Chapter Two

Company and Marketing Strategy

Partnering to Build Customer
Relationships
 Company and Marketing Strategy
Topic Outline
• Companywide Strategic Planning: Defining
Marketing’s Role
• Designing the Business Portfolio
• Planning Marketing: Partnering to Build
Customer Relationships
• Marketing Strategy and the Marketing Mix
• Managing the Marketing Effort
 Companywide Strategic Planning: Defining
Marketing’s Role

• Strategic planning is the process of developing and maintaining a

strategic fit between the organization’s goals and capabilities and its
changing marketing opportunities.
• 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.
Companywide Strategic Planning: Defining
Marketing’s Role
• Like the marketing strategy, the broader company
strategy must be customer focused.
• Company-wide strategic planning guides marketing
strategy and planning.
 Defining a Market-Oriented Mission

• The mission statement is 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.
Defining a Market-Oriented Mission
Setting Company Objectives and Goals

Business Marketing
objectives objectives
• Build profitable • Increase
customer market share
relationships • Create local
• Invest in partnerships
research • Increase
• Improve profits promotion
 Designing the Business Portfolio
• The business portfolio is the collection of
businesses and products that make up the
company.
• Business portfolio planning involves two steps:

the company must

shape the future
analyze its current
portfolio by developing
business portfolio and
strategies for growth
determine the
and downsizing
investment
Analyzing the Current Business Portfolio

• Portfolio analysis is a major activity in

strategic planning whereby management
evaluates the products and businesses that
make up the company
• Management’s first step is to identify the key
businesses that make up the company, called
strategic business units (SBUs).
 Company
division

Product line
SBU
within a division

Single product
or brand
 Analyzing the Current Business Portfolio

The company next assesses the

attractiveness of its various SBUs and
decides how much support each deserves.

the attractiveness of the SBU’s market or

industry and the strength of the SBU’s
position in that market or industry.

The best-known portfolio-planning method

was developed by the Boston Consulting
Group, a leading management consulting
firm.
The Boston Consulting Group Approach

• A company classifies all its SBUs according to

the growth-share matrix. The growth-share
matrix defines four types of SBU’s:
 BCG
Stars are high-growth,
high-share businesses or
They require a lot of
cash to hold their
products. They often share, let alone
need heavy investments increase it.
to finance their rapid
growth.

CASH COWS Q MARK

STARS DOGS

They may generate

These established enough cash to
and successful SBUs maintain themselves
need less investment but do not promise to
to hold their market be large sources of
share. cash.
The Boston Consulting Group Approach

• It can pursue one of four strategies for each

SBU.
Build ： Hold:
It can invest more in the It can just enough to
business unit. share at the current level.

Harvest ： Divest ：
It can harvest the SBU, It can divest the SBU by
milking its short-term selling it or phasing it out
cash. and using the resources
elsewhere.
 Problems with Matrix Approaches
• It have some limitations:
– Difficulty in defining SBUs and measuring market share and
growth
– Time consuming
– Expensive
– Focus on current businesses, not future planning
• Methods to improve:
– Dropped formal matrix methods in favor of more customized
approaches that better suit their specific situations
– Today’s strategic planning has been decentralized
Developing Strategies for Growth and Downsizing

• Product/market expansion grid is a portfolio-

planning tool for identifying company growth
opportunities through market penetration,
market development, product development,
or diversification.
• Market development ─ Companies can grow by developing new markets for
existing products. For example, Starbucks is expanding rapidly in China,
which by 2015 will be its second-largest market, behind only the United
States.

• Diversification ─ Through diversification, companies can grow by starting or

buying businesses outside their current product/markets. For example,
Starbucks is entering the “health and wellness” market with stores called
Evolution By Starbucks.
 Developing Strategies for Growth and
Downsizing

Market • Company growth by increasing sales of

current products to current market
penetration segments without changing the product

Market • The company growth by identifying and

developing new market segments for
development current company products.

Product • Company growth by offering modified or

new products to current market segments.
development
• Company growth through starting up or
Diversification acquiring businesses outside the
company’s current products and markets.
 Planning Marketing: Partnering to Build Customer
Relationships

• Marketing plays a key role in the company’s strategic planning

in several ways:
First, marketing provides a guiding philosophy—the marketing
concept—that suggests the company strategy should revolve
around building profitable relationships with important consumer
groups.

Second, marketing provides inputs to strategic planners by helping

to identify attractive market opportunities and assessing the firm’s
potential to take advantage of them.

