Basic02 ppt-1

Chapter Two
Company and Marketing

Strategy:
Partnering to Build
Customer Relationships
Roadmap: Previewing the Concepts
1. Explain companywide strategic planning and
its four steps.
2. Discuss how to design business portfolios
and growth strategies.
3. Explain marketing’s role in strategic planning
and how marketing works with its partners to
create and deliver customer value.
4. Describe the elements of a customer-driven
marketing strategy and mix, and the forces
that influence it.
5. List the marketing management functions,
including the elements of a marketing plan.
Copyright 2007, Prentice Hall, Inc. 2-2
Strategic Planning
 The process of developing and

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

Steps in Strategic Planning
1. Defining the company mission.

2. Setting company objectives and
goals.
3. Designing the business portfolio.
4. Planning marketing and other
functional strategies.

The Mission Statement
 A statement of the organization’s

purpose.
– What it wants to accomplish in the larger
environment.
 Should be market oriented and defined

in terms of customer needs.

The Mission Statement
 Questions the mission statement

should answer include:
– What is our business?
– Who is our customer?
– What do consumers value?
– What should our business be?

The Mission Statement:
 Should be realistic.
 Should be specific.
 Should fit the market environment.
 Should be based on distinctive
competencies.
 Should be motivating.

Designing the Business Portfolio
 The business portfolio is the collection of

businesses and products that make up the
company.
 The company must:
– analyze its current business portfolio or Strategic
Business Units (SBUs),
– decide which SBUs should receive more, less, or
no investment,
– develop growth strategies for growth or
downsizing.

Portfolio Analysis
 An evaluation of the products and

business making up the company.
 Resources are directed to more

profitable businesses and weaker ones
are phased down or dropped.

Strategic Business Unit (SBU)
 A unit of the company that has a

separate mission and objectives and
that can be planned independently from
other company businesses.
 Can be a company division, a product

line within a division, or sometimes a
single product or brand.

BCG Growth-Share Matrix

 Stars
– High share of low growth market.
– Build into cash cow via investment.
 Cash Cows
– High share of low growth market.
– Maintain or harvest for cash to build STARS.
 Question Marks
– Low share of high growth market.
– Build into STAR via investment if warranted, or
reallocate financing and let slip into DOG status.
 Dogs
– Low share of low growth market. Maintain or
divest.
 The BCG Matrix, also known as the Boston

Consulting Group Matrix, is a strategic
business tool used for portfolio management
and product evaluation. It was developed by
the Boston Consulting Group in the early
1970s and is widely used by organizations to
analyze and make decisions about their
product lines or business units.

 Stars:
• High market growth rate
• High relative market share
• Typically, products or business units in this
category are leaders in their market segments
and require significant investment to maintain
and expand their market share. They have the
potential to become cash cows in the future.
 Smartphones:
• Market Growth Rate: High
• Relative Market Share: High
• Explanation: The company's smartphones are
market leaders with a high market share in a
rapidly growing market. They require ongoing
investment to maintain their position and
continue to grow.
 Cash Cows:
• Low market growth rate
• High relative market share
• These are established products or business
units that generate substantial cash flows but
have limited growth potential. They are often
used to fund other parts of the business.

 Tablets:
• Market Growth Rate: Low
• Relative Market Share: High
• Explanation: The tablet market has matured,
and the company's tablets have a significant
market share. While they generate steady cash
flows, there is limited growth potential in this
market.
 Question Marks (or Problem Children):
• High market growth rate
• Low relative market share
• Products or business units in this category
have the potential for growth but currently
hold a small market share. They require
careful consideration and investment to
determine whether they can become stars or
should be phased out.
 Smartwatches:
• Market Growth Rate: High
• Relative Market Share: Low
• Explanation: The company's smartwatches are
relatively new to the market and have high
growth potential. However, they currently hold
a small market share compared to competitors,
requiring investment to capture a larger share.

 Dogs:
• Low market growth rate
• Low relative market share
• Dogs represent products or business units with
limited growth prospects and a small market
share. These are often considered for
divestment unless they serve a specific
strategic purpose.
 MP3 Players:
• Market Growth Rate: Low
• Relative Market Share: Low
• Explanation: MP3 players are in decline as
consumers shift to other devices for music.
The company's MP3 players have a minimal
market share and offer little growth potential.
They may need to be phased out.
Problems with Matrix Approaches
 Can be difficult, time consuming, and costly

to implement.
 Difficult to define SBUs and measure market
share and growth rate.
 Focus is on current businesses; gives little
help with future planning.
 Can place too much emphasis on growth.
 Can lead to poorly planned diversification.

