Value creation and delivery sequence
The value chain -- a tool for identifying ways to create more customer value. The value chain identifies nine strategically relevant activities that create value and cost a specific business. These nine value creating activities consist of five primary activities and four support activities.
The primary activities cover the sequence of:
The support activities are handled in certain specialized departments, these activities include:
A firm success depends not only on how well each department performs its work, but on how well the various departmental activities are coordinated to conduct core business processes. These core business processes include:
Core competency has three characteristics:
The holistic marketing framework is designed to address three key management questions:
Value exploration
developing a strategy requires an understanding of the relationships and interactions among three spaces:
Value creation
marketers need to:
Business realignment may be necessary to maximize core competencies. It involves three steps;
Value delivery
company must become proficient at:
Strategic planing -- calls for action in three key areas:
Four main organizational levels:
Corporate headquarters -- responsible for designing a corporate strategic plan to guide the whole enterprise; decision making for allocation of resources into divisions
division level -- establishes plans covering the allocation of funds to each business unit within the division
business unit level -- develop strategic plans to carry out the business unit into a profitable future
product level -- product lines, brands, business unit develops marketing plans for achieving its objectives in the product market
Marketing plan -- the central instrument for directing and coordinating the marketing effort. The marketing plan operates at two levels: strategic and tactical.
The strategic marketing plan -- lays out the target markets and the value proposition that will be offered, based on analysis of the best market opportunities
the tactical marketing plan -- specifies the marketing tactics, including product features, promotion, merchandising, pricing, sales channels, and service.
Corporate and division strategic planning
Corporate headquarters undertake before planning activities:
To define its mission, the company should address these classic questions:
what is our business?
Who is the customer?
What is of value to the customer?
What will I business be?
What should our business be?
Mission statements -- guides geographically dispersed employees to work independently and yet collectively toward realizing the organizational goals, to be shared with managers, employees and in some cases customers. Provides a shared sense of purpose, direction, and opportunity.
Good Mission statements have three major characteristics:
A business can be defined in terms of three dimensions:
Strategic business units (SBUs) have three characteristics:
Assessing growth opportunities -- involves planning new businesses, downsizing, terminating older businesses
intensive opportunities -- further growth within current businesses
integrative opportunities -- identifying opportunities to build or acquire businesses that are related to the current business
diversification opportunities -- identifying opportunities to add attractive businesses that are on related to current businesses
Intensive growth
Market penetration strategies -- the company first considers whether it could gain more market share with its current products and their current markets
market development strategy -- company considers whether it can find or develop new markets for its current products
product development strategy -- company considers whether it can develop new products of potential interest to its current markets
diversification strategy -- company reviews opportunities to develop new products for new markets
Organization and organizational culture
organization -- consists of its structures, policies, and corporate culture
corporate culture -- the shared experiences, stories, police come and norms that characterize an organization
Scenario analysis -- consists of developing plausible representation of a firm's possible future that make different assumptions about forces driving the market and include different uncertainties
The business mission
each business unit needs to define its specific mission within the broader company mission.
SWOT analysis -- but overall a violation of a company strengths, weaknesses, opportunities, and threats. It involves monitoring the external and internal marketing environment
external environment analysis -- the business unit has to monitor key macro environment forces such as:
For each trend or development, management needs to identify the associated opportunities and threats.
Marketing opportunity -- is an area of buyer need an interest in which there is a high probability that a company can profitably satisfy that need.
There are three main sources of market opportunities:
To evaluate opportunities, companies can use the market opportunity analysis (MOA) to determine the attractiveness and probability of success:
Environmental threat -- challenges posed by an unfavorable trend or development that would lead, in the absence of defensive marketing action, to lower sales or profit
Internal environment analysis can identify strengths and weaknesses, performance, and importance in the areas of marketing, finance, manufacturing, and organization skills.
Goal formulation -- managers use the term goals to describe objectives that are specific with respect to magnitude and time. Most business units pursue a mix of objectives including:
The business unit sets these objectives and then manages by objectives (MBO). For an MBO system to work, the units objectives must meet for criteria:
Trade-offs to consider --
Strategic formulation
Porters generic strategies
Strategic alliances
product or service alliances -- 1 company licenses another to produce its product, were two companies jointly market their complementary products or new product
promotional alliances -- 1 company agrees to carry a promotion for another company's product or service
logistics alliances -- 1 company offers logistical services for another company's product
pricing collaborations -- 1 a more companies join a special pricing collaboration
Marketing plan -- is a written document that summarizes what the marketer has learned about the marketplace and indicates how the firm plans to reach its marketing objectives
Contents of the marketing plan:
In The value delivery process involves choosing (or identifying), providing (or delivering), and communicating with superior value. The value chain is a tool for identifying key activities that create value and costs in the specific business.