Finally, within individual business units, marketing designs

strategies for reaching the unit’s objectives. Once the unit’s
objectives are set, marketing’s task is to help carry them out
profitably.
 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.
• That is, each department carries out value-creating activities
to design, produce, market, deliver, and support the firm’s
products.
 Partnering with Others in the Marketing System

• Value delivery network is the network made up of the

company, its suppliers, its distributors, and, ultimately, its
customers who partner with each other to improve the
performance of the entire system.
• Toyota’s performance against Ford depends on the quality of
Toyota’s overall value delivery network versus Ford’s.
 Marketing Strategy and the Marketing Mix

• Next comes marketing strategy—the

marketing logic by which the company hopes
to create this customer value and achieve
these profitable relationships.
 Customer-Driven Marketing Strategy

• Most companies are in a position to serve some segments better

than others.
• Thus, each company must divide up the total market, choose the
best segments, and design strategies for profitably serving chosen
segments.
• This process involves:

Marketing
segmentation Positioning

Market
targeting
 Market 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,
is called market segmentation.
• Market segment is a group of consumers who respond in a
similar way to a given set of marketing efforts.
 Marketing Targeting
• Market targeting is the process of evaluating each market
segment’s attractiveness and selecting one or more segments
to enter.
• A company with limited resources might decide to serve only
one or a few special segments or market niches.
• Most companies enter a new market by serving a single
segment; if this proves successful, they add more segments.
 Marketing Differentiation and Positioning

• Positioning is arranging for a product to occupy a clear,

distinctive, and desirable place relative to competing products
in the minds of the target consumer.
• Thus, effective positioning begins with differentiation—
actually differentiating the company’s market offering so that
it gives consumers more value.
 Product means the
Price is the amount
Developing an Integrated
goods-and-services Marketing Mix
of money customers
The
combination the marketing
must pay to obtain
company offers to the
the product. mix ─ or the
target market. four Ps ─
• Marketing mix is the set of controllable consists of
tactical marketing
Promotion refers to tools—product, price, place,
tactical
marketing
and activities An
promotion—that
that effective marketing program
the firm blends blends the
to tools
marketing mix Place includes
communicate the elements
merits into an integrated blended
produce the response
of marketing
the productprogram
and
it wants
designed in the
to achieve the target
company activities
into an
that make the
market. company’s
persuade marketing objectives by delivering value
target integrated
product available to
to consumers. The
customers to buy it. marketing mix constitutes the marketing
target consumers.
company’s tactical tool kit for establishing strongprogram
positioning in target incentives. that
actually
delivers the
intended
value to
target
customers.
 Developing an Integrated Marketing Mix

• It holds that the four Ps concept takes the seller’s view of the
market, not the buyer’s view. From the buyer’s viewpoint, in
this age of customer value and relationships, the four Ps might
be better described as the four Cs:
4Ps 4Cs
Product Customer solution
Price Customer cost
Place Convenience
Promotion Communication
 Managing the Marketing Effort
• Managing the marketing process requires the four marketing
management functions:
 Marketing Analysis
• The marketer should conduct a SWOT analysis ,by which it
evaluates the company’s overall strengths (S), weaknesses
(W), opportunities (O), and threats (T).
 Marketing Planning
• Through strategic planning, the company decides what it wants to
do with each business unit. Marketing planning involves choosing
marketing strategies that will help the company attain its overall
strategic objectives. Positioning

Marketing Strategy:
It outlines how the Marketi
company intends to Target ng Market mix
markets strategy
create value for target
customers in order to
capture value in
return. Marketing
expenditure
level
 Marketing Implementation
• Marketing implementation is the process that turns
marketing plans into marketing actions to accomplish
strategic marketing objectives.
• Whereas marketing planning addresses:
what
 Many managers think that why“doing things right” (implementation)
is as important as, or even more important than, “dong the right
who
things”(strategy).
where
when
how
Marketing Department Organization
• This is the most common form of marketing
organization with different marketing functions headed
Functional organization by a functional specialist.

• Useful for companies that sell across the country or

internationally. Managers are responsible for
Geographic organization developing strategies and plans for a specific region.

• Useful for companies with different products or brands.

Managers are responsible for developing strategies and
Product management plans for a specific product or brand.

Market or customer • Useful for companies with one product line sold to
many different markets and customers. Managers are
management responsible for developing strategies and plans for
organization their specific markets or customers.
 Marketing Control
• Marketing control is the measuring and evaluating the results
of marketing strategies and plans and taking corrective action
to ensure that the objectives are achieved.
Management first sets Measures its
specific marketing performance in the
goals. market place

Four steps of
marketing
control:
Management takes Evaluates the causes of
corrective action to any differences
close the gaps between between expected and
goals and performance actual performance
 Measuring and Managing Return on Marketing
Investment

• Return on marketing investment (or marketing ROI) is the

net return from a marketing investment divided by the costs
of the marketing investment.
• It measures the profits generated by investments in marketing
activities.
• Many companies are assembling such measures into
marketing dashboards ─ meaningful sets of marketing
performance measures in a single display used to monitor
strategic marketing performance.
Measuring and Managing Return on Marketing Investment