PPT - C02 - Company and Marketing Strategy

Ch 2 -0 Copyright © 2011 Pearson Education
0
Principles of Marketing,
Arab World Edition
Philip Kotler, Gary Armstrong, Anwar Habib, Ahmed
Tolba
Presentation prepared by Annelie Moukaddem Baalbaki
CHAPTER TWO
Company and Marketing
Strategy:
Partnering to Build Customer
Relationships
Lecturer: Hany Labib
Ch 1
Ch 2 -1
-1 Copyright
Copyright © 2011
© 2011 Pearson
Pearson Education
Education
Company and Marketing Strategy
Topic Outline
2.1 Companywide Strategic Planning: Defining

Marketing’s Role
2.2 Designing the Business Portfolio
2.3 Planning Marketing: Partnering to Build Customer
Relationships
2.4 Marketing Strategy and the Marketing Mix
2.5 Managing the Marketing Effort
2.6 Measuring and Managing Return on Marketing
Investment

Companywide Strategic Planning
Strategic Planning
Strategic planning is the process of developing and

maintaining a strategic fit between the organization’s goals
and capabilities and its changing marketing opportunities.


Defining a Market-Oriented Mission
❑ The mission statement is the organization’s purpose; what

it wants to accomplish in the larger environment.
❑ What is our business? Who is the customer? What do
consumers value? What should our business be?
❑ Mission statements should be market oriented

❑ A market-oriented mission statement defines the
business in terms of satisfying basic customer needs.
❑ Mission statements should be meaningful and specific yet
motivating.

product-oriented versus market-oriented business definitions

Amazon mission statement turn into marketing
strategy
Amazon has built its success of a marketing strategy

called flywheel or virtuous cycle. That consists of
a reinforcement process that starts with the
customer experience and ends with it.
When this cycle gains momentum, it also powers up

economies of scale and made it possible to
Amazon to speed up its growth process to the point
in which in a few years the company dominated
several industries.
Therefore, from customer experience, you get a lot

of traffic.
Rather than monetizing that traffic just by selling Amazon products, the company focused
on allowing third-parties to sell their products on Amazon; this is the foundation of third-
parties stores.
Instead of focusing on products Amazon already has, the company allows third-parties to
bring a selection that – at least initially – is hard for Amazon to have. That selection
makes the customer experience even richer.
7
Amazon mission statement turn into marketing
strategy
customer experiences might focus on a

few key elements:
✓ Low prices
✓ Really big selection
✓ A great delivery experience
This marketing strategy has two key

elements:
✓ A lower cost structure, where cash

is reinvested in the business, to https://fourweekmba.com/amazon-flywheel/
offer even lower prices, better
selection, and more efficient
inventory management
✓ The customer experience improves
as prices get lower and selection
broadens up, which in turns spins
the flywheel with more momentum!
8
Macdonald’s changing its mission statement
“being the world’s best quick-service restaurant”
“being our customers’ favorite place and way to eat.”
An exceptional customer experience:

✓ People amenities such as live plants, wireless Internet access, and flat-screen TVs showing cable news.
Play areas in some new restaurants now feature video games.
✓ To make the customer experience more convenient, McDonald’s stores now open earlier to extend
breakfast hours and stay open longer to serve late-night now open 24 hours a day.
✓ A reworked menu, including healthier options, such as Chicken McNuggets made with white meat,
Premium Salads, and the Angus burger.
McDonald’s rediscovered dedication to customer value sparked a remarkable turnaround. Since

announcing its Plan to Win,
McDonald’s sales have increased by more than 50 %, and profits have more than quadrupled
Setting Company Objectives and Goals
The company needs to turn its mission statement into detailed

supporting objectives for each level of management.

Setting Company Objectives and Goals
Heinz’s overall objective is to build profitable customer

relationships by developing foods “superior in quality,
taste, nutrition, and convenience” that embrace its
nutrition and wellness mission
improving the
increasing
company’s share of
sales
domestic
improving and international
profits markets
reducing
costs
objective Goals
Designing the Business Portfolio
The business portfolio is the collection of businesses and

products that make up the company.
Portfolio analysis is a major activity in strategic planning,

whereby management evaluates the products and businesses
that make up the company.

Designing The Business Portfolio
Analyzing the Current Business Portfolio
Strategic business unit (SBU) is a unit of the company that

has a separate mission, and objectives that can be planned
separately from other company businesses.
• Company division
• Product line within a division
• Single product or brand

Amazon Business Portfolio
Analyzing the Current Business Portfolio
The purpose of strategic planning is to find ways in which the company can best
use its strengths to take advantage of attractive opportunities in the
environment. So most standard portfolio analysis methods evaluate SBUs on
two important dimensions: the attractiveness of the SBU’s market or industry
and the strength of the SBU’s position in that market or industry.

