Marketing
Berkowitz*Crane*Kerin*Hartley*Rudelius
Chapter 02
Linking Marketing and Corporate Strategies

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• Chapter 2 - Linking Marketing and Corporate Strategies - (pages 28-52)
• Key terms (page 49)
• Kinds of organizations
  • Business firms = for-profit
    • Profit = revenues - expenses = reward to a business firm for the risk it undertakes
  • Nonprofit (not-for-profit) organizations = nongovernmental organization that serves its customers but does not have profit as an organizational goal.
  • Firm = Company = Corporation = Organization = either business or nonprofit operation = this textbook will not distinguish between the two kinds of organizations.
• Levels of Strategy in organizations (see figure 2-1, page 31)
  1. Corporate strategy
     • top management directs overall strategy for the entire organization
     • overall strategy formulation
     • manage a portfolio of businesses (see business units, below)
  2. Business Unit strategy
     • business units = operating groups = strategic business segments = product-marketing units (PMUs) (p.31) = strategic business unit (SBU) (p.36)
     • business unit = an organization that markets a set of related products to a clearly defined group of customers.
     • Business unit managers set the direction for their products and markets.
     • specific strategy formulation
  3. Functional strategy (Teams)
     • Departments = specialized functions = (e.g. information systems, finance, R&D, marketing, manufacturing, HR)
     • strategy implementation
     • Groups of specialists actually create value for the organization.
     • strategy implementation = very specific strategy formulation - hierarchy of strategic directions = they make things happen
     • Cross-functional teams = a small number of people from different departments (employees, suppliers, customers) in an organization who are mutually accountable to a common set of performance goals.
• Marketing
  • Keep a focus on customers = create customer value
  • Add genuine customer value
  • Customers are listened to, products are designed and produced, and customer needs are satisfied.
  • Marketing works with all departments to deliver customer value and satisfaction.
• Purpose, Focus, Direction, Raison d'être of the organization
  1. the business definition
     • What is our business?
     • Who are our customers? - The focus must be on the customer.
     • What offerings should we provide to give these customers value?
  2. mission
     • A statement of the organization's scope
       • scope = range of view or activity; outlook; the area or sphere in which any activity takes place; the length or sweep of a cable at which a ships rides at anchor
     • identifies its customers, markets, products, technology, values
     • vision statement = mission statement
       • frequently inspirational, igniting loyalty
  3. values and culture
     • Culture = a system or set of shared values, attitudes, and behaviours of a homogeneous group of people that distinguishes one organization from others and is transmitted from one generation to the next.
     • Organizations must connect with all stakeholders
       • Internal stakeholders = employees, officers, board members
       • External stakeholders = customers, suppliers, distributors, governments, union, local communities, general public
       • stakeholders = individuals or groups, either within or outside an organization, that relate to it in what it does and how well it performs.
  4. goals
     • Goals = Objectives - (the terms are used interchangeably in this textbook) = targeted levels of performance to be achieved, often by a specific time = a measure of how well a mission is being accomplished.
       • profit, ROI
       • sales revenue
       • market share = the ratio of sales revenue of the firm to the total sales revenue of all firms in the industry, including the firm itself.
       • unit sales
       • quality
       • customer satisfaction
       • employee welfare
         • employment opportunities, working conditions
       • social responsibility
         • overall welfare of all stakeholders
           • balance conflicting goals of consumers, employees, and shareholders to promote the overall welfare of all these groups, even at the expense of profits.
         • "good global citizens" - ethics
         • sustainable development
• Strategic Directions
• Where are we now?
  • Customers (and prospective customers) and their needs
  • Competencies = what do we do best? = the organization's special capabilities, including the skills, technologies, and resources that distinguish it from other organizations.
    • Competitive advantage = a unique strength relative to competitors, often based on quality, time, cost, innovation, or customer intimacy.
      • Quality = those features and characteristics of a product that influence its ability to satisfy customer needs.
      • Benchmarking =  discovering how others do something better than your own firm so you can imitate or leapfrog competition.
  • Competitors
    • who they are; how they are changing
  • SWOT analysis (Figure 2-7, page 43)
  • Environmental scanning (chapter 3)
• Where do we want to go?  (Growth strategies)
  • portfolio analysis - growth share matrix (p.37) - Boston Consulting Group
  • market-product analysis
• Success = striking the right balance among these four "building blocks".
  1. Customer relationships
  2. Innovation
  3. Quality, excellence
  4. Efficiency, lower costs and prices
• Strategic Marketing process (see Figure 2-6, page 42)
  • Strategic Marketing process =  the approach whereby an organization allocates its marketing mix resources to reach its target markets.
  • Marketing Plan = a road map for the marketing activities of an organization for a specified future period of time.
  1. Planning
     1. SWOT Analysis
     2. Market-product focus (who & what)
        • Goal setting (market goals, product goals)
          • measurable
        • target markets
          • market segmentation = aggregating prospective buyers into groups, or segments, that (1) have common needs and (2) will respond similarly to a marketing action.
          • who = which customers
        • points of difference
          • characteristics of the product that make it superior to competitive substitutes.
        • position the product
          • position in the customers' minds (quality, features, etc.)
          • what = which customer needs the firms product offerings can satisfy
     3. Marketing program (how)
        • marketing mix
          • Product strategy
          • Price strategy
          • Promotion strategy
          • Place (distribution) strategy
        • budget
          • sales forecast = Estimated expenses & Estimated revenues
          • commitment of time and money
  2. Implementation (= carrying out = executing)
     1. Obtain resources
     2. Design marketing organization
        • organization chart of marketing department's structure
     3. Develop schedules
        • detailed schedules with deadlines
     4. Execute the marketing program
        • end sought = specified target market
        • means to achieve it = marketing program
          1. strategy = the means by which a marketing goal is to be achieved, usually characterized by a specified target market and a marketing program to reach it.
          2. tactics = detailed day-to-day operational decisions essential to the overall success of marketing strategies.
  3. Control
  1. Compare actual results with the planned targets (goals, objectives)
  • planning gap = (graphed) difference between projected results and previous results - (see Figure 2-10, page 48)
  2. Act on Deviations
  • Take corrective actions (to correct negative deviations)
  • Exploit positive deviations

Resources

• Chapter 2 - Marketing
• Marketing - Fifth Canadian Edition
• Student Centre