Company and Marketing Strategy: Partnering to Build Customer Relationships Chapter 2 Powerpoint slides Extendit! version Instructor name Course name School name Date Principles of Marketing: 6th Canadian Edition

Strategic Planning Strategic planning: Developing/maintaining a strategic fit between organizational goals and capabilities, and changing marketing opportunities Strategic planning sets the stage for other planning Steps in strategic planning: Figure 2.1 Principles of Marketing: 6th Canadian Edition

Mission Statements Mission statement: statement of an organization’s purpose; what it wants to accomplish in the larger environment; needs to be specific, realistic, and motivating; today’s statements are market-oriented Table 2.1 Principles of Marketing: 6th Canadian Edition

Designing the Business Portfolio Business portfolio: collection of businesses within the overall company Portfolio analysis: management tool to identify/evaluate businesses; make resource allocation decisions Strategic business unit (SBU): Figure 2.2 Unit with separate mission and objectives Planned independently from other company businesses Used as the building block of portfolio analysis Principles of Marketing: 6th Canadian Edition

BCG Growth-Share Matrix Portfolio planning method that evaluates SBU’s Classifys SBU’s based on market growth rate and relative market share Four categories of companies: Stars: need heavy investment to maintain rapid growth; become future cash cows Cash cows: successful products that generate cash to fund other SBU’s Question marks: need cash to hold share, could go either way Dogs: may be self-sustaining, but with low prospects for growth; targets for divesting Figure 2.2 Principles of Marketing: 6th Canadian Edition

Competitive Strategy Five forces determining profitability: Competitive strategy chosen will be influenced by: Industry structure Competitive position within that industry Five forces determining profitability: Barriers to entry to industry (patents in pharmaceutical industry) Power of the customer relative to the firm (Walmart) Power of suppliers relative to the firm (Jean Coutu as a wholesaler) Presence of substitutes for the products offered (direct and indirect) Degree of competitive rivalry within industry Principles of Marketing: 6th Canadian Edition

Strategies for SBU’s Porter’s winning strategies: Overall cost leadership: achieving lowest costs of production and distribution to allow low pricing strategy, sell standardized products and use low cost media to promote. Ex. Wal-Mart Differentiation: creating a highly differentiated product line and marketing program; targeted customers, pursue quality leadership. Ex. Caterpillar (customers with intense needs) Focus: serving only a few market segments, offering products closely aligned with their needs. Ex. MEC (Mountain Equipment Co-op) Losing strategy: middle of the road, not standing out on any dimension. Ex. Sears, Chrylser Principles of Marketing: 6th Canadian Edition

Strategies for SBU’s Treacy and Wiersema: Operational excellence: providing superior value by leading in price and convenience; reliable, good-quality products; similar to cost leadership strategy. Ex. Dell, IKEA Product leadership: provide superior value by continuous stream of new, leading-edge products; focus on new product development. Ex. Cognos, PeopleSoft Customer intimacy: providing superior value by precise segmentation of markets and matching product offering to those needs; focus on being responsive to the target customer’s needs. Ex. FedEx Principles of Marketing: 6th Canadian Edition

Strategies for Growth Product-market expansion grid: Portfolio planning tool for identifying company growth opportunities Uses products (new/existing) and markets (new/existing) Four strategies for growth Growth is necessary (but not at any cost) Marketing’s job to: Identify, Evaluate, and Select growth opportunities Figure 2.3 Principles of Marketing: 6th Canadian Edition

Strategies for Growth: Tim Horton’s Marketing penetration: Opening more locations in existing markets, advertising Continuous improvement of facilities and operations Market development: New demographic age groups, or geographical locations (U.S.A) Product development: Expanding the product line to attract lunch crowd Diversification: Entering new markets with new products Growth by acquisition or development Figure 2.3 Principles of Marketing: 6th Canadian Edition

Strategic Planning and Small Business Strategic planning is not just for large businesses Can provide a basis for contingency planning Steps: Identify major elements in the business environment Describe mission of the company Explain internal and external forces that will have an impact Identify the basic driving force that will direct the company Develop long-term objectives Outline general plan: Logistical factors Financial factors Personnel factors Principles of Marketing: 6th Canadian Edition