Companywide Strategic Planning:
The Boston Consulting Group Approach (BCG)
Stars are high-growth, high-share Question marks are low-share business units in
businesses or products. They often need high-growth markets.
heavy investments to finance their rapid They require a lot of cash to hold their share, let
growth. Eventually their growth will slow alone increase it. Management has to
think hard about which question marks it should try
down, and they will turn into cash cows.
to build into stars and which should be phased out.
Cash cows are low-growth, high- Dogs are low-growth, low-

share businesses or products. share businesses and
These established products. They may generate
and successful SBUs need less enough cash to maintain
investment to hold their market themselves but do not
share. Thus, they produce a lot of promise to be large sources
the cash that the company uses to of cash.
pay its bills and support other
SBUs that need investment.

Companywide Strategic Planning:
The Boston Consulting Group Approach
❑ The 10 circles in the growth-share matrix represent the

company’s 10 current SBUs.
❑ The company has two stars, two cash cows, three
question marks, and three dogs. The areas of the circles
are proportional to the SBU’s dollar sales.
❑ This company is in fair shape, although not in good shape.
It wants to invest in the more promising question marks
to make them stars and maintain the stars so that they
will become cash cows as their markets mature.
❑ Fortunately, it has two good-sized cash cows. Income from
these cash cows will help finance the company’s question
marks, stars, and dogs.
❑ The company should take some decisive action concerning
its dogs and its question marks.
Applying BCG on Apple products
Invest to Hold Invest to Build 4 strategies for each

SBU:
➢ Invest to Build
High
➢ Invest to Hold
Market growth
➢ Harvest
➢ Divest
Harvest Divest
Low
High Low
Market share
Problems with Matrix Approaches
• Difficulty in defining SBUs and measuring market share

and growth
• Time consuming
• Expensive
• Focus on current businesses, not future planning

Developing Strategies for Growth and Downsizing
❑ Designing the business portfolio involves finding

businesses and products the company should consider in
the future. Companies need growth if they are to
compete more effectively, satisfy their stakeholders, and
attract top talent.
❑ Product/market expansion grid is a portfolio planning
tool for identifying company growth opportunities through:
• Market penetration
• Market development
• Product development
• Diversification

Product/market expansion grid (Ansoff model)
Market penetration is a growth strategy increasing

sales to current market segments without changing the
product.
Market development is a growth strategy identifying and

developing new market segments for current products.

Product development is a growth strategy through offering

new or modified products to current market segments.
Diversification is a growth strategy through starting up or

acquiring businesses outside the company’s current
products and markets.

- CocaCola
Market Product
Penetration Development
Existing
Adapting the ‘Promotion’ element of the

Cherry Coke in 1985
Marketing Mix. Coca-Cola has been able – Coca-Cola’s first
to utilize market penetration on an annual extension beyond its
basis by creating an association between original recipe.
Markets
Coca-Cola and Christmas
Market Diversification
Development
New
In 2007, Coca-Cola
The launch of Coke Zero in 2005- Diet Coke spent $4.1 billion to
was launched more than 30 years ago, it acquire Glaceau,
came to light that it’s a woman’s drink.
With its shiny black can and polar opposite
including its health
advertising campaigns, Coke Zero has drink brand
successfully generated a more ‘masculine’ Vitaminwater
appeal.
Existing New
Products
- MacDonalds
Market Product
Penetration Development
Existing
• •
• •
Markets
• •
Market Diversification
Development
New
•
•
•
•
•
Existing New
Products
Diversification strategies
Concentric diversification
Diversification
Horizontal diversification
Conglomerate
diversification
Adding new products or

services that are
significantly unrelated and
with no technological or
commercial similarities
Downsizing is the reducing of the business portfolio by

eliminating products or business units that are not
profitable or that no longer fit the company’s overall strategy.
“company should be either No.

1 or No. 2 in a particular
industry, or else leave it
completely”
Jack Welch

Planning Marketing: Partnering to Build
Customer Relationships
Partnering with Other Company Departments
Value chain is a series of departments that carry out value-

creating activities to design, produce, market, deliver, and
support a firm’s products.

Planning Marketing
Partnering with Others in the Marketing System
Value delivery network is made up of the company,

suppliers, distributors, and ultimately the customers who
partner with each other to improve performance of the
entire system.

Marketing Strategy and the Marketing Mix

Customer-Driven Marketing Strategy
Market segmentation is the division of a market into distinct

groups of buyers who have distinct 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.

