Chapter 2 Company and Marketing Strategy Partnering to Build Customer Relationships.

Chapter 2

Company and Marketing Company and Marketing StrategyStrategy

Partnering to Build Customer Partnering to Build Customer RelationshipsRelationships

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 2

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 and discuss the importance of measuring and managing marketing ROMI.

Rest Stop:Rest Stop: Previewing the ConceptsPreviewing the Concepts


Nike’s Early Success• 1970s: Nike’s earliest success

was the waffle trainer and by 1979 the firm owned 50% of U.S. running shoe market.

• 1980s: Endorsements, promotional events, and heavy ad spending on “Just Do It” campaign revolutionized sports marketing. Nike built customer relationships by marketing a way of life.

• 1990s: Nike Swoosh logo became prominent; firm expanded into other sports and product offerings.

NIKE: Creating Brand Experiences & Community

First Stop

Challenge and Solution• Late 1990s: Nike became a

victim of its own success; sales slipped, ad creativity declined & customer relationships cooled.

• Nike Turnaround: Refocused on product innovation, revised mission statement, sought deeper, stronger, customer relationships via interactions with customers.

• Building Brand Experiences: Reduced mass media spending in favor of customer community building via social networking and in-person events, resulting in large market share gains.


Strategic Planning Defined

• 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 Process

• Corporate level:Defining the company mission.Setting objectives and goals.Designing the business portfolio.

• Business unit, product, and market level:Planning marketing strategy as well as

other functional strategies.


The Mission Statement Defined

• A mission statement is a statement of the organization’s purpose–what it wants to accomplish in the larger environment.Example: Nike’s mission is “to bring

inspiration and innovation to every athlete* in the world (*if you have a body, you are an athlete).”


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?

• Mission statements should be market oriented, not product oriented.


• In addition to being market-oriented, well-defined mission statements should be:Meaningful.Specific.Motivating.Based on the firm’s strengths in the

marketplace.Focused on customers and the customer

experience rather than on sales and profits.

The Mission Statement


Setting Firm Objectives and Goals

• The mission should be translated into supporting objectives for each level of management.Creates a hierarchy of objectives that are

consistent with one another. For example:• Business objective: Increase profits.• Marketing objective: Increase market share

of domestic and international markets.


• 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) and decide which SBUs should receive more, less, or no investment.

Develop strategies for growth and downsizing that will shape the future business portfolio.

Designing the Business Portfolio


• Strategic business unit:A unit of the company that has a

separate mission and objectives and that can be planned independently from other company businesses.

An SBU can be a company division, a product line within a division, or sometimes a single product or brand.

Strategic Business Unit (SBU)


Portfolio Analysis

• Portfolio analysis:Process by which management

evaluates the products and businesses making up the company.

Resources are directed toward more profitable businesses while weaker ones are phased out or dropped.


Portfolio Analysis

• Standard portfolio analysis evaluates SBUs on two important dimensions:Attractiveness of SBUs market or industry.Strength of SBUs position within that market

or industry.

• BCG Growth Share Matrix uses market growth rate and relative market share to classify SBUs into four groups.

Boston Consulting Group Growth-share Matrix


BCG Growth-Share Matrix

• Stars: High-share of high-growth market. Strategy: Build into cash cow via investment.

• Cash cows: High-share of low-growth market. Strategies: Maintain or harvest for cash to build

STARS.

• Question marks: Low-share of high-growth market. Strategies: Build into STAR via investment OR

reallocate funding and let slip into DOG status.

• Dogs: Low-share of low-growth market. Strategies: Maintain or divest.


• Several problems exist: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.

• These problems have led to changes in the strategic planning process used by firms.

Problems with Matrix Approaches


Product/Market Expansion Grid

• The product/market expansion grid can identify growth opportunities.Market penetration

• Existing markets, existing productsMarket development

• New markets, existing productsProduct development

• Existing markets, new productsDiversification

• New products, new markets


Downsizing

• Downsizing reduces the business portfolio by eliminating products of business units that are not profitable or that no longer fit the company’s overall strategy.Many reasons exist for downsizing.


