Transcript Chapter 2

Company and Marketing
Strategy
Partnering to Build Customer
Relationships
Chapter 2
Strategic Planning: overview
 Strategic planning sets the stage for the rest of the planning in
the firm.
 Companies usually prepare annual plans, long-range plans, and
strategic plans.
 The annual and long-range plans deal with the company’s current
businesses and how to keep them going.
 In contrast, the strategic plan involves adapting the firm to take
advantage of opportunities in its constantly changing
environment.
 The strategic planning process begins by defining the overall
purpose and mission of the company.
 This mission is turned into objectives that guide the whole
company.
 Marketing planning occurs at the business-unit, product, and
market levels.
 Next slide defines strategic planning.
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Strategic Planning Defined
• The process of developing and
maintaining a strategic fit between the
organization’s goals and capabilities
and its changing marketing
opportunities.
• The stages of the strategic planning
process are outlined next…
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Figure 2.1:
Steps in Strategic Planning
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Levels of Strategic Planning Process
1. Corporate level:

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
Defining the company mission.
Setting objectives and goals.
Designing the business portfolio.
2. Business unit, product, and market
level
3. Functional level: setting functional
strategies for each function.
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The Mission Statement: overview
A clear mission statement acts as an
“invisible hand” that guides people in the
organization.
Mission statements should be market
oriented, not product-oriented.
A market-oriented mission statement
should define the business in terms of
satisfying basic customer needs.
Management should avoid making its
mission too narrow or too broad.
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The Mission Statement Defined
• A mission statement is a statement of
the organization’s purpose–what it
wants to accomplish in the larger
environment.
Nike’s mission is “to bring
inspiration and innovation to every
athlete in the world (if you have a body,
you are an athlete).”
 Example:
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The Mission Statement: questions…
• Questions the mission statement
should answer include:
 What
is our business?
 Who is our customer?
 What do consumers value?
 What should our business be?
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Well-defined Mission Statement
should be…
 Meaningful.
 Specific.
 Motivating.
 Based
on the firm’s strengths in the
marketplace.
 Focused on customers and the
customer experience rather than on
sales and profits.
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Setting Firm Objectives and Goals
• The mission should be translated into
supporting objectives for each level of
management.
 It
creates a hierarchy of objectives that
are consistent with one another.
Example:
• Business objective: Increase profits.
• Marketing objective: Increase market share
of domestic and international markets.
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Designing the Business Portfolio
• The business portfolio is the collection of
•
businesses that make up the company.
The company must:
 Analyze
its current business portfolio or
strategic business units (SBUs) and decide
which SBUs should receive more, less, or no
investment.
 Develop strategies for growth and/or
downsizing that will shape the future business
portfolio.
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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.
 An SBU can be a company division, a
product line within a division, or
sometimes a single product or brand.
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Portfolio Analysis
• Portfolio analysis: is a process by which
management evaluates the products and
businesses making up the company.
Resources are directed toward more
profitable businesses while weaker ones
are phased out or dropped.
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Portfolio Analysis (cont’d)
• Standard portfolio analysis evaluates
SBUs on two important dimensions:
 Attractiveness
of SBUs market or industry.
 Strength of SBUs position within that market
or industry.
• BCG Growth Share Matrix uses market
•
growth rate and relative market share to
classify SBUs into four groups.
Next slide…
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The Boston Consulting Group Approach
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BCG Growth-Share Matrix
•
•
•
•
Stars: High-share of high-growth market.
Strategy: Build into cash cow via investment.
Cash cows: High-share of low-growth market.
Strategy: Maintain or harvest for cash to build STARS.
Question marks: Low-share of high-growth market.
Strategy: Build into STAR via investment OR reallocate
funding and let slip into DOG status.
Dogs: Low-share of low-growth market.
Strategy: Maintain or divest (selling it or phasing out).
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Problems with Matrix Approaches
• Several problems exist:
 Can
be difficult, time consuming, and costly to
implement.
 Difficult to define SBUs and measure market
share and growth rate.
 Focus is on current businesses; gives little help
with future planning.
• These problems have led to changes in the
strategic planning process used by firms.
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Product/Market Expansion Grid
The product/market expansion grid can identify
growth opportunities. See next slide…
Market penetration (Existing markets, existing products)
making more sales to current customers without
changing products
 Market development (New markets, existing products)

 identifying and developing new markets for its current products

Product development (Existing markets, new products)
 offering modified or new products to current markets

Diversification (New products, new markets)
 starting up or buying businesses outside of its current products
and markets. That is, switch to a different line of business
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product/market expansion grid:
Strategies for Growth opportunities
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Downsizing
• Downsizing reduces the business
portfolio by eliminating products of
business units that are not profitable or
that no longer fit the company’s overall
strategy.
 Many
other reasons exist for downsizing.
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Planning Marketing
• Marketing plays a key role in strategic
planning:
it provides a guiding philosophy (e.g.
through the marketing concept)
 It provides input to strategic planners
(e.g. through Identifying opportunities)
 Designs strategies to reach objectives.

