Chapter Two Marketing Strategy: Where Marketing Really Begins With Duane Weaver

OUTLINE Strategic Planning Defined and the Process SBU’s Marketing Positioning – Tools: - The BCG Matrix and - The Product-Market Expansion Grid Partnering Strategy a& Marketing Mix Segmentation Differentiation & Positioning Managing Effort, SWOTs, & ROI A Marketing Plan

What Is 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.

Strategic Planning and the Marketing Process Company