Planning Marketing

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

• The marketing concept Provides input to strategic planners.

• Identifies opportunitiesDesigns strategies to reach objectives.


Creating Customer Value

• Marketers must practice partner relationship management.Working with partners internally within

the company can create an effective value chain.

Working with external partners in the marketing system helps to form a superior value delivery network.


Value Delivery Network

• Components include: Company’s value chain

• Each department is a linkDistributorsSuppliersCustomers

• Improved performance in delivery value to customers is the goal.


Marketing Strategy and the Marketing Mix

• Goal: create value for customers and build customer relationships.

• Marketing strategy decisions include:Market segmentation and targetingDifferentiation and positioning

• Marketing strategy must guide marketing mix decisions.


• Segmentation: The process of dividing a market into distinct

groups of buyers who have different needs, characteristics, or behaviors and who might require separate products or marketing programs.

• Targeting: Involves evaluating each market segment’s

attractiveness and selecting one or more segments to enter.

Market Segmentation and Targeting


Differentiation and Positioning

• Positioning:Arranging for a product to occupy a clear,

distinctive, and desirable place relative to competing products in the minds of target consumers.

• Differentiation:Creating superior customer value by

actually differentiating the market offering.


• The set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market.These tools are often called the 4 P’s:

• Product• Price• Place (distribution)• Promotion

The Marketing Mix


• Product:Variety, features, brand name, quality, design, packaging, and services.

• Promotion:Advertising, sales promotion, public relations, and personal selling.

• Place:Channels, coverage, logistics, locations, transportation, assortments, and inventory.

• Price:List price, discounts, allowances, payment period, and credit terms.

The Marketing Mix


• 4 Ps – Seller’s ViewProductPricePlacePromotion

• 4 Cs – Buyer’s ViewCustomer SolutionCustomer CostConvenienceCommunication

The 4 Ps and the 4 Cs of the Marketing Mix


Managing the Marketing Effort

• Four marketing management functions:Marketing analysis

• SWOT analysis is key.Marketing planning

• Create marketing plan consistent with strategic plan.

Marketing implementation• Carry out the plans successfully.

Marketing control• Measure and evaluate results; take corrective

action as needed.


• 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.

SWOT Analysis


1. Executive summary2. Current marketing situation3. Analysis of threats and opportunities4. Objectives and issues5. Marketing strategy6. Action programs7. Budgets8. Controls

Contents of a Marketing Plan


• Turns marketing plans into marketing actions by addressing:WhoWhereWhenHow

• Implementation can be difficult but is critical to success.

Marketing Implementation


Organizing Marketing Departments

• Chief marketing officer (CMO) positions are becoming more common.

• Functional organization: Each marketing activity is headed by a

functional specialist.• E.g., sales manager, advertising manager,

marketing research manager, etc.

• Geographic organization: Sales and marketing people are assigned to

specific countries, regions, and/or districts.


• Product management organization:One person is given responsibility for

complete strategy and marketing program for a single product.

• Market or customer organization:Manager responsible for particular market or

type of customer (e.g., government buyers).

• Combination organization: Uses some combination of the previous four

approaches.

Marketing Department Organization


Marketing Control Process

• Marketing control involves four steps:Set goalsMeasure performanceEvaluate performanceTake corrective action

• May require changing action programs or goals.


Marketing Control Process

• Operating controlEvaluates performance against the

annual plan and takes corrective action.

• Strategic controlEvaluates whether strategies match

opportunities.


Return on Marketing Investment

• Return on marketing investment is assessed using one or more methods:Standard marketing performance

measures (marketing dashboards):• Brand awareness, sales, market share.

Customer-centered measures:• Customer acquisition, customer retention,

customer lifetime value, customer equity.


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 and discuss the importance of measuring and managing marketing ROMI.

Rest Stop: Reviewing the Concepts

Chapter 2 Company and Marketing Strategy Partnering to Build Customer Relationships.

Documents

pearson education

customer relationships

planning marketing strategy

nikes mission

marketing plan

marketing romi

revised mission statement

company mission