2

Principles of Marketing

Company and Marketing

Strategy: Partnering to Build
Customer Relationships
Learning Objectives
After studying this chapter, you should be able to:
1. Explain companywide strategic planning in its four steps
2. Discuss how to design business portfolios and develop growth
strategies
3. Explain marketing’s role in strategic planning and how
marketing works with its partners to create and deliver
customer value
4. Describe the elements of a customer-driven marketing
strategy and mix, and the forces that influence it
5. List the marketing management functions, including the
elements of a marketing plan, and discuss the importance of
measuring return on marketing investment

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Chapter Outline

1. Companywide Strategic Planning: Defining

Marketing’s Role
2. Planning Marketing: Partnering to Build
Customer Relationships
3. Marketing Strategy and the Marketing Mix
4. Managing the Marketing Effort
5. Measuring and Managing Return on
Marketing Investment

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Companywide Strategic Planning:
Defining Marketing’s Role

Strategic Planning

Strategic planning is the process of

developing and maintaining a strategic fit
between the organization’s goals and
capabilities and its changing marketing
opportunities

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Figure 2.1 - Steps in
Strategic Planning

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Mission Statement
 Statement of the organization’s purpose

 Market oriented - defined in terms of

satisfying basic customer needs

 Emphasize the company’s strengths

 Focus on customers and the customer

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Companywide Strategic Planning:
Defining Marketing’s Role

Defining a Market-Oriented Mission

Mission statement: The organization’s

purpose, what it wants to accomplish in the
larger environment
Market-oriented mission statement:
Defines the business in terms of satisfying
basic customer needs

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 Companywide Strategic Planning:
Defining Marketing’s Role

Defining a Market-Oriented Mission

 A mission statement refers to the organization’s purpose.

What it wants to accomplish in the larger environment.
Forging a sound mission begins with the following
questions: What is our business? Who is the customer?
What do consumers value? What should our business be?
 Successful companies continuously raise these questions
and answer them carefully and completely.

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Mission Statement
 Mission statements should be
meaningful and specific, yet motivating.
They should emphasize the company’s
strengths and tell forcefully how it
intends to win in the marketplace.
 For example, Google’s mission is to
give people a window into the world’s
information, wherever it may be found.
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Mission Statement
 Finally, a company’s mission should
focus on customers and the customer
experience it seeks to create.
 For example, Buffalo Wild Wings
chain’s mission is to provide a total
eating and social environment that
“fuels the sports fan experience.”

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Companywide Strategic Planning:
Defining Marketing’s Role

Setting Company Objectives and Goals

• Business objectives
• Marketing objectives

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Companywide Strategic Planning:
Defining Marketing’s Role

Setting Company Objectives and Goals

 A company needs to turn its mission into

detailed supporting objectives for each level
of management.
 Each manager should have objectives and be
responsible for reaching them.

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Companywide Strategic Planning:
Defining Marketing’s Role

Setting Company Objectives and Goals

 A broad mission leads to a hierarchy of

objectives, including business objectives and
marketing objectives.
 Marketing strategies and programs must be
developed to support marketing objectives.

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Companywide Strategic Planning:
Defining Marketing’s Role

Setting Company Objectives and Goals

 For example, the renamed CVS Health, views

itself as a “pharmacy innovation company,”
one that is “helping people on their path to
better health.” The company’s motto: “Health
is everything.”

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Companywide Strategic Planning:
Defining Marketing’s Role

Designing the Business Portfolio

The business portfolio is the collection of

businesses and products that make up the
company

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 Business Portfolio
Disney has
become
a sprawling
collection of
media and
entertainment
businesses.

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Companywide Strategic Planning:
Defining Marketing’s Role

Analyzing the Current Business Portfolio

Analyzing the current business portfolio is

the process by which management
evaluates the products and businesses
making up the company

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Business Portfolio

 Steps in business portfolio planning:

 Analyze the firm’s current business
portfolio
 Develop strategies to shape the future
portfolio

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Companywide Strategic Planning:
Defining Marketing’s Role

Steps in Analyzing the Current Business Portfolio

1. Identify key businesses making up the

company
2. Assess the attractiveness of its various SBUs
3. Decide how much support each SBU
deserves

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Companywide Strategic Planning:
Defining Marketing’s Role

Steps in Analyzing the Current Business Portfolio

Identify key businesses making up the company

• Strategic business unit (SBU) is a unit of the
company that has a separate mission and objectives
that can be planned separately from other company
businesses
• Company division
• Product line within a division
• Single product or brand

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Companywide Strategic Planning:
Defining Marketing’s Role

