Company and

Marketing Strategy:
Partnering to Build
Customer
Relationships
Chapter 2

Strategic Planning
• Strategic planning is defined
as:
 “The process of developing and
maintaining a strategic fit
between the organization’s goals
and capabilities and its changing
marketing opportunities.”
2- 2

Strategic Planning
• Planning activities occur at the
business unit, product, and
market levels, and include:
 Defining the purpose and mission
 Setting objectives and goals
 Designing the business portfolio
 Developing detailed marketing
and departmental plans
2- 3

4 . .Strategic Planning • Mission statements should .  be motivating.  be “market-oriented” rather than “product-oriented”.  be neither too narrow. . 2. nor too broad.  fit with the market environment.  serve as a guide for what the organization wants to accomplish.

• We bring inspiration & innovation to every athlete* in the world.5 . you are an athlete. (*If you have a body.) 2.Nike • We sell athletic shoes & apparel.

6 .• We are an online social network. 2. • We connect people around the world and help them share important moments in their lives.

and enjoyable—we’re the place where you can find and discover anything you want to buy online. consumer electronics.Amazon.7 . housewares. CDs. easy. videos. and other products • We make the internet buying experience fast. 2. hardware.com • We sell books. toys.

” 2.Wal-Mart • We run discount stores. Live Better. “Save Money.8 . • We deliver low prices every day and give ordinary folks the chance to buy the same things as rich people.

9 . • We create the RitzCarlton experienceone that enlivens the senses. instills well-being. 2.Ritz-Carlton Hotels & Resorts • We rent rooms. and fulfills even the unexpressed wishes and needs of our guests.

2.10 .Strategic Planning • Mission statements guide the development of objectives and goals.  Objectives are developed at each level in the organization hierarchy.  Strategies are developed to accomplish these objectives.

11 .Setting Company Objectives and Goals Heinz 2.

” Overall objective: “build profitable customer relationships by developing foods ‘superior in quality. and our company. the planet. taste.” 2. and convenience’ that embrace its nutrition and wellness mission.12 . Heinzthe original Pure Food Company-is dedicated to the sustainable health of people.Heinz (best known for its tomato ketchup) Mission Statement: “As the trusted leader in nutrition and wellness. nutrition.

bought Quero in Brazil and ABC in Indonesia 2.Need to invest in R & D.13 . Fund this through profits Marketing objectives: increase profits by increasing sales and reducing costs Increasing sales in the US or entering new markets Becomes the marketing objectives Marketing strategies & program – broaden product lines (breakfast wraps to weight watchers).

14 .” • Designing the business portfolio is a key element of the strategic planning process.Designing the Business Portfolio • Business portfolio: “the collection of businesses and products that make up the company. 2.

2.15 .Strategic Planning Portfolio Design • Step 1: Analyze the current business portfolio • Step 2: Shape the future business portfolio • Identify strategic business units (SBUs) • Assess each SBU:  The BCG growthshare matrix classifies SBUs into one of four categories using the:  Market growth rate  SBU’s relative market share within the market.

Strategic Planning BCG Growth-Share Matrix High Market Growth Stars Low Market Growth Cash Cows High Relative Market Share Question Marks Dogs Low Relative Market Share 2.16 .

Strategic Planning Portfolio Design • Step 1: Analyze the current business portfolio • Step 2: Shape the future business portfolio • Determine the future role of each SBU and choose the appropriate resource allocation strategy:     Build Hold Harvest Divest • SBUs change positions over time 2.17 .

Strategic Planning • Matrix approaches to formal planning share many problems:  Difficult.  Too strongly emphasize market share growth or growth via diversification.18 . time-consuming.  Focus only on current businesses. 2. and costly to implement.

Strategic Planning • Designing the business portfolio also involves:  Developing strategies for growth by identifying.  Product/market expansion grid  Developing strategies for downsizing the business portfolio.19 . evaluating. and selecting promising new market opportunities. 2.

Strategic Planning Product/Market Expansion Grid Existing Products New Products Existing Markets Market Penetration Product Development New Markets Market Development Diversificatio n 2.20 .

2.  Partnering with other departments in the company as well as other firms in the marketing system helps to build a superior value delivery-network.Planning Marketing • Marketing plays a key role in the strategic planning process. • Marketers must practice CRM and Partner Relationship Management.21 .

Marketing’s role in strategic planning • Guiding philosophy – the marketing concept • Inputs to strategic planners – identify attractive market opportunities • Designs strategies for reaching unit’s objectives 2.22 .

2. All departments must understand marketing and their role in creating customer value. etc.Partnering with other company departments • Internal value chain • Purchasing • Production • Finance.23 .

24 .Partnering with Others in the Marketing System Value chains • Suppliers • Distributors • Customers Customer Value Delivery Network 2.

25 . • Selecting target markets • Developing the marketing mix • Managing the marketing effort 2.The Marketing Strategy • The marketing strategy – the marketing logic by which the business unit hopes to create customer value and achieve profitable customer relationships.

The Marketing Strategy • The segmentation • Selecting target markets • Developing the marketing mix • Managing the marketing effort The segmentation process divides the total market into market segments. • Target marketing determines which segment(s) are pursued.26 . 2. • The market positioning for the product is then determined.

price. promotion (seller viewpoint)  The “Four Cs” – customer solution. place. convenience.The Marketing Strategy • Selecting target markets • Developing the marketing mix • Managing the marketing effort • Competitor analysis guides competitive marketing strategy development.27 . and communication (customer viewpoint) 2. cost. • Strategy leads to tactics by way of the marketing mix:  The “Four Ps” – product.

28 .The Marketing Strategy • Selecting target markets • Developing the marketing mix • Managing the marketing effort • Marketing analysis  Provides information helpful in planning. implementation. and control • Marketing planning  Strategies and tactics • Marketing implementation  Turns plans into action • Marketing control   Operating control Strategic control  Marketing audit 2.

The Marketing Plan • Executive summary • Current marketing situation • Threats and opportunities analysis • Objectives and Issues • Marketing Strategy • Action programs • Budget • Controls 2.29 .

30 . • Measures profits generated by investments in marketing activities 2.Measuring & Managing Return on Marketing Investment • Return on marketing investment (marketing ROI) • The net return from marketing investment divided by the costs of the marketing investment.

managerial salaries & expenses 2. promotion expenses.31 .Marketing return on sales (marketing ROS) Net marketing contribution • Marketing ROS =----------------Net Sales Net marketing contribution (NMC) = Net sales – cost of goods sold – marketing expenses Marketing expenses: sales expenses.

Marketing return on investment Net marketing contribution • Marketing ROI =----------------Marketing Expenses 2.32 .

Application Business A – Marketing ROS • NMC Business B – Marketing ROS • NMC 800 m – 375 m – 110 m = 315 million 900 m – 400 m -160 m = Marketing ROS = Marketing ROS = 315 39. return is $37.33 .78% 900 *For every $100 in sales.38% 800 *For every $100 in sales. return is $39.38 340 million 340 37.78 2.

Business A – Marketing ROI Business B – Marketing ROI • NMC • NMC 800 m – 375 m – 110 m = 315 million 900 m – 400 m -160 m = Marketing ROI= Marketing ROS = 315 110 289.5% 160 • May reach more than 100%. needs to be compared with other firms in the industry 2. needs to be compared with other firms in the industry 340 million 340 212.34 .36% • May reach more than 100%.