Company and Marketing Strategy: Partnering to Build Customer Relationships

Marketing : An IntroductionAn Asian Perspective© Armstrong, Kotler & da Silva 2-1

Company and Marketing Strategy: Partnering to Build Customer Relationships

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Marketing : An IntroductionAn Asian Perspective

Armstrong, Kotler & da Silva

Marketing : An IntroductionAn Asian Perspective© Armstrong, Kotler & da Silva 2-2

Explain companywide strategic planning and its four steps.

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.

Important Concepts

Marketing : An IntroductionAn Asian Perspective© Armstrong, Kotler & da Silva 2-3

Opening Case Study- Walt Disney Company

Marketing : An IntroductionAn Asian Perspective© Armstrong, Kotler & da Silva

Disney LandKnown for films, animation, theme parks and customer orientation

Parks offer a variety of attractions as well as cleanliness, order, and warmth

Satisfying the customer is everyone’s job

Disney has grown via diversification

Disney’s strong presence will be enhanced in Asia with the opening of Hong Kong

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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.

Marketing : An IntroductionAn Asian Perspective© Armstrong, Kotler & da Silva 2-6

Steps in Strategic PlanningFigure 2.1

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Outcomes of effective marketing strategies:

• Achieve clear competitive advantages over the firm’s rivals

• Create positive responses among its target customers

• Turn in positive contributions to its bottom-line

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Figure 2.3

Strategies Over Time-Singapore Airlines

Marketing : An IntroductionAn Asian Perspective© Armstrong, Kotler & da Silva 2-9

Questions a Mission Statement Should Answer

What is our Business?

Who is the Customer?

What do Consumers Value?

What Should our Business Be?

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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.

Marketing : An IntroductionAn Asian Perspective© Armstrong, Kotler & da Silva 2-11

Mission Statements Should:

Be Realistic

Be Specific

Fit the Market Environment

Be Based on Distinctive Competencies

Be Motivating

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Mission Statements : Examples

Amazon.com: We sell books, videos, CDs, Consumer electronics, hardware and other products.

Canon: We make copying machines, fax machines and scanners

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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.

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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.

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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.

Marketing : An IntroductionAn Asian Perspective© Armstrong, Kotler & da Silva

Management’s first step is to identify the key businesses making up the company. These can be called Strategic Business Units (SBUs).

The next step in the business portfolio analysis calls for management to assess the attractiveness of various SBUs and decide how much support each deserves.

The best known portfolio planning method was developed by the Boston Consulting Group (BCG), a leading management consulting firm.

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Step I. Analyzing the Current Business Portfolio:

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Analyzing Current SBU’s:BCG Growth-Share Matrix

Question Marks

• Low share SBUs in high growth markets• Require cash to hold market share• Build into Stars or phase out

Stars

• High growth & share• May need heavy investment to grow• Eventually, growth will slow

Relative Market Share High Low

Mar

ket G

rowt

h Ra

te L

ow

H

igh

?

Cash Cows

• Low growth, high share• Established, successful SBU’s• Produce cash

Dogs

• Low growth & share • Generate cash to sustain self• Do not promise to be cash sources

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Figure 2.6

Strategies in Managing the SBUs in the Portfolio

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The BCG Growth-Share Matrix

Figure 2.4

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Comparison of Business Portfolios

Figure 2.5

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Can be Difficult, Time Consuming, Costly to Implement

Difficult to Define SBUs & Measure Market Share/Growth

Focus on Current Businesses, Not Future Planning

Can Place too Much Emphasis on Growth

Problems With Matrix Approaches

Marketing : An IntroductionAn Asian Perspective© Armstrong, Kotler & da Silva

Step II. Developing strategies for growth and Downsizing

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Marketing has the main responsibility for achieving profitable growth for the company.

Marketing must identify, evaluate, and select market opportunities and lay down strategies for collecting them.

One useful device for identifying growth opportunities is the Product/Market Expansion Grid.