Steps in Analyzing the Current Business Portfolio

Assess the attractiveness of various SBUs and

decide how much support each deserves

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Companywide Strategic Planning:
Defining Marketing’s Role
Analyzing the Current Business Portfolio
The Boston Group Approach

Growth share matrix is a portfolio planning method that

evaluates a company’s strategic business units in terms of
their market growth rate and relative share
Strategic business units are classified as:
• Stars
• Cash Cows
• Question marks
• Dogs

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Companywide Strategic Planning:
Defining Marketing’s Role

Analyzing the Current Business Portfolio

The Boston Group Approach

Stars are high-growth, high-share businesses or products

requiring heavy investment to finance rapid growth. They
will eventually turn into cash cows.

Cash cows are low-growth, high-share businesses or products

that are established and successful SBUs requiring less
investment to maintain market share

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Companywide Strategic Planning:
Defining Marketing’s Role

Analyzing the Current Business Portfolio

The Boston Group Approach

Question marks are low-share business units in high-growth

markets requiring a lot of cash to hold their share

Dogs are low-growth, low-share businesses and products that

may generate enough cash to maintain themselves but do
not promise to be large sources of cash

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Companywide Strategic Planning:
Defining Marketing’s Role

Analyzing the Current Business Portfolio

Problems with Matrix Approaches

• Difficulty in defining SBUs and measuring

market share and growth
• Time consuming
• Expensive
• Focus on current businesses, not future
planning
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Companywide Strategic Planning:
Defining Marketing’s Role

Developing Strategies for Growth and Downsizing

Product/market expansion grid is a tool for

identifying company growth opportunities
through market penetration, market
development, product development, or
diversification

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 Companywide Strategic Planning:
Defining Marketing’s Role
Developing Strategies for Growth and Downsizing

• Product/market expansion grid strategies

• Market penetration
• Market development
• Product development
• Diversification

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Companywide Strategic Planning:
Defining Marketing’s Role

Developing Strategies for Growth and Downsizing

Market penetration is a growth strategy

increasing sales to current market segments
without changing the product

Market development is a growth strategy

that identifies and develops new market
segments for current products

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Companywide Strategic Planning
Defining Marketing’s Role

Developing Strategies for Growth and Downsizing

Product development is a growth strategy

that offers new or modified products to
existing market segments

Diversification is a growth strategy through

starting up or acquiring businesses outside
the company’s current products and markets

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Companywide Strategic Planning
Defining Marketing’s Role

Developing Strategies for Growth and Downsizing

Downsizing is the reduction of the business

portfolio by eliminating products or business
units that are not profitable or that no
longer fit the company’s overall strategy

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Planning Marketing: Partnering
to Build Customer Relationships

Partner Relationship Management

Partner relationship management is the

process of working closely with partners in
other company departments to form an
effective value chain that serves the
customer, as well as partnering effectively
with other companies in the marketing
system to form a competitively superior
value-delivery network
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 Planning Marketing: Partnering
to Build Customer Relationships
Partnering with Other Company Departments

Value chain is a series of departments that

carry out value-creating activities to
design, produce, market, deliver, and
support a firm’s products

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 Planning Marketing: Partnering
to Build Customer Relationships
Partnering with Others in the Marketing System
Value delivery network is made up of the
company, suppliers, distributors, and
ultimately customers who partner with
each other to improve performance of the
entire system

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Marketing Strategy and the
Marketing Mix

Marketing Strategy

Marketing strategy is the marketing logic by

which the business unit hopes to achieve its
marketing objectives

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Marketing Strategy and the
Marketing Mix

Customer-Driven Marketing Strategy

Market segmentation is the division of a

market into distinct groups of buyers who
have distinct needs, characteristics, or
behavior and who might require separate
products or marketing mixes

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Marketing Strategy and the
Marketing Mix

Customer-Driven Marketing Strategy

Market segment is a group of consumers who

respond in a similar way to a given set of
marketing efforts

Target marketing is the process of evaluating

each market segment’s attractiveness and
selecting one or more segments to enter

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 Marketing Strategy and the
Marketing Mix

Customer-Driven Marketing Strategy

Market positioning is the arranging for a

product to occupy a clear, distinctive, and
desirable place relative to competing
products in the minds of the target
consumer

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Marketing Strategy and the
Marketing Mix

Developing an Integrated Marketing Mix

Marketing mix is the set of controllable

tactical marketing tools—product, price,
place, and promotion—that the firm blends
to produce the response it wants in the
target market

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 Marketing Strategy and the
Marketing Mix
Developing an Integrated Marketing Mix
The four Ps

