Chapter 2

Company and
Marketing Strategy
Partnering to Build Customer
Engagement, Value, and
Relationships
2-1
 Learning Objective 1

•Explain company-wide
strategic planning and its four
steps.
Company-Wide Strategic
Planning: Defining
Marketing’s Role
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 Company-Wide 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.
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Company-Wide Strategic Planning
Steps in Strategic Planning

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 Company-Wide Strategic Planning
Defining a Market-Oriented Mission
The mission statement is the
organization’s purpose; what it
wants to accomplish in the larger
environment.

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 Company-Wide Strategic Planning
Setting Company Objectives and Goals
Business objectives Marketing objectives

• Build profitable • Increase

customer market share
relationships • Create local
• Invest in partnerships
research • Increase
• Improve profits promotion
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 Learning Objective 2
•Discuss how to design business
portfolios and develop growth
strategies.
Designing the Business Portfolio
The business portfolio is the
collection of businesses and
products that make up the
company. . 2-7
 Designing the Business Portfolio
Portfolio analysis is a major activity in
strategic planning whereby management
evaluates the products and businesses that
make up the company.
Strategic business units can be a
•Company division, Product line within a
division and Single product or brand. The
unit of the company that has a separate
mission and objectives and which can be
planned independently from other
company businesses. . 2-8
 Designing the Business Portfolio
The designing the business portfolio. The best
business portfolio is the one that best fits the
company’s strengths and weaknesses to
opportunities in the environment. In order to
design the business portfolio, the business
must: 1). Analyze its current business portfolio
and decide which business should receive more,
less, or no investment 2). Develop growth
strategies for adding new products or
businesses to the
portfolio. Analyze the current business 9
Two steps are important in this analysis: The first step
is to identify the key businesses (SBUs). The second
step is to assess the attractiveness of its various SBUs
and decide how much support each deserves. The best-
known portfolio planning method is the Boston
Consulting Group (BCG) matrix: 1). Using the BCG
approach, where a company classifies all its SBUs
according to the growth-share matrix. a). The vertical
axis, market growth rate, provides a measure of
market attractiveness. b). The horizontal axis, relative
market share, serves as a measure of company strength
in the market. 2). Using the matrix, four types of SBUs
can be identified:
Analyzing the Current Business Portfolio 10
 Designing the Business Portfolio
a). Stars (IPhone & Samsung ) are high-growth, high-share
businesses or products (they need heavy investment to
finance their rapid growth potential). b). Cash Cows (Lux &
surf Excel) are low-growth, high-share businesses
or products (they are established, successful, and
need less investment to hold share). c). Question
Marks (Nokia android) are low-share business units
in high-growth markets (they require a lot of cash
to hold their share). d). Dogs (Haleeb) are low-
growth, low-share businesses and products (they
may generate enough cash to maintain themselves,
but do not have much future).
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 Designing the Business Portfolio
Analyzing the Current Business Portfolio

Once it has classified its SBUs, a company must

determine what role each will play in the future.
The four strategies that can be pursued for each
SBU are: 2-17
 Designing the Business Portfolio
Problems with Matrix Approaches

•Difficulty in defining SBUs and measuring

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

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 Designing the Business Portfolio
Developing Strategies for Growth and Downsizing
Companies should always be looking
to the future. One useful device for
identifying growth opportunities for
the future is the product/market
expansion grid. The product/market
expansion grid is a portfolio-planning
tool for identifying company growth
opportunities through:
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1). Market Penetration—making more sales to
present customers without changing products in
any way. Market penetration means trying to
increase sales of a firm’s present products in its
present markets probably through a more
aggressive marketing mix. The firm may try to
strengthen its relationship with customers to
increase their rate of use or repeat purchases, or
try to attract competitors’ customers or current
nonusers. New promotion appeals alone may not
be effective. A firm may need to add a home page
on the Internet to make it easier and faster for
customers to place an order. Or, it may need to
add more stores in present areas for greater 15
2). Market Development—a strategy for
company growth by identifying and developing
new markets for current company products
(example, demographic markets). Market
development means trying to increase sales by
selling present products in new markets. Firms
may try advertising in different media to reach
new target customers. Or they may add channels
of distribution or new stores in new areas,
including overseas.
3). Product Development—a strategy for company
growth by offering modified or new products to
16
Product development means offering new or
improved products for present markets. By
knowing the present market’s needs, a firm may
see new ways to satisfy customers. Computer
software firms like Microsoft boost sales by
introducing new versions of popular programs.
4). Diversification a strategy for company growth
by starting up or acquiring businesses outside the
company’s current products and markets.
Diversification means moving into totally different
lines of business perhaps entirely unfamiliar
products, markets, or even levels in the production-
marketing system. 17
 Designing the Business Portfolio
Developing Strategies for Growth and Downsizing
Existing New
products products
Existing
markets

New
markets

FIGURE 2.3 The Product/Market Expansion Grid

Downsizing is when a company must prune,

harvest, or divest businesses that are
unprofitable or that no longer
. fit the strategy. 2-18
 Learning Objective 3
Explain marketing’s role in strategic planning and how
marketing works with its partners to create and deliver
customer value.
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.
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 Planning Marketing: Partnering to Build
Customer Relationships
Partnering with Others in the Marketing System

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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 Learning Objective 4
• Describe the elements of a customer value-driven
marketing strategy and mix, and the forces that
influence it
Marketing Strategy and the Marketing Mix

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 Marketing Strategy and the Marketing Mix
Customer Value-Driven Marketing Strategy
Marketing strategy is the marketing logic by
which the company hopes to create
customer value and achieve profitable
customer relationships.
Market segmentation is the division of a
market into distinct groups of buyers who
have different needs, characteristics, or
behaviors and who might require separate
products or marketing mixes.
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 Marketing Strategy and the Marketing Mix
Customer Value-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 target consumers.
Differentiation begins the positioning
process.
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Marketing Strategy and the Marketing Mix
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.
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Marketing Strategy and the Marketing Mix
Developing an Integrated Marketing Mix

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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.
Managing the Marketing
Effort
Measuring and Managing
Return on Marketing
Investment
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Managing the Marketing Effort
Marketing Analysis

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 Managing the Marketing Effort
Marketing Analysis – SWOT Analysis

Internal

External

Positive Negative
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 Managing the Marketing Effort
Marketing Implementation
•Turning marketing strategies and
plans into marketing actions to
accomplish strategic marketing
objectives

• Addresses who, where, when, and

how
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 Managing the Marketing Effort
Marketing Department Organization
Functional
Geographic
Product management
Market
Customer management

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 Managing the Marketing Effort
Marketing Control
•Evaluating results
•Taking corrective action
•Operating control
•Strategic control

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 Measuring and Managing
Return on Marketing Investment
Return on Marketing Investment (Marketing ROI)
•Net return from a marketing
investment divided by the costs of
the marketing investment

•Measurement of the profits

generated by investments in
marketing activities
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 Measuring and Managing
Return on Marketing Investment

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