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Market Penetration

ProductDevelopment

Market Development

Existing NewP R O D U C T

NewM A

R K

E T

Diversification

Existing

Product/Market Expansion GridFigure 2.7

Marketing : An IntroductionAn Asian Perspective© Armstrong, Kotler & da Silva 2-25

Product/Market Expansion Grid Based on Starbucks

• Market Penetration: make more sales to current customers without changing products. – How? Add new stores in current market areas;

improve advertising, prices, menu, service.• Market Development: identify and develop

new markets for current products. – How? Review new demographic

(seniors/ethnic consumers) or geographic (Asian, European, Australian, & South American) markets.

Market Penetration

1/ 2011Surej P John26

Started the first shop in 2004

In 2009, the number of shops reached 41 including 8 University campuses

Market Development

Marketing : An IntroductionAn Asian Perspective© Armstrong, Kotler & da Silva 2-28

Product/Market Expansion Grid Based on Starbucks

• Product Development: offering modified or new products to current markets. – How? Add food offerings, sell coffee in

supermarkets, co-brand products.• Diversification: start up or buy businesses

outside current products and markets.– How? Making and selling CDs, testing

restaurant concepts, or branding casual clothing.

Product Development

1/ 2011Surej P John29

DiversificationDiversification is developing new products

for new markets

1/ 2010Surej P John30

Downsizing:

Reducing the business portfolio by eliminating the products or business units that are not profitable or that no longer fit the company’s overall strategy.

1/ 2011Surej P John31

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Managing Marketing Strategy and Marketing Mix

Figure 2.13

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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.

Marketing : An IntroductionAn Asian Perspective© Armstrong, Kotler & da Silva

Market segmentation

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Marketing : An IntroductionAn Asian Perspective© Armstrong, Kotler & da Silva

What is the target

market?

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Target Marketing• Involves

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

• Target segments that can sustain profitability.

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Market Positioning

• Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers (e.g. “in a perfect world everyone would drive a Mercedes Benz”)

• Process begins with differentiating the company’s marketing offer so it gives consumers more value.

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The Marketing Mix

• The set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market.

• Consists of the 4 P’s

1. Product2. Price3. Place4. Promotion

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The 4 P’s of the Marketing MixFigure 2.14

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Achieving Competitive Advantage, Integration and Positioning in the Marketing Mix

Figure 2.15 (a)

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Product strategies

Any kind of strategies that are related to make product improvements.

Product qualityProduct designProduct featuresBrand NamePackagingServices

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Price Strategies

Any kind of business decisions that directly related to the price of the product or service offered

List priceDiscountsAllowancesCredit terms etc.

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Place Strategies

Place includes the company activities that make the product available to target customers.

Place includes Channels, Coverage, Locations, Inventory, transportation, logistics etc.

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Promotion Strategies

Promotion means activities that communicate the merits of the products and persuade the target customers to buy it.

Advertising, Sales promotion, personal selling, public relations etc. are coming under the Promotion concept.

Marketing : An IntroductionAn Asian Perspective© Armstrong, Kotler & da Silva 2-45

SWOT ANALYSIS

An overall evaluation if the company’s strength (S), weakness (W), Opportunities (O), and Threats (T) is called SWOT analysis.

Marketing : An IntroductionAn Asian Perspective© Armstrong, Kotler & da Silva 2-46

StrengthsInternal abilities that help the company to achieve its objectives

Good brand nameLow cost of production

Cheap Labor

Enough budget for advertisement or promotions

Ability to introduce the new product into market

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WeaknessInternal limitations that may interfere or block the company’s ability to achieve its objectives

High CompetitionLack of enough moneyPoor QualityCheap Brand name

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Opportunities'External factors of the market that the company may be able to take advantage.

Large potential market

Lack of competitors

Moving into new market segment that offer more profits

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ThreatExternal factors that may challenge the company’s performance

A new competitor in your home market.Price wars with competitors.A competitor has a new, innovative product or service.Competitors have superior access to channels of distribution.