- choose the value
- customer segmentation
- market selection/focus
- value positioning
- provide the value
- product development
- service development
- pricing
- sourcing/making
- distributing/servicing
- communicate the value
- salesforce
- sales promotion
- advertising
The value chain -- a tool for identifying ways to create more customer value. The value chain identifies nine strategically relevant activities that create value and cost a specific business. These nine value creating activities consist of five primary activities and four support activities.
The primary activities cover the sequence of:
- inbound logistics -- bringing materials into the business
- operations -- converting them into final products
- outbound logistics -- shipping out final products
- marketing and sales -- marketing the products
- service -- ongoing service activities
The support activities are handled in certain specialized departments, these activities include:
- procurement
- technology development
- human resource management
- firm infrastructure
A firm success depends not only on how well each department performs its work, but on how well the various departmental activities are coordinated to conduct core business processes. These core business processes include:
- the market sensing process -- all the activities involved in gathering market intelligence, coordinating it within the organization, and acting on information
- new offering realization process -- all the activities involved in researching, developing, and launching new high-quality offerings quickly and within budget
- customer acquisition process -- all the activities involved in defining target markets and prospecting for new customers
- customer relationship management process -- all the activities involved in building deeper understanding, relationships, and offerings to individual customers
- the fullfillment management process -- all the activities involved in receiving and approving orders, shipping the goods on time, and collecting payment
Core competency has three characteristics:
- it is a source of competitive advantage in that it makes a significant contribution to perceived customer benefits
- it has applications in a wide variety of markets
- difficult for competitors to imitate
The holistic marketing framework is designed to address three key management questions:
- value exploration -- How can a company identify new value opportunities?
- Value creation -- How can a company efficiently create more promising new value offerings?
- Value delivery -- How can a company used its capabilities and infrastructure to deliver the new value offerings more efficiently?
Value exploration
developing a strategy requires an understanding of the relationships and interactions among three spaces:
- the customer's cognitive space -- reflects existing and latent needs and includes dimensions such as the need for participation, stability, freedom, and change
- the company's competence space -- described in terms of breadth, broad versus focused scope of business; and depth, physical versus knowledge-based capabilities
- the collaborators resource space -- involves horizontal partnerships, where companies choose partners based on their ability to exploit related market opportunities, and vertical partnerships, where companies choose partners based on their ability to serve their value creation
Value creation
marketers need to:
- identify new customer benefits from the customers view
- utilize core competencies from its business domain
- select and manage business partners from its collaborative of networks
Business realignment may be necessary to maximize core competencies. It involves three steps;
- (re) defining the business concept (the big idea)
- (re) shaping the business scope (the lines of business)
- (re) positioning the company's brand identity (how customers see the company)
Value delivery
company must become proficient at:
- customer relationship management -- allows company to discover who they are, how they behave, what they need and want
- internal resource management -- allows company to respond effectively, and a great major business processes, such as order processing, General ledger, payroll, production
- business partnership management -- allows company to handle complex relationships with trading partners to sores, process, deliver products
Strategic planing -- calls for action in three key areas:
- managing a company's businesses as an investment portfolio
- assessing each business is stirring by considering the market's growth rate and companies position in that market
- establishing the strategy -- developing the game plan for achieving its long-run objectives
Four main organizational levels:
- corporate level
- division level
- business unit level
- product level
Corporate headquarters -- responsible for designing a corporate strategic plan to guide the whole enterprise; decision making for allocation of resources into divisions
division level -- establishes plans covering the allocation of funds to each business unit within the division
business unit level -- develop strategic plans to carry out the business unit into a profitable future
product level -- product lines, brands, business unit develops marketing plans for achieving its objectives in the product market
Marketing plan -- the central instrument for directing and coordinating the marketing effort. The marketing plan operates at two levels: strategic and tactical.
The strategic marketing plan -- lays out the target markets and the value proposition that will be offered, based on analysis of the best market opportunities
the tactical marketing plan -- specifies the marketing tactics, including product features, promotion, merchandising, pricing, sales channels, and service.
Corporate and division strategic planning
Corporate headquarters undertake before planning activities:
- defining the corporate mission
- establishing strategic business units
- assigning resources to each SBU
- assessing growth opportunities
To define its mission, the company should address these classic questions:
what is our business?
Who is the customer?
What is of value to the customer?
What will I business be?
What should our business be?
