C HAPTER 2 Company and Marketing Strategy: Partnering to Build Customer Relationships.

CCHAPTER HAPTER 22

Company and Marketing Company and Marketing Strategy:Strategy:

Partnering to Build Partnering to Build Customer RelationshipsCustomer Relationships

Copyright 2007, Prentice-Hall Inc. 2-2

Explain companywide strategic planning and its four steps.

Discuss how to design business portfolios and 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-driven marketing strategy and mix, and the forces that influence it.

List the marketing management functions, including the elements of a marketing plan.

Roadmap: Previewing the Concepts


Early Days Characterized by “seat of

the pants” management. Innovative sneaker tread

drove early success. Technological product

superiority, big-name endorsements, and “Just Do It” ads revolutionized sport marketing.

1980s – 1990s: Nike leverages brand strength into new product areas.

Late 1990s - Present Changes in consumer

shoe preference, declining product innovation, and negative PR plague Nike.

Anti-establishment image no longer works: brand backlash occurs.

Strategic planning is embraced & Nike focuses on innovation & exploring new market opportunities.

Nike has global success.

NIKENIKE – Strategy: Then and Now – Strategy: Then and Now


Strategic Planning

The process of developing The process of developing and maintaining a strategic and maintaining a strategic

fit between the organization’s fit between the organization’s goals and capabilities and goals and capabilities and

its changing marketing its changing marketing opportunities.opportunities.


Figure 2-1Steps in Strategic Planning


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.


Market-Oriented Mission Statements

Should address the following questions:– What is our

business?– Who is our

customer?– What do consumers

value?– What should our

business be?

Mission statement must also be:– Realistic.– Specific.– One that fits the

market environment.– Based on distinctive

competencies.– Motivating.


Let’s Talk!

Evaluate Microsoft’s new mission against the criteria previously discussed.

How does it fare?

In 2002 Microsoft’s mission was "To empower people through great software -- any time, any place, and on any device.”

The mission statement now reads, "At Microsoft, we work to help people and businesses throughout the world realize their full potential.”


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 strategies for growth or downsizing.


Strategic Business Unit (SBU)

Can be a company division, a product line within a division, or sometimes a single product or brand.

A unit of the company that has a A unit of the company that has a separate mission and objectives separate mission and objectives

and that can be planned and that can be planned independently from other independently from other

company businesses.company businesses.


Strategic Business Units

The Symrise company creates ingredients used in flavors, fragrances, and cosmetics.

The Flavors Division is structured into SBUs which are responsible for developing the product categories shown at left.

Marketing in Action

http://www.symrise.com


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.

Portfolio Analysis


Figure 2-2The BCG Growth-Share Matrix


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

Helps in the identification, evaluation, and selection of market growth opportunities. – Marketing must

achieve profitable growth for the firm.


Figure 2-3The Product/Market Expansion Grid


Market Penetration

Strategy: to increase sales to current buyers without changing the products being sold.

Market penetration can be achieved by adding new stores in current market areas, improving advertising, lowering prices, adding services, etc.


Market Development

Strategy: identify and develop new markets – demographic or geographic – for current products.

Bass Pro Shops has aggressively developed new geographic markets for its Outdoor World retail stores.


Product Development

Strategy: offering modified or new products to current markets. – How? Adding new sizes, flavors, or

offerings, co-branding products, etc.


Diversification

Strategy: start up or buy businesses outside of current products and markets.– Diversification is the riskiest strategy.– Firms that diversify too broadly into

unfamiliar products or industries can lose their market focus.


Let’s Talk!

After watching the MayoClinic video clip, answer the following questions:

What growth strategies were used by the Mayo Clinic?

Are there additional growth opportunities that could be pursued? Explain.

Video Snippet


Planning Marketing

Marketing plays a key role in strategic planning:– Provides a guiding philosophy.

The Marketing Concept– Provides input to strategic planners.– Designs strategies to reach objectives.