Product/Market Expansion Grid

 Market Penetration
– Existing markets, existing products
 Market Development
– New markets, existing products
 Product Development
– Existing markets, new products
 Diversification
– New products, new markets
Product Expansion
Product Expansion: In this approach, a company introduces new
products or services to its existing customer base. This strategy leverages
the company's existing customer relationships and distribution channels
to sell additional offerings. Product expansion can take different forms:
1. Line Extension: Expanding the product line by introducing
variations or extensions of existing products. For example, a
cosmetics company may introduce new shades of lipstick or flavors
of a snack product.
2. Brand Extension: Extending the brand name to new product
categories. For instance, a well-known automobile manufacturer
may enter the electric scooter market under the same brand.
3. Product Innovation: Developing entirely new products that are
related to the existing product line. For instance, a smartphone
manufacturer may introduce a new line of wearable devices, like
smartwatches.
Market Expansion
Product Expansion: In this approach, a company introduces new products
or services to its existing customer base. This strategy leverages the
company's existing customer relationships and distribution channels to sell
additional offerings. Product expansion can take different forms:
1. Line Extension: Expanding the product line by introducing variations

or extensions of existing products. For example, a cosmetics company
may introduce new shades of lipstick or flavors of a snack product.
2. Brand Extension: Extending the brand name to new product
categories. For instance, a well-known automobile manufacturer may
enter the electric scooter market under the same brand.
3. Product Innovation: Developing entirely new products that are
related to the existing product line. For instance, a smartphone
manufacturer may introduce a new line of wearable devices, like
smartwatches.
Market Penetration:
Definition: This strategy aims to increase market share by selling existing products or services in
the current market.
Example: A coffee shop offering loyalty programs and discounts to attract more customers in its
existing location.
Market Development:
Definition: This strategy involves selling existing products or services to new markets or
customer segments.
Example: An e-commerce company expanding from its home country to international markets to
reach a global audience.
Product Development:
Definition: This strategy focuses on creating new products or services for existing markets or
customer segments.
Example: A smartphone manufacturer launching a new model with advanced features to cater to
the needs of tech-savvy consumers in its current market.
Diversification:
Definition: This strategy involves entering new markets with new products or services that are
unrelated to the company's current offerings.
Example: An automobile manufacturer diversifying into the hospitality industry by acquiring a
chain of hotels.

Planning Marketing
(Partnering to build customer relationship)
 Marketing plays a key role in strategic

planning:
– Provides a guiding philosophy.
• The Marketing Concept
– Provides inputs to strategic planners.
– Designs strategies to reach objectives.

Planning Marketing
 Value Chain
full life cycle of product/process
–Series of departments that carry out value-
creating activities to design, produce,
market, deliver and support firm’s product

Planning Marketing
Value Delivery Network

Components include:
– Company’s value chain
• Each department is a link
– Distributors
– Suppliers
– Customers
Improved performance in delivery value
to customers is the goal.
Marketing Strategy and the Marketing Mix
(Customer Driven Marketing Strategy)

Market Segmentation
 The process of dividing a market into

distinct groups of buyers with different
needs, characteristics, or behavior who
might require separate products of
marketing programs.
 A market segment consists of
consumers who respond in a similar
way to a given set of marketing efforts.

Target Marketing
 Involves evaluating each market

segment’s attractiveness and selecting
one or more segments to enter.
 Target segments that can sustain

profitability.

Market Positioning
 Arranging for a product to occupy a

clear, distinctive, and desirable place
relative to competing products in the
minds of target consumers.
 Begins with differentiating the

company’s marketing offer so it gives
consumers more value.

The Marketing Mix
 The set of controllable, strategic

marketing tools that the firm blends to
produce the response it wants in the
target market.
– Product
– Price
– Place (distribution)
– Promotion

The Marketing Mix
 Product:  Place:
– Variety, quality, – Channels, coverage,
design, features, logistics, locations,
brand name, transportation,
packaging and assortments and
services. inventory.
 Promotion:  Price:
– Advertising, sales – List price, discounts,
promotion, public allowances, payment
relations and period and credit
personal selling. terms.
The 4 Ps & the 4 Cs
of the Marketing Mix
 4 Ps –  4 Cs –
Seller’s View Buyer’s View
– Product – Customer Solution
– Price – Customer Cost
– Place – Convenience
– Promotion – Communication

Managing the Marketing Effort
 Four marketing management functions:

– Marketing Analysis
• SWOT analysis is key.
– Marketing Planning
• Create brand marketing plan.
– Marketing Implementation
• Determine who, where, when, and how.
– Marketing Control
• Evaluate results, take corrective action.

SWOT Analysis
 Strengths:
Internal capabilities that may help a
company reach its objectives.
 Weaknesses:
Internal limitations that may interfere
with a company’s ability to achieve its
objectives.

