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Business Marketing Planning: Strategic Perspectives

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Title: Business Marketing Planning: Strategic Perspectives


1
0
Chapter 5 Business Marketing Planning
Strategic Perspectives
PowerPoint by Ray A. DeCormier, Ph.D. Central
Connecticut State University
2
Chapter Topics
0
  1. Marketings strategic role in corporate strategy
    development
  2. The multifunctional nature of business marketing
    decision-making
  3. Components of a business model that can be
    converted into superior positions of advantage in
    the business market
  4. A valuable framework for detailing the processes
    and systems that drive strategy success

3
New Strategies
0
  • New strategies come from new ideas
  • New ideas often come from new voices
  • To meet both domestic and foreign competition,
    B2B firms are recognizing the vital role of
    marketing in developing and implementing
    successful strategies

4
Effective Strategies
0
  • Effective strategies share a
  • Responsiveness to market needs
  • Ability to exploit the organizations special
    competencies
  • Ability to make valid assumptions about
    environmental trends
  • Ability to take advantage of competitive behavior
  • Realistic basis for securing and sustaining a
    competitive advantage

5
Market-Driven Organizations
0
  • Market-driven organizations are
  • Centered on customers
  • Take an outside-in view of strategy
  • Demonstrate an ability to sense market trends
    ahead of their competitors

6
Hierarchy of Strategies 3 parts
0
  • Corporate Strategy
  • Business-Level Strategy
  • Functional Strategy

7
Hierarchy of Strategies Part 1
0
  • Corporate Strategy
  • What businesses are we in?
  • What are our core competencies?
  • How should we allocate resources?
  • What businesses should we be in?

8
Corporate Strategy
0
  • At this level, the role of Marketing is to
  • Assess market attractiveness and competitive
    effectiveness of the firm
  • Promote customer orientation to management
  • Formulate the companys overall value proposition
    that is marketed to the customer, management and
    employees

9
Marketing Strategy to Corporate
0
  • An important role for marketing management is
    to make the firm understand the Customer is
    King and advocate a set of values and beliefs
    that put the customer first in the firms
    decision-making process.

10
Hierarchy of Strategies Part 2
0
  • Business-Level Strategy
  • How do we compete in a given industry?
  • How should we position ourselves against
    competitors?

11
Business-Level Strategy
0
  • The focus is on how firms compete in a given
    industry.
  • Competition is not between large corporations.
    It is between individual business units (SBUs)
    that compete in specific markets. Each SBU needs
    to develops its own business and marketing plans
    to answer
  • How can we compete?
  • How and what is the most efficient way to get to
    the market?
  • What are our distinctive skills?

12
Hierarchy of Strategies Part 3
0
  • Functional Strategy
  • How can we allocate resources to most efficiently
    and effectively support business-level
    strategies?
  • How can we use resources to meet the firms
    objectives within a specific product market?

13
Strategic Formulation The Hierarchy of
Strategies
0
  • The interplay between the three levels of
    strategic formulation
  • Cuts across functional areas
  • Involves issues related to long term objectives
  • Involves allocating resources across SBUs and/or
    product markets
  • Includes decisions about the direction of
    corporate strategy, application of technology and
    choice of alliance partners

14
Strategic Decision
0
  • Process involves active participation of several
    functional groups with differing opinions about
  • Appropriateness of certain strategies
  • Corporate goals
  • Altering strategic goals can cause friction
    between them.
  • However, strategic decision-making represents a
    bargaining process between competing functional
    factions.

15
The Game
0
  • There are a number of players within an
    organization that want to change strategy to
    further their interests.
  • Certain managers feel their functional areas
    belong to them (turf) and if anyone intrudes by
    changing the strategy, they are stepping over
    their bounds.
  • Further, various groups possess different
    philosophies, beliefs and incentives resulting in
    different thought-worlds.
  • Thus, each subculture has a different agenda.
  • The bargaining process for arriving at a mutually
    agreeable strategic decision between these
    competing forces represent the game.

16
Collective Action Perspective of Strategy
Formulation Process
0
17
Corporate Progress Requires a Meeting of the
Minds
0
  • Successful cross-functional connections occur
    when turf wars, thought-worlds, and other various
    interest groups come together and develop a
    workable strategy to deal with the competitive
    world.
  • In order for this to occur, the marketing group
    needs to be sensitive toand connect withthese
    stakeholders.

