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Priciples of Marketing

by Philip Kotler and Gary Armstrong

Chapter 2
Company and Marketing Strategy
Partnering to Build Customer
Relationships
PEARSON
Objective Outline
Companywide Strategic Planning: Defining
Marketings Role
1 Explain company-wide strategic planning and its four
steps.

Designing the Business Portfolio


Discuss how to design business portfolios and
2
develop growth strategies.
Objective Outline
Planning Marketing: Partnering to Build
Customer Relationships
3 Explain Marketings role in strategic planning and
how marketing works with its partners to create and
deliver customer value.

Marketing Strategy and the Marketing Mix


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

Managing the Marketing Effort


Measuring and Managing Return on
Marketing Investment
List the marketing management functions, including
5 the elements of a marketing plan, and discuss the
importance of measuring and managing return on
marketing investment.
Companywide Strategic Planning: Definin
g Marketings Role
Strategic planning is the process of developing and maintaini
ng a strategic fit between the organizations goals and capabilit
ies 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 companys curr
ent 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 environm
ent.
Companywide Strategic Planning:
Defining Marketings 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 organizations purp
ose, what it wants to accomplish in the larger env
ironment.
Market-oriented mission statement defines the bu
siness in terms of satisfying basic customer needs
.
Defining a Market-Oriented Mission
Setting Company Objectives and Goals
Designing the Business Portfolio
The business portfolio is the collection of busine
sses and products that make up the company.
Business portfolio planning involves two steps:
Analyzing the Current Business Portfolio
Portfolio analysis is a major activity in strategic
planning whereby management evaluates the pro
ducts and businesses that make up the company
Managements first step is to identify the key bus
inesses that make up the company, called strategi
c business units (SBUs).
Analyzing the Current Business Portfoli
o
Stars are high-growth,
The Boston Consulting They
GrouprequireApproach
high-share businesses a lot of
or products. They often cash to hold their
need heavy investments share, let alone
A company classifies
to finance their rapidall
its SBUsincrease
according
to th it.
growth.
e growth-share matrix. The growth-share matrix
defines four types of SBUs:

These established They may generate


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.
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
Todays strategic planning has been decentralized
Developing Strategies for Growth and Dow
nsizing
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
Product/market
States. expansion grid is a portfolio-pl
anning tool for identifying company growth oppo
Diversification Through diversification, companies can grow by
rtunities
starting through
or buying market
businesses penetration,
outside their currentmarket deve For
product/markets.
lopment,
example, product
Starbucks development,
is entering the health or
anddiversification.
wellness market with
stores called Evolution By Starbucks.
Developing Strategies for Growth a
nd Downsizing
Planning Marketing: Partnering to Build C
ustomer Relationships
Marketing plays a key role in the companys strategic pla
nning in several ways:
First, marketing provides a guiding philosophythe marketing
conceptthat 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 firms
potential to take advantage of them.

Finally, within individual business units, marketing designs


strategies for reaching the units objectives. Once the units
objectives are set, marketings task is to help carry them out
profitably.
Partnering with Other Company Departm
ents
Value chain is a series of departments that carry out valu
e-creating activities to design, produce, market, deliver, a
nd support a firms products.
That is, each department carries out value-creating activit
ies to design, produce, market, deliver, and support the fir
ms products.
Partnering with Others in the Marketing Sy
stem
Value delivery network is the network made up of the co
mpany, its suppliers, its distributors, and, ultimately, its c
ustomers who partner with each other to improve the perf
ormance of the entire system.
Toyotas performance against Ford depends on the qualit
y of Toyotas overall value delivery network versus Ford
s.
Marketing Strategy and the Marketing Mi
x
Next comes marketing strategythe marketing
logic by which the company hopes to create this
customer value and achieve these profitable relati
onships.
Customer-Driven Marketing Strategy
Most companies are in a position to serve some segments bette
r than others.
Thus, each company must divide up the total market, choose th
e best segments, and design strategies for profitably serving ch
osen segments.
This process involves:
Market Segmentation
The process of dividing a market into distinct groups of b
uyers who have different needs, characteristics, or behavi
ors, and who might require separate products or marketin
g 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 mark
et segments attractiveness and selecting one or more seg
ments 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 s
egment; if this proves successful, they add more segments
.
Marketing Differentiation and Positioning
Positioning is arranging for a product to occupy a clear, d
istinctive, and desirable place relative to competing produ
cts in the minds of the target consumer.
Thus, effective positioning begins with differentiation
actually differentiating the companys market offering so
that it gives consumers more value.
Product means the
Price is the amount
Developing an Integrated Marketing Mix
goods-and-services
combination the
of money customers
The
marketing
must pay to obtain
company offers to the
the product. mix or
Marketing mix is the set
target market. of controllable tactical
the four Ps
marketing toolsproduct, price, place, and prom consists
of tactical
otionthat
Promotion the firm
refers to blends to produce the responmarketing
Anthat
effective marketing program blends the tools
se it wants in
activities the target market. Place includes
marketing mix elements into an integrated
communicate the merits blended
company activities
of marketing
the product program
and designed to achieve the
that make the
into an
companys
persuade targetmarketing
customers objectives byproduct
delivering integrated
value to consumers. The marketing mix available
constitutes to
marketing
to buy it. target consumers.
the companys tactical tool kit for establishing program
strong 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 sellers view of
the market, not the buyers view. From the buyers viewp
oint, in this age of customer value and relationships, the f
our 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 m
anagement functions:
Marketing Analysis
The marketer should conduct a SWOT analysis ,by which it e
valuates the companys 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 cho
osing marketing strategies that will help the company attain its
overall strategic objectives.

Marketing Strategy:
It outlines how the Marketi
Marketi
company intends to ng
ng
strategy
strategy
create value for target
customers in order to
capture value in return.
Marketing Implementation
Marketing implementation is the process that turns mar
keting plans into marketing actions to accomplish strategi
c marketing objectives.
Whereas marketing planning addresses:
what
Many managers think that doing things right (implementation)
why
is as important as, or even more important than, dong the right
things(strategy). who
where
when
how
Marketing Department Organization
Marketing Control
Marketing control is the measuring and evaluating the r
esults of marketing strategies and plans and taking correct
ive action to ensure that the objectives are achieved.

Four steps of
marketing
control:
Measuring and Managing Return on Mark
eting Investment
Return on marketing investment (or marketing ROI) i
s the net return from a marketing investment divided by t
he costs of the marketing investment.
It measures the profits generated by investments in marke
ting activities.
Many companies are assembling such measures into mark
eting dashboards meaningful sets of marketing perform
ance measures in a single display used to monitor strategi
c marketing performance.
Measuring and Managing Return on Mark
eting Investment
The End

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