Chapter Two

Company and Marketing Strategy

Partnering to Build Customer
Relationships
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Company and Marketing Strategy

Topic Outline
Companywide Strategic Planning: Defining
Marketings Role
Planning Marketing: Partnering to Build Customer
Relationships
Marketing Strategy and the Marketing Mix
Managing the Marketing Effort
Measuring and Managing Return on Marketing
Investment

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Companywide Strategic Planning

Strategic Planning

Strategic planning is the process of

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

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Companywide Strategic Planning

Steps in Strategic Planning

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Companywide Strategic Planning

Defining a Market-Oriented Mission

The mission statement is

the organizations
purpose, what it wants to
accomplish in the larger
environment
Market-oriented mission
statement defines the
business in terms of
satisfying basic customer
needs
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Defining a Market-Oriented Mission

Begin asking following questions: What is
our business? Who is the customer? What
do consumers value? What should our
business be?
A mission statement should:
1. Not be myopic in product terms
2. Meaningful and specific
3. Motivating
4. Emphasize the companys strengths
5. Contain specific workable guidelines
6. Not be stated as making sales or profits
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Companywide Strategic Planning

Setting Company Objectives and Goals
Business
objectives

Build profitable
customer
relationships
Invest in
research
Improve profits

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Marketing
objectives

Increase
market share
Create local
partnerships
Increase
promotion

Companywide Strategic Planning

Designing the Business Portfolio
The business portfolio is the collection of businesses and
products that make up the company. Best fits the
companys strengths and weaknesses to opportunities in
the environment.
Portfolio analysis is a major activity in strategic planning
whereby management evaluates the products and
businesses that make up the company. Company must
analyze its current business portfolio and determine
which businesses should receive more, less, or no
investment. Then, shape the future portfolio developing
strategies for growth and downsizing
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Companywide Strategic Planning

Analyzing the Current Business Portfolio

Strategic business units can be

Company division
Product line within a division
Single product or brand

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Companywide Strategic Planning

Analyzing the Current Business Portfolio
Identify key businesses (strategic
business units, or SBUs) that make
up the company
Assess the attractiveness of its
various SBUs

Decide how much support each

SBU deserves

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Companywide Strategic Planning: Boston

Consulting Group (BCG) approach

Companywide Strategic Planning: Boston

Consulting Group (BCG) approach
Stars are high-growth, high-share businesses or products
requiring heavy investment to finance rapid growth. They
will eventually turn into cash cows.
Cash cows are low-growth, high-share businesses or
products that are established and successful SBUs requiring
less investment to maintain market share.
Question marks are low-share business units in highgrowth markets requiring a lot of cash to hold their share.
Dogs are low-growth, low-share businesses and products
that may generate enough cash to maintain themselves but
do not promise to be large sources of cash.
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Companywide Strategic Planning

Problems with Matrix Approaches

Difficulty in defining SBUs and measuring market

share and growth
Time consuming
Expensive
Focus on current businesses, not future planning
Increasingly, companies are placing responsibility
for strategic planning in the hands of crossfunctional teams of divisional managers who are
close to their markets.
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Companywide Strategic Planning

Developing Strategies for Growth and Downsizing

Product/Market Expansion Grid

a tool for identifying

company growth
opportunities

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Market
penetration

Product
development

Market
development

Diversification

Companywide Strategic Planning

Developing Strategies
for Growth and Downsizing
Market penetration growth by
increasing sales to current market
segments without changing the
product : Add new stores in current
market areas to make it easier for
customers to visit.
Market development growth by
identifying and developing new
market segments for current
products :new geographic markets,
new demographic markets
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Companywide Strategic Planning

Developing Strategies
for Growth and Downsizing

Product development is a growth strategy that

offers new or modified products to existing
market segments: moving into new product
categories
Diversification is a growth strategy through starting
up or acquiring businesses outside the companys
current products and markets : acquire a company
that operates in different market segments with a
different product mix.
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Companywide Strategic Planning