Value Chain

Each company department engages in some type of value-creating activity.– Purchasing– Marketing– Operations, etc.

Coordination between departments is key to providing superior value.


Value Delivery Network

Components include: – Company’s value chain

Each department is a link in the value chain.

– Distributors– Suppliers– Customers

Improved performance in delivery value to customers is the goal.

Many groups contribute to Wal*Mart’s value chain


Figure 2-4Managing Marketing Strategy and the

Marketing Mix


A market segment consists of consumers who respond in a similar

way to a given set of marketing efforts.

Market Segmentation

The process of dividing a market The process of dividing a market into distinct groups of buyers with into distinct groups of buyers with different needs, characteristics, or different needs, characteristics, or

behavior who might require behavior who might require separate products or marketing separate products or marketing

programs.programs.


Target Marketing

Involves evaluating each market segment’s attractiveness and selecting one or more segments to enter.

Target those segments that can sustain profitability.


Target Marketing

Jones Soda caters to its niche of 12- to 24-year-olds who “appreciate the brand’s wacky and irrelevant attitude”.

Loyal consumers help design product flavors, colors, labels, and brand names. Visit the Web site to learn more.

Marketing in Action

www.jonessoda.com


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.


Marketing in Action

Promoting attributes, benefits, usage situations, or users can help to establish a product’s position in the consumer’s mind.

How is the Gelstat Migraine medicine being positioned?

Is this ad effective?

Positioning


The Marketing Mix

The set of controllable, tactical The set of controllable, tactical marketing tools that the firm marketing tools that the firm

blends blends to produce the response it wants to produce the response it wants

in in the target market.the target market.


Figure 2-5The Four “Ps” of the Marketing Mix


4 Ps – Seller’s View– Product– Price– Place– Promotion

4 Cs – Buyer’s View– Customer Solution– Customer Cost– Convenience– Communication

The 4 Ps and the 4 Cs of the Marketing Mix


Let’s Talk!

Select either ultimate consumers or businesses as your target market.

Explain each element of Visa’s marketing mix – product, price, place, and promotion – in the context of marketing Visa towards your selected target market.


Figure 2-6Marketing Analysis, Implementation,

Planning, and Control


Analysis feeds the development of strategic plans.

Division, product, and brand level plans are implemented.

Marketing activities are evaluated and corrected as part of control process.

Marketing Management Functions


Marketing Management: Analysis

The SWOT analysis is critical:– Finding

opportunities– Avoiding threats– Understanding

strengths– Analyzing

weaknesses


Figure 2-7SWOT Analysis


Brand / Product Marketing Plan:1. Executive summary2. Current marketing situation3. Analysis of threats and opportunities4. Objectives for the brand5. Marketing strategy6. Action programs7. Marketing budget8. Controls

Marketing Management: Planning


Plans are turned into action with day-to-day activities.

Good implementation is a challenge. Marketing departments must be

properly organized to ensure timely implementation.

Marketing Management: Implementation


Marketing Department Organization

Function Geography Product

management Market or

customer Combination of

two or more of the above

Geographic organization is very common for national and international marketers.


Under what circumstances does it make sense to structure the marketing department by combining a product management organizational system with a customer organizational system?

Offer an example of a specific manufacturer for which you feel this would be appropriate.

Let’s Talk!

?


Marketing Control Process

Set Goals Measure Performance Evaluate Performance

– Operating Control– Strategic Control

The marketing audit is major tool.

Take Corrective Action


Figure 2-8Return on Marketing


Explain companywide strategic planning and its four steps.

Discuss how to design business portfolios and 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-driven marketing strategy and mix, and the forces that influence it.

List the marketing management functions, including the elements of a marketing plan.

Rest Area: Reviewing the Concepts

C HAPTER 2 Company and Marketing Strategy: Partnering to Build Customer Relationships.

Documents

strategic planning slide

strategic business units

strategic business unit

companywide strategic

strategic fit

business portfolios

microsofts mission

current business portfolio