Chapter Seven Business Marketing Planning: Strategic Perspectives

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Introduction
Most of us believe that strategy is the province of senior managers. New growth strategies comes from new ideas and new ideas comes from new voices. Harnessing collective organizational efforts to formulate strategies.

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Marketings strategic role

Centered on customers Take an outside-in view of strategy Demonstrate an ability to sense market trends ahead of their competitors How large organizations like J&J, Motorola, 3M manage their numerous business portfolios?

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Hierarchy of Strategies
 Corporate Strategy  What businesses are we in?  What are our core competencies?  How should we allocate resources?  What businesses should we be in?  Role of marketing manager: as advocates of the customer to put the customer first in the firms decision making  Business-Level Strategy  How do we compete in a given industry?  How should we position ourselves against competitors?
 Role of marketing: to provide a detailed analysis of customer and competitors and firms distinctive skills and resources for competing in a particular market segment
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GE CEO Jack Welch example

Describe the global competitive environment in which you operate? In last 2 years what have your competitors done? In the same period, what have you done to them in the market place? How might they attach you in the future? What are the plans to leapfrog them?

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Functional Strategy

How can we allocate resources to most efficiently and effectively support businesslevel strategies? Marketing manages organization-customer connections Marketing role: to allocate and coordinate marketing resources and activities to achieve the firms objective.
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Marketing: Perhaps Best Understood as:

1. Customer-product connectionlinking the customer to the focal offering. 2. Customer-service delivery connectiondesign and delivery actions involved in providing firms goods and services. (CRM) 3. Customer-financial accountability connection-Activities and processes that link customers to financial outcomes.( customer satisfaction & profitability)

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Marketings Role in Managing Three Customer Connections

Customer

Marketing, Operations

Product

Operations

Service Delivery

Human Resources, Accounting

Financial Accountability

Top Management

Human Resources

Accounting, Management Information Systems

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Cross-Functional Connections Explore Interrelationships Between Marketing and Four Business Functions Formulating Business Marketing Strategy: Vital Cross-Functional Connections

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Components of business models

CUSTOMER INTERFACE Fulfillment & Support Information & Insight Relationship Dynamics Pricing Structure

CORE STRATEGY Business Mission Product/Market Scope Basis for Differentiation

STRATEGIC RESOURCES Core Competencies Strategic Assets Core Processes

VALUE NETWORK Suppliers Partners Coalitions

EFFICIENT / UNIQUE / FIT / PROFIT BOOSTERS

Major business concept components tied together by three important bridge elements: customer benefits, configuration, and company boundaries.
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Fulfillment and support

Information and insight

Customer Interface

Pricing structure
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Relationship dynamics
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Core StrategyThree Elements

The business mission describes overall objective of strategy, sets course of direction, and defines performance criteria to measure progress. Product/market scope defines where firm competes. Basis for differentiation captures essence of how firm competes differently than its rivals do.

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Ways to differentiate products and services

Provide superior service or technical assistance competence through speed, responsiveness to complex orders or ability to solve customers problems Provide superior quality that reduces customer cost or improve their performance Offer innovative product features that use new technologies.

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Strategic Resources
Core competencies are set of skills, systems, and technologies that creates uniquely high value for customers. Strategic assets are more tangible requirements for advantage. Strategic assets include brands, customer data, distribution coverage, patents. Core processes are methodologies and routines that companies use to transform competencies, assets, and other inputs into value for customers.

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Aligning Internal Business Processes to the Customer Strategy

Customer Strategy The Focus of Internal Business Processes Operations Management
Low Total Cost Strategy Highly Efficient Operating Processes Efficient, Timely Distribution

Customer Relationship Management

Ease of Customer Access Superb Post-Sales Service

Innovation Management
Seek Process Innovations Gain Scale Economies

Product Leadership Strategy

Flexible Manufacturing Processes Rapid Introduction of New Products

Capture Customer Ideas for New Offering Educate Customers about Complex New Products/Services

Disciplined, High-Performance Product Development First-to-Market

Complete Customer Solutions Strategy

Deliver Broad Product/ Service Line Create Network of Suppliers for Extended Product/ Service Capabilities Provide Capacity for Proprietary Product/ Service Reliable Access and Ease of Use

Create Customized Solutions for Customers Build Strong Customer Relationships Develop Customer Knowledge Create Awareness Influence Switching Costs of Existing and Potential Customers

Identify New Opportunities to Serve Customers Anticipate Future Customer Needs Develop and Enhance Proprietary Product Increase Breadth/ Applications of Standard

Lock-in Strategies

Source: Adapted from Robert S. Kaplan and David P. Norton, Strategy Maps: Converting Intangible Assets into Tangible Outcomes (Boston: Harvard Business School Publishing Corporation, 2004), pp. 322-344.
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Key value propositions

Low total cost- offer attractive prices, ease of purchase, responsive services Product innovation and leadership Customer receive products that expand existing performance boundaries through new features and functions ( Intel, Sony) Complete customer solutions- IBM Lock-in: purchasing a widely used proprietary product from the firm. Ex: Microsoft operating system, eBays exchange network
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Self assessment exercise

1. In the hierarchy of strategies, ____ strategy defines the businesses in which a company will compete, preferably in a manner that utilizes resources to convert distinctive competence into competitive advantage. a. functional b. corporate c. business-level d. product e. divisional
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In the hierarchy of strategies, ____ strategy centers on how a firm will compete in a given industry and will position itself against its competitors. a. functional b. corporate c. business-level d. product e. divisional

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Self assessment exercise

A business concept or model consists of the following major components except: a. core strategy. b. strategic resources. c. customer interface. d. value network e. negotiated outcomes. Which of the following is an element of the customer interface? a. Relationship dynamics. b. Core processes. c. Pricing structure. d. All of the above. e. (a) and (c) only.

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Self assessment exercise

All of the following are components of a firm's value network except: a. suppliers. b. coalitions. c. strategic alliance partners. d. customers. Cisco and General Electric demonstrate special skills in forging relationships with suppliers and alliance partners. This is an example of: a. a value network. b. relationship dynamics c. a strategic asset. d.a market scope.
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Self assessment exercise

Techniques for differentiating products and services include which of the following? a. Superior service or technical assistance. b. Superior quality. c. Lowest price among competitors. d. All of the above. e. Only a and b.
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____ are the set of skills, systems, and technologies a company uses to create uniquely high value for customers. a. Strategic assets b. Core competencies c. Core processes d. Core strategies e. Customer interfaces
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Self assessment exercise

The three principal drivers of organizational learning and growth include: a. human capital. b. information capital. c. organizational capital. d. All of the above. e. Only b and c. Which of the following are used in the Customer Perspective of the Balanced Scorecard to measure core customer outcome measures? a. Market share. b. Customer acquisition. c. Customer retention. d. All of the above. e. Only b and c.
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