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Chapter 2

Company and Marketing


Strategy:
Partnering to Build
Customer Relationships

Learning Objectives
1. Explain companywide strategic planning
and its four steps
2. Discuss how to design business portfolios
and develop growth strategies
3. Explain marketings role in strategic
planning and how marketing works with
its partners to create and deliver
customer value
4. Describe the elements of a customerdriven marketing strategy and mix, and
the forces that influence it
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Introduction

Definition of Strategic Planning

Four (4) steps in strategic planning


Step 1 Defining the company mission
Step 2 Setting company objectives and
goals
Step 3 Designing the business portfolio
Product/market expansion grid

Step 4 Planning marketing and other


functional strategies

Introduction
Marketing strategy and marketing mix
Customer-driven Marketing strategy
Developing an Integrated Marketing Mix

Marketing strategy and marketing mix


SWOT Analysis

Learning Objective 1
Explain companywide strategic planning
and its four steps

Companywide Strategic
Planning:
Defining Marketings Role
Strategic Planning

The process of developing


and maintaining a strategic fit
between the organizations
goals and capabilities and
its changing marketing
opportunities.

Current capabilities

GOAL

4 Steps in Strategic
Planning

What is the significance of the perforated line separating the first 3


steps from the 4th step?
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Step 1: Defining Company


Mission
A mission statement is a statement of the
organizations purpose - what it wants to accomplish in
the larger environment.

Organizations purpose.
As a foundation of any marketing plan.
A clear mission statement acts as an invisible hand
that guides people in the organization.
A market-oriented mission statement defines the
business in terms of satisfying basic customer needs.

Step 1: Defining Company


Mission
Should address the

Mission statement

following questions:

must also be:

What is our

Realistic.

business?
Who is our
customer?
What do consumers
value?
What should our
business be?

Specific.
One that fits the

market environment.
Based on distinctive
competencies.
Motivating.

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MISSION To be a leading university offering education of the highest


standard in all significant fields aimed at fully developing the individual and
better serving the nation. UTAR shall pursue a rigorous academic approach
towards producing disciplined graduates critical in their thinking and dedicated
to the quest of continuous learning and the pursuit of excellence
Committed to the advancement of knowledge. UTAR shall collaborate with
international universities, research institutions, and industries in pushing the
frontiers of the humanities and embarking on scientific discoveries, medical
breakthroughs and technological innovations.
Dedicated to inculcating among the UTAR's community high moral values,
appreciation of the rich diversity in a multiethnic society and an abiding
concern for the betterment of all humankind.

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Mission Statement:
"Establish Starbucks as the premier purveyor of the finest coffee
in the world while maintaining our uncompromising principles while
we grow."

Step 2: Setting company


objectives and goals
Company needs to turn its mission into detailed
objectives for each level of management.
Each manager should have objectives &

be responsible for reaching them.


Marketing strategies and programs must

be developed to support these marketing


objectives.
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Step 2: Setting company


objectives and goals

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Example:

Starbucks stated objective is:


to establish Starbucks as the most
recognized and respected brand of coffee
in the worlds.

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Learning Objective 2
Discuss how to design business portfolios
and develop growth strategies

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Step 3: Designing the


Business Portfolio

The business portfolio is the


collection of
businesses and products that make
up the
The best business portfolio is the one that best
fits the companyscompany.
strengths and weaknesses to
opportunities in the environment.
Business portfolio planning involves two steps:
1. Analyze its current business portfolio and decide
which businesses should receive more, less, or
no investment.
2. Shape the future portfolio by developing
strategies for growth and downsizing.

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Analyzing the Current Business


Portfolio
The major activity in strategic planning is business

portfolio analysis.
Portfolio analysis is where management
evaluates the products and businesses making
up the company.
The steps in portfolio analysis are:
1. To identify the strategic business units (SBU).
The SBU is a unit of the company that has a
separate mission and objectives and that can
be planned independently from other company
businesses.
2. To assess the attractiveness of its various SBUs
and decide how much support each deserves.
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Developing strategies for


Growth and Downsizing
A companys objective must be profitable

growth.
Marketing has the main responsibility for
achieving profitable growth for the company
Growth strategies:
product / market
expansion grid
(Product/market
development)

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Downsizing strategies:
eliminate product /
SBUs that are not
profitable

Growth strategies:
Product/Market Expansion
Grid
The product/market expansion

grid is a planning tool and used in


identifying growth opportunities.
a)
b)
c)
d)
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Market penetration
Market development
Product development
Diversification

Growth strategies:
Product/Market Expansion
Grid

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(A) Market Penetration


(existing product / existing market)
Strategy:
Making more sales to current customers without

changing its products.


