Chapter 2

COMPANY AND MARKETING

STRATEGY
Partnering to build Customer Engagement,
Value and Relationship
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Learning Objectives

1. Explain company-wide strategic planning and its four steps.

2. Discuss how to design business portfolios and develop growth
strategies.
3. Explain marketing’s role in strategic planning and how
marketing works with its partners to create and deliver customer
value.

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Learning Objectives

4. Describe the elements of a customer value-driven marketing

strategy and mix and the forces that influence it.
5. List the marketing management functions, including the
elements of a marketing plan, and discuss the importance of
measuring and managing marketing return on investment.

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First Stop: Rolex
Building Brand Equity through a Customer-drive
Marketing Mix
Rolex endorses sports that
reinforce the values of the
brand—achievement and
exclusivity.

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Learning Objective 1
Explain company-wide strategic planning and its four
steps.

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Strategic Planning

Companies must find the game plan for long-run survival and
growth given its specific situation, opportunities, objectives, and
resources – focus of strategic planning.
Strategic Planning: The process of developing and maintaining a
strategic fit between its goals and capabilities and changing
marketing opportunities.

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Figure 2.1 - Steps in Strategic Planning

Corporate level Business unit, product &

market level

Planning
Defining the Setting company Designing the
marketing and
company objectives and business
other functional
mission goals Portfolio
strategies

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Mission Statement

Statement of the organization’s purpose: What it wants to accomplish in

the larger environment.
Forging a sound mission begins with the following questions:
What is our business?
Who is the customer?
What do consumers value?
What should our business be?
Successful companies continuously raise these questions and answer
them carefully and completely.
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Mission Statement requirements

Market oriented and defined in terms of satisfying basic customer

needs.
Meaningful and specific, yet motivating, emphasizing the company’s
strengths and tell forcefully how it intends to win in the marketplace.
For example, Google’s mission is to give people a window into the world’s
information, wherever it may be found.
Focus on customers and the customer experience it seeks to create.
For example, Buffalo Wild Wings chain’s mission is to provide a total eating
and social environment that “fuels the sports fan experience.”
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Table 2.1: - Examples of Product versus Market-
Oriented Mission Statement
Company Product-define definition Market-oriented Definition
Facebook We are an online social We connect people around the world and help them
network. share important moments in their lives.
Revlon We make cosmetics. We sell lifestyle and self-expression; success and
status; memories, hopes, and dreams.
Starbucks We sell coffee and snacks. We sell “the Starbucks experience,” one that
enriches people’s lives one moment, one human
being, one extraordinary cup of coffee at a time.
Walmart We run discount stores. We deliver low prices every day and give ordinary
folks the chance to buy the same things as rich
people. “save Money. live better.”
Setting Company Objectives
and Goals
A company needs to turn its mission into detailed supporting
objectives for each level of management
Setting a hierarchy of objectives
Business objectives
Marketing objectives
Marketing strategies and programs must be developed to support marketing
objectives.

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Setting Company Objectives & Goals

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Learning Objective 1: Summary

Strategic planning
1. Defining the company’s mission
2. Setting objectives and goals
3. Designing a business portfolio
4. Developing functional plans
Company mission statement
Market oriented, realistic, specific
Motivating, consistent with market environment

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Learning Objective 2
Discuss how to design business portfolios and develop
growth strategies.

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Business Portfolio

Collection of businesses and products that make up the company

The best business portfolio is the one that best fits the company’s
strengths and weaknesses to opportunities in the environment.
Steps in business portfolio planning:
Analyze the firm’s current business portfolio to determine which
businesses should receive more, less, or no investment
Develop strategies to shape the future portfolio

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Marketing at Work 2.1

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Portfolio Analysis

The management’s evaluation of its products and businesses to

direct resources toward more profitable businesses and phase
down or drop its weaker ones.
Identify the strategic business units (SBUs)
Assess SBUs’ attractiveness and decide on the level of support SBU
deserves
the attractiveness of the SBU’s market or industry and
The strength of the SBU’s position in that market or industry.

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Figure 2.2 - The BCG Growth-Share Matrix
High Star Question Mark
Market Growth rate

Cash Cow Dog

Low
High Low
Relative Market share 2 - 18
Growth-Share Matrix

Evaluates a company’s SBUs in terms of market growth rate and

relative market share
Problems with Growth-Share Matrix
difficult, time consuming, and costly to implement.
difficult to define SBUs and measure market share and growth.
focus on classifying current businesses but provide little advice for future
planning.