Developing Strategies
for Growth and Downsizing

Downsizing prune, harvest or divest businesses

that are unprofitable or that no longer fit the
strategy:
The firm may have grown too fast or entered areas
where it lacks experience.
The market environment might change, making some
products or markets less profitable.
Some products or business units simply age and die.
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Planning Marketing
Partnering to Build Customer Relationships

Value chain is a series of

departments that carry
out value-creating
activities to design,
produce, market,
deliver, and support a
firms products
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Planning Marketing
Partnering to Build Customer Relationships

Value delivery network is

made up of the
company, suppliers,
distributors, and
ultimately customers
who partner with each
other to improve
performance of the
entire system
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Marketing Strategy and

the Marketing Mix

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Marketing Strategy and the

Marketing Mix
Market segmentation is the division of a
market into distinct groups of buyers who
have different needs, characteristics, or
behavior and who might require separate
products or marketing mixes
Market segment is a group of consumers who
respond in a similar way to a given set of
marketing efforts
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Marketing Strategy and the

Marketing Mix
Market Targeting

Market targeting
is the process of evaluating each market
segments attractiveness and selecting one
or more segments to enter

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Marketing Strategy and the Marketing

Mix

Market positioning is the arranging for a

product to occupy a clear, distinctive, and
desirable place relative to competing
products in the minds of the target
consumer
Whole marketing plan supports the
positioning strategy
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Marketing Strategy and the

Marketing Mix
Differentiation begins the positioning
process
Whole marketing plan supports the
positioning strategy

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Marketing Strategy and the Marketing

Mix
Developing an Integrated Marketing Mix

Marketing mix is the set of controllable

tactical marketing toolsproduct, price,
place, and promotionthat the firm blends
to produce the response it wants in the
target market

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Marketing Strategy and the Marketing

Mix
Developing an Integrated Marketing Mix
ProductCustomer
solution
PriceCustomer
cost
Place
Convenience
Promotion
Communication

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Managing the Marketing Effort

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Managing the Marketing Effort

Marketing Analysis SWOT Analysis

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Managing the Marketing Effort

Market PlanningParts of a Marketing Plan

Executive
summary

Marketing
situation

Threats and
opportunities

Objective
and issues

Marketing
strategy

Action
programs

Budgets

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Controls

Managing the Marketing Effort

Marketing Implementation

Implementing
Turns marketing plans into marketing actions
to accomplish strategic marketing objectives
Addresses who, where, when, how

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Managing the Marketing Effort

Marketing Department Organization
Functional organization

Geographic organization
Product management organization
Market or customer management

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ContFunctional organization: This is the most common form of marketing

organization with different marketing functions headed by a
functional specialist.
Geographic organization: Useful for companies that sell across the
country or internationally. Managers are responsible for developing
strategies and plans for a specific region.
Product management: Useful for companies with different products
or brands. Managers are responsible for developing strategies and
plans for a specific product or brand.
Market or customer management organization: Useful for companies
with one product line sold to many different markets and customers.
Managers are responsible for developing strategies and plans for their
specific markets or customers.
Customer management involves a customer focus and not a product
focus for managing customer profitability and customer equity.
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Managing the Marketing Effort

Marketing Control

Controlling
evaluating of results
taking of corrective action to achieve objectives
Operating control :involves checking ongoing performance against
the annual plan and taking corrective action when necessary. Its
purpose is to ensure that the company achieves the sales, profits,
and other goals set out in its annual plan. It also involves determining
the profitability of different products, territories, markets, and
channels.

Strategic control :involves looking at whether the

companys basic strategies are well matched to its
opportunities
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Measuring and Managing

Return on Marketing Investment
Return on Marketing Investment (Marketing ROI)

Return on marketing investment

is net return from a marketing
investment divided by the costs of the
marketing investment.
provides a measurement of the profits
generated by investments in marketing
activities.
ROI in terms of standard marketing
performance measures, such as brand
awareness, sales, or market share.

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