• Product
• Price
• Place
• Promotion

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Marketing Strategy and the
Marketing Mix

Developing an Integrated Marketing Mix

The four Ps

Product is the goods and services in

combination that the company offers to the
target market

Price is the amount of money customers have

to pay to obtain the product

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Marketing Strategy and the
Marketing Mix
Developing an Integrated Marketing Mix
The four Ps

Place is the company activities that make the

product available to target customers

Promotion is the activities that communicate

the merits of the product and persuade
target customers to buy it

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Marketing Strategy and the
Marketing Mix

Developing an Integrated Marketing Mix

The 4 Ps versus The 4 Cs
Product Customer solution
Price Customer cost
Place Convenience
Promotion Communication

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Managing the Marketing Effort

Managing the marketing effort requires:

• Analysis
• Planning
• Implementing
• Controlling

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Managing the Marketing Effort

Marketing Analysis

Analysis is the complete analysis of the

company’s situation in a SWOT analysis that
evaluates the company’s:
• Strengths
• Weaknesses
• Opportunities
• Threats
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Managing the Marketing Effort
Marketing Analysis

Strengths include internal capabilities,

resources, and positive situational factors
that may help to serve company customers
and achieve company objectives

Weaknesses include internal limitations and

negative situational factors that may
interfere with company performance

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Managing the Marketing Effort

Marketing Analysis

Opportunities are favorable factors or trends in

the external environment that the company
may be able to exploit to its advantage

Threats are unfavorable factors or trends that

may present challenges to performance

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Managing the Marketing Effort
Market Planning

Planning is the development of strategic and

marketing plans to achieve company
objectives

Marketing strategy consists of the specific

strategies for target markets, positioning,
the marketing mix, and marketing
expenditure levels

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 Managing the Marketing Effort
Market Planning
Sections of a marketing plan include:
• Executive summary
• Current marketing situation
• Threats and opportunities
• Objective and issues
• Action programs
• Budgets
• Controls
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Managing the Marketing Effort

Marketing Implementation

Implementing is the process that turns marketing

plans into marketing actions to accomplish strategic
marketing objectives

Successful implementation depends on how well the

company blends its people, organizational structure,
decision and reward system, and company culture
into a cohesive action plan that supports its
strategies
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Managing the Marketing Effort

Marketing Department Organization

• Functional
• Geographic
• Product
• Market or customer management

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Managing the Marketing Effort
Marketing Department Organization

Functional organization: This is the most

common form of marketing organization
with different marketing functions headed
by a functional specialist
• Sales manager
• Market research manager
• Customer service manager
• New product manager

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Managing the Marketing Effort
Marketing Department Organization

Geographic organizations: Useful for companies that

sell across the country or internationally. Managers
are responsible for developing strategies and plans
for a specific region.

Product Management: Useful for companies with

different products or brands. Managers are
responsible for developing strategies and plans for a
specific product or band.

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Managing the Marketing Effort

Marketing Department Organization

Market or customer management

organization: Useful for companies with
one product line sold to many different
markets and customers. Managers are
responsible for developing strategies and
plans for their specific markets or
customers.
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Managing the Marketing Effort

Marketing Department Organization

Customer management involves a customer

focus and not a product focus for managing
customer profitability and customer equity

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Managing the Marketing Effort

Marketing Control

Controlling is measuring and evaluating

results and taking corrective action as
needed
• Operating control
• Strategic control

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Managing the Marketing Effort

Marketing Control

Operating control involves checking ongoing

performance against annual plan and taking
corrective action as needed

Strategic control involves looking at whether

the company’s basic strategies are well
matched to its opportunities

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Managing the Marketing Effort

Marketing Control

Marketing audit is a comprehensive,

systematic, independent, and periodic
examination of a company’s environment,
objectives, strategies, and activities to
determine problem areas and opportunities

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 Measuring and Managing Return
on Marketing Investment

Return on Marketing Investment

(ROI)

Return on marketing investment (ROI)

is the net return from a marketing
investment divided by the costs of the
marketing investment. Marketing ROI
provides a measurement of the profits
generated by investments in marketing
activities.
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Measuring and Managing Return on
Marketing Investment

Customer-Centered Measures

• Customer acquisition
• Customer retention
• Customer lifetime value

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PowerPoint created by:
Ronald Heimler

 Dowling College, MBA

 Georgetown University, BS Business
Administration
 Adjunct Professor, LIM College, NY
 Adjunct Professor, Long Island University,
NY
 Lecturer, California Polytechnic State
University, Pomona, CA
 President, Walter Heimler, Inc.