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Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 3
Marketing’s Strategic Role in the Organization
1-2
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cGraw-Hill/Irwin
Copyright
© 2001
by The
McGraw-Hill
Inc.
rights
reserved.
Copyright
© 2004
by The
McGraw-Hill Companies,
Companies, Inc.
All All
rights
reserved.
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.
1-3Irwin/McGraw-Hill
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
After studying this chapter,
you should be able to:
 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.
1-4Irwin/McGraw-Hill
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
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.
1-5Irwin/McGraw-Hill
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Organizational Strategic Planning

Higher organizational level strategic
plans provide direction for strategic
plans at lower levels.

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Lower-level plans are developed
to execute higher-level plans.
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Types of Strategic Plans
Organizational Level
Type of Strategic Plan
Key Strategic Decisions
Corporate
Corporate strategic
plan
Corporate vision
Objectives & resource
allocation
Growth strategies
Business
Business strategic
plan
Market scope
Competitive advantage
Marketing
Marketing strategic
plan
Target market
Marketing mix
Product marketing
plan
Specific target market
Specific marketing mix
Execution action plan
1-7Irwin/McGraw-Hill
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
The Strategic Role of Brand Loyalty
Generating
Market Share
Developing a Strong
Customer Base
Customer Equity
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Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
The Strategic Planning Process
1-9Irwin/McGraw-Hill
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
The Role of Marketing

Strategic Marketing:

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Marketing activities that affect corporate,
business, and marketing strategic plans.
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
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.
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Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
The Role of Marketing

Marketing
Management:

Relates to specific
product marketing
strategies.
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
Networks:

Comprise strategic
alliances among
suppliers, distributors,
and the marketing firm.
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Corporate Strategy Decisions
Corporate Vision
 Corporate Objectives & Resource Allocation
 Corporate Growth Strategies
 Business-unit Composition

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Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Corporate Vision

Corporate Vision:

The basic values of an organization.

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The vision specifies what
the organization stand for,
where it plans to go, and
how it plans to get there.
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
What Comprises Corporate Vision?
Markets
 Products and services
 Geographic domain
 Core competencies
 Organizational objectives
 Organizational philosophy
 Organizational self-concept
 Desired public image

Irwin/McGraw-Hill
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Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
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.
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Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Core Purpose

Core Competency:

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A bundle of skills that are possessed by
individuals across the organization.
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
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?
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Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
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?
Irwin/McGraw-Hill
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Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Corporate Objectives and Resource Allocation
 Corporate
objectives specify the
achievement of desired levels of
performance during particular time
periods.
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Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Corporate Objectives and Resource Allocation
Corporate objectives and
resource allocation affect
marketers in 2 basic ways:
2)
Providing guidance
for the development
and Implementation of
marketing strategies.
1) In setting the
objectives for different
organizational levels.
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Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Corporate Growth Strategies
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Same
New
Same
Market
Penetration
Market
Expansion
New
Markets
Products
Product
Expansion
Diversification
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Business-Unit Composition

Strategic Business Unit
(SBU):

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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”
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Business-Unit Composition

Companies often organize around
competency-based SBUs to
establish Sustained Competitive
Advantage.
Irwin/McGraw-Hill
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Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Business Strategy Decisions

The basic objective of a business strategy is
to determine how the business unit will
compete successfully.
Irwin/McGraw-Hill
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Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Business Strategy Decisions

Dimensions of
Strategy:

Market scope.

How broadly the
business views its
target market.

Competitive
advantage.
Irwin/McGraw-Hill
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
Competitive
Advantage:

The way a business
tries to get consumers
to purchase its
products over those
offered by
competitors.
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
General Business Strategies
Market Scope
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Low price
Differentiation
Competitive Advantage
Focused
Broad
• Easyjet
• Southwest
• Jet Blue
• Conair
• Alaskan Airlines
• Midwest
• American
• Delta
• United Jet Blue
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
The Rule of Three

The Rule of Three:

Naturally occurring
competitive forces will
create a consistent
structure in many
mature markets.
Irwin/McGraw-Hill
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
Three major players often
compete by offering a wide
range of related products
and services and serve
most major market
segments.
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
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.
Irwin/McGraw-Hill
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Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Business & Product Marketing Strategies
Decision Area
Business Marketing Strategy
Product Marketing Strategy
Target market
Segmented or mass approach
Specific definition of target market
Product
Number of different products
Specific features of each product
Price
General competitive price level
Specific price
Distribution
General distribution policy
Specific distributions
General emphasis on marketing
communications tools
Specific marketing
communications program
Marketing
communications
Irwin/McGraw-Hill
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Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
International Marketing Strategies

Entry Strategy:


The approach used to
market products in an
international market.
Irwin/McGraw-Hill
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The Basic Options:



Exporting
Joint Ventures
Direct Investment
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
International Marketing Strategies
Standardized Marketing Strategy:
The same product, price, distribution, & promotion
programs in all international markets.
Customized Marketing Strategy:
A different marketing mix for each
target market country.
Irwin/McGraw-Hill
1-32
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Executing Strategic Plans with Teamwork
1.
Cross-Functional Teamwork
2.
Marketing Teamwork
3.
Co-Marketing Alliances
Irwin/McGraw-Hill
1-33
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Business Function Orientations
Function
Basic Orientation
Marketing
Production
Finance
Accounting
Purchasing
R&D
Engineering
To attract and retain customers
To produce products at lowest cost
To keep within budgets
To standardize financial reports
To purchase products at lowest cost
To develop newest technologies
To design product specifications
Irwin/McGraw-Hill
1-34
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.