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Chapter 3

Marketings Strategic Role in the

Organization
1-2
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2001
TheMcGraw-Hill
McGraw-Hill
Companies,
Inc. reserved.
All rights reser
Copyright
2004by
by The
Companies,
Inc. All rights

After
After studying
studying this
this chapter,
chapter,
you
you should
should be
be able
able to:
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.

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After studying this chapter,

you should be able to:
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.

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Organizational Levels
The Corporate Level is the
highest level in any organization.

The Functional Level includes all the

various functional areas within a business unit.
The Business Level consists of units within the
overall organization that are generally managed
as self-contained businesses.
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Organizational Strategic Planning

Higher organizational level strategic

plans provide direction for strategic
plans at lower levels.

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Lower-level plans are developed

to execute higher-level plans.

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Types of Strategic Plans

Organizational
OrganizationalLevel
Level

Type
Typeof
ofStrategic
StrategicPlan
Plan

Key
KeyStrategic
StrategicDecisions
Decisions

Corporate
Corporate

Corporate
Corporatestrategic
strategic
plan
plan

Corporate
Corporatevision
vision
Objectives
Objectives&&resource
resource
allocation
allocation
Growth
Growthstrategies
strategies

Business
Business

Business
Businessstrategic
strategic
plan
plan

Market
Marketscope
scope
Competitive
Competitiveadvantage
advantage

Marketing
Marketing

Marketing
Marketingstrategic
strategic
plan
plan

Target
Targetmarket
market
Marketing
Marketingmix
mix

Product
Productmarketing
marketing
plan
plan

Specific
Specifictarget
targetmarket
market
Specific
Specificmarketing
marketingmix
mix
Execution
Executionaction
actionplan
plan

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The Strategic Role of Brand Loyalty

Generating
Market Share

Developing a Strong
Customer Base

Customer Equity
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The Strategic Planning Process

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The Role of Marketing

Strategic Marketing:

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Marketing activities that affect corporate,

business, and marketing strategic plans.

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reser

The Role of Marketing

Marketers orient everyone in the organization
toward markets and customers.

Marketers analyze the current situation,

identify trends in the marketing environment,
and assess the potential impact of these trends.

Marketers development corporate, business,

and marketing strategic plans.
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The Role of Marketing

Marketing
Management:

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Relates to specific
product marketing
strategies.

Networks:

Comprise strategic
alliances among
suppliers, distributors,
and the marketing firm.

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reser

Corporate Strategy Decisions

Corporate Vision
Corporate Objectives & Resource Allocation
Corporate Growth Strategies
Business-unit Composition

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Corporate Vision

Corporate Vision:

The basic values of an organization.

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The vision specifies what

the organization stand for,
where it plans to go, and
how it plans to get there.

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What Comprises Corporate Vision?

Markets
Products and services
Geographic domain
Core competencies
Organizational objectives
Organizational philosophy
Organizational self-concept
Desired public image

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Core Purpose: A Companys Reason for Being

3M:
3M:To
Tosolve
solveproblems
problemsinnovatively.
innovatively.

Hewlett-Packard:
Hewlett-Packard:To
Tomake
maketechnical
technicalcontributions
contributionsfor
forthe
the
advancement
and
welfare
of
humanity.
advancement and welfare of humanity.

Mary
MaryKay
KayCosmetics:
Cosmetics:To
Togive
giveunlimited
unlimitedopportunity
opportunityto
towomen.
women.

Merck:
Merck:To
Topreserve
preserveand
andimprove
improvehuman
humanlife.
life.

Sony:
Sony:To
Toexperience
experiencethe
thejoy
joyof
ofadvancing
advancingand
andapplying
applyingtechnology
technology
for
forthe
thebenefit
benefitof
ofthe
thepublic.
public.

Wal-Mart:
Wal-Mart:To
Togive
giveordinary
ordinaryfolks
folksthe
thechance
chanceto
tobuy
buythe
thesame
samethings
things
as
asrich
richpeople.
people.