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Creating Customer Value
• Marketers must practice partner
relationship management to enhance
customer value, through:
Working with partners internally within
the company which can create an
effective value chain.
Working with external partners in the
marketing system that helps form a
superior value delivery network.
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Value Chain
• Each company department engages in
some type of value-creating activity
(e.g. Purchasing, Marketing. operations,
etc).
• Coordination between departments is
key to providing superior value.
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Value Delivery Network
Today, companies are partnering with the other
members of the supply chain to improve the
performance of the customer value delivery
network.
• Components of the value delivery network
include:
 Company’s value chain (Each department is a link)
 Distributors
 Suppliers
 Customers
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Marketing Strategy
and the Marketing Mix
Today, consumers are in the center, and
that Profitable customer relationships
are the goal.
• Marketing strategy decisions include:
 Market
segmentation and targeting
 Differentiation and positioning
– (See next slide…)
• Marketing strategy must guide marketing
mix decisions.
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Marketing Strategy and the
Marketing Mix
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Market Segmentation and Targeting
• 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 serve.
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Differentiation and Positioning
• Positioning:
 Arranging
for a product to occupy a clear,
distinctive, and desirable place relative to
competing products in the minds of target
consumers.
• Differentiation:
 Creating
superior customer value by
actually differentiating the market offering.
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The Marketing Mix
• The Marketing Mix is a 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
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The Four Ps of the Marketing Mix
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The Marketing Mix
• Product:
Variety, features,
brand name, quality,
design, packaging,
and services.
• Promotion:
Advertising, sales
promotion, public
relations, and
personal selling.
• Place:
Channels, coverage,
logistics, locations,
transportation,
assortments, and
inventory.
• Price:
List price, discounts,
allowances, payment
period, and credit terms.
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The 4 Ps and the 4 Cs
of the Marketing Mix
• 4 Ps –
Seller’s View
Product
Price
Place
Promotion
• 4 Cs –
Buyer’s View
Customer Solution
Customer Cost
Convenience
Communication
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Managing the Marketing Effort
• Four marketing management functions:
 Marketing
analysis
 Marketing
planning
 Marketing
implementation
 Marketing
control
• SWOT analysis is key.
• Create marketing plan consistent with strategic
plan.
• Carry out the plans successfully.
• Measure and evaluate results; take corrective
action as needed.
– (See next slide...)
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Figure 2.6:
Managing Marketing:
Analysis, Planning, Implementation,
and Control
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SWOT Analysis
•
Strengths:

•
Weaknesses:
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•
Internal limitations that may interfere with a company’s ability to
achieve its objectives.
Opportunities:

•
Internal capabilities that may help a company reach its objectives.
External factors that the company may be able to exploit to its
advantage.
Threats:

Current and emerging external factors that may challenge the
company’s performance.
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Contents of a Marketing Plan
1.
2.
3.
4.
5.
6.
7.
8.
Executive summary
Current marketing situation
Analysis of threats and opportunities
Objectives and issues
Marketing strategy
Action programs
Budgets
Controls
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Marketing Implementation
• Turns marketing plans into marketing
actions by addressing:
 Who
 Where
 When
 How
• Implementation can be difficult but is
critical to success.
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Organizing Marketing Departments
(1) Chief Marketing Officer (CMO): in small companies, one
person may perform all the marketing functions under Chief
Marketing Officer (CMO) position. Today, this type is
becoming more common.
(2) Functional organization: used mainly by big companies
 Each marketing activity is headed by a functional
specialist.
• E.g., sales manager, advertising manager, marketing
research manager, etc.
(3) Geographic organization:
 Sales and marketing people are assigned to specific
countries, regions, and/or districts.
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Organizing Marketing Departments
(cont’d)
(4) Product management organization:
 One person is given responsibility for complete strategy
and marketing program for a single product.
(5) Market or customer organization:
 A Manager is fully responsible for particular market or
type of customer (e.g., government buyers). Often used
in companies that sell one product to many different
kinds of buers.
(6) Combination organization:
 Uses any combination of the previous approaches.
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Marketing Control Process
Marketing control: is evaluating the results
of marketing strategies and plans and
taking corrective action to ensure that
objectives are achieved.
• Marketing control involves four steps:
 Set
goals
 Measure performance
 Evaluate performance
 Take corrective action
• The corrective action may require changing action
programs or even goals.
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Marketing Control Process (cont’d)
The control process includes the following:
1. Operating control: Evaluates
performance against the annual plan and
takes corrective action.
2. Strategic control: Evaluates whether
strategies match opportunities.
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MEASURING AND MANAGING RETURN ON
MARKETING INVESTMENT
Marketing managers must ensure that their
marketing dollars are being well spent.
Return on marketing investment is assessed
using one or more of the following methods:
Standard marketing performance measures (also
called marketing dashboards): Examples include
Brand awareness, sales, market share.
 Customer-centered measures: Examples include

Customer acquisition, customer retention, customer lifetime
value, customer equity.
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