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CHAPTER LINKING MARKETING AND CORPORATE STRATEGIES © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin LEVELS OF STRATEGY IN ORGANIZATIONS • Kinds of Organizations • Business firms Profit • Non-profit organizations • Levels in Organizations and How Marketing Links to Them • Corporate level • Business unit level Business unit • Functional level © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin CROSS FUNCTIONAL TEAMS • Where Things Happen: Functional Areas and Cross-Functional Teams A small number of people from different departments in an organization who are mutually accountable to a common set of performance goals. • Also known as core teams © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin STRATEGY ISSUES IN ORGANIZATIONS • The Business • The Mission • Values and Culture • Stakeholders • Goals or Objectives • Profit • Sales revenue • Market share © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin FIGURE 2-2 Medtronic’s mission © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin MORE ORGANIZATIONAL GOALS • Goals or Objectives • • • • • Unit sales Quality Customer satisfaction Employee welfare Social responsibility © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Concept Check 1. What are the three levels in today’s large organizations? A: The three levels are the corporate, business unit, and functional levels. © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Concept Check 2. What is the difference between an organization’s mission and its culture? A: A mission is a statement of the organization’s scope, often identifying its customers, markets, products, technology, and values. It often has an inspirational theme. In contrast, a culture is a system of shared values, attitudes and behaviors that distinguish the organization from others. © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin FIGURE 2-8 The strategic marketing process © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin STEP 1: SITUATION ANALYSIS • A Look Around: Where Are We Now? • Customers • Competencies Competitive advantage Quality Benchmarking • Competitors • SWOT Analysis © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Application Designing a car is expensive and time-consuming, even with the use of computers, because until recently there was no way for all the varied departments that are involved in new car development to work together. DaimlerChrysler has created a central, Web-based system that cuts the design and production process by at least two years. This is an example of a(n): A. B. C. D. E. benchmarking project. innovation-oriented mission. action program. operational goal implementation. competency. © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Application The competency of a central, Web-based system that cuts the design and production process by at least two years gave DaimlerChryler : A. B. C. D. E. a competitive advantage. benchmarking experience. a tactical innovation. leapfrogging capabilities. a viable mission. © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin FIGURE 2-3 Lands’ End’s competitors? They go far beyond traditional catalog companies © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin FIGURE 2-9 Ben & Jerry’s: a “SWOT” to get it growing again © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin STEP 2: SETTING GOALS • The Portfolios of Businesses: BCG Analysis • Market-Product Analysis • Market segmentation • Points of difference © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin FIGURE 2-5 Boston Consulting Group growthshare matrix for a strong, diversified firm © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin MARKET-PRODUCT ANALYSIS Product/ Market (Expansion) Grid Existing Products Existing Markets 1. Market Penetration New Markets 2. Market Development New Products 3. Product Development 4. Diversification © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin APPLICATION: WHAT STRATEGY? • McDonald’s: • Opens its first restaurants in China • Develops a line of McDonald’s toys to be sold through Toys R Us stores • Adds a new line of deli sandwiches to its menu • Runs a promotion based on the Monopoly game • Gives coupons for free fries for a subsequent visit © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin FIGURE 2-6 Four market-product strategies: alternative ways to expand sales revenues for Ben and Jerry’s © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin STEP 3: PLANNING • Develop a Marketing Program • Decide on implementation of the Marketing Mix • Set budgets Estimate revenues Estimate expenses Estimate profits © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin FIGURE 2-10 Elements of the marketing mix that comprise a cohesive marketing program © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Concept Check 1. What is the difference between a strength and an opportunity in a SWOT analysis? A: Both are positive factors for the organization, but a strength is an internal factor whereas an opportunity is an external one. © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Concept Check 2. What is market segmentation? A: This involves aggregating prospective buyers into groups, or segments, that (1) have common needs and (2) will respond similarly to a marketing action. © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Concept Check 3. What are “points of difference” and why are the important? A: Points of difference are those characteristics of a product that make it superior to competitive substitutes. They are the single most important factor in the success or failure of a new product. © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin THE STRATEGIC MARKETING PROCESS: IMPLEMENTATION • • • • Obtaining Resources Designing the Marketing Organization Develop Schedules Execute!! Marketing strategy Marketing tactics © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin TYPICAL MARKETING ORGANIZATION Replace Figure 2-11 VP of Marketing Product/Brand Management Product Marketing Marketing Communications © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Market Research THE STRATEGIC MARKETING PROCESS: CONTROL • Compare results to plan • Identify deviations • Correct where possible © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin FIGURE 2-12 Evaluation and control of Kodak’s marketing program © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Concept Check 1. What is the control phase of the strategic management process? A: This is the phase that seeks to keep the marketing program moving in the direction set for it. © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Concept Check 2. How do the objectives set for a marketing process in the planning phase relate to the control phase of the strategic marketing process? A: The planning phase objectives are used as the benchmark with which the actual performance results are compared in the control phase. © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin