C H A P T E R

3
Marketings Strategic Role in the Organization
2007 The McGraw-Hill Companies, Inc. All rights reserved.

McGraw-Hill/Irwin

Learning Objectives
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. 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.

Bearden Marketing 5th Ed

3-2

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Disney
Disneys long-run objective is to become the worlds premier family entertainment company through the ongoing development of its powerful brand and character franchises. Its business is making people happy by turning fantasy into reality.
Bearden Marketing 5th Ed

3-3

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Organizational Levels
Corporate Level Business Level
The highest level in any organization.

Units within the organization that are generally managed as selfcontained businesses. Includes all of the various functional areas within a business unit.

Functional Level

Bearden Marketing 5th Ed

3-4

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Organizational Strategic Planning

Strategic planning for multibusiness, multiproduct organizations typically occurs at each organizational level. Strategic plans at higher organizational levels provide direction for strategic plans at lower levels.

Bearden Marketing 5th Ed

3-5

2007 The McGraw-Hill Companies, Inc. All rights reserved.

The Strategic Role of Brand Loyalty

Brand Loyalty

Name Awareness

Perceived Quality

Brand Equity

Competitive Advantage

Brand Assets Cognitive Associations

Bearden Marketing 5th Ed

3-6

2007 The McGraw-Hill Companies, Inc. All rights reserved.

The Strategic Planning Process

This process applies to strategic planning at every level. In the business world, most organizations are involved in different stages of the process simultaneously and do not necessarily follow such a step-by-step approach.

Exhibit 3-2

Bearden Marketing 5th Ed

3-7

2007 The McGraw-Hill Companies, Inc. All rights reserved.

The Role of Marketing

Exhibit 3-2

Bearden Marketing 5th Ed

3-8

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Marketing Strategy and the Internet

The failure of many dot-com companies has raised many important questions regarding the lessons firms should learn from Internet business. Internet usage continues to grow globally, and many traditional firms have found viable applications of Web technology. Internet selling direct to consumers is frequently employed as another channel of communication and interaction. One of the primary effects of the Internet has been the increased availability of information and the emphasis on price.

Bearden Marketing 5th Ed

3-9

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Corporate Strategy Decisions

Vision

Business Unit Composition

Corporate Strategy Decisions

Growth Strategy

Objectives & Resource Allocation

Bearden Marketing 5th Ed

3-10

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Corporate Vision
A corporate vision represents the basic values of an organization. The vision specifies what the organization stands for, where it plans to go, and how it plans to get there. Corporate Vision Components:

Markets Products and services Geographic domain Core competencies Organizational objectives Organizational philosophy Organizational self-concept Desired public image
3-11
2007 The McGraw-Hill Companies, Inc. All rights reserved.

Bearden Marketing 5th Ed

Core Values and Purpose

Core values are the small set of guiding principles that represent the enduring tenets of an organization. Core purpose reflects the companys reason for being or its idealistic motivation for doing work.

Bearden Marketing 5th Ed

3-12

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Unilevers Mission Statement

Unilever's mission is to add Vitality to life. We meet everyday needs for nutrition, hygiene and personal care with brands that help people feel good, look good and get more out of life. Our deep roots in local cultures and markets around the world give us our strong relationship with consumers and are the foundation for our future growth. We will bring our wealth of knowledge and international expertise to the service of local consumers a truly multi-local multinational.

Our long-term success requires a total commitment to exceptional standards of performance and productivity, to working together effectively, and to a willingness to embrace new ideas and learn continuously.
To succeed also requires, we believe, the highest standards of corporate behaviour towards everyone we work with, the communities we touch, and the environment on which we have an impact. This is our road to sustainable, profitable growth, creating long-term value for our shareholders, our people, and our business partners.
Bearden Marketing 5th Ed

3-13

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Corporate Vision
Core competency reflects a bundle of skills that are possessed by individuals across the organization.

Bearden Marketing 5th Ed

3-14

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Objectives and Resource Allocation

Corporate objectives specify the achievement of desired levels of performance during particular periods.
Corporate objectives are established for many areas, but the most visible tend to be financial objectives.