How?:
Adding new stores in current market areas, improving

advertising, lowering prices, adding services, and etc.

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Example:
Starbucks can penetrate the market by:
a) Add new stores in current market areas to
make it easier for customer to visit.
b) Improvement in advertising, prices,
service, menu selection or store design to
encourage customers to stop more often
and stay longer.

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(b) Market Development


(existing product / new market)
Strategy:
Identify and develop new markets for its current
products.

How?:
Enter new demographics
or products
geographic area
Current
with same products.

New markets

New markets

New markets

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Ikea Malaysia

Ikea Sweden

Ikea China

Example:
Management of Starbucks can look or
identify the demographic markets
( seniors or ethnics) and geographic
markets (smaller cities) in developing
their market.
1996 11 coffeehouse outside North

America
Now 4000 coffeehouse

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(c) Product Development


(new product / existing market)
Strategy:
Offering modified or new products to current markets.

How?
Adding

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new sizes & flavors to the current products.

Example:
Starbucks added Fruit Juice Frappuchino
beverages to its menu.
To grow in more non-coffee drinkers
Offer sandwiches to bolster its morning
business.

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(d) Diversification
(new product / new market)
Strategy:
Starting up or buying businesses outside of its

current products and markets.


How?:

Create new category of product or buy other business.

Eg: Dunhill starting with


selling cigarette, then
has its own Apparel
division.

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E.g.: Starbucks 1999 purchase of Hear Music


and create a new Starbucks Entertainment
division.

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Downsizing strategies
Companies must also develop strategies for

downsizing.
When a firm finds brands/businesses that

are unprofitable or no longer fit the overall


strategy, it may prune, harvest, or divest
them.

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Learning Objective 3
Explain marketings role in strategic planning
and how marketing works with its partners to
create and deliver customer value

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Step 4: Planning
Marketing and other
functional
strategies
Marketing
plays a key role in the companys
strategic planning.
Marketing provides a guiding philosophythe

marketing concept.
Marketing provides inputs to strategic planners.
Marketing designs strategies for reaching the units
objectives.
Customer value is the key ingredient in the

marketers formula for success.


In addition to customer relationship
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management, marketers must also practice


partner relationship management.

Partnering with Other


Company Departments
Each company department is a link in the

companys value chain.


Such departments (R&D, Finance, Operation and

Marketing) cooperate together creates value


chain.
Success depends on how well the various

departments coordinate their activities.


Ideally, a companys different functions
should work in harmony to produce value for
consumers.
Marketers must find ways to get all departments
to think consumer.
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Example:
Wal-Mart goal is to create customer

value & satisfaction by providing


shoppers with products at the lowest
possible prices.
Marketers must find ways to get all

departments to think customer


and to develop a smoothly functioning
value chain.

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Partnering with Others in


Marketing System
Companies today are partnering with the

other members of the supply chain such as


suppliers, distributors and customers to
improve the performance of the customer
value-delivery network.
Competition takes place between the entire

value-delivery networks created by


competitors.

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Marketing Strategy and the


Marketing Mix
Marketing strategy is nextthis is the

broad logic under which the company


attempts to develop profitable
relationships.
Guided by the strategy, the company

develops its marketing mixproduct,


price, place, and promotion.

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Marketing Strategy and the


Marketing Mix

Market
Positioning

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Learning Objective 4
Describe the elements of a customer-driven
marketing strategy and mix, and the forces
that influence it

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Customer-Driven Marketing
Strategy
Marketing requires a deep understanding

of customers.
Companies must divide up the total
market, choose the best segments, and
design strategies for profitably serving
chosen segments.
This process involves:
Market segmentation
Market targeting
Market differentiation, and positioning.

