Chapter 2:

Company and Marketing Strategy - Partnering to Build Customer Engagement, Value, and
Relationships

Objective 2-1: Company-Wide Strategic Planning

Definition of Strategic Planning

Strategic planning is the process of developing and maintaining a profitable fit between the
organization's goals and its changing marketing opportunities. It ensures long-term survival and growth
by adapting to the evolving business environment.

Steps in Strategic Planning

1. Defining the Company’s Mission

o A mission statement articulates the organization’s purpose.

o Characteristics: Market-oriented, realistic, specific, motivating, and aligned with the

environment.

o Example: A mission that focuses on customer needs rather than just products.

2. Setting Objectives and Goals

o The mission is transformed into company-wide goals, guiding all levels of management.

o Goals should be SMART: Specific, Measurable, Achievable, Relevant, and Time-bound.

3. Designing the Business Portfolio

o The company identifies its business units or products and evaluates their performance.

o Tools such as the BCG Growth-Share Matrix and Product/Market Expansion Grid are
used for analysis.

4. Developing Functional Strategies

o Each department (marketing, finance, operations) creates specific plans aligned with the
overall strategy.

o Marketing plays a critical role by identifying opportunities and executing strategies to

achieve company objectives.

Objective 2-2: Business Portfolios and Growth Strategies

Designing the Business Portfolio

A business portfolio represents the collection of businesses and products within a company. The aim is to
create a balanced portfolio that maximizes strengths and addresses weaknesses.

1. Current Portfolio Analysis

 o Tools like the BCG Growth-Share Matrix classify Strategic Business Units (SBUs) into:

 Stars: High-growth, high-share businesses requiring investment.

 Cash Cows: Low-growth, high-share businesses generating stable revenue.

 Question Marks: High-growth, low-share businesses needing strategic decisions.

 Dogs: Low-growth, low-share businesses with limited prospects.

2. Shaping the Future Portfolio

o Companies decide which SBUs to invest in, divest, or phase out.

o Strategies may include increasing support for Stars or harvesting Cash Cows to fund
growth initiatives.

Developing Growth Strategies

The Product/Market Expansion Grid identifies growth opportunities:

1. Market Penetration: Increasing sales of existing products in current markets.

o Example: Boosting sales through better marketing or customer engagement.

2. Market Development: Entering new markets with existing products.

o Example: Expanding geographically or targeting new demographics.

3. Product Development: Creating new products for current markets.

o Example: Launching innovative products to existing customers.

4. Diversification: Introducing new products into new markets.

o Example: Acquiring a business in a different industry for broader reach.

Growth and Downsizing

While growth is essential for survival, companies also need to downsize when:

 Products become unprofitable.

 Market environments change.

 Businesses no longer align with overall strategies.

 Resources are better allocated elsewhere.

Here is a detailed explanation of Objectives 2-3, 2-4, and 2-5:

Objective 2-3: Marketing’s Role in Strategic Planning and Partnering to Deliver Value

Marketing's Role in Strategic Planning

1. Providing a Guiding Philosophy:

o Marketing focuses on creating customer value and fostering profitable relationships.

o The marketing concept ensures company strategies are customer-centered.

2. Critical Inputs for Strategy Development:

o Marketing assesses market conditions, identifies opportunities, and evaluates the

company’s ability to take advantage of them.

3. Execution of Strategies:

o Marketing designs specific strategies for each business unit and helps carry out
company-wide objectives profitably.

Partnering to Deliver Value

1. Internal Value Chain:

o Every department contributes to creating customer value, forming links in the value
chain.

o Success depends on cross-departmental collaboration to ensure smooth operations and

customer satisfaction.

2. External Value Delivery Network:

o Collaboration with suppliers, distributors, and other partners improves the efficiency
and effectiveness of delivering value.

o Example: Subway partners with franchisees and suppliers to fulfill its "fresh, made-to-
order" promise.

Objective 2-4: Elements of a Customer Value-Driven Marketing Strategy and Marketing Mix

Steps to Develop a Marketing Strategy

1. Market Segmentation:

o Dividing the total market into smaller, meaningful customer groups based on distinct
needs or characteristics.

2. Targeting:

o Selecting the most promising segments to serve, ensuring alignment with company goals
and resources.
 3. Differentiation:

o Offering unique value to set the company apart from competitors.

4. Positioning:

o Establishing a distinct image or identity in the minds of target customers.

o Positioning strategies should communicate the benefits of the brand clearly.

The Marketing Mix (4 Ps)

1. Product:

o Decisions about features, quality, branding, and packaging.