Customer-Driven Marketing Strategy
Market targeting is the process of evaluating each market

segment’s attractiveness and selecting one or more
segments to enter.
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.

Developing an Integrated Marketing Mix
Marketing mix is the set of controllable tactical marketing

tools—product, price, place, and promotion—that the firm
blends to produce the response it wants in the target market.

Developing an Integrated Marketing Mix

Managing the Marketing Effort
Managing the marketing process requires the four marketing management functions shown
in Figure 2.6—analysis, planning, implementation, and control.
❑ Planning : The company first develops company-wide strategic plans and then
translates them into marketing and other plans for each division, product, and brand.
❑ Implementation: the company turns the plans into actions.
❑ Control: consists of measuring and evaluating the results of marketing activities and
taking corrective action where needed.
❑ Analysis : provides information and evaluations needed for all the other marketing
activities.

The goal of SWOT analysis is to match
❑ the company’s strengths to attractive opportunities in the environment.

❑ while eliminating or overcoming the weaknesses and minimizing the
threats.

SW
Coca-Cola SWOT Analysis
1. Coca Cola is the number one beverages brand in terms of WEAKNESSES
reach and sales
2. Coca Cola has Global reach with presence in over 200
1.Strong competition in the aerated drinks
countries
segment from PepsiCo means constant
3. Coca Cola has employee strength of around 1,50,000
fight over market share for Coca Cola
Internal factors
people globally
2. Coca Cola and related soft drinks brands
4. Strong and efficient supply chain network, ensuring that all
have been linked now with high sugar
the products are available even in the most remote places
content and many health concerns are
5. Strong financial condition
being raised, this becomes a weakness
6. Strong brand recall of all Coca Cola products through
worth looking at
advertising and marketing by associating with celebrity
3. Coca Cola does not have a food
brand ambassadors
business unlike its competitors like
7. CSR activities in the field of water conservation and
PepsiCo, it is only limited to beverages
recycling, education, health etc.
as of now
8. Effective and efficient packaging technique giving emphasis
4. Overdependence on 4-5 major brands
on recycling and reusing
like Coca Cola, Sprite etc.
9. long association with international sports events,
sponsorships etc STRENGTHS
OPPORTUNITIES 1. Health consciousness amongst people
avoiding aerated drinks can adversely
External factors
1. Increase its reach in untapped (available) countries and
market can boost Coca Cola affect Coca Cola
2. Market and popularize the less known products 2. Difficulty in complying with different
3. Acquiring other companies can strengthen Coca Cola's government regulations and norms in
place in the industry further different countries
OT
4. Diversify its product portfolio by entering into snacks 3. Inflation, economic slowdown and
industry to compete with PepsiCo instabilityNegative
5. Launching a full fledged health drinks line of business 4. Strong competition can lead to reduced
market share
THREATS
Positive negative
TOWS Strategic Alternatives Matrix
It's a variation of SWOT analysis, but differs because SWOT focuses on internal
factors (strengths and opportunities), while TOWS focuses on external factors
(threats and opportunities).
It helps you ask, and answer, the following questions:
1. How can we make the most of our strengths?

2. How do we avoid our weaknesses?
3. How can we capitalize on external opportunities?
4. How should we best manage threats?
External Opportunities (O) External Threats (T)

SO ST
Internal "Maxi-Maxi Strategy" "Maxi-Mini Strategy"
Strengths (S) Strategies that use strengths to Strategies that use strengths to
maximize opportunities. minimize threats.
WO WT
Internal
"Mini-Maxi Strategy" "Mini-Mini Strategy"
Weaknesses
Strategies that minimize weaknesses by Strategies that minimize
(W)
taking advantage of opportunities. weaknesses and avoid threats.
TOWS Strategic Alternatives Matrix
When you have many factors to consider, it may be helpful to construct