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A Portfolio-planning Tool For Identifying
Company Growth Opportunities
Existing Products New Products

Market
Existing Markets Product Development
Penetration

New Markets Market Development Diversification

Figure 2.3 - The Product/Market Expansion Grid

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Developing Strategies for Growth

Under Armour has grown at a

blistering rate under its
multipronged growth strategy.

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Downsizing

Products
or business units that are unprofitable or no longer fit the
company’s overall strategy
Downsizing strategies include carefully pruning, harvesting, or
divesting
Reasons to abandon products or markets
Rapid growth of the company
Lack of experience in a market
Change in market environment
Decline of a particular product

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Learning Objective 2: Summary

Portfolio analysis
BCG Growth-Share Matrix
Product market expansion grid
Strategies for growth and downsizing

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Learning Objective 3
Explain marketing’s role in strategic planning and how
marketing works with its partners to create and deliver
customer value.

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Marketing ‘S Role In The Company’s
Strategic Planning
Provides a guiding philosophy: Marketing concept—company
strategy should create customer value and build profitable
relationships
Provides inputs to strategic planners: Identify market
opportunities and potential to take advantage of them
Designs strategies for reaching the business unit’s objectives

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Value chain
Partnering with Other Company
Departments
Company departments are links in the company’s internal value
chain.
Each department carries out value-creating activities to design, produce,
market, deliver, and support the firm’s products.
Company’s success depends on how well the various departments
coordinate their activities.
Marketers should ensure all the departments are customer-focused
and develop a smooth functioning value chain.

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Partnering with Other Company
Departments

True Value’s Internal

Value Chain.

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Partnering with Others in the Marketing
System
Value delivery network is composed of the company, its
suppliers, its distributors, and its customers.
For example, Ford’s performance against Toyota depends on the quality of
Ford’s overall value delivery network versus Toyota’s.
Even if Ford makes the best cars, it might lose in the marketplace if
Toyota’s dealer network provides a more customer-satisfying sales and
service experience.

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Learning Objective 3: Summary

Planning Marketing (Marketing’s role)

Partnering to build customer relationships
Partnering with other company departments (value chain)
Partnering with suppliers, distributors and customers
Value delivery network

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

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Customer Value-Driven Marketing Strategy

 The strategic plan defines the company’s overall mission and objectives.
 Marketing strategy: marketing logic by which the company creates customer
value and achieves profitable customer relationships
 Integrated marketing mix: product, price, place, and promotion
 To find the best marketing strategy and mix the company engages in marketing
analysis, planning, implementation, and control.
 Through these activities, the company watches and adapts to the factors and
forces in the marketing environment.

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Figure 2.5 Managing Marketing Strategy and
the Marketing Mix

Creating customer value

and profitable customer
relationships is at the core
of marketing.
• Which customers to
serve ? (segmentation
and targeting)
• How will we create
value for them?
(differentiation and
positioning)

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Market Segmentation and Market Targeting

Market segmentation
• Dividing a market into distinct groups of buyers who have different needs,
characteristics, or behaviors, and who might require separate products or marketing
programs

Market segment
• Group of consumers who respond in a similar way to a given set of marketing
efforts

Market targeting
• Evaluating each market segment’s attractiveness and selecting one or more
segments to enter
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Marketing at Work 2.2
Differentiation & Positioning

Differentiating the market offering to create superior customer

value
Positioning the product to occupy a clear, distinctive, and
desirable place relative to competing products
Once the company has chosen a desired position, it must take
strong steps to deliver and communicate that position to target
consumers.
The entire marketing program should support the chosen
positioning strategy.
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Positioning

From its founding, Southwest Airlines has

positioned itself as “The LUV Airline,”
A positioning recently reinforced by the
colorful heart in its new logo and plane
graphics design.
As recent Southwest advertising affirms,
“Without a heart, it’s just a machine.” The
airline has “always put Heart in everything
it does.”
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Figure 2.5 - The Four Ps of the Marketing
Mix
PRODUCT PRICE
Variety List price
Quality Discounts
Design Allowances
Features Payment period
Brand Name Credit terms
Packaging
Target
Services
customers