18
Cross-Functional Connections Explore
Interrelationships between Marketing and Four
Business Functions
0
19
B2B Top Performers
0
  • Marketing managers who know how to get the job
    done (i.e., facilitate negotiations across
    functional areas) possess certain
    characteristics
  • Responsive timely
  • Perspective-taking ability to understand and
    anticipate other functional managers priorities
  • Open, frequent and high quality communication
    style
  • Their word is their bond and follow through
  • Able to develop a strong network

20
Functional Integrated Planning
0
  • Successful marketing managers know how to
    integrate functional areas. They
  • Understand their capabilities
  • Capitalize on their strengths
  • Facilitate strategies that are responsive to
    customer needs
  • Successful marketing managers assume a central
    role in strategy implementation.

21
Inter-Functional Involvement in Marketing
Decision MakingAn Illustrative Responsibility
Chart
0
Organizational Function
Decision areas Marketing Manufacturing RD Logistics Tech. Services SBU Manager Corp. Level Manager
Product Design specifications Performance character. Reliability
Price List/Discount
Tech. Services Customer training
Logistics Inventory Customer service level
Sales Force Training
Advertising Message development
Channel Selection
Decision role RResponsibility AApproval
CConsult MImplement IInform, XNo
Role Vocabulary
22
Roles in Strategic Decision Making
0
  • Participants in strategic decision making may
    assume the following roles
  • Responsible (R) - Manager takes initiative,
    analyzes situation, develops alternatives,
    consults with others, make initial
    recommendation, facilitates approval of
    decision
  • Approve (A) - Manager accepts or rejects
    decisions
  • Consult (C) - Manager offers input
  • Implement (M) - Manager is accountable for
    implementing decision
  • Inform (I) - Manager is informed of the decision

23
Marketing Strategy Center (MSC)
0
  • Representatives may assume more than one role
  • Roles evolve during the marketing strategy
    development process
  • Composition of the MSC is not strictly prescribed
    by the organization chart
  • MSC share certain parallels with the buying center

24
Managing Strategic Interdependencies
0
  • One challenge for the business marketer is to
    minimize interdepartmental conflict.
  • Conflicts are motivated by personal and
    organizational goals.
  • Organizational objectives may be different for
    different functional areas. (Example Various
    functional areas are rewarded differently.)
  • Managing conflict, promoting cooperation,
    developing and coordinating strategy is a
    fundamental responsibility for marketing managers.

25
Strategy Success
0
  • For a strategy to succeed
  • Each firm needs to have a business concept that
    separates them apart from their competition.
  • There are 4 components
  • Customer Interface
  • Core Strategy
  • Strategic Resources
  • Value Network
  • Refer to Figure 5.2

26
Fig. 5.2 Components of a Business Model
Bridges to Profits
0
CUSTOMER BENEFITS
COMPANY BOUNDARIES
CONFIGURATION
VALUE NETWORK
CUSTOMER INTERFACE
STRATEGIC RESOURCES
CORE STRATEGY
Suppliers Partners Coalitions
Fulfillment Support Information
Insight Relationship Dynamics Pricing Structure
Business Mission Product/Market Scope Basis for
Differentiation
Core Competencies Strategic Assets Core Processes
EFFICIENT / UNIQUE / FIT / PROFIT BOOSTERS
  • Major business concept components are tied
    together by three important bridge elements
    customer benefits, configuration, and company
    boundaries.

27
1. Customer Interface
0
Fulfillment Support
Information Insight
Relationship Dynamics
Pricing Structure
28
1. Customer Interface
0
  1. Fulfillment Support They are the channels a
    firm uses to reach and support customers.
  2. Information Insight Involves the capture of
    knowledge from customers and uses it to provide
    enhanced value to customers.
  3. Relationship Dynamics Involves the dyadic
    nature of the buy/sell relationship in order to
    understand customer expectations so it can exceed
    them, increase the affiliation and lower
    competitive influences.
  4. Pricing Structure Employs a pricing policy and
    structure that enhances profits but not at the
    expense of curtailing business.

29
Fig. 5.2 Components of a Business Model
Bridges to Profits
0
CUSTOMER BENEFITS
COMPANY BOUNDARIES
CONFIGURATION
VALUE NETWORK
CUSTOMER INTERFACE
STRATEGIC RESOURCES
CORE STRATEGY
Suppliers Partners Coalitions
Fulfillment Support Information
Insight Relationship Dynamics Pricing Structure
Business Mission Product/Market Scope Basis for
Differentiation
Core Competencies Strategic Assets Core Processes
EFFICIENT / UNIQUE / FIT / PROFIT BOOSTERS
  • Major business concept components are tied
    together by three important bridge elements
    customer benefits, configuration, and company
    boundaries.

