Chapter 2: Partnering to Build Customer Engagement, Value ......2018/09/02 · BCG matrix: • A means of evaluating “strategicbusiness units”on the basis of (1) their business
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Chapter 2: ‘Partnering to Build Customer
Engagement, Value, and Relationships’
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Learning Objectives
After completing this chapter, students will be able to:
• Explain company-wide strategic planning and its four steps.
• Discuss how to design business portfolios and develop
growth strategies.
• Explain marketing’s role in strategic planning and how
marketing works with its partners to create and deliver customer
value.
• Describe the elements of a customer value-driven marketing
strategy and mix, and the forces that influence it.
• 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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Company-Wide 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.
Strategic planning sets the stage for the rest of planning in the firm!
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Company-Wide Strategic Planning
At the corporate level, the company starts the strategic
planning process by defining its overall purpose and
mission!
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Company-Wide Strategic Planning
The mission statement is the organization’s purpose;
what it wants to accomplish in the larger environment.
Xiaomi overall
Mission
Statement:
“Making quality
technology
accessible to
everyone”
“At Xiaomi, we strive to create the highest quality products in lowest possible prices in
order to provide people access to the necessary tools and services that connect them
to the world, and ultimately, to their dreams!”
→ Its marketing strategies and programs must support this mission!
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Company-Wide Strategic Planning
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?
These simple-sounding questions are among the most
difficult the company will ever have to answer. Successful
companies continuously raise these questions and answer
them carefully and completely!
“At Xiaomi, we strive to create the highest quality products in lowest possible prices in
order to provide people access to the necessary tools and services that connect them
to the world, and ultimately, to their dreams!”
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Company-Wide Strategic Planning
A mission statement should:
• Not be myopic in product terms
• Be meaningful and specific
• Be motivating
• Emphasize the company’s strengths
• Contain specific workable guidelines
• Not be stated as making sales or profits
“At Xiaomi, we strive to create the highest quality products in lowest possible prices in
order to provide people access to the necessary tools and services that connect them
to the world, and ultimately, to their dreams!”
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Company-Wide Strategic Planning
This mission is then turned into detailed supporting
objectives that guide the entire company!
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Company-Wide Strategic Planning
Next, headquarters decides what portfolio of businesses and
products is best for the company and how much support to give
each one.
In turn, each business and product develops detailed marketing and
other departmental plans that support the company-wide plan.
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Company-Wide Strategic Planning
Setting Company Objectives and Goals
The company needs to turn its mission into detailed supporting objectives for each
level of management. Each manager should have objectives and be responsible for
reaching them!
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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 whereby management evaluates the products
and businesses that make up the company.
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Designing The Business Portfolio
Strategic business units (SBU) can be a
• Company division
• Product line within a division
• Single product or brand
Strategic business unit (SBU): the single independent businesses of an organization
that formulate their own competitive strategies!
Mercedes Benz Truck Division
Apple TV
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Designing The Business Portfolio
• Analyzing the Current Business Portfolio
When designing a business portfolio, it is a good idea to add and support products and
businesses that fit closely with the firm’s core philosophy and competencies.
& strength of the SBU’s position
in that market or industry
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The BCG Matrix (波士顿矩阵)
BCG matrix:
• A means of evaluating “strategic business units” on the
basis of (1) their business growth rates and (2) their
share of the market.
Stars
明星
Cash Cows
现金牛
Dogs
瘦狗
Question marks
问题
波士顿咨询公司
The best-known portfolio-planning method is the Boston Consulting Group (BCG)
approach:
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Designing The Business Portfolio
Analyzing the Current Business Portfolio
Stars are high-growth, high-share businesses or products
requiring heavy investment to finance rapid growth. They
will eventually turn into cash cows.
波士顿矩阵
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Designing The Business Portfolio
Analyzing the Current Business Portfolio
• Cash cows are low-growth, high-share businesses or
products that are established and successful SBUs
requiring less investment to maintain market share.
波士顿矩阵
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Designing The Business Portfolio
Analyzing the Current Business Portfolio
• Question marks are low-share business units in high-
growth markets requiring a lot of cash to hold their share.
波士顿矩阵
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Designing The Business Portfolio
Analyzing the Current Business Portfolio
• 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 cash.
波士顿矩阵
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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
→ Many companies have dropped formal matrix methods in favor of more
customized approaches that better suit their specific situations!
→ Companies are placing responsibility for strategic planning in the hands of
cross-functional teams of divisional managers who are close to their
markets.
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Designing The Business Portfolio
Marketing needs to identify, evaluate, and select market opportunities
and establish strategies for capturing them. One useful device for
identifying growth opportunities is the product/market expansion
grid:
Market penetration - making more sales to current customers without
changing its original product such as by adding new stores in current
market areas to make it easier for customers to visit!
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Designing The Business Portfolio
Marketing needs to identify, evaluate, and select market opportunities
and establish strategies for capturing them. One useful device for
identifying growth opportunities is the product/market expansion
grid:
Market development – identifying and developing new markets for its
current products. Example: new demographic markets - perhaps new
groups such as seniors could be encouraged! or managers could
consider new geographic markets.
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Designing The Business Portfolio
Marketing needs to identify, evaluate, and select market opportunities
and establish strategies for capturing them. One useful device for
identifying growth opportunities is the product/market expansion
grid:
Product development – offering modified or new products to current
markets such as by moving into new product categories.