Partnering to Build Customer Relationships Marketing’s role in strategic planning: Provides a guiding philosophy (the type of relationship with customers, quality product, servicing, delivery time, etc.) Provide inputs to help identify marketing opportunities and assess potential for taking advantage of them (choice of products) Designs strategies for reaching objectives Partner relationship management: Working closely with partners from Other company departments Outside the company to Jointly bring greater value to customers Principles of Marketing: 6th Canadian Edition

Partnering to Build Customer Relationships Value chain: Series of departments that carry out value-creating activities Design, produce, market, deliver, and support a firm’s products Value delivery network: Company, suppliers, distributors, and customers Partner with each other to Improve the performance of the whole system Principles of Marketing: 6th Canadian Edition

The Marketing Process The marketing process: Three key steps: Analyzing marketing opportunities Selecting target markets Figure 2.4 Developing the marketing mix, and Managing the marketing effort Three key steps: Market segmentation Target marketing Market positioning Principles of Marketing: 6th Canadian Edition

The Marketing Process (continued) Market segmentation: Dividing a market into groups with distinct needs Who might require (respond to) different marketing mix Target marketing: Evaluating the attractiveness of each market segment Deciding which segment(s) to enter Most profitably serve Market positioning: Occupying a clear, distinctive, and desirable place Relative to competing products In the minds of target customers Figure 2.4 Principles of Marketing: 6th Canadian Edition

Strategies for Competitive Advantage To be successful, companies must do a better job of satisfying customer needs than their competition (keep customers and grow with them) Marketing strategy is not formulated in a vacuum Competitive intelligence is necessary to keep track Marketing strategy choice dependent on industry position, resources, distinctive competencies, and objectives Strategic industry positions: Market leader Market challenger Market followers Market nichers Principles of Marketing: 6th Canadian Edition

The Four P’s of the Marketing Mix Set of controllable, tactical marketing tools Product, price, place, and promotion Blended to produce the desired response in the target market Internal consistency helps to be successful Represents the seller’s view of the market Figure 2.5 Principles of Marketing: 6th Canadian Edition

The 4 P’s Versus 4 C’s A different (buyer’s) way of looking at the four P’s Product Customer solution Price Customer cost Place Convenience Promotion Communication Principles of Marketing: 6th Canadian Edition

Managing the Marketing Effort Four marketing management functions: Marketing analysis Marketing planning Implementation Control Marketing strategy: The marketing logic by which the business unit Hopes to achieves its marketing objectives Figure 2.6 Principles of Marketing: 6th Canadian Edition

Contents of a Marketing Plan (Table 2.2) Executive summary: Table of contents Current marketing situation: Market description, product review, competition, and distribution Threat and opportunity analysis: Marketing objectives and issues: Marketing strategy: Target markets, positioning, expenditure levels, and marketing mix Action program: Budget: Controls: Principles of Marketing: 6th Canadian Edition

Marketing Plan Implementation Marketing implementation: Process that turns strategies and plans Into marketing actions That accomplish strategic marketing objectives Marketing department organization: Functional organization Geographic organization Product management organization Customer equity management (customer profitability – total customer relationship) Market or customer management organization (one product and several market segments) Principles of Marketing: 6th Canadian Edition

The Control Process Marketing audit: Comprehensive, systematic, independent, periodic Examination of a company’s environment, objectives, strategies, and activities To identify problems, opportunities, and plans of action Figure 2.7 Set goals What do we want to achieve? Measure performance What is happening? Evaluate performance Why is it happening? Take corrective action What should we do about it? Principles of Marketing: 6th Canadian Edition

In Conclusion… The learning objectives for this chapter were: Explain company-wide strategic planning and its four steps Discuss how to design business portfolios and develop strategies for growth and downsizing Assess marketing’s role in strategic planning and explain how marketers partner with others inside and outside the firm to build profitable customer relationships Describe the marketing process and the forces that influence it List the marketing management functions, including the elements of a marketing plan Principles of Marketing: 6th Canadian Edition