1. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-1

2. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-2 McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 3 Marketing’s Strategic Role in the Organization

3. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-3 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 each level. Understand the organizational strategic planning process and the role of marketing in this process. Describe the key decisions in the development of corporate strategy.

4. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-4 Understand the different general business strategies and their relationship to business marketing, product marketing, and international marketing strategies. Realize the importance of relationships and teamwork in executing strategic plans. After studying this chapter, you should be able to:

5. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-5 Organizational Levels The Corporate Level is the highest level in any organization. The Functional Level includes all the various functional areas within a business unit. The Business Level consists of units within the overall organization that are generally managed as self-contained businesses.

6. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-6 Organizational Strategic Planning Lower-level plans are developed to execute higher-level plans. Higher organizational level strategic plans provide direction for strategic plans at lower levels.

7. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-7 Types of Strategic Plans Organizational LevelType of Strategic PlanKey Strategic Decisions CorporateCorporate strategic Corporate vision planObjectives & resource allocation Growth strategies BusinessBusiness strategic Market scope planCompetitive advantage MarketingMarketing strategic Target market planMarketing mix Product marketing Specific target market planSpecific marketing mix Execution action plan CorporateCorporate strategic Corporate vision planObjectives & resource allocation Growth strategies BusinessBusiness strategic Market scope planCompetitive advantage MarketingMarketing strategic Target market planMarketing mix Product marketing Specific target market planSpecific marketing mix Execution action plan

8. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-8 The Strategic Role of Brand Loyalty Generating Market Share Developing a Strong Customer Base Customer Equity

9. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-9 The Strategic Planning Process

10. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-10 The Role of Marketing Strategic Marketing:  Marketing activities that affect corporate, business, and marketing strategic plans.

11. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-11 The Role of Marketing 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.

12. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-12 The Role of Marketing Marketing Management:  Relates to specific product marketing strategies. Networks:  Comprise strategic alliances among suppliers, distributors, and the marketing firm.

13. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-13 Corporate Strategy Decisions Corporate Vision Corporate Objectives & Resource Allocation Corporate Growth Strategies Business-unit Composition

14. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-14 Corporate Vision Corporate Vision:  The basic values of an organization.  The vision specifies what the organization stand for, where it plans to go, and how it plans to get there.

15. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-15 What Comprises Corporate Vision? Markets Products and services Geographic domain Core competencies Organizational objectives Organizational philosophy Organizational self-concept Desired public image

16. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-16 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. Wal-Mart: To give ordinary folks the chance to buy the same things as rich people. 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. Wal-Mart: To give ordinary folks the chance to buy the same things as rich people.

17. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-17 Core Purpose Core Competency:  A bundle of skills that are possessed by individuals across the organization.

18. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-18 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?

19. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-19 Questions Leading to an Effective Corporate Vision 5. In what end-product markets will you participate in the future? 6. What will be the basis for your competitive advantage in the future? 7. What skills or capabilities will make you unique in the future?

20. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-20 Corporate Objectives and Resource Allocation Corporate objectives specify the achievement of desired levels of performance during particular time periods.

21. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-21 Corporate Objectives and Resource Allocation Corporate objectives and resource allocation affect marketers in 2 basic ways: 1) In setting the objectives for different organizational levels. 2) Providing guidance for the development and Implementation of marketing strategies.

22. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-22 Corporate Growth Strategies Market Penetration Product Expansion Diversification Market Expansion Products SameNew Markets New Same

23. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-23 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 management is responsible for all (or most) of the basic business functions”

24. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-24 Business-Unit Composition Companies often organize around competency-based SBUs to establish Sustained Competitive Advantage.

25. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-25 Business Strategy Decisions The basic objective of a business strategy is to determine how the business unit will compete successfully.

26. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-26 Business Strategy Decisions Dimensions of Strategy:  Market scope.  How broadly the business views its target market.  Competitive advantage. Competitive Advantage:  The way a business tries to get consumers to purchase its products over those offered by competitors.

27. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-27 General Business Strategies Easyjet Jet Blue Conair Alaskan Airlines Midwest American Delta United Jet Blue Southwest Market Scope FocusedBroad Competitive Advantage Differentiation Low price

28. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-28 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.

29. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-29 Marketing Strategy Decisions A Marketing Strategy Addresses: Selection of a target market. Development of a marketing mix. Functional strategies are at the business-unit level. Operating strategies are at the product level.

30. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-30 Business & Product Marketing Strategies Target marketSegmented or mass approachSpecific definition of target market ProductNumber of different productsSpecific features of each product PriceGeneral competitive price levelSpecific price DistributionGeneral distribution policySpecific distributions Marketing communicationsGeneral emphasis on marketingSpecific marketing communications toolscommunications program Decision AreaBusiness Marketing StrategyProduct Marketing Strategy

31. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-31 International Marketing Strategies Entry Strategy:  The approach used to market products in an international market. The Basic Options:  Exporting  Joint Ventures  Direct Investment

32. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-32 International Marketing Strategies Customized Marketing Strategy: A different marketing mix for each target market country. 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. Standardized Marketing Strategy: The same product, price, distribution, & promotion programs in all international markets.

33. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-33 Executing Strategic Plans with Teamwork 1. Cross-Functional Teamwork 2. Marketing Teamwork 3. Co-Marketing Alliances 1. Cross-Functional Teamwork 2. Marketing Teamwork 3. Co-Marketing Alliances

34. Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-34 Business Function Orientations FunctionBasic Orientation MarketingTo attract and retain customers ProductionTo produce products at lowest cost FinanceTo keep within budgets AccountingTo standardize financial reports PurchasingTo purchase products at lowest cost R&DTo develop newest technologies EngineeringTo design product specifications