PROMOTION Intended PLACE

Advertising Positioning Channels
Personal Selling Coverage
Sales Promotion Locations
Public relations Inventory
Transportation
Logistics

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Criticisms of the Four Ps

Omits or underemphasizes service products

Needs to include packaging as a product decision
Buyer’s perspective would emphasize the four A s:
Product → Acceptability
Price → Affordability
Place → Accessibility
Promotion → Awareness

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Figure 2.6 - Managing Marketing: Analysis,
Planning, Implementation, and Control
ANALYSIS

PLANNING IMPLEMENTATIO CONTROL

N
Developing strategic Measure results
plans Carry out the plans

Evaluating results

Developing marketing
plans Take corrective action

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Marketing Analysis: SWOT Analysis
STRENGTHS WEAKNESSES

Internal capabilities that may help a Internal limitations that may interfere
Internal company reach its objectives with a company’s ability to achieve
its objectives

OPPORTUNITIES THREATS

External factors that the company Current and emerging external factors
External may be to exploit to its advantage that may challenge the company’s
performance

Positive Negative
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Learning Objective 4: Summary

Customer value-driven marketing strategy

Market segmentation and market segment
Market targeting
Positioning and differentiating
Four Ps of the marketing mix
Analysis, planning implementation and control
SWOT analysis

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Learning Objective 5
List the marketing management functions, including the
elements of a marketing plan, and discuss the
importance of measuring and managing marketing return
on investment.

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Contents of a Marketing Plan

Section Purpose
Executive summary Brief summary of the main goals and
recommendations
Current marketing Gives the market description and the product,
situation competition, and distribution review

Threats and opportunities Helps management to anticipate important

analysis positive or negative developments

Objectives and issues States and discusses marketing objectives and key
issues
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Contents of a Marketing Plan (Cont’d)
Section Purpose
Marketing Outlines the broad marketing logic and the specifics of target
strategy markets, positioning, marketing expenditure levels, and strategies
for each marketing mix element
Action Spells out how marketing strategies will be turned into specific
programs action programs
Budgets Details a supporting marketing budget that is a projected profit-
and-loss statement
Controls Outlines the controls that will be used to monitor progress, allow
management to review implementation
results, and spot products that are not meeting their goals
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Market Implementation

Whereas marketing planning addresses the WHAT and WHY of

marketing activities.
Implementation addresses the WHO, WHERE, WHEN, and HOW
of the marketing activities.
In other words, Implementation turns marketing strategies and
plans into marketing actions to accomplish strategic marketing
objectives

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Marketing Department Organization

Product
Functional Geographic
management
organization organization
organization

Market or customer
Combination
management
organization
organization

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Marketing Control

Measuring and evaluating the results of marketing strategies and

plans and taking corrective action to ensure that the objectives are
achieved.
Two kinds of control:
Operating control ensures that the company achieves its sales, profits,
and other goals.
Strategic control involves looking at whether the company’s basic
strategies are well matched to its opportunities.

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Marketing Return on Investment
(Marketing ROI)
Netreturn from a marketing investment divided by the costs of the
marketing investment.
Itmeasures the profits generated by investments in marketing
activities.
Assessment measures
Standard marketing performance measures: brand awareness, sales, or
market share.
Customer-centered measures customer acquisition, customer engagement,
customer retention, customer lifetime value, and customer equity.
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Figure 2.8 - Marketing Return on Investment
Marketing Investment

Marketing Return

Improved customer value and engagement

Cost of Marketing
Investment
Increased customer Increased customer
attraction retention

Increased customer lifetime values and customer equity

Marketing return on Investment

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Learning Objective 5: Summary

Contents of a marketing plan

Analysis, planning and implementation
Operating and strategic marketing control
Marketing department organization
Marketing return on investment

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Review

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Learning Objectives

1. Explain company-wide strategic planning and its four steps.

2. Discuss how to design business portfolios and develop growth
strategies.
3. Explain marketing’s role in strategic planning and how
marketing works with its partners to create and deliver customer
value.

2 - 53
Learning Objectives

4. Describe the elements of a customer value-driven marketing

strategy and mix and the forces that influence it.
5. List the marketing management functions, including the
elements of a marketing plan, and discuss the importance of
measuring and managing marketing return on investment.

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Thank you for listening!