Transcript Principles of MKTG - Auburn University

Principles of
Marketing
Chapter 2:
Company &
Marketing Strategy
Strategic Planning
• Managing the strategic fit between one’s
goals and capabilities and its changing
marketing opportunities.
 Adapting
the resources of the firm to the
opportunities and threats of an ever-changing retail
environment.
 Focused
not on current business but future
opportunities
Dr. James Carver – Auburn University
Steps in
Strategic Planning
• Corporate level:
•
i.e., headquarters
 Define
mission statement
 Set objectives and goals
 Design business portfolio
• Strategic Business Unit (SBU) level
•
e.g., a product line, division, single product, or brand
 Plan
•
functional strategies for delivering value
Includes marketing planning
Dr. James Carver – Auburn University
Strategic Business Unit (SBU)
• Strategic business unit:
A
unit of the company that has a separate mission
and objectives and that can be planned
independently from other company businesses.
 Can
•
•
•
be:
A division,
A product line within a division,
A single product or even brand.
Dr. James Carver – Auburn University
Mission Statement
• A mission statement is a statement of the
organization’s purpose–what it wants to
accomplish in the larger environment.
• It’s a basic description of the fundamental
nature, rationale, and direction of the firm.
 Basically
•
answers “what business are we in?”
Less than 60% have a written mission statement*
Dr. James Carver – Auburn University
Mission Statement (Cont.)
• Should be crafted at “the most meaningful
level of generalization possible”
 Should
•
be market oriented, not product oriented
Risk Marketing Myopia
 Focused
on customer experience, not sales and
profits.
Dr. James Carver – Auburn University
Goals and Objectives
• Established as a hierarchy of objectives that
“feed” the lower levels:
 Business
•
objectives
More about “what” (e.g., increase profits)
 Marketing
•
objectives
More about “how” (e.g., increase market share
domestically)
Dr. James Carver – Auburn University
Goals and Objectives (cont.)
• Each manager should have objectives and be
responsible for reaching them. Why?
1.
Provide direction and guidance to the firm in the
formulation of its strategies.
•
2.
An [intermediate] “destination” for the firm
Establish a standard against which to measure and
evaluate future firm performance.
•
They minimize the ability for ex post justification
Dr. James Carver – Auburn University
Designing the Business Portfolio
• The collection of businesses and products that
make up the company.
• Portfolio planning involves two steps:
1.
Analyze current portfolio & decide which should
receive more, less, or no investment
2.
Shape future portfolio through development and
downsizing
Dr. James Carver – Auburn University
Portfolio Analysis
• Steps:
1.
2.
3.
Identify key SBUs that make up company
Assess each SBU’s attractiveness
Decide how much support is deserved
• Most analyses are based on 2 factors (BCG):
1.
2.
Attractiveness of market (i.e., growth rate)
Strength within each market (i.e., share)
Dr. James Carver – Auburn University
Boston Consulting Group (BCG)
Growth-Share Matrix
Dr. James Carver – Auburn University
Strategies from the BCG Matrix
• Stars: High-share / high-growth
•
Strategy: Build into cash cow via investment.
• Cash cows: High-share / low-growth
•
Strategies: Maintain or harvest cash to support STARS.
• Question marks: Low-share / high-growth
•
Strategies: Build into STAR via investment OR
reallocate funding and let slip into DOG status.
• Dogs: Low-share / low-growth
•
Strategies: Maintain or divest investments.
Dr. James Carver – Auburn University
Problems with Matrix Approaches
• Several problems exist:
 Can
be difficult, time consuming, and costly
 Difficult
to define SBU’s market share & growth
rate.
 Focus
on current businesses, not future planning.
Dr. James Carver – Auburn University
Product/Market Expansion Grid
• An alternative to the Product Matrix
approach:
 Identify
“needs”
growth opportunities based more on
Dr. James Carver – Auburn University
From Strategic Planning
to Building Relationships
• Marketing plays a key role in strategic
planning:
 Provides
•
The marketing concept
 Provides
•
a guiding philosophy.
input to strategic planners.
Identifies attractive market opportunities
 Designs
strategies to reach objectives.
Dr. James Carver – Auburn University
The “Integrated Effort” Portion
of the Marketing Concept
• Marketers play a vital role, but can’t do it
alone
 They
•
Manage the internal value chain