2. Price:

o Setting prices to reflect value while considering market demand and costs.

3. Place:

o Channels and logistics to deliver the product conveniently to customers.

4. Promotion:

o Communication strategies to inform, persuade, and remind customers about the

product.

Objective 2-5: Marketing Management Functions and ROI

Marketing Management Functions

1. Analysis:

o Conducting a SWOT analysis to evaluate Strengths, Weaknesses, Opportunities, and

Threats.

o The goal is to align internal capabilities with external opportunities while addressing
threats.

2. Planning:

o Developing a detailed marketing plan that outlines:

 Executive summary.

 Current market situation.

 Threats, opportunities, and objectives.

 Marketing strategy, execution plans, budgets, and controls.

3. Implementation:
 o Turning plans into actions, allocating resources, and managing teams.

4. Control:

o Monitoring performance, evaluating results, and making necessary adjustments.

Marketing ROI

1. Definition:

o Marketing ROI is the net return from a marketing investment divided by the costs of that
investment.

2. Metrics:

o Financial returns (sales, profits).

o Non-financial returns (customer satisfaction, engagement, retention).

3. Challenges:

o Measuring the long-term effects of customer engagement and brand equity accurately.

Here are the Key Terms from Chapter 2, organized serially with detailed explanations derived from the
PDF:

Objective 2-1

1. Strategic Planning

o The process of developing and maintaining a strategic fit between the organization’s
goals and its changing marketing opportunities.

o It ensures long-term survival and growth by adapting to the dynamic market

environment.

2. Mission Statement

o A statement of the organization’s purpose, defining what it wants to achieve in the larger
environment.

o Characteristics: Market-oriented, inspiring, specific, and aligned with the company’s

strengths.

Objective 2-2

3. Business Portfolio

o The collection of businesses and products that make up the company.

 o Designed to evaluate and optimize the performance of various strategic business units
(SBUs).

4. Portfolio Analysis

o A tool to assess and manage the company’s SBUs based on their market growth and
relative market share.

o Example: BCG Growth-Share Matrix.

5. Growth-Share Matrix

o A framework that categorizes SBUs into four types:

 Stars: High growth, high share.

 Cash Cows: Low growth, high share.

 Question Marks: High growth, low share.

 Dogs: Low growth, low share.

6. Product/Market Expansion Grid

o A tool for identifying growth opportunities through:

 Market Penetration: Increasing sales in existing markets with current products.

 Market Development: Entering new markets with current products.

 Product Development: Offering new products to current markets.

 Diversification: Launching new products in new markets.

7. Market Penetration

o A growth strategy aimed at increasing sales of existing products to existing markets

through improved marketing efforts.

8. Market Development

o Expanding into new geographic or demographic markets with existing products.

9. Product Development

o Offering new or modified products to current market segments.

10. Diversification

 Starting up or acquiring businesses outside the company’s current products and markets.

Objective 2-3

11. Value Chain

  A series of internal activities performed by a company to deliver valuable products or services.

 Each department contributes to creating customer value.

12. Value Delivery Network

 A network composed of the company, suppliers, distributors, and customers who collaborate to
deliver customer value.

Objective 2-4

13. Marketing Strategy

 The logic by which the company hopes to create customer value and achieve profitable
relationships.

 Includes segmentation, targeting, positioning, and differentiation.

14. Market Segmentation

 Dividing a market into distinct groups of buyers with unique needs, characteristics, or behaviors.

15. Market Segment

 A group of customers who respond in a similar way to a given marketing effort.

16. Market Targeting

 Selecting which segments to serve based on their attractiveness and alignment with company
goals.

17. Positioning

 Defining a brand’s place in the minds of target customers relative to competitors.

18. Differentiation

 Creating a unique offering that provides superior customer value and sets the brand apart from
competitors.

19. Marketing Mix

 The set of tactical tools (Product, Price, Place, Promotion) used to implement a marketing
strategy effectively.

Objective 2-5

20. SWOT Analysis

 A tool to evaluate the company’s internal Strengths and Weaknesses, as well as external
Opportunities and Threats.
 Helps in aligning resources with market opportunities.

21. Marketing Implementation

 Turning marketing plans into actions by allocating resources and managing teams.

 Example: Launching a product campaign.

22. Marketing Control

 The process of monitoring and evaluating marketing performance and making corrective
adjustments.

 Ensures that objectives are met.

23. Marketing Return on Investment (ROI)

 A measure of the profitability of marketing investments.

 Formula: Net Return from Marketing Investment ÷ Cost of the Investment.

 Metrics: Sales growth, market share, and customer lifetime value.