Exhibit 3-7

Bearden Marketing 5th Ed

3-15

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Customer Relationship Management

Customer Relationship Management (CRM) initiatives are designed to achieve a continuing dialogue with customers, across all contact and access points, with personalized treatment of the most valuable customers designed to increase customer retention and the effectiveness of marketing strategies.

Bearden Marketing 5th Ed

3-16

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Corporate Growth Strategies

Corporate growth strategies describe the general approach for achieving corporate growth objectives.
Exhibit 3-8

Bearden Marketing 5th Ed

3-17

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Corporate Growth Strategies

A market penetration strategy represents a decision to achieve corporate growth objectives with existing products within existing markets.

Market Penetration

Market Expansion

A market expansion strategy entails marketing existing products to new markets.

A product expansion strategy calls for marketing new products to the same market.
more

Product Expansion

Bearden Marketing

5th

Ed

3-18

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Corporate Growth Strategies (cont)

Diversification

A diversification strategy requires the firm to expand into new products and new markets.
Unrelated diversification means that the new products and markets have nothing in common with existing operations. Related diversification occurs when the new products and markets have something in common with existing operations.

Bearden Marketing 5th Ed

3-19

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Business Unit Composition

A strategic business unit (SBU) 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 of related needs,

The units management is responsible for all (or most) of the basic business functions.

Bearden Marketing 5th Ed

3-20

2007 The McGraw-Hill Companies, Inc. All rights reserved.

SBU Evaluation
SBUs can be evaluated in terms of market share and market growth using some variation of the Boston Consulting Group growth share matrix.
Exhibit 3-9

Bearden Marketing 5th Ed

3-21

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Business Strategy Decisions

Market Scope
Market scope refers to how broadly the business views its target market. Two basic strategies exist: Focused or Broad.

Competitive Advantage

Competitive advantage refers to the way a business tries to get consumers to purchase its products over those offered by competitors. Two basic strategies exist: Differentiation or Low Price

Bearden Marketing 5th Ed

3-22

2007 The McGraw-Hill Companies, Inc. All rights reserved.

General Business Strategies

Combining the market scope and competitive advantage decisions produce four general business strategies.
Exhibit 3-10

Bearden Marketing 5th Ed

3-23

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Marketing Strategy Decisions

Developed as functional strategies at the business unit level and as operating strategies at the product level.

Business strategy decisions provide direction for all business-level marketing activities. Product strategy decisions guide the execution of marketing activities for individual products.

Bearden Marketing 5th Ed

3-24

2007 The McGraw-Hill Companies, Inc. All rights reserved.

Social Responsibility as a Strategy

The principles underlying socially responsible corporate and marketing strategy include the following:

Treating customers with fairness, openness, and quick response to inquiries and complaints. Treating employees, suppliers, and distributors with fairness. Caring about the environmental impact of the firms activities and supply chain. Behaving in a consistently ethical manner.

Bearden Marketing 5th Ed

3-25

2007 The McGraw-Hill Companies, Inc. All rights reserved.

International Entry Strategies

An entry strategy is the approach used to market products in an international market. Exporting
Exporting is a method of selling products to buyers in international markets.
Direct investment is where the marketer invests in production, sales, distribution, or other operations in the foreign country. Joint ventures include any arrangement between two or more organizations to market products internationally.
3-26
2007 The McGraw-Hill Companies, Inc. All rights reserved.

Direct Investment

Joint Ventures
Bearden Marketing 5th Ed

International Strategic Orientation

Firms operating in international markets can use two different orientations toward marketing strategy. Standardized Marketing Strategy
With a standardized marketing strategy, a firm develops and implements the same product, price, distribution, and promotion programs in all international markets. With a customized marketing strategy, a firm develops and implements a different marketing mix for each target market country.
3-27
2007 The McGraw-Hill Companies, Inc. All rights reserved.

Customized Marketing Strategy

Bearden Marketing 5th Ed

Executing Strategic Plans

CrossFunctional Teamwork

Routes to Effective Execution

Comarketing Alliances
Bearden Marketing 5th Ed

Marketing Teamwork
3-28
2007 The McGraw-Hill Companies, Inc. All rights reserved.

Summary
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. 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.

Bearden Marketing 5th Ed

3-29

2007 The McGraw-Hill Companies, Inc. All rights reserved.