•
Must:
Cross-functional management
Coordinate the external value delivery system

Interfirm management (e.g., channel management)
 “Marketing
•
is Everything”
(McKenna HBR 1991)
Little “m” marketing buy-in is critical
Dr. James Carver – Auburn University
Marketing Strategy
and the Marketing Mix
• The goal of marketing strategy is:
 Create
value & build customer relationships
 Marketing
•
•
•
•
strategy decisions include:
Market segmentation
Targeting
Differentiation
Positioning
• Marketing strategy guides the marketing mix
Dr. James Carver – Auburn University
Marketing Strategy Decisions
• Segmentation:

The process of dividing a market into distinct
groups of buyers who have different needs,
characteristics, or behaviors and who might require
separate products or marketing programs.
• Targeting:
 Involves
evaluating each market segment’s
attractiveness and selecting one or more segments
to enter.
Dr. James Carver – Auburn University
Differentiation and Positioning
• Differentiation:
 Creating
superior customer value by actually
meeting the needs better than the competition*

•
Note: Text defined differentiation with “differentiating”
Assists in later positioning
• Positioning:
 Arranging
(perceptually*) a product to occupy a
clear, distinctive, and desirable place relative to
competing products
Dr. James Carver – Auburn University
The Marketing Mix
• The set of controllable, tactical marketing
tools that the firm blends to produce the
response it wants in the target market.
 These
•
•
•
•
tools are often called the 4 P’s:
Product
Price
Place (distribution)
Promotion
Dr. James Carver – Auburn University
The 4 Ps and the 4 Cs
of the Marketing Mix
• 4 Ps –
Seller’s View
 Product
 Price
 Place
 Promotion
Dr. James Carver – Auburn University
• 4 Cs –
Buyer’s View
 Customer
Solution
 Customer Cost
 Convenience
 Communication
Marketing Management
• Four marketing management functions:
 Marketing
analysis
 Marketing
planning
 Marketing
implementation
 Marketing
control
Dr. James Carver – Auburn University
Developing a Differentiation
Strategy
• Firms begin with a SWOT analysis.
 Internally:
•
What are the firm’s relative strengths and weaknesses?
 Externally:
•
What potential threats and opportunities exist within the
market?
• Successful firms will…
•
•
Leverage strengths that minimize future threats, and
Correct weaknesses that coincide with market
opportunities
Dr. James Carver – Auburn University
SWOT Analysis
• Strengths:
1.
What major competitive advantage(s) do we
have?
2.
What are we good at?
3.
What do customers perceive as our strong points?
Dr. James Carver – Auburn University
SWOT Analysis
• Weaknesses
1.
What major competitive advantage(s) do
competitors have over us?
2.
What are competitors better at than we are?
3.
What are our major internal weaknesses?
SWOT Analysis
• Opportunities
1.
What favorable environmental trends may benefit
our firm?
2.
What is the competition doing in our market?
3.
What areas of business that are closely related to
ours are undeveloped?
SWOT Analysis
• Threats
1.
What unfortunate environmental trends may hurt
our future performance?
2.
What technology is on the horizon that may soon
have an impact on our firm?
Marketing Implementation
• Turns marketing plans into marketing actions
by addressing:
 Who
 Where
 When
 How
• Implementation can be difficult but is critical
to success.
Dr. James Carver – Auburn University
Organizing Marketing Departments
• Four general types of organizations:
 Functional
•
organization:
Each marketing activity is headed by a functional
specialist.
e.g., sales manager, advertising manager, marketing research
manager, etc.
 Most common form

 Geographic
•
organization:
Sales and marketing people are assigned to specific
countries, regions, and/or districts.

Best for firms that sell internationally or across country
Dr. James Carver – Auburn University
Marketing Department
Organization (cont.)
 Product
•
One person is responsible for complete strategy and
marketing program for a single product

Best for firms that sell many different products and/or brands
 Market
•
(or customer) organization:
Manager responsible for particular market or type of
customer

 Or
management organization:
Best for firms that sell one product line to many different
markets
some combination thereof…
Dr. James Carver – Auburn University
Marketing Control Process
• Marketing control involves four steps:
 Set
goals
 Measure performance
 Evaluate performance
 Take corrective action
• In essence it’s “Closed Loop” marketing*
Dr. James Carver – Auburn University