Chapter - 2

Company & Marketing Strategy

 A marketing department in an organization does not work in isolation The marketing department has to:
keep in mind the overall organizations goals Work simultaneously with the other departments

 How does the Marketing departments role fit in the overall company?

Defining the Companys Mission

Corporate Level

Setting the Company Objectives

Designing the Business Portfolio

Business Unit, Product, & Market Level

Planning the Marketing and other functional strategies

Defining a Market-Oriented Mission

Definition: Mission Statement
A statement which defines the purpose of the organization
What is the business of the firm? Who are their customers? What does the firm want to become?

 A mission statement should NOT be:

Product based They become outdated Stated in terms of profits or sales Profits
are rewards for creating value for customers

Instead, it should be market-oriented

Based on satisfying customer needs
As the basic needs may last forever

 Example

Product-Oriented

Market-Oriented

To sell athletic goods

To bring inspiration and innovation to every athlete in the world.

 Example

Product-Oriented

Market-Oriented

To provide the world's best online search engine

To help you organize the worlds information and make it accessible and useful

Setting Company Objectives

Definition: Objectives
Desired outcomes, goals or targets

The goals are based on the companys mission statement

 The mission statement leads to a hierarchy of goals

Set for each level of management
Upper level Middle level Lower level

Set for each functional department

Finance Marketing Production etc.

Designing the Business Portfolio

Definition: Business Portfolio
The collection of products and services provided by a company

Definition: Strategic Business Unit (SBU)

A company division, a product line within a division, or a single product/brand A profit making area that requires its own marketing plan, competitor analysis, and marketing campaign

 Baby foods Bottled water

Cereals
Chocolate Drinks Coffee

 Engro Fertilizer Limited Engro Foods Limited

Engro Polymer & Chemicals Limited

Engro Powergen Limited Engro Vopak Terminal Limited Engro EXIMP Private Limited

 Pantene
Head & Shoulders Wella Hair Color Safeguard Ariel

Pampers
Always

 Retail Fuel
Aviation Fuel

Lubricants

 Prepaid
Postpaid

Uth Package
Ladys Package
Kissan Package

 Definition: Business Portfolio Analysis

Evaluation of the products and businesses that make up the company

What is the purpose of business portfolio analysis?

Companies have limited budget They want to put more resources in their most profitable businesses or products Close down unprofitable businesses or products

 Business portfolio planning involves two steps:

Analyzing the current business portfolio to decide which businesses should receive how much investment Plan for future portfolio by developing strategies for growth and downsizing

Analyzing Current Business Portfolio

Boston Consulting Group Approach

Company classifies all its SBUs according to the growth-share matrix

 Growth-Share Matrix
Vertical axis Market growth rate
A measure of market attractiveness

Horizontal axis Relative market share

A measure of company strength in the market

 There are four types of SBUs:

Stars Need heavy investment to increase share Cash Cows Less investment and produce a lot of
cash

Question Marks Need heavy investment to

maintain share. Either turn into Star or Divest

Dogs Generate enough cash to maintain themselves

and eventually phase out

 There are four strategies which can be used:

Build Make further investments (for example, to
maintain Star status, or to turn a Question Mark into a Star)

Hold Maintain the status quo (do nothing). Harvest Reduce the investment (enjoy positive cash
flow and maximize profits from a Cash Cow)

Divest To sell or phase out and use the resources

elsewhere

Cash Usage

Cash Generation

- Fair n Lovely - Sunsilk - Walls

- Clear Shampoo - Comfort - Lifebouy Shampoo

- Lipton - Surf Excel - Wheel - Rin

- Close up
- Blue Band

- Slice - Lays - Aquafina

- Mountain Dew - Diet Pepsi

- Pepsi - Tropicana Twister

Developing Strategies for Growth & Downsizing

Companies need growth if they want to compete effectively So they need to find businesses or products they should consider to include in their portfolio in the future
Objective:
To manage profitable growth

 Marketing has the main responsibility for achieving profitable growth

One useful device for identifying growth opportunities is the Product/market Expansion Grid

 Product/market Expansion Grid:

 Market Penetration

Increase market share by:

Adjusting the marketing mix elements Gaining competitors' customers Convincing current clients to use more of your product/service
by advertising by introducing loyalty schemes

 Market Development Increase sales by:

Entering new geographical areas Attracting institutional customers Entering new demographic segments
Age Family size Gender Income Education level Religion Language Employment status Nationality

New Markets

Institutional Customers
Retail Fuel Aviations and Marine

Individuals Companies

New Demographics

 Difference between Market Penetration and Market Development

The key difference is the definition of the target market must change
Market penetration Market size is fixed Market development Market potential must increase

Difference between:

Non-Buyers
Individuals who use the type of product or service you sell, but buy a different brand

Non-Users
Individuals who do not use the type of product or service you sell

 Product Development

New product introduced to existing market

Sunsilk Shampoo

Sunsilk Conditioner

Gillette Razor

Gillette Shaving Cream

Facewash

Toner

Pepsi

Lays

 Diversification

New product introduced in new market

Olpers Milk

Omore Ice-cream

For Females

For Kids

For Middle Class

For Upper Class

Clothes

Meat

Planning Marketing
Marketers alone cannot produce superior value for customers
Marketers should collaborate with Other functions External partners

Marketing Strategy
Definition: Marketing strategy
Planning how to create customer value and achieve profitable customer relationships

The marketer does: Segmentation Targeting Positioning

Marketing Mix
Once the strategy is made, the marketer plans the details of the marketing mix Product Combination of goods & services offered
to consumers

Price Amount of money paid by the customer Place Areas where the product is available Promotion Activities done to communicate with
customers

Managing the Marketing Effort

Just being good at marketing is not enough Marketers need to make sure that the marketing process is properly:
Analyzed Planned Implemented Controlled

Marketing Analysis

Analyze the companys overall situation with the help of SWOT Analysis

S Strengths W Weaknesses O Opportunities T Threats

Internal

External

Strengths
- Company image - Competent HR - Strong marketing - Large customer base - Patents - Cost advantages - Strong distribution

Weaknesses
- Lack of patent - Weak brand name - Poor reputation - High cost - Weak distribution - Weak financial position

Opportunities
- Unfulfilled customer need - Arrival of new technologies - Loosening of government regulations - Removal of international trade barriers

Threats
- Shifts in consumer taste - Emergence of substitute products - New regulations - Increased trade barriers

Marketing Planning

Strategic planning What each

business unit should do

Marketing planning Answers the

what and why of marketing

Marketing budget How much will you

spend on each activity

Marketing Implementation

A brilliant marketing strategy counts for little if the company fails to implement it properly
Definition: Marketing Implementation
The process that turns marketing plans into marketing actions in order to accomplish marketing objectives

It answers the questions

Who Where

- When - How

 Definition: Marketing Control

Marketing Control

Evaluating the results of marketing strategies and plans and taking corrective action to ensure that objectives are attained

Measure performance with the marketing goals decided in the beginning

Corrective actions, if any deviations

 Types of Control

Operating Control
Checking ongoing performance against the annual plan
Whether company is achieving its sales and profits

Strategic Control
Whether companys basic strategies are well matched with its opportunities?