a matrix to match individual strengths and weaknesses to the individual
opportunities and threats you've identified.
To do this, you can construct a matrix such as the one below for each
quadrant (SO, ST, WO, and WT).
SO Matrix S1 S2 S3 S4
O1
O2
O3
O4
STRATEGIES FOR
COMPETITIVENESS AND
POSITIONING
Porter’s Strategic Competition models
In his book, “Competitive Advantage,” in 1985, Porter conceptualized the
concept of competitive advantage, by looking at two key aspects. Industry
attractiveness, and the company’s strategic positioning.
Industry Company’s
Attractiveness competitiveness
Porter’s Five Forces
Porter’s Generic Strategies: Differentiation,
Cost Leadership and Focus - 1985
• Porter’s question is about the determinants of a company’s relative
competitive position in an industry after a certain industry is
chosen to enter.
• Because, in order to be a successful company, being active in an
attractive industry alone is not enough: you will need to acquire a
dominant competitive position by choosing among three generic
strategies: Differentiation, Cost Leadership and Focus.
• Failing to choose between one of these strategies will result in
strategic mediocrity and below-average performance, or as Porter
describes it: ‘being stuck in the middle’.
Cost
Differentiation Focus
Leadership
Cost Leadership and Focus
Porter’s Generic Strategies is an answer to one of two central questions
underlying the choices companies have with regard to competitive
strategy
underlying the choices companies have with regard to competitive strategy
• The Competitive Advantage of the company.
• The Scope of the Market targeted.
Porter’s Generic Strategies: Differentiation, Cost
Leadership and Focus
Lower Cost Differentiation
Cost Leadership Differentiation

Broad Target
Competitive Manufacturing Quality of its products or the

process, or Cheap raw materials character of the Company
Wal-Mart, McDonald’s, EasyJet, Apple, Harley-Davidson,
Costco and Amazon, BIC. Nespresso, LEGO, Nike and
Starbucks, Louis Vuitton.
Cost Focus Differentiation Focus

Narrow Target
Very Competitive in Cost in a very Unique product or Niche

certain Product or Market Niche Rolls Royce, Omega, Prada and
Southwest Airlines ,Claire’s, Home Razer
Depot and Smart.
Lower Cost Differentiation
Cost Leadership Differentiation

Broad Target
Cost Focus Differentiation Focus

Narrow Target
Porter’s Generic Strategies: McDonald’s Cost Leadership
1. Rapid food delivery –McDonald’s can serve
more customers in an hour than its
competitors. The process of making a
hamburger, for instance, has been simplified
and optimized over the years so that any
employee can learn it quickly.
2. Employee recruitment and training –
McDonald’s is known to recruit teenagers who
are often applying for their first job. Hiring
inexperienced staff as opposed to trained
cooks means the company can pay a lower
wage.
3. Vertical integration – compared to some of
its competitors, McDonald’s favours vertical
integration. The company owns the facilities
that produce standardized ingredient mixes
for its menu items. It also grows its own beef
via contracted producers and handles its own
product transportation.
STRATEGIES FOR PRICING
AND PROMOTION
NEW PRODUCTS
Skimming/Penetration Strategy
High Promotion Mix Low
Rapid Skimming Strategy Slow Skimming Strategy

High
High price/High Promotion High price/Low Promotion
• To create a brand • To create a brand

• To address prestige need • To address prestige need
• Consumer surplus • Consumer surplus
• Tough Competition • Tough Competition
• Public visibility needed is • No Public visibility is needed
needed
Price
Rapid Penetration Strategy Slow Penetration Strategy

Low price/High Promotion Low price/Low Promotion
• Economies of scale • Economies of scale

• Consumer surplus is • Consumer surplus is
constraint constraint
• Tough Competition • Tough Competition
• Public visibility is needed • No Public visibility is needed
Low
High Promotion Mix Low
Rapid Skimming Strategy Slow Skimming Strategy

High
High price/High Promotion High price/Low Promotion

Price
Rapid Penetration Strategy Slow Penetration Strategy

Low price/High Promotion Low price/Low Promotion
Low
Rapid-skimming strategy
• Launch new product at high price

• High promotion level
• Makes sense if:
• large part of potential market is unaware of the product.
• Those who become aware are eager & willing to pay
• Need to build brand preference quickly due to potential
competition
Slow-skimming strategy
• launch new product at high price -low promotion

• helps maintain high profit per unit
• makes sense if:
• market size is limited
• most of market is aware of product
• buyer willing to pay high price
• no significant potential competition
Rapid-penetration strategy
• launch new product at low price

• Spend heavily on promotion
• Allows fastest market penetration & share
• Makes sense if:
• Large market that is unaware of product
• Buyers are price-sensitive
• Strong potential competition exists
• Can rapidly enjoy economies of scale
Slow-penetration strategy
• launch new product at low price

• Low level of promotion
• Encourages rapid product acceptance
• Allow slightly higher profits than rapid-penetration
• Makes sense if:
• Market is price-sensitive
• Market is not promotion-sensitive
• Large market that is aware of the product
• Some potential competition
Market Planning
Parts of a Marketing Plan

Marketing Implementation
Implementing is the process that turns marketing plans into

marketing actions to accomplish strategic marketing
objectives.
Successful implementation depends on how well the company

blends its people, organizational structure, its decision
and reward system, and company culture into a cohesive
action plan that supports its strategies.