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Process of dividing a market into


distinct groups of buyers who have
Market
different needs, characteristics, or
Segmentati
behaviour who might require
on
separate products or marketing
programs.
Market
Targeting

Evaluating each market segments


attractiveness and selecting one or
more segments to enter.

Differentiation is differentiating
the companys market offering so
that it gives consumers more value.
Market
Differentiati Positioning is arranging for a
on &
product to occupy a clear,
Positioning
distinctive, and desirable place
relative to competing products in the
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minds of target consumers.

Market segmentation
Example:
Segment one: customer who want the

biggest car regardless the price


Segment two: customer who care
mainly about the price.

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Target Marketing/Market
Targeting
Example:
Abercrombie & Fitch targets college
students, teens, and kids with same
upscale, casual clothes and accessories
in different outlets

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Market Differentiation and


Positioning
The trick is to figure out how to express the

difference
Must identify the possible customer value
differences that provide competitive
advantages to build position.
Example:

Air Asia Now Everyone Can Fly


Malaysian Airlines Going beyond expectations

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Developing an Integrated
Marketing Mix
The marketing mix is the set of

controllable, tactical marketing tools that


the firm blends to produce the response it
wants in the target market.
The marketing mix consists of the four Ps:
product,The
price,
place,
and promotion.
goods
and services
combination
Product the company offers to the target
market. (Consumer solution)
Price

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Place

The amount of money customers have


to pay to obtain the product.
(Consumer cost)
The company activities that make the
product available to target consumers.

The Four Ps of the Marketing


Mix

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Managing the Marketing


Effort
Managing the marketing process requires

the four marketing management functions


of analysis, planning, implementation,
and control.
Marketing Analysis: Analysis should be

performed to understand the markets and


marketing environment the company
faces.
SWOT Analysis
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SWOT ANALYSIS
SWOT Analysis is used to evaluate the

companys strengths (S), weaknesses


(W), opportunities (O), and threats
(T).
Strengths: capabilities, resources, and
positive situational factors.
Weaknesses: negative internal factors
and negative situational factors.
Opportunities: favorable external factors.
Threats: unfavorable external factors.
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SWOT ANALYSIS

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(a) Internal Environment


All controllable elements inside a firm
that influence how well the firm
operates.

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Physical facilities

Quality product

Strong brand

financial resources

Image/reputation

technology
Weaknesses

ENVIRONMENT

INTERNAL

Strengths

(b) External Environment


Elements outside the firm that may
affect it either positively or negatively.
Firm cannot directly control external
factors but can respond to them via
planning

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Socio cultural trend

demographic

economic

technological

political / legal

competition

Threats

ENVIRONMENT

EXTERNAL

Opportunities

SWOT ANALYSIS
The company should analyze its market and

marketing environment to find attractive


opportunities & identify the
environmental threats.

Analyze company strength & weaknesses

as well as current & possible marketing actions


to determine which opportunities can be
pursued.

The goal is to match the strengths to

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attractive opportunities in the environment,


while eliminating or overcoming the
weaknesses and minimizing the threats

Exercise.
The product strategy is how marketers communicate

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product benefits and features to the target market.


(F; Answer: Promotion strategy)
The packaging is relates most closely to the product
element of the marketing mix.
(T)
Price is the assignment of value, or the amount the
consumer must exchange to receive the offering.
(T)
The promotion element of the marketing mix includes
the design of the product.
(F; Answer: Product element)
Within the context of the marketing mix, place refers to
the availability of the product to the customer at the
desired time and location.
(T)

Exercise.

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The internal environment of an organization


identifies its weaknesses and threats.
(False, Answer: Strengths and Weaknesses)
A marketing plan is a document that describes the
marketing environment, outlines the marketing
objectives and strategies, and identifies how the
strategies imbedded in the plan will be
implemented and controlled.
(T)
Managers use SWOT analyses to select channels of
distribution for their products.
(False; Answer: to assess their companies internal
and external environments)

CLASS ACTIVITY

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Group Activity
Develop a mission

statement for
YOU!
You can think of

yourself as a
product that you
are promoting to a
potential employer

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Chapter 2
The End

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