Mission statements -- guides geographically dispersed employees to work independently and yet collectively toward realizing the organizational goals, to be shared with managers, employees and in some cases customers. Provides a shared sense of purpose, direction, and opportunity.
Good Mission statements have three major characteristics:
- focus on a limited number of goals
- stress the company's major policies and now use
- define major competitive spheres within which the company will operate
A business can be defined in terms of three dimensions:
- customer groups
- customer needs
- technology
Strategic business units (SBUs) have three characteristics:
- it is a single business or collection of related businesses that can be planned separately from the rest of the company
- it has its own set of competitors
- it has a manager who is responsible for strategic planing and profit performance and controls most of the factors affecting profit
Assessing growth opportunities -- involves planning new businesses, downsizing, terminating older businesses
intensive opportunities -- further growth within current businesses
integrative opportunities -- identifying opportunities to build or acquire businesses that are related to the current business
diversification opportunities -- identifying opportunities to add attractive businesses that are on related to current businesses
Intensive growth
Market penetration strategies -- the company first considers whether it could gain more market share with its current products and their current markets
market development strategy -- company considers whether it can find or develop new markets for its current products
product development strategy -- company considers whether it can develop new products of potential interest to its current markets
diversification strategy -- company reviews opportunities to develop new products for new markets
Organization and organizational culture
organization -- consists of its structures, policies, and corporate culture
corporate culture -- the shared experiences, stories, police come and norms that characterize an organization
Scenario analysis -- consists of developing plausible representation of a firm's possible future that make different assumptions about forces driving the market and include different uncertainties
The business mission
each business unit needs to define its specific mission within the broader company mission.
- External and internal opportunities and threats analysis
- goal formulation
- strategy formulation
- program formulation
- implementation
- feedback and control
SWOT analysis -- but overall a violation of a company strengths, weaknesses, opportunities, and threats. It involves monitoring the external and internal marketing environment
external environment analysis -- the business unit has to monitor key macro environment forces such as:
- demographic
- economic
- natural
- technological
- legal
- social
- cultural
- customers
- competitors
- suppliers
- distributors
- dealers
For each trend or development, management needs to identify the associated opportunities and threats.
Marketing opportunity -- is an area of buyer need an interest in which there is a high probability that a company can profitably satisfy that need.
There are three main sources of market opportunities:
- fulfilling supply of products with high demand/short supply
- supply existing products or services in a new or superior way
- creating new products or services
To evaluate opportunities, companies can use the market opportunity analysis (MOA) to determine the attractiveness and probability of success:
- can the benefits involved in the opportunity be articulated convincingly to a defined target market(s)?
- Can the target market relocated and reached with cost-effective media and trade channels?
- Does the company possess or have access to the critical capabilities and resources needed to deliver the customer benefits?
- Can a company deliver the benefits better than any actual or potential competitors?
- Will the financial rate of return meet or exceed the companies required threshold for investment?
Environmental threat -- challenges posed by an unfavorable trend or development that would lead, in the absence of defensive marketing action, to lower sales or profit
Internal environment analysis can identify strengths and weaknesses, performance, and importance in the areas of marketing, finance, manufacturing, and organization skills.
Goal formulation -- managers use the term goals to describe objectives that are specific with respect to magnitude and time. Most business units pursue a mix of objectives including:
- profitability
- sales growth
- market share improvement
- risk containment
- innovation
- reputation
The business unit sets these objectives and then manages by objectives (MBO). For an MBO system to work, the units objectives must meet for criteria:
- arranged hierarchically from most to least important
- objectives should be stated quantitatively whenever possible
- goals must be realistic
- objectives must be consistent
Trade-offs to consider --
- short-term profit versus long-term growth
- deep penetration of existing markets versus developing new markets
- profit goals versus nonprofit goals
- high growth versus low risk
Strategic formulation
Porters generic strategies
- overall cost leadership
- differentiation
- focus on narrow market segments
Strategic alliances
product or service alliances -- 1 company licenses another to produce its product, were two companies jointly market their complementary products or new product
promotional alliances -- 1 company agrees to carry a promotion for another company's product or service
logistics alliances -- 1 company offers logistical services for another company's product
pricing collaborations -- 1 a more companies join a special pricing collaboration
Marketing plan -- is a written document that summarizes what the marketer has learned about the marketplace and indicates how the firm plans to reach its marketing objectives
Contents of the marketing plan:
- executive summary and table of contents
- situation analysis
- marketing strategy
- financial projections
- implementation controls
In The value delivery process involves choosing (or identifying), providing (or delivering), and communicating with superior value. The value chain is a tool for identifying key activities that create value and costs in the specific business.
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