Week 10: Business Marketing Planning

Question 1

Explain the importance of performance measures

Answer 1

Reporting and marketing control systems are required:

• to assist in developing and implementing strategies
• to assess whether or not strategies worked
• to provide the measures that lead to control and improvement

Question 2

How does the Balanced Scorecard manage control

Answer 2

= Cause and effect relationship
- Defines the chain of logic by which intangible assets will be transformed to tangible value
Financial Perspective addresses this through
- productivity, long-term shareholder value and revenue growth

= Customer value proposition
- Clarifies conditions that create value for the customer
Customer Perspective include
- product/service attributes (price, quality, time, function), relationship (partnership) and image (brand)

= Value-creating processes
- Defines processes that transform intangible assets into customer and financial outcomes
Internal Process Perspective include
- managing operations, customers, innovation and regulatory/social processes

= Clustering assets and activities
- Defines intangible assets to be aligned and integrated to create value
Learning & Growth Perspectives:
- human capital and information capital and organisational capital

Question 3

Explain the first component of the business model

Answer 3

Each element is tied together by three important ‘bridge’ elements =>

• customer benefits
• configuration
• company boundaries

1. Customer Interface
   - Provide superior performance through:
   ->Speed
   ->Responsiveness to complex orders
   ->Customised to solve customer problems
   - Provide superior quality by:
   ->Reducing customer costs
   ->Improving performance
   ->Offer innovative product features that employ new technologies
   =Components
   - Fulfillment and support
   ->Are the channels a firm uses to reach and support customers
   - Information and insight
   ->Invovles the capiture of knowledge from customers and uses it to provide enhanced value to customers
   - 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
   - Pricing structure
   ->Employs a pricing policy and structure tha enhances profits but not at the expense of curtailing business

Question 4

Explain the second component of the business model

Answer 4

2. Core Strategy
   - The business mission describes overall strategic objective, sets course direction and defines performane criteria to measure progress
   - Product and market scope defines where firm competes
   - Basis for differentiation captures essence of how firm compettes differently than its rivals do
   - >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

Question 5

Explain the third component of the business model

Answer 5

3. Strategic Resources
   - Employing superior strategic resources and skills can gain a compettive advantage
   ->Core competencies:
   Set of skills, systems and technologies that create uniquely high value for customers
   -> Strategic assets:
   More tangible requirements for advantage; incl brands, customer data, distribution coverage, patents
   ->Core processes:
   Methodologies and routines that companies use to transform competencies, assets and other inputs into value for customers

Question 6

Explain the fourth component of the business model

Answer 6

4. Value Network
   - Includes those who complement and enrich the organisation
   - >Do we have good relations with supplier, 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?

Question 7

Explain what a balanced scorecard is and outline the first perspective measured by the scorecard.

Answer 7

= comprehensive system for converting a company’s vision and strategy into a set of performance measures. All this can be represented on a strategy map.

1. Financial Perspective
   = Financial growth and productivity outcomes
   - Balanced scorecard matches financial objectves with business units’ growth and other life cycle stages
   - Shows how intangible assets will be transformed into tangible value

Overall objective => increased shareholder value

• Two ways to increase shareholder value:
• > Financial growth, outcomes incl percentage profit form sales and sales growth
• > Productivity outcomes, incl lower operating costs, inventory turns

=Consideration given to:
->Productivity
->Long-term shareholder value
->Revenue growth
=Lifecycle phases of a business linked to financial objectives:
-Growth
->Balanced scorecard seeks to match financial objectives with business units growth and other life cycle stages
->Operation: where the company needs to commit resources for new product/service
->Financial objectives: know sales growth rate by segment, know percentage revenue from new product/services/customers
- Sustain
-> Operation: represents majority of business where strategy is to maintain and grow slowly
->Financial objectives: focus on share of target customers and account, know customer and product line profitability
- Harvest
->Mature SBUs (strategic business unit) or products
->Operations: provide only enough investment to maintain product equipment and capabilities
->Financial objectives: goal is payback, know customer and product-line profitability

Question 8

Outline the second perspective measured by the scorecard.

Answer 8

2. Customer Perspective
   = Defines how the firm proposes to deliver a competitively superior value proposition to the targeted customer
   = Clarifies how value will be created for the customer
   - Strategies include:
   ->Moving product image from commodity to branded product
   ->Personalised customer service
   ->Utilising partners (eg. distributors or manufacturing representatives)
   - Core measures:
   ->Market share
   ->Customer acquisition
   ->Customer retention
   ->Customer satisfaction

Question 9

Outline the third perspective measured by the scorecard.

Answer 9

3. Internal Perspective
   = Describes the business processes that directly affect the chosen strategies
   - Transforms intangible assets into customer and financial outcomes, outcomes include:
   ->Customer relationship management
   ->Innovation management
   ->Operations management
   ->Supply chain management
   ->Regulatory and social processes management

Question 10

Outline the fourth perspective measured by the scorecard.

Answer 10

4. Learning & Growth Perspective
   = The human, info and organisational capital to support value creating internal processes
   - Defines the intangibles assets that must be aligned and integrated to create value