30
Core Strategy Three Elements
0
The business mission describes overall strategic
objective, sets course 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.
31
Differentiation of Products and Services
0
  • A business is differentiated when its
    value-adding activities are perceived as superior
    and profitable.
  • Value-added features need to motivate customers
    to pay a higher premium than the cost of superior
    performance.

32
Some ways to Differentiate
0
  • Provide superior performance through
  • Speed
  • Responsiveness to complex orders
  • Customized to solve customer problems
  • Provide superior quality by
  • Reducing customer costs
  • Improving performance
  • Offer innovative product features that employ new
    technologies

33
Fig. 5.2 Components of a Business Model
Bridges to Profits
0
CUSTOMER BENEFITS
COMPANY BOUNDARIES
CONFIGURATION
VALUE NETWORK
CUSTOMER INTERFACE
STRATEGIC RESOURCES
CORE STRATEGY
Suppliers Partners Coalitions
Fulfillment Support Information
Insight Relationship Dynamics Pricing Structure
Business Mission Product/Market Scope Basis for
Differentiation
Core Competencies Strategic Assets Core Processes
EFFICIENT / UNIQUE / FIT / PROFIT BOOSTERS
  • Major business concept components are tied
    together by three important bridge elements
    customer benefits, configuration, and company
    boundaries.

34
Competitive Advantage
0
  • Employing superior strategic resources and skills
    can gain a competitive advantage.
  • Core competencies are set of skills, systems, and
    technologies that create uniquely high value for
    customers.
  • Strategic assets are more tangible requirements
    for advantage includes 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.

35
Fig. 5.2 Components of a Business Model
Bridges to Profits
0
CUSTOMER BENEFITS
COMPANY BOUNDARIES
CONFIGURATION
VALUE NETWORK
CUSTOMER INTERFACE
STRATEGIC RESOURCES
CORE STRATEGY
Suppliers Partners Coalitions
Fulfillment Support Information
Insight Relationship Dynamics Pricing Structure
Business Mission Product/Market Scope Basis for
Differentiation
Core Competencies Strategic Assets Core Processes
EFFICIENT / UNIQUE / FIT / PROFIT BOOSTERS
  • Major business concept components are tied
    together by three important bridge elements
    customer benefits, configuration, and company
    boundaries.

36
Value Network
0
  • A value network includes those who complement and
    enrich the organization.
  • Do we have good relations with suppliers,
    partners, vendors and other supporters?
  • Can we partner with others in such a way that we
    can use their assets as if they were our own?
  • Example Using UPS as shipping service

37
Strategic Positioning
0
  • Competitive positioning is about being different
    and competing in a distinct way by using a unique
    mix of customer values.
  • Michael Porter states there are six fundamentals
    principles that a company should employ for
    establishing and maintaining a distinct strategic
    position.

38
0
Michael Porter Asks What is Strategic
Positioning?
39
Michael Porter Strategic Positioning
0
  • Right goal Superior long term ROI instead of
    performance goals (i.e., share market)
  • Create and deliver a good customer value
    proposition
  • Create a distinctive value chain by offering or
    performing similar features but in a different
    way
  • Accept trade-offs You cant be everything to
    everyone, therefore give up some things and
    reinforce others that enhance the distinctions
  • Emphasize those element that facilitate the
    strategic fit and reinforce them
  • Continuity of direction means to define a
    distinctive value proposition and build strong
    customer relations by staying consistent to that
    plan

40
Building the Strategic Plan
0
  • Companies need to do many things well.
  • However, underperformance is caused by a
    breakdown between strategy and operations.
  • Kaplan Norton contend that successful strategic
    execution involves two rules
  • Understand the Management cycle that links
    strategy and operations, and
  • Know what tools to apply at each stage of the
    cycle.

41
0
The Management System
This system allows management to plan, coordinate
and monitor the links between strategy and
operations.

42
The Management System
0
  • Involves 5 stages
  • Strategy development
  • Translate strategy into objectives
  • Design key processes
  • Monitor performance
  • Adapt the strategy
  • 2 Key tools for successful strategy
    implementation are
  • Balanced Scorecard
  • Strategy Map

43
Balanced Scorecard
0
  • Developed by Kaplan and Norton.
  • We know measures are central to any strategy.
  • The Balanced Scorecard is a comprehensive system
    for converting a companys vision and strategy
    into a tightly connected set of performance
    measures.

