer-product connection—linking the customer to the focal offering. 2.Customer-service delivery connection—design and delivery actions involved in providing firm’s goods and services. 3.Customer-financial accountability connection-- Activities and processes that link customers to financial outcomes.

Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Developed by Cool Pictures and MultiMedia Presentations 5 Marketing’s Role in Managing Three Customer Connections Customer ProductService Delivery Financial Accountability Top Management Operations Human Resources, Accounting Accounting, Management Information Systems Marketing, Operations, Research and Development Marketing, Accounting, Management Information Systems Corporate Strategy Accounting, Finance Marketing, Operations Human Resources

Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Developed by Cool Pictures and MultiMedia Presentations 6 This approach applies to strategic decisions that: Cut across functional areas Involve firm’s long- term objectives Involve resource allocation Collective Action Perspective of Strategy Formulation Process

Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Developed by Cool Pictures and MultiMedia Presentations 7 Cross-Functional Connections Explore Interrelationships Between Marketing and Four Business Functions Formulating Business Marketing Strategy: Vital Cross-Functional Connections

Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Developed by Cool Pictures and MultiMedia Presentations 8 Major business concept components tied together by three important “bridge” elements: customer benefits, configuration, and company boundaries. CUSTOMER INTERFACE Fulfillment & Support Information & Insight Relationship Dynamics Pricing Structure CORE STRATEGY Business Mission Product/Market Scope Basis for Differentiation STRATEGIC RESOURCES Core Competencies Strategic Assets Core Processes VALUE NETWORK Suppliers Partners Coalitions EFFICIENT / UNIQUE / FIT / PROFIT BOOSTERS

Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Developed by Cool Pictures and MultiMedia Presentations 9 Customer Interface Fulfillment and support Information and insight Relationship dynamics Pricing structure

Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Developed by Cool Pictures and MultiMedia Presentations 10 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.

Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Developed by Cool Pictures and MultiMedia Presentations 11 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.

Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Developed by Cool Pictures and MultiMedia Presentations 12 The Balanced Scorecard - Translating Strategy Into Operational Terms Learning and Growth Perspective Internal Process Perspective Financial Perspective Productivity Long-Term Shareholder Value Revenue Growth Customer Perspective Product/Service AttributesRelationshipImage PriceQualityTimeFunctionPartnershipBrand Manage Operations Manage Customers Manage Innovation Manage Regulatory and Social Processes Human Capital Information Capital Organization Capital ++ Cause-and-Effect Relationships Defines the chain of logic by which intangible assets will be transformed to tangible value. Customer Value Proposition Clarifies conditions that create value for the customer. Value-Creating Processes Defines processes that transform intangible assets into customer and financial outcomes. Clustering Assets and Activities Defines intangible assets to be aligned and integrated to create value

Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Developed by Cool Pictures and MultiMedia Presentations 13 Aligning Internal Business Processes to the Customer Strategy Customer Strategy The Focus of Internal Business Processes Operations ManagementCustomer Relationship Management Innovation Management Low Total Cost StrategyHighly Efficient Operating Ease of Customer Access Seek Process Innovations Processes Superb Post-Sales Service Gain Scale Economies Efficient, Timely Distribution Product LeadershipFlexible 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 Complete CustomerDeliver 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 Lock-inProvide Capacity for Create AwarenessDevelop and Enhance Strategies Proprietary Product/ Influence Switching Costs of Proprietary Product Service Existing and PotentialIncrease Breadth/ Reliable Access and Customers Applications of Standard Ease of Use 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

Copyright © 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Developed by Cool Pictures and MultiMedia Presentations 14 Strategy Map Template: Product Leadership Financial Perspective Customer Perspective Internal Perspective Learning and Growth Perspective “Products and Services That Expand Existing Performance Boundaries into the Highly Desirable” A Capable, Motivated and Technologically Enabled Workforce Long-Term Shareholder Value Manage Total Life-Cycle Product Costs Revenues from New Products Gross Margins: New Products Productivity StrategyRevenue Growth Strategy High-Performance Products: Smaller, Faster, Lighter, Cooler, More Accurate, More Storage, Brighter… First to market New Customer Segments Operations ManagementCustomer ManagementInnovationRegulatory and Social Flexible Robust Processes Rapid Introduction of New Products Supply Capacity for Rapid Growth In-line Experimentation and Improvement Educate Customers about Complex New Products/Services Capture Customer Ideas for New Products/Services Disciplined, High-Performance Product Development Product Development Time: From Idea to Market Minimize Product Liability And Environmental Impact Contribute to Communities “Find, Motivate, Grow, and Retain the Best Talent” Human Capital Information Capital Organization Capital Deep Functional Expertise Creative, Versatile Employees: Cross- functional Teamwork Virtual Product Prototyping and Simulation Computer-Aided Design and Manufacturing (CAD/CAM) Creativity, Innovation