CHAPTER 2: SUMMARY
DEVELOPING MARKETING STRATEGIES AND PLANS
The value delivery process (marketing) involves choosing (or identifying), providing (or
delivering), and communicating superior value to the consumer. The value chain is a tool for
identifying key activities that creates value and costs in a specific business.
Strong companies develop superior capabilities in managing core business processes by
managing core processes effectively to create a marketing network from suppliers to
consumers. Managing these core processes effectively, means creating a marketing network in
which the company works closely with all parties in the production and distribution chain, from
suppliers of raw materials to retail distributors. Companies no longer compete— marketing
Holistic marketing maximizes value exploration by understanding the relationships between the
customer’s cognitive space, the company’s competence space, and the collaborator’s resource
space. It maximizes value creation by identifying new customer benefits from the customer’s
cognitive space; utilizing core competencies from its business domain, selecting and managing
business partners from its collaborative networks. Maximized value is delivered by becoming
proficient at customer relationship management, internal resource management, and business
Market-orientated strategic planning is the managerial process of developing and maintaining a
viable fit between the organization’s objectives, skills, and resources and its changing market
opportunities. The aim of strategic planning is to shape the company’s businesses and products
so that it yields target profits and growth. Strategic planning takes place at four levels:
corporate, division, business unit, and product.
The corporate strategy establishes the framework within which the divisions and business units
prepare their strategic plans. Setting a corporate strategy entails four activities: defining the
corporate mission, establishing strategic business units (SBUs), assigning resources to each SBU
based on its market attractiveness and business strength, and planning new business and
downsizing older businesses.
Strategic planning for individual businesses entrails the following activities: defining the
business mission, analyzing external opportunities and threats, analyzing internal strengths and
weaknesses, formulating goals, formulating strategy, formulating supporting programs,
implementing the programs, gathering feedback, and exercising control.
Each product level within a business unit must develop a marketing plan for achieving its goals.
The marketing plan is one of the most important outputs of the marketing process. A key
ingredient of the marketing management process is insightful, creative marketing strategies,
and plans that can guide marketing activities.
See the example of a Marketing Plan for a skate company found on pages 61-65.
MARKETING AND CUSTOMER VALUE
Marketing involves satisfying consumers’ needs and wants. The task of any business is to
deliver customer value at a profit.
The Value Delivery Process
The traditional view of marketing is that the firm makes something and then sells it.
A) Will not work in economies where people face abundant choice.
B) New belief: marketing begins with the planning process.
C) Value creation and delivery consists of three parts:
1) Choosing the value (segment the market, define target market, develop
2) Providing the value (product features, prices, and distribution channels).
3) Communicating the value (sales force, advertising, and promotional tools).
Each of these “values” involves a cost component to the company.
D) The Japanese use:
1) Zero customer feedback time.
2) Zero product-improvement time.
3) Zero purchasing time.
4) Zero set-up time.
5) Zero defects.
E) Nirmalya Kumar’s 3 “Vs” approach to marketing:
1) Define the value segment or segments.
2) Define the value proposition.
3) Define the value network.
F) Frederick Webster views marketing in terms of:
1) Value defining process.
2) Value developing processes.
3) Value delivering processes.
The Value Chain
Michael Porter’s Value Chain identifies nine strategically relevant activities that create
value and costs (five primary and four support activities).
Review Key Definition here: value chain
A) Primary activities:
1) Inbound logistics (material procurement).
2) Operations (turn into final product).
3) Outbound logistics (shipping and warehousing).
4) Marketing (marketing and sales).
5) Servicing (service after the sale).
B) Support activities:
2) Technology development.
3) Human resource management.
4) Firm infrastructure.
The firm’s task is to examine its costs and performance in each value-creating activity and to
look for ways to improve performance.
C) Core business processes:
1) The market sensing process (marketing intelligence).
2) The new offering realization process (research and development).
3) The customer acquisition process (defining target markets and consumers).
4) The customer relationship management process (deeper understanding of
The fulfillment management process (receiving, shipping, and collecting payments).
Strong companies develop superior capabilities in these core business processes. Strong
companies also reengineer the workflows and build cross-functional teams responsible for
each process. Many companies have partnered with suppliers and distributors to create a
superior value-delivered network.
D) Value-delivery network (supply chain).
To be successful today, a firm must look for competitive advantages beyond its own
operations—to its suppliers and distributors to create a superior value-delivery network
Review Key Definitions here: value-delivery network or supply chain
A) Companies need resources (labor, materials, energy, etc.)
1) Own or nurture the resources and competencies that make up the essence of
the business—outsource if competency is cheaper and available.
2) Competitive advantage accrues to companies that possess distinctive
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