44
Balanced Scorecard
0
  • Examines the performance of a business unit from
    four perspectives
  • Financial
  • Customer
  • Internal Business
  • Learning and growth

45
The Balanced Scorecard - Translating Strategy
Into Operational Terms
0
Cause-and-Effect Relationships Defines the chain
of logic by which intangible assets will be
transformed to tangible value.
Customer Value Proposition Clarifies conditions
that create value for the customer.
Value-Creating Processes Defines processes that
transform intangible assets into customer and
financial outcomes.
Manage Regulatory and Social Processes
Manage Operations
Manage Customers
Manage Innovation
Clustering Assets and Activities Defines
intangible assets to be aligned and integrated to
create value.
4. Learning and Growth Perspective
Human Capital
Information Capital
Organization Capital


46
1. Financial Perspective
0
  • Cause Effect Relationship defines the logic
    that transforms intangible assets into tangible
    assets.
  • Consideration is give to
  • Productivity
  • Long-term shareholder value
  • Revenue growth

47
1. Financial Perspective Growth Stage
0
  • Balanced Scorecard seeks to match financial
    objectives with business units growth and other
    life cycle stages.
  • Growth stage
  • Operation This stage is where the company needs
    to commit resources for new product or service.
  • Financial objectives
  • Know sales growth rate by segment
  • Know of revenue from new product, services and
    customers

48
1. Financial Perspective Sustain Stage
0
  • Sustain Stage
  • Operation This stage represents majority of
    business where the strategy is to maintain and
    grow slowly.
  • Financial objectives
  • Focus on share of target customers and account
  • Know customer and product line profitability

49
1. Financial Perspective Harvest
0
  • Harvest Stage
  • Mature SBUs or products
  • Operations Provide only enough investment to
    maintain product equipment and capabilities.
  • Financial Objectives
  • Goal is payback
  • Know customer and product-line profitability

50
The Balanced Scorecard - Translating Strategy
Into Operational Terms
0
Cause-and-Effect Relationships Defines the chain
of logic by which intangible assets will be
transformed to tangible value.
Customer Value Proposition Clarifies conditions
that create value for the customer.
Value-Creating Processes Defines processes that
transform intangible assets into customer and
financial outcomes.
Manage Regulatory and Social Processes
Manage Operations
Manage Customers
Manage Innovation
Clustering Assets and Activities Defines
intangible assets to be aligned and integrated to
create value.
4. Learning and Growth Perspective
Human Capital
Information Capital
Organization Capital


51
2. Customer Perspective
0
  • Clarifies conditions that create customer value
  • Take into consideration
  • Product/Service attributes (price, quality, time
    function)
  • Relationships (partnerships)
  • Image (brand)

52
2. Customer Perspective Core Measures
0
Market Share Proportion of business in a particular market by share of market Total number of customers Dollars spent or unit volume sold
Customer Acquisition Tracks in absolute or relative terms rate at which SBU attracts and/or wins new customers
Customer Retention Tracks in absolute or relative terms rate at which SBU retains new customers
Customer Satisfaction Matches the satisfaction level of customers on specific performance criteria such as quality, service, delivery, reliability, etc.
Customer Profitability Assesses the net profit on each customer, or a segment, after deducting unique expenses allocated to support that customer or segment
53
3. Internal Process Perspective
0
  • This highlights the value-creating processes that
    define the other processes that will transform
    intangible assets into tangible assets.
  • It considers
  • Operations management
  • Customer management
  • Innovation management
  • Regulatory social processes management

54
3. Aligning Internal Business Processes

0
Key Value Propositions Customer Strategy
The Focus of Internal Business Processes
Operations Management Customer Relationship
Management Innovation Management
Low Total Cost Strategy Highly Efficient
Operating Ease of Customer Access Seek
Process Innovations Processes Superb
Post-Sales Service Gain Scale
Economies Efficient, Timely Distribution
Product Leadership Flexible Manufacturing
Capture Customer Ideas for Disciplined,
High-Performance Strategy Processes
New Offering Product
Development Rapid Introduction of Educate
Customers about Complex First-to-Market
New Products New Products/Services
Complete Customer Deliver Broad Product/
Create Customized Solutions Identify New
Opportunities Solutions Strategy Service
Line for Customers to Serve
Customers Create Network of Suppliers
Build Strong Customer Anticipate Future
Customer for Extended Product/
Relationships Needs Service
Capabilities Develop Customer Knowledge
Lock-in Provide Capacity for Create
Awareness Develop and Enhance Strategies
Proprietary Product/ Influence Switching
Costs of Proprietary Product Service
Existing and Potential Increase
Breadth/ Reliable Access and
Customers Applications of Standard Ease
of Use
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.
55
The Balanced Scorecard - Translating Strategy
Into Operational Terms
0
Cause-and-Effect Relationships Defines the chain
of logic by which intangible assets will be
transformed to tangible value.
Customer Value Proposition Clarifies conditions
that create value for the customer.
Value-Creating Processes Defines processes that
transform intangible assets into customer and
financial outcomes.
Manage Regulatory and Social Processes
Manage Operations
Manage Customers
Manage Innovation
Clustering Assets and Activities Defines
intangible assets to be aligned and integrated to
create value.
4. Learning and Growth Perspective
Human Capital
Information Capital
Organization Capital


