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1-1Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 3 Marketing’s Strategic Role in the Organization 1-2 MIrwin/McGraw-Hill 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. 1-6Irwin/McGraw-Hill 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 1-8Irwin/McGraw-Hill 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: Irwin/McGraw-Hill 1-10 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. Irwin/McGraw-Hill 1-11 Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. The Role of Marketing Marketing Management: Relates to specific product marketing strategies. Irwin/McGraw-Hill 1-12 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 Irwin/McGraw-Hill 1-13 Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Corporate Vision Corporate Vision: The basic values of an organization. Irwin/McGraw-Hill 1-14 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 1-15 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. Irwin/McGraw-Hill 1-16 Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Core Purpose Core Competency: Irwin/McGraw-Hill 1-17 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? Irwin/McGraw-Hill 1-18 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 1-19 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. Irwin/McGraw-Hill 1-20 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. Irwin/McGraw-Hill 1-21 Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Corporate Growth Strategies Irwin/McGraw-Hill 1-22 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): Irwin/McGraw-Hill 1-23 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 1-24 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 1-25 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 1-26 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 Irwin/McGraw-Hill 1-27 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 1-28 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 1-29 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 1-30 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 1-31 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.