Partnering to Build Customer Relationships

Chapter 2
Company and
Marketing
Strategy:
Partnering to Build
Customer
Relationships
Company and Marketing Strategy
Topic Outline
• Companywide Strategic Planning: Defining
Marketing’s Role
• Designing the Business Portfolio
• Planning Marketing: Partnering to Build
Customer Relationships
• Marketing Strategy and the Marketing Mix
• Managing the Marketing Effort
• Measuring and Managing Return on Marketing
Investment
2-2
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
2-3
Strategic Planning
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
2-4
Steps in Strategic Planning
2-5
Defining a Market-Oriented Mission
• The mission statement is the organization’s
purpose, what it wants to accomplish in the
larger environment
• Market-oriented mission statement defines
the business in terms of satisfying basic
customer needs
We help you organize the world’s

information and make it
universally accessible and useful.
2-6
Market-Oriented Mission
A mission statement A mission statement
answers... should be:
 What is our  Market not product
business? oriented
 Who is the  An “invisible hand”
customer?  Neither too narrow
 What do nor too broad
consumers value?  Fitting the environment
 What should our  Emphasize the
business be? company’s strengths
 Motivating
2-7
Product-
Company Oriented Market-Oriented
Definition Definition
Disney We run amusement We create fantasies - a
parks place where dreams come
true and the world works the
way it’s supposed to
Nike We sell athletic We bring inspiration and

shoes and apparel innovation to every athlete*
in the world
(*if you have a body, you are
an athlete)
Google We provide the We help you organize the
world’s best online world’s information and
search engine make it universally
accessible and useful
2-8
Setting Company Objectives and Goals
The company needs to turn its mission
statement into detailed supporting objectives
& strategies for each level of management
Business Marketing
objective objective
• Increase profits • Increase market
by 15% within share from 50%
two years to 60% in one
year
2-9
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 where management
evaluates the current products and
businesses that make up the company and
shapes the future business portfolio
2 - 10
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. SBUs can
be:
• Company division
• Product line within a division
• Single product or brand
2 - 11
Analyzing the Current Business Portfolio
Identify key businesses (strategic business

units, or SBUs) that make up the company
Assess the attractiveness of the company’s

various SBUs
Decide how much support each SBU deserves
2 - 12
BCG Growth-Share Matrix
2 - 13
BCG Growth-Share Matrix
Stars are high-growth, high-share businesses or products
requiring heavy investment to finance rapid growth.
They will eventually turn into cash cows
Cash cows are low-growth, high-share businesses or
products that are established and successful SBUs
requiring less investment to maintain market share
Question marks are low-share business units in high-
growth markets requiring a lot of cash to hold their
share
Dogs are low-growth, low-share businesses and products
that may generate enough cash to maintain themselves
but do not promise to be large sources of cash2 - 14
Shape The Future Business Portfolio
 Build  Harvest
• Increase market • Increases short-term
cash flow
share
• Good for weak cash
• Works well for cows, question marks
question marks and dogs
 Hold  Divest
• Preserve market • Sell or liquidate
share • Downsizing
• Good for cash cow • Good for dogs and
question marks
2 - 15
Problems with Matrix Approaches
• Difficulty in defining SBUs and measuring
market share and growth
• Time consuming
• Expensive
• Focus on current businesses, not future
planning & products
• Too strongly emphasize market share and
growth
2 - 16
Developing Strategies for Growth and
Downsizing
Designing the business portfolio also
involves developing strategies for
growth by identifying, evaluating,
and selecting promising new
product & market opportunities
2 - 17
Developing Strategies for Growth
Product/market expansion grid is a tool for
identifying company growth opportunities
through
• Market penetration
• Market development
• Product development
• Diversification 2 - 18
Product/Market Expansion Grid Strategies
2 - 19
Market penetration is a growth strategy

increasing sales to current market segments
without changing the product
Market development is a growth strategy that
identifies and develops
new market segments
for current products
2 - 20
Product development is a growth strategy

that offers new or modified products to
existing market segments
Diversification is a growth strategy through
starting up or acquiring businesses
outside the company’s current products
and markets
2 - 21
Strategies for
Growth
Which strategy
is this?
• Market penetration
• Market
development
• Product
development
• Diversification
2 - 22
Marketing’s Role
in Strategic Planning
• Provide a guiding philosophy

• Identify attractive opportunities
• Design effective strategies
• Build strong value chains
• Form superior value delivery
networks
2 - 24
Marketing Strategy and
the Marketing Mix
2 - 27
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 different 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
2 - 28
Marketing Strategy and the Marketing Mix
Customer-Driven Marketing Strategy
Market targeting is the

process of evaluating
each market
segment’s
attractiveness and
selecting one or
more segments to
enter
2 - 29
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.
“Four Ps” are the seller’s viewpoint
The corresponding “Four Cs”, customer
solution, cost, convenience, and
communication, are the customer’s viewpoint
2 - 31
Marketing Strategy and the Marketing Mix
Developing an Integrated Marketing Mix
2 - 32
Managing the Marketing Effort
Marketing Analysis – SWOT Analysis
2 - 34
Market Planning - Parts of a Marketing Plan
Executive summary Marketing situation
Threats and Objective and

opportunities issues
Marketing strategy Action programs
Budgets Controls
2 - 35
Marketing Department Organization
Functional organization: The most common form
of marketing organization, different marketing
functions are headed by a functional specialist
Geographic organization: Useful for companies
that sell across the country or internationally.
Strategies are developed by region
Product management: Useful for companies with
different products or brands. Strategies are
developed for a specific product or brand
2 - 39
Marketing Department Organization
Market or customer management organization:
Useful for companies with one product line
sold to many different markets and customers.
Managers are responsible for developing
strategies and plans for their specific markets
or customers
Customer management involves a customer focus
and not a product focus for managing customer
profitability and customer equity
2 - 40
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 2 - 41

Partnering to Build Customer Relationships

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Partnering to Build Customer Relationships

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Chapter 2

Strategic planning is the process of

We help you organize the world’s

Nike We sell athletic We bring inspiration and

The business portfolio is the collection of

Identify key businesses (strategic business

Assess the attractiveness of the company’s

Decide how much support each SBU deserves

Market penetration is a growth strategy

Product development is a growth strategy

• Provide a guiding philosophy

Market targeting is the

Executive summary Marketing situation

Threats and Objective and

Marketing strategy Action programs

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