Company and Marketing Strategy

Objectives Understand companywide strategic planning and its four steps. Learn how to design business portfolios and develop strategies for growth and downsizing. Understand marketing’s role in strategic planning and how marketers partner with others.

Objectives Be able to describe the marketing process and the forces that influence it. Understand the marketing management functions, including the elements of the marketing plan.

EXAMPLE : Walt Disney c Known 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 Sales and net income have fallen How Can Disney Recover?

Disney companies ABC 16 cable networks 4 TV production companies ESPN, Disney Channel, Toon Disney, SoapNET, A&E, the History Channel, Lifetime Television, E! Entertainment 4 TV production companies 8 movie production companies Walt Disney, Touchstone Pictures, Hollywood Pictures, Miramax Films

More Disney companies 5 magazine publishing groups 5 music labels 19 Internet groups Disney Interactive The Disney Store Disney Cruise Lines Two sports Franchises

Strategic Planning Strategic planning is defined as: “The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities.”

Components of Strategic Planning Source: Figure adapted from Marketing Strategy, Second Edition, by O. C. Ferrell, Michael Hartline, and George Lucas, Jr. Copyright © 2002. Reproduced with permission of South-Western, a division of Thomson Learning. FIGURE 2.1 Copyright © Houghton Mifflin Company. All rights reserved.

Steps in the Strategic Planning Process Figure 2-1: Steps in the Strategic Planning Process

Strategic Planning Mission statements should . . . serve as a guide for what the organization wants to accomplish. be “market-oriented” rather than “product-oriented”. be neither too narrow, nor too broad. fit with the market environment. be motivating.

Strategic Planning Mission statements guide the development of objectives and goals. Objectives are developed at each level in the organization hierarchy. Strategies are developed to accomplish these objectives.

Discussion Question Google.com is one of the leading Internet search engines. Construct a market-oriented mission statement that fits this business.

Strategic Planning Business portfolio: “the collection of businesses and products that make up the company.” Designing the business portfolio is a key step in the strategic planning process.

Levels of Strategic Planning FIGURE 2.3 Copyright © Houghton Mifflin Company. All rights reserved.

Corporate Strategy A strategy that determines the means for utilizing resources in the various functional areas to reach the organization’s goals Determines the scope of the business Guides its resource deployment Identifies its competitive advantages Provides overall coordination of functional areas Copyright © Houghton Mifflin Company. All rights reserved.

Corporate Strategy (cont’d) Issues Influencing Corporate Strategy Development Corporate culture Competition Differentiation Diversification Interrelationships among business units Environment concerns and social issues Copyright © Houghton Mifflin Company. All rights reserved.

Business-Unit Strategy Strategic Business Unit (SBU) A division, product line, or other profit center within a parent company Market A group of individuals and/or organizations that have needs for products in a product class and have the ability, willingness, and authority to purchase those products Market Share The percentage of a market that actually buys a specific product from a particular company Copyright © Houghton Mifflin Company. All rights reserved.

Business-Unit Strategy (cont’d) Market-Growth/Market-Share Matrix A strategic planning tool based on the philosophy that a product’s market growth rate and market share are important in determining marketing strategy Factors determining SBU/product’s position within a matrix Product-market growth rate Relative market share Copyright © Houghton Mifflin Company. All rights reserved.

Strategic Planning Portfolio Design Identify strategic business units (SBUs) Assess each SBU: The BCG growth-share matrix classifies SBUs into one of four categories using: Market growth rate The SBU’s relative market share within the market. Portfolio Design Step 1: Analyze the current business portfolio Step 2: Shape the future business portfolio

Figure 2-2: Growth-Share Matrix

Market-Growth/Market-Share Matrix (cont’d) BCG Classification Star—high growth market, dominant market share requires additional resources for continued growth Cash cow—low growth, dominant market share generates surplus resources for allocation to other SBUs Dog—low/declining market, subordinate market share has diminished prospects and represents a drain on the portfolio Question mark—high growth market, low market share represents a high-risk/cost opportunity requiring a large commitment of resources to build market share Copyright © Houghton Mifflin Company. All rights reserved.

Strategic Planning Portfolio Design Determine the future role of each SBU and choose the appropriate resource allocation strategy: Build Hold Harvest Divest SBUs change positions over time Portfolio Design Step 1: Analyze the current business portfolio Step 2: Shape the future business portfolio

Strategic Planning Matrix approaches to formal planning share many problems: Difficult, time-consuming, and costly to implement. Focus only on current businesses. Too strongly emphasize market share growth or growth via diversification.

Strategic Planning Designing the business portfolio also involves: Developing strategies for growth by identifying, evaluating, and selecting promising new market opportunities. Developing strategies for downsizing the business portfolio.

Product / Market Expansion Grid Figure 2-3: Product / Market Expansion Grid

Marketing plays a key role in the strategic planning process.

Figure 2-4: The Marketing Process

The Marketing Process Key Elements Analyzing marketing opportunities The strategic planning and business portfolio analysis processes help to identify and evaluate marketing opportunities. The purpose of the marketing process is to help the firm plan how to capitalize on these opportunities. Key Elements Analyzing marketing opportunities Selecting target markets Developing the marketing mix Managing the marketing effort

The Marketing Process Key Elements The segmentation process divides the total market into market segments. Target marketing chooses which segment(s) are pursued. Market positioning for the product is then determined. Key Elements Analyzing marketing opportunities Selecting target markets Developing the marketing mix Managing the marketing effort

Positioning Market positioning is not restricted to physical goods. Identify the “competing products” of relevance to the Marble Collegiate Church. What clear, distinctive, and desirable place in the consumer’s mind does the ad at left attempt to create?