SWOT Analysis
 Opportunities:
External factors that the company may
be able to exploit to its advantage.
 Threats:
Current and emerging external factors
that may challenge the company’s
performance.

Brand / Product Marketing Plan
1. Executive summary
2. Current marketing situation
3. Analysis of threats and opportunities
4. Objectives for the brand
5. Marketing strategy
6. Action programs
7. Marketing budget
8. Controls
Marketing Department
Organization
 Functional Organization:
Each marketing activity is headed by a
functional specialist.
– Sales Manager
– Advertising Manager
– Director of Marketing Research
– Customer Service Manager
– New Product Manager

Organization
 Geographic Organization:
Sales and marketing people are
assigned to specific countries, regions,
and districts.
 Product Management Organization:

One person given responsibility for
complete strategy and marketing program
for a single product.
Organization
 Market or Customer Organization:

Manager responsible for particular
market or customer.
 Combination Organization:
Use some combination of the previous
four approaches.
– This is especially true in large companies
(e.g., Procter & Gamble)
Marketing Control Process
 Set Goals
 Measure Performance
 Evaluate Performance
 Take Corrective Action

Marketing Control Process
 Operating Control
– Evaluates performance against the plan
and takes corrective action.
 Strategic control
– Evaluates whether strategies match
opportunities.
• The marketing audit is major tool.

Return on Marketing

Return on Marketing
 Assessed using one or more methods:

– Standard marketing performance
measures
• Brand awareness, sales, market share
– Customer-centered measures
• Customer acquisition, customer
retention, customer lifetime value

Rest Stop: Reviewing the Concepts
1. Explain companywide strategic planning and
its four steps.
2. Discuss how to design business portfolios
and growth strategies.
3. Explain marketing’s role in strategic planning
and how marketing works with its partners to
create and deliver customer value.
4. Describe the elements of a customer-driven
marketing strategy and mix, and the forces
that influence it.
5. List the marketing management functions,
including the elements of a marketing plan.

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Chapter Two

Company and Marketing

 The process of developing and

Copyright 2007, Prentice Hall, Inc. 2-3

1. Defining the company mission.

Copyright 2007, Prentice Hall, Inc. 2-4

 A statement of the organization’s

 Should be market oriented and defined

Copyright 2007, Prentice Hall, Inc. 2-5

 Questions the mission statement

Copyright 2007, Prentice Hall, Inc. 2-6

Copyright 2007, Prentice Hall, Inc. 2-7

 The business portfolio is the collection of

Copyright 2007, Prentice Hall, Inc. 2-8

 An evaluation of the products and

 Resources are directed to more

Copyright 2007, Prentice Hall, Inc. 2-9

 A unit of the company that has a

 Can be a company division, a product

Copyright 2007, Prentice Hall, Inc. 2-10

Copyright 2007, Prentice Hall, Inc. 2-11

 The BCG Matrix, also known as the Boston

Copyright 2007, Prentice Hall, Inc. 2-13

Copyright 2007, Prentice Hall, Inc. 2-16

Copyright 2007, Prentice Hall, Inc. 2-19

 Can be difficult, time consuming, and costly

Copyright 2007, Prentice Hall, Inc. 2-22

Copyright 2007, Prentice Hall, Inc. 2-23

1. Line Extension: Expanding the product line by introducing variations

Copyright 2007, Prentice Hall, Inc. 2-27

 Marketing plays a key role in strategic

Copyright 2007, Prentice Hall, Inc. 2-28

Copyright 2007, Prentice Hall, Inc. 2-29

Value Delivery Network

Copyright 2007, Prentice Hall, Inc. 2-31

 The process of dividing a market into

Copyright 2007, Prentice Hall, Inc. 2-32

 Involves evaluating each market

 Target segments that can sustain

Copyright 2007, Prentice Hall, Inc. 2-33

 Arranging for a product to occupy a

 Begins with differentiating the

Copyright 2007, Prentice Hall, Inc. 2-34

 The set of controllable, strategic

Copyright 2007, Prentice Hall, Inc. 2-35

Copyright 2007, Prentice Hall, Inc. 2-37

 Four marketing management functions:

Copyright 2007, Prentice Hall, Inc. 2-38

Copyright 2007, Prentice Hall, Inc. 2-39

Copyright 2007, Prentice Hall, Inc. 2-40

Copyright 2007, Prentice Hall, Inc. 2-42

 Product Management Organization:

 Market or Customer Organization:

Copyright 2007, Prentice Hall, Inc. 2-45

Copyright 2007, Prentice Hall, Inc. 2-46

Copyright 2007, Prentice Hall, Inc. 2-47

 Assessed using one or more methods:

Copyright 2007, Prentice Hall, Inc. 2-48

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