56
4. Learning Growth
0
  • Intangible assets must be aligned to long term
    strategy to achieve long term growth.
  • Intangible assets represent the capabilities of
    the companys employees to satisfy customer
    needs.
  • They include
  • Human capital
  • Information capital
  • Organization capital

57
4. Learning Growth (continued)
0
  • To implement strategy, the organization needs
  • Human Capital Availability of employees with
    skills talent
  • Information Capital Availability of information
    systems and infrastructure
  • Organization Capital The culture, leadership,
    incentives and teamwork

58
Benefit of the Balanced Scorecard
0
  • The Balanced Scorecard helps align the firms
    tangible and intangible assets with the
    organizations strategic goals.
  • See next frame
  • 3. Aligning Internal Business Processes

59
3. Aligning Internal Business Processes

0
Key Value Propositions Customer Strategy
The Focus of Internal Business Processes
Operations Management Customer Relationship
Management Innovation Management
Low Total Cost Strategy Highly Efficient
Operating Ease of Customer Access Seek
Process Innovations Processes Superb
Post-Sales Service Gain Scale
Economies Efficient, Timely Distribution
Product Leadership Flexible Manufacturing
Capture Customer Ideas for Disciplined,
High-Performance Strategy Processes
New Offering Product
Development Rapid Introduction of Educate
Customers about Complex First-to-Market
New Products New Products/Services
Complete Customer Deliver Broad Product/
Create Customized Solutions Identify New
Opportunities Solutions Strategy Service
Line for Customers to Serve
Customers Create Network of Suppliers
Build Strong Customer Anticipate Future
Customer for Extended Product/
Relationships Needs Service
Capabilities Develop Customer Knowledge
Lock-in Provide Capacity for Create
Awareness Develop and Enhance Strategies
Proprietary Product/ Influence Switching
Costs of Proprietary Product Service
Existing and Potential Increase
Breadth/ Reliable Access and
Customers Applications of Standard Ease
of Use
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.
60
Strategy Map
0
  • The cause effect components of the Balanced
    Scorecard template is transformed into visual
    model called the strategy map.
  • The strategy map allows the company to describe
    and illustrate its
  • Objectives, initiatives targets
  • Measurements used to assess performance
  • Linkages which are the foundation of the
    strategic direction

61
Strategy Map
0
  • The next frame illustrates a firms strategic map
    for pursuing a product leadership strategy.
  • To start the company emphasize
  • Productivity strategy
  • Revenue Growth strategy
  • Refer to Strategy Map Template

62
Balanced ScorecardStrategy Map Template Product
Leadership
0
Long-Term Shareholder Value
Financial Perspective
Productivity Strategy
Revenue Growth Strategy
Manage Total Life-Cycle Product Costs
Revenues from New Products
Gross Margins New Products
Products and Services That Expand Existing
Performance Boundaries into the Highly Desirable
Customer Perspective
High-Performance Products Smaller, Faster,
Lighter, Cooler, More Accurate, More Storage,
Brighter
New Customer Segments
First to market
Operations Management
Customer Management
Innovation
Regulatory and Social
Flexible Robust Processes
Rapid Introduction of New Products
Educate Customers about Complex
New Products/Services
Disciplined, High-Performance Product Development
Minimize Product Liability And Environmental Impac
t
Internal Perspective
Supply Capacity for Rapid Growth
In-line Experimentation and Improvement
Capture Customer Ideas for New Products/Services
Product Development Time From Idea to Market
Contribute to Communities
Find, Motivate, Grow, and Retain the Best Talent
A Capable, Motivated and Technologically Enabled
Workforce
Learning and Growth Perspective
Human Capital
Information Capital
Organization Capital
Computer-Aided Design and Manufacturing (CAD/CAM)
Deep Functional Expertise
Creative, Versatile Employees Cross- functional
Teamwork
Virtual Product Prototyping and Simulation
Creativity, Innovation
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