Page 68 - Marketing Management

DEVELOPING MARKETING STRATEGIES AND PLANS | CHAPTER 2 45

Several types of diversification are possible for Musicale. First, the company could choose a concen-
tric strategy and seek new products that have technological or marketing synergies with existing
product lines, though appealing to a different group of customers. It might start a laser disk manufac-
turing operation, because it knows how to manufacture compact discs. Second, it might use a
horizontal strategy to search for unrelated new products that appeal to current customers. Musicale
might produce compact disc cases,for example,though they require a different manufacturing process.
Finally, the company might seek new businesses that have no relationship to its current technology,
products, or markets, adopting a conglomerate strategy to consider making application software or
personal organizers.

DOWNSIZING AND DIVESTING OLDER BUSINESSES Companies must care-
fully prune, harvest, or divest tired old businesses to release needed resources for other
uses and reduce costs. To focus on its travel and credit card operations, American Express
in 2005 spun off American Express Financial Advisors, which provided insurance, mutual
funds, investment advice, and brokerage and asset management services (it was renamed
Ameriprise Financial).

Organization and Organizational Culture
Strategic planning happens within the context of the organization. A company’s organization con-
sists of its structures, policies, and corporate culture, all of which can become dysfunctional in a
rapidly changing business environment. Whereas managers can change structures and policies
(though with difficulty), the company’s culture is very hard to change. Yet adapting the culture is
often the key to successfully implementing a new strategy.
What exactly is a corporate culture? Some define it as “the shared experiences, stories, beliefs,
and norms that characterize an organization.” Walk into any company and the first thing that
strikes you is the corporate culture—the way people dress, talk to one another, and greet customers.
When Mark Hurd became CEO of HP, one of his goals was to reinvigorate the famous “HP Way,” a
benevolent but hard-nosed corporate culture that rewarded employees amply but expected team-
work, growth, and profits in return. 25
A customer-centric culture can affect all aspects of an organization. Sometimes corporate
culture develops organically and is transmitted directly from the CEO’s personality and habits
to the company employees. Mike Lazaridis, president and co-CEO of BlackBerry producer
Research In Motion, is a scientist in his own right, winning an Academy Award for technical
achievement in film. He has hosted a weekly, innovation-centered “Vision Series” at company
headquarters that focuses on new research and company goals. As he states, “I think we have a
culture of innovation here, and [engineers] have absolute access to me. I live a life that tries to
promote innovation.” 26

Marketing Innovation
Innovation in marketing is critical. Imaginative ideas on strategy exist in many places within a
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company. Senior management should identify and encourage fresh ideas from three underrepre-
sented groups: employees with youthful or diverse perspectives, employees far removed from
company headquarters, and employees new to the industry. Each group can challenge company
orthodoxy and stimulate new ideas.
German-based Reckitt Benckiser has been an innovator in the staid household cleaning prod-
ucts industry by generating 40 percent of sales from products under three years old. Its
multinational staff is encouraged to dig deep into consumer habits and is well rewarded for excel-
lent performance.“Marketing Insight: Creating Innovative Marketing” describes how some leading
companies approach innovation.
Firms develop strategy by identifying and selecting among different views of the future. The
Royal Dutch/Shell Group has pioneered scenario analysis, which develops plausible representa-
tions of a firm’s possible future using assumptions about forces driving the market and different
uncertainties. Managers think through each scenario with the question,“What will we do if it hap-
pens?” adopt one scenario as the most probable, and watch for signposts that might confirm or
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disconfirm it. Consider the challenges faced by the movie industry.