The Marketing Process Key Elements Analyzing marketing opportunities Competitor analysis guides competitive marketing strategy development. Strategy leads to tactics via the marketing mix: The “Four Ps” – product, price, place, promotion (seller viewpoint) The “Four Cs” – customer solution, cost, convenience, and communication (customer viewpoint) Key Elements Analyzing marketing opportunities Selecting target markets Developing the marketing mix Managing the marketing effort

Figure 2-5: The Marketing Mix

The Marketing Process Key Elements Analyzing marketing opportunities Marketing analysis Provides information helpful in planning, implementation, and control Marketing planning Strategies and tactics Marketing implementation Turns plans into action Marketing control Operating control Strategic control Key Elements Analyzing marketing opportunities Selecting target markets Developing the marketing mix Managing the marketing effort

Managing the Marketing Effort Figure 2-6: Managing the Marketing Effort

Creating the Marketing Plan Marketing Planning The systematic process of assessing opportunities and resources, determining objectives, defining strategies, and establishing guidelines for implementation and control of the marketing program Copyright © Houghton Mifflin Company. All rights reserved.

Creating the Marketing Plan (cont’d) Benefits of Planning Provides the basis for internal communication among employees Defines the assignment of responsibilities and tasks and sets the schedules for implementation Presents objectives and specifies resource allocations Helps in monitoring and evaluating the performance of the marketing strategy Copyright © Houghton Mifflin Company. All rights reserved.

Copyright © Houghton Mifflin Company. All rights reserved.

Implementing Marketing Strategies Marketing Implementation The process of putting marketing strategies into action Intended Strategy The strategy that the company decides on during the planning phase Realized Strategy The strategy that actually takes place Intended Strategy Realized Strategy Implementation Copyright © Houghton Mifflin Company. All rights reserved.

Organizing Marketing Activities Centralized Organization A structure in which top management delegates little authority to levels below it Decentralized Organization A structure in which decision-making authority is delegated as far down the chain of command as possible Copyright © Houghton Mifflin Company. All rights reserved.

Organizing the Marketing Unit Alternatives for Organizing the Marketing Unit Product Groups Centralized or Decentralized Marketing Functions Geographic Regions Customer Types Copyright © Houghton Mifflin Company. All rights reserved.

The Marketing Control Process FIGURE 2.5 Copyright © Houghton Mifflin Company. All rights reserved.

Controlling Marketing Activities Marketing Control Process Establishing performance standards and trying to match actual performance to those standards Establishing Performance Standards Expected levels of performance Taking Corrective Action Improve actual performance Reduce or change the performance standards Do both Copyright © Houghton Mifflin Company. All rights reserved.

Controlling Marketing Activities (cont’d) Problems in Controlling Marketing Activities Lack of the information required to control activities Uncontrollable influence of market environment changes on marketing activities Time lag that occurs between marketing campaigns and their results delays corrective actions Copyright © Houghton Mifflin Company. All rights reserved.

HOW TO DEVELOP A Marketing Plan 1/16/2019 HOW TO DEVELOP A Marketing Plan

Market: Past, present, and future 1/16/2019 Market Summary Market: Past, present, and future Review changes in market share, leadership, players, market shifts, costs, pricing, and competition

Describe the product or service being marketed 1/16/2019 Product Definition Describe the product or service being marketed

The competitive landscape 1/16/2019 Competition The competitive landscape Provide an overview of product competitors, and their strengths and weaknesses Position each competitor’s product against the new product

Positioning of product or service 1/16/2019 Positioning Positioning of product or service Statement that distinctly defines the product in its market and against its competition over time Consumer promise Statement summarizing the benefit of the product or service to the consumer

Communication Strategies 1/16/2019 Communication Strategies Messaging by audience Target consumer demographics

Packaging and Fulfillment 1/16/2019 Packaging and Fulfillment Product packaging Discuss form factor, pricing, look, and strategy Discuss fulfillment issues for items not shipped directly with the product COGs Summarize cost of goods and high-level bill of materials

Supply backup material with detailed budget information for review 1/16/2019 Launch Strategies Launch plan If product is being announced Promotion budget Supply backup material with detailed budget information for review

Strategy and execution 1/16/2019 Public Relations Strategy and execution PR strategies PR plan highlights Have backup PR plan including editorial calendars, speaking engagements, conference schedules, etc.

Strategy and execution 1/16/2019 Advertising Strategy and execution Overview of strategy Overview of media and timing Overview of ad spending

Third-party marketing 1/16/2019 Other Promotion Direct marketing Overview of strategy, vehicles, and timing Overview of response targets, goals, and budget Third-party marketing Co-marketing arrangements with other companies Marketing programs Other promotional programs

Pricing Pricing Policies 1/16/2019 Pricing Pricing Summarize specific pricing or pricing strategies Compare to similar products Policies Summarize policy relevant to understanding key pricing issues

Distribution strategy Channels of distribution Distribution by channel 1/16/2019 Distribution Distribution strategy Channels of distribution Summarize channels of distribution Distribution by channel Show plan of what percent share of distribution will be contributed by each channel – a pie chart might be helpful

Vertical Markets/Segments 1/16/2019 Vertical Markets/Segments Vertical market opportunities Discuss specific market segment opportunities Address distribution strategies for those markets or segments Address use of third-party partner role in distribution to vertical markets

International distribution 1/16/2019 International International distribution Address distribution strategies Discuss issues specific to international distribution International pricing strategy Localization issues Highlight requirements for local product variations

Measures of success/failure Requirements for success 1/16/2019 Success Metrics First year goals Additional year goals Measures of success/failure Requirements for success

18-month schedule highlights Timing 1/16/2019 Schedule 18-month schedule highlights Timing Isolate timing dependencies critical to success