Chapter 2 Company and Marketing Strategy Idil Yaveroglu Lecture Notes

Planning 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

Mission Statement A statement of the organizations scope and purpose, often identifying its customers, markets, products, technology and values. A statement of what it wants to accomplish in the larger environment Should be market oriented not product or technology oriented. Old: Industry / Product: Newspaper / Railroad New: Customer / Benefit: _________ / __________

Market-Oriented Mission A mission statement asks.. A mission statement should be: What is our business? Who is the customer? What do consumers value? What should our business be? An “invisible hand” Neither too narrow nor too broad Should be market oriented, not product oriented Fitting of market environment Based on distinctive competencies Motivating

Example Mission Statements “We create fantasies – a place where America still works the way it’s supposed to” We help people experience the emotion of competition, winning, and crushing competitors. We sell lifestyle and self expression; success and status, memories, hopes and dreams. Google’s mission is to organize the world‘s information and make it universally accessible and useful.

“..creativity, quality design and rapid turnaround to adjust to changing market demands”

Example: Southwest airlines http://www.youtube.com/watch?v=DYA_ivyj3kE http://www.youtube.com/watch?v=3ccinu-bY3s http://www.youtube.com/watch?NR=1&v=Jy0Yf1CAsuQ&feature=endscreen

Mission Statement Marketing Objectives Business Objectives

Designing the Business Portfolio Business Portfolio – the collection of businesses and products that make up the company Identify key businesses or strategic business units. A strategic business unit is a unit of a company with a separate mission and objectives and that can be planned independently from other company businesses. Assess attractiveness of the SBUs

The BCG Matrix Strategies that can be followed for each SBU: MS of your business MS of biggest player Strategies that can be followed for each SBU: Build: invest more Hold: invest enough to hold current position Harvest: Milking ST cash flow Divest: Phasing out

A “healthy” portfolio?

A “sick” portfolio?

Procter and Gamble http://www.pg.com.tr/procter/pg_sitemap.htm http://www.pg.com/en_US/brands/all_brands.sht ml

Limitations of the BCG Matrix Difficult to implement – sometimes it is difficult to define SBUs and measure market share and growth Classifies current businesses but provides little advice for future planning.

Product/Market Expansion Grid

Strategic Windows Product Development Diversification Market Increase market share among existing customers Market Penetration Attract new customers to existing products Market Development Create new products for present markets Product Development Introduce new products into new markets Diversification

Marketing Strategy and Marketing Mix

Target Market Strategy Segment the market based on groups with similar characteristics Analyze the market based on attractiveness of market segments Select one or more target markets Find points of difference Position your product Develop a marketing mix that will produce satisfying exchanges with target markets

Marketing Mix The marketing mix includes controllable and tactical marketing tools knows as the 4P’s The 4P’s include Product Place Promotion Price

The Marketing Mix

S W O T SWOT Analysis Internal External Things the company does well. ©South-Western College Publishing S W O T Things the company does well. Things the company does not do well. Conditions in the external environment that favor strengths. Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness. Internal External

Strengths and Weaknesses SWOT Analysis Strengths and Weaknesses INTERNAL Production Costs Marketing Skills Employee Capabilities Financial Resources Available Technology Company/Brand Image

Opportunities and Threats SWOT Analysis Opportunities and Threats EXTERNAL Social Demographic Economic Technological Political/Legal Competitive

Competitor Analysis Identifying Competitors Competitor myopia: a narrow view of the potential competitors Fall of the Railroads “They let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business. The reason they defined their industry wrong was because they were railroad oriented instead of transport oriented; they were product oriented instead of customer oriented.” Theodore Levitt “Market Myopia” Are railroads any better now at this? Transportation   Railroads Cars Planes Speed Medium Medium High Flexibility Low High Low Comfort High Medium Low Safety Medium Medium Low Price Medium Low Medium - High (Marginal) 

Competitor Analysis Identifying Competitor Strategies Strategic group – group of firms in an industry following the same or similar strategy in a given target market. Benchmarking – process of comparing the companies products and processes to those of competitors or leading firms in other industries to identify best practices and find ways to improve quality and performance Competitors to Attack and Avoid Weak vs Strong competitors Finding Unontested Market Spaces Blue Ocean vs Red Ocean Strategies

Competitive Strategies Cost Leadership: Company works to achieve lowest production and differentiation costs Eg. Walmart Differentiation: Company focus is on creating a differentiated product …is an attractive approach whenever buyers needs are too diverse to be satisfied by a standardized product Its essence is to be unique in ways that are valuable to the buyer, and that can be sustained A premium price could be charged for the product Eg. Nike Focus: Company focuses its efforts by serving a few market segments Eg. Rolex