Marketing Department Organization

Marketing Control
Marketing Control is the process of measuring and

evaluating the results of marketing strategies and plans and
taking corrective action to ensure that objectives are
achieved.
• Operating control
• Strategic control

Measuring and Managing Return on Marketing
Investment
Return on Marketing Investment (Marketing ROI)
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.

Measuring and Managing Return on Marketing
Investment
Return on Marketing Investment (Marketing ROI)
Without Marketing With Marketing

Activities Activities
Unit Sales 10,000 12,000
Profit Margin $15 $15
Gross Profit $150,000 $180,000
Marketing activities
N/A 20,000
cost
Net Profit $150,000 $160,000
Extra Profits $10,000
ROMI $10,000/20,000=50%

SWOT TOWS
Analysis matrix
Porter’s 5
BCG matrix
forces
Porter’s
Ansoff generic
model Strategies
Strategies for
Pricing and
Promotion
This work is protected by local and international copyright laws and is provided solely for
the use of instructors in teaching their courses and assessing student learning.
Dissemination or sale of any part of this work (including on the World Wide Web) will
destroy the integrity of the work and is not permitted. The work and materials from this site
should never be made available to students except by instructors using the accompanying
text in their classes. All recipients of this work are expected to abide by these restrictions
and to honor the intended pedagogical purposes and the needs of other instructors who rely
on these materials.

PPT - C02 - Company and Marketing Strategy

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

PPT - C02 - Company and Marketing Strategy

Uploaded by

Copyright:

Available Formats

Ch 2 -0 Copyright © 2011 Pearson Education

Lecturer: Hany Labib

2.1 Companywide Strategic Planning: Defining

Ch 2 -2 Copyright © 2011 Pearson Education

Strategic planning is the process of developing and

Ch 2 -3 Copyright © 2011 Pearson Education

Ch 2 -4 Copyright © 2011 Pearson Education

❑ The mission statement is the organization’s purpose; what

❑ Mission statements should be market oriented

Ch 2 -5 Copyright © 2011 Pearson Education

Ch 2 -6 Copyright © 2011 Pearson Education

Amazon has built its success of a marketing strategy

When this cycle gains momentum, it also powers up

Therefore, from customer experience, you get a lot

customer experiences might focus on a

This marketing strategy has two key

✓ A lower cost structure, where cash

“being the world’s best quick-service restaurant”

“being our customers’ favorite place and way to eat.”

An exceptional customer experience:

McDonald’s rediscovered dedication to customer value sparked a remarkable turnaround. Since

The company needs to turn its mission statement into detailed

Ch 2 -7 Copyright © 2011 Pearson Education

Heinz’s overall objective is to build profitable customer

The business portfolio is the collection of businesses and

Portfolio analysis is a major activity in strategic planning,

Ch 2 -8 Copyright © 2011 Pearson Education

Strategic business unit (SBU) is a unit of the company that

Ch 2 -9 Copyright © 2011 Pearson Education

Ch 2 -10 Copyright © 2011 Pearson Education

Cash cows are low-growth, high- Dogs are low-growth, low-

Ch 2 -11 Copyright © 2011 Pearson Education

❑ The 10 circles in the growth-share matrix represent the

Invest to Hold Invest to Build 4 strategies for each

• Difficulty in defining SBUs and measuring market share

Ch 2 -12 Copyright © 2011 Pearson Education

❑ Designing the business portfolio involves finding

Ch 2 -13 Copyright © 2011 Pearson Education

Market penetration is a growth strategy increasing

Market development is a growth strategy identifying and

Ch 2 -14 Copyright © 2011 Pearson Education

Product development is a growth strategy through offering

Diversification is a growth strategy through starting up or

Ch 2 -15 Copyright © 2011 Pearson Education

Adapting the ‘Promotion’ element of the

Coca-Cola and Christmas

Adding new products or

Downsizing is the reducing of the business portfolio by

“company should be either No.

Ch 2 -16 Copyright © 2011 Pearson Education

Value chain is a series of departments that carry out value-

Ch 2 -17 Copyright © 2011 Pearson Education

Value delivery network is made up of the company,

Ch 2 -18 Copyright © 2011 Pearson Education

Ch 2 -19 Copyright © 2011 Pearson Education

Market segmentation is the division of a market into distinct

Market segment is a group of consumers who respond in a

Ch 2 -20 Copyright © 2011 Pearson Education

Market targeting is the process of evaluating each market

Market positioning is the arranging for a product to occupy

Ch 2 -21 Copyright © 2011 Pearson Education

Marketing mix is the set of controllable tactical marketing

Ch 2 -22 Copyright © 2011 Pearson Education