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Core Purpose

Core Competency:

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A bundle of skills that are possessed by

individuals across the organization.

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Questions Leading to an Effective Corporate Vision

1.

Which customers will you be

serving in the future?

2.

Through which channels will you

reach customers in the future?

3.

Who will be your competitors in

the future?

4.

Where will your margins come

from in the future?

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Questions Leading to an Effective Corporate Vision

5.

In what end-product markets

will you participate in the
future?

6.

What will be the basis for your

competitive advantage in the
future?

7.

What skills or capabilities will

make you unique in the
future?

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Corporate Objectives and Resource Allocation

Corporate objectives specify the

Corporate objectives specify the

achievement
achievement of
of desired
desired levels
levels of
of
performance
performance during
during particular
particular time
time
periods.
periods.

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Corporate Objectives and Resource Allocation

Corporate objectives and

resource allocation affect
marketers in 2 basic ways:
2)

Providing guidance
for the development
and Implementation of
marketing strategies.

1) In setting the
objectives for different
organizational levels.

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Corporate Growth Strategies

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Same

New

Same

Market
Penetration

Market
Expansion

New

Markets

Products

Product
Expansion

Diversification

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Business-Unit Composition

Strategic Business Unit

(SBU):

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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 or related needs,
and the units management is
responsible for all (or most) of
the basic business functions

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reser

Business-Unit Composition
Companies often organize around
Companies often organize around

competency-based
competency-based SBUs
SBUs to
to
establish
establish Sustained
Sustained Competitive
Competitive
Advantage.
Advantage.

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Business Strategy Decisions

The basic objective of a business strategy is
The basic objective of a business strategy is

to
to determine
determine how
how the
the business
business unit
unit will
will
compete
compete successfully.
successfully.

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Business Strategy Decisions

Dimensions of
Strategy:

Market scope.

How broadly the

business views its
target market.

Competitive
advantage.

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Competitive
Advantage:

The way a business

tries to get consumers
to purchase its
products over those
offered by
competitors.

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General Business Strategies

Market Scope

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Low price
Differentiation

Competitive Advantage

Focused

Broad

Easyjet

Southwest

Jet Blue

Conair
Alaskan Airlines
Midwest

American
Delta
United Jet Blue

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The Rule of Three

The Rule of Three:

Naturally occurring
competitive forces will
create a consistent
structure in many
mature markets.

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Three major players often

compete by offering a wide
range of related products
and services and serve
most major market
segments.

Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reser

Marketing Strategy Decisions

A Marketing
Strategy Addresses:
Selection of a
target market.
Development of a
marketing mix.

Functional strategies
are at the
business-unit level.

Operating strategies
are at the product level.
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Business & Product Marketing Strategies

Decision Area

Business Marketing Strategy

Product Marketing Strategy

Target market

Segmented or mass approach

Specific definition of target market

Product

Number of different products

Specific features of each product

Price

General competitive price level

Specific price

Distribution

General distribution policy

Specific distributions

General emphasis on marketing

communications tools

Specific marketing
communications program

Marketing
communications

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International Marketing Strategies

Entry Strategy:

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The approach used

to market products in
an international
market.

The Basic Options:

Exporting
Joint Ventures
Direct Investment

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International Marketing Strategies

Standardized Marketing Strategy:
The same product, price, distribution, & promotion
programs in all international markets.

Customized Marketing Strategy:

A different marketing mix for each
target market country.

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Executing Strategic Plans with Teamwork

1.
1.

Cross-Functional
Cross-Functional Teamwork
Teamwork

2.
2.

Marketing
Marketing Teamwork
Teamwork

3.
3.

Co-Marketing
Co-Marketing Alliances
Alliances

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Business Function Orientations

Function

Basic Orientation

Marketing
Production
Finance
Accounting
Purchasing
R&D
Engineering

To attract and retain customers

To produce products at lowest cost
To keep within budgets
To standardize financial reports
To purchase products at lowest cost
To develop newest technologies
To design product specifications

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