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Designing The Business Portfolio
Marketing needs to identify, evaluate, and select market opportunities
and establish strategies for capturing them. One useful device for
identifying growth opportunities is the product/market expansion
grid:
Diversification – starting up or buying businesses beyond its current
products and markets. Example: the company could acquire a
company that operates in different market segments with a different
product mix.
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The Diversification Strategy
Unrelated Diversification:
• Operating several businesses under one ownership that
are not related to one another.
Example:
Hunan Jinjian Cereals
湖南金健米业股份有限公司• China’s first cereal producer to list on the
Shanghai Stock Exchange.
• Entered seven additional lines of business after
its initial public offering – “pharmaceutical
products”, “real estate”, “dairy production”,
“electric power generation” …
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The Diversification Strategy
Related Diversification:
• An organisation under one ownership operates separate
businesses that are related to one another.
博柏利
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Designing The Business Portfolio
Growth strategy: a corporate strategy that is used when
an organisation wants to expand the number of markets
served or products offered, either through its current
business(es) or through new business(es)
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Designing The Business Portfolio
Downsizing strategy:
• Downsizing is when a company must prune, harvest, or divest
businesses that are unprofitable or that no longer fit the strategy.
A firm might want to abandon products or markets for a number of
reasons:
• The firm may have grown too fast or entered areas where it
lacks experience.
• The market environment might change, making some products
or markets less profitable.
• Some products or business units simply age and die.
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Planning Marketing: Partnering to Build
Customer Relationships
Partnering with Other Company Departments
The marketing department alone cannot create superior
customer value! Under the company-wide strategic plan,
marketers must work closely with other departments to
form an effective internal company value chain.
• Value chain is a series of departments that carry out
value creating activities to design, produce, market,
deliver, and support a firm’s products.
Departments: Human Resources, Research and Development, Sales & Marketing,
Production, Finance & Purchase, Accounting, IT …
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Planning Marketing: Partnering to Build
Customer Relationships
Partnering with Others in the Marketing System
More companies today are partnering with other members
to improve the performance of the customer value
delivery network:
• 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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Marketing Strategy and the Marketing Mix
1.
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Marketing Strategy and the Marketing Mix
2.
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Marketing Strategy and the Marketing Mix
3.
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Marketing Strategy and the Marketing Mix
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 actors and forces in the marketing environment!
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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.
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Marketing Strategy and the Marketing Mix
Customer Value-Driven Marketing Strategy
The market consists of many types of customers,
products, and needs. The marketer must determine which
segments offer the best opportunities:
• 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.
• Market segment is a group of consumers who respond
in a similar way to a given set of marketing efforts.
Consumers can be grouped and served in various ways based on geographic,
demographic, psychographic, and behavioral factors.
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Marketing Strategy and the Marketing Mix
Customer Value-Driven Marketing Strategy
A company should target segments in which it can profitably generate
the greatest customer value and sustain it over time:
• 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
Customer Value-Driven Marketing Strategy
Positioning:
• The L’Oréal group serves major segments of the beauty
market, and within each segment it caters to many sub-
segments.
• L’Oréal targets the larger segments through its major
divisions; further within these major divisions, L’Oréal
markets various brands that cater to customers of
different ages, incomes, and lifestyles.
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Marketing Strategy and the Marketing Mix
After determining its overall marketing strategy, the
company is ready to begin planning the details of 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 (generate demand for the products!).
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Marketing Strategy and the Marketing Mix
Customer solution Customer cost
ConvenienceCommunication
The 4Ps can be redefined to the 4Cs to make them more customer centric!
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Managing the Marketing Effort
Managing the marketing process requires the four
marketing management functions – analysis, planning,
implementation, and control.
The company first develops company-wide strategic plans and then translates
them into marketing and other plans for each division, product, and brand.
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Managing the Marketing Effort
Managing the marketing process requires the four
marketing management functions – analysis, planning,
implementation, and control.
Through implementation, the company turns the plans into actions.
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Managing the Marketing Effort
Managing the marketing process requires the four
marketing management functions – analysis, planning,
implementation, and control.
Control consists of measuring and evaluating the results of marketing activities and
taking corrective action where needed.
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Managing the Marketing Effort
Managing the marketing process requires the four
marketing management functions – analysis, planning,
implementation, and control.
Finally, marketing analysis provides information and evaluations needed for all the
other marketing activities.
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Managing the Marketing Effort
• Company should analyze its markets and marketing environment to find
attractive opportunities and identify environmental threats.
• It should analyze company strengths and weaknesses as well as current
and possible marketing actions to determine which opportunities it can best
pursue.
→ Goal: Match the company’s strengths to attractive opportunities in the
environment, while eliminating weaknesses and minimizing the threats!
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Managing the Marketing Effort
Market Planning — Parts of a Marketing Plan
Marketing planning involves choosing marketing strategies that will help the company
attain its overall strategic objectives. A detailed marketing plan is needed for each
business, product, or brand!
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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!
A brilliant marketing strategy counts for little if the company fails to implement it
properly!
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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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Review questions:
1. State two possible strengths and two
possible weaknesses of Haier.
2. Explain how Haier might tackle one of
those weaknesses!
3. Distinguish between a cash cow and
a rising star in the Boston Matrix.
• Please read Chapter 3 (pp. 90-
121)!
Homework --- Chapter 2
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