Company and Marketing Strategy

Partnering to Build Customer Relationships

Chapter 2
2-1 Copyright 2012 Pearson Canada Inc.

Previewing the Concepts

1. Explain the four steps of company-wide strategic planning 2. Discuss how to design business portfolios and growth strategies 3. Explain marketings role in strategic planning and how marketing creates and delivers 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 and discuss the importance of measuring and managing return on marketing investment
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Strategic Planning Defined

Strategic Planning:
The process of developing and maintaining a strategic fit between the organizations goals and capabilities and its changing marketing opportunities

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Steps in Strategic Planning

Corporate level:
Defining the company mission Setting objectives and goals Designing the business portfolio

Business unit, product, and market level:

Planning marketing strategy as well as other functional strategies

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Mission Statement Defined

A mission statement is a statement of the organizations purpose what it wants to accomplish in the larger environment
Example: Nikes mission is to bring inspiration and innovation to every athlete* in the world. (*If you have a body, you are an athlete.)

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The Mission Statement

Questions the mission statement should answer include:
What is our business? Who is the customer? What do consumers value? What should our business be?

Mission statements should be market oriented, not product oriented

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Setting Objectives and Goals

The mission should be translated into supporting objectives for each level of management
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

Business Portfolio:
The collection of businesses and products that make up the company

The company must:

Analyze its current portfolio and decide which should receive more, less, or no investment Shape the future portfolio by developing strategies for growth and downsizing

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Portfolio Analysis
Portfolio Analysis:
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
Evaluate the companys key businesses, called strategic business units (SBUs):
Attractiveness of SBUs market or industry Strength of SBUs position in that market or industry

BCG Growth Share Matrix uses market growth rate and relative market share to classify SBUs into four groups
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BCG Growth-Share Matrix

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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

As a result, many companies favour more customized strategic planning approaches

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Product/Market Expansion Grid

The product/market expansion grid can identify growth opportunities:

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Downsizing
Companies must develop strategies for growing and downsizing portfolios Downsizing eliminates products or business units that are not profitable or no longer fit the companys overall strategy
Many reasons exist for downsizing

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Planning Marketing
Marketing plays a key role in strategic planning:
Provides a guiding philosophy
The marketing concept

Provides input to strategic planners

Identifies opportunities

Designs strategies to reach objectives

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Creating Customer Value

Marketers must practice partner relationship management
Working with internal partners can create an effective value chain Working with external partners helps to form a superior value delivery network

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Value Delivery Network

Components include:
Companys value chain Suppliers Distributors Customers

Improved performance in delivery value to customers is the goal

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Marketing Strategy and the Marketing Mix

The goal is to create value for customers and build profitable customer relationships Marketing strategy decisions include:
Market segmentation and targeting Differentiation and positioning

Marketing strategy must guide marketing mix decisions

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Market Segmentation and Targeting

Segmentation:
Dividing a market into distinct groups of buyers who have different needs, behaviours, characteristics, and who might require separate products or marketing programs

Targeting:
Evaluating the attractiveness of each market segment and selecting one or more segments to enter
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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 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 Ps:
Product Price Place (Distribution) Promotion
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The Marketing Mix

The 4 Ps of the marketing mix:

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The 4 Ps and the 4 Cs

4 Ps: Sellers View
Product Price Place Promotion

4 Cs: Buyers View

Customer Solution Customer Cost Convenience Communication

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Managing the Marketing Effort

Four marketing management functions:
Analysis; SWOT analysis is key Planning; ensure marketing plan is consistent with strategic plan Implementation; carry out the plans successfully Control; measure and evaluate results and take corrective action as needed

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SWOT Analysis
SWOT analysis:

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Contents of a Marketing Plan

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

Many companies have a Chief Marketing Officer (CMO) Functional organization:
Different marketing activities are headed by a specialist (i.e. sales manager)

Geographic organization:
Sales and marketing people are assigned to specific countries, regions, and/or districts
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Marketing Department Organization

Product management organization:
One person is responsible for the strategy and marketing program for a single product

Market or customer organization:

Manager responsible for specific market or type of customer (i.e. government buyers)

Combination organization:
Uses some combination of the previous four approaches
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Marketing Control Process

Marketing control involves four steps:
Set specific marketing goals Measure performance in the marketplace Evaluate performance Take corrective action to close the gaps between goals and performance

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Marketing Control Process

Operating control:
Evaluates performance against the annual plan and takes corrective action

Strategic control:
Evaluates whether strategies match opportunities

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Return on Marketing Investment

Return on marketing investment is assessed using one or more methods:
Standard marketing performance measures (marketing dashboards):
Brand awareness, sales, market share

Customer-centered measures:
Customer acquisition, customer retention, customer lifetime value, customer equity

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Reviewing the Concepts

1. Explain the four steps of company-wide strategic planning 2. Discuss how to design business portfolios and growth strategies 3. Explain marketings role in strategic planning and how marketing creates and delivers 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 and discuss the importance of measuring and managing return on marketing investment
2 - 33 Copyright 2012 Pearson Canada Inc.