CH 2: Company & Marketing Strategy

Companywide Strategic Planning: Defining Marketing’s Role

 Strategic Planning: the process of developing & maintaining a strategic fit between the
org’s goals & capabilities and its changing marketing opportunities
 Steps in Strategic Planning:

Defining a Market-oriented Mission

 A mission statement: a statement of the organization’s purpose—what it wants to
accomplish in the larger environment
 Mission statement should be market oriented and defined in terms of satisfying basic
customer needs.
 Products & technologies eventually become outdated, but basic market needs may last
forever

Setting Company Objective & Goals

 The company needs to turn its mission into detailed supporting objectives for each level
of management
 The mission should lead to a hierarchy of objectives, including business objectives and
marketing objectives
 Marketing strategies & programs must be developed to support these marketing
objectives

Designing the Business Portfolio

 The Business Portfolio is the collection of businesses & products that make up the
company
  It involves two steps:
o Analyze its current business portfolio & decide which businesses should receive
more, less, or no investment
o Shape the future portfolio by developing strategies for growth & downsizing
 Analyzing the current business portfolio:
o Strategic business units (SBUs): can be a company division, a product line within
a division, or a single product or brand.
o BCG matrix:

Anticipated Industrial
Growth Rate

High
Question Marks Stars

Dog Cash-Cow

Low

Low High
Market Share

 Build: the company can invest more in the business unit in order to build its share
 Hold: the company can invest just enough to hold the SBU’s share at its current level
 Harvest: Milking its short-term cash flow regardless of the long-tern effect
 Divest: Selling it or phasing the SBU out and using the resources elsewhere
 Problem with Matrix Approaches:
o Difficult
o Time consuming
o Costly to implement
o Focuses on current businesses, not future planning
o Difficulty in defining SBU’s and measuring market share & growth
Developing Strategies for Growth & Downsizing
 Product/Market expansion Grid

Existing Products New Products

Existing Markets Market Penetration Products Development

New Markets Market Development Diversification

 Downsizing a portfolio:
o Products or markets become less profitable
o Entered area where it lacks experience
o Introducing new products that do not offer superior customer value

Planning Marketing: Partnering to Build Customer Relationship

Partnering with Other Company Departments (Value-chain)
 Each company department can be thought as a link in the company’s value chain
 Each department carrier out value-creating activities to design, produce, market,
deliver, & support the firm’s products
 The firm’s success depends on how well the various department co-ordinate their
activities

Partnering with others in the Marketing System (Value delivery Network)

 The firm needs to look beyond its own value chain and into the value chains of its
suppliers, distributors & customers
 More companies today are partnering with the other members of the supply chain to
improve the performance of the customer value delivery network
 In today’s marketplace, competition no longer takes place between individual
competitors. Rather, it takes place between the entire value delivery networks created
by these competitors
Marketing Strategy & Marketing Mix
 Marketing Strategy: the marketing logic by which the company hopes to create
customer value & achieve profitable relationships

Customer-Driven Marketing Strategy

 Marketing Segmentation
o The process of dividing a market into distinct groups of buyers who have
different needs, characteristics, or behaviors, and who might require separate
products or marketing programs.
o Market Segment: consist of consumers who respond in a similar way to a given
set of marketing efforts
 Market Targeting
o After a company has defined market segments, it can enter one or many of these
segments
o Market targeting involves evaluating each market segment’s attractiveness and
selecting one or more segments to enter.
o A company should target segments in which it can profitably generate the
greatest customer value & sustain it over time
o A large company ,might decide to offer a complete range of products to serve all
market segments, eventually seeking full market coverage
 Market Differentiation & Positioning
o Positioning: Arranging for a product to occupy a clear, distinctive, and desirable
place relative to competing products in the minds of target consumers.
o The company’s entire marketing program should support the chosen positioning
strategy
o Differentiation: Actually differentiating the company’s market offering so that it
gives consumers more value

Developing an Integrated Marketing Mix

 Marketing Mix: It is the set of controllable, tactical marketing tools that the firm blends
to produce the response it wants In the target markets
 The marketing mix consists of everything the firm can do to influence the demand for its
product
 The Many possibilities can be collected into 4 groups of variables known as “the four
P’s”
o Product: Goods & services combination the company offers to target market
o Price: The amount of money customers must pay to obtain the product
o Place: Company activities that make the product available to target consumers
 o Promotion: activities that communicate the merits of the product & persuade
target customers to buy it
 The 4 P’s concept takes the seller’s view of the market, not the buyer’s view
 The 4 P’s become the 4 C’s from a buyer’s viewpoint
o Product  Customer Solution
o Price  Customer Cost
o Place  Convenience
o Promotion  Communication

Managing the Marketing Effort

 Managing the marketing process requires the four marketing management functions:

Marketing Analysis
 The Marketer should conduct a SWOT analysis

 The goal is to match the company’s strengths to attractive opportunities in the

environment, while eliminating or overcoming the weaknesses and minimizing the
threats

Marketing Planning
 Marketing Planning involves deciding on marketing strategies that will help the
company attain its overall strategic objectives
 Part of a Marketing Plan
Marketing Implementation
 A brilliant marketing strategy counts for little if the company fails to implement it
properly
 Marketing Implementation is the process that turns marketing plans into marketing
actions in order to accomplish strategic marketing objectives
 One firm can have essentially the same strategy as another, yet win in the marketplace
through faster or better execution

Marketing Department Organization

 The company must design a marketing organization that can carry out marketing
strategies & plans
 As a company expands, a marketing department emerges to plan and carry out
marketing activities
 Many companies now created a chief marketing officer (CMO) position
 Forms of Marketing Organization:
o Functional organization: different marketing activities are headed by a
functional specialist—a sales manager, advertising manager, marketing research
manager, customer-service manager, or new-product manager
o Geographic organization: Used by companies that sells across country or
internationally—it allows salespeople to settle into a territory, get to know their
customers, and work with a minimum travel time & cost
o Product management organization: Used by companies with different products
or brands—a product manager develops & implements a complete strategy and
marketing program for a specific product or brand
 o Market or customer management: Used by companies that sell on product line
to different type of markets—Market managers are responsible for developing
marketing strategies & plans for their specific markets or customers
o Combination:
 Used by large companies that produce many product in many markets
 They use a combination of all the organization forms
 This ensures that each unction, product, and market receives its share of
management attention

Marketing Control
 Evaluating the results of market strategies & plans and taking corrective action to
ensure that objectives are attained
 Operating Control
o Involves checking ongoing performance against the annual plan and taking
corrective action when necessary
 Strategic Control
o Involves looking at whether the company’s basic strategies are well matched to
its opportunities
o Marketing strategies & programs can quickly become outdated, and each
company should periodically reassess its overall approach to the marketplace

Measuring & Managing Return on Marketing Investment

 Return on marketing investment (Marketing ROI): is the net return from a marketing
investment divided by the costs of the marketing investment.
 Marketing ROI provides a measurement of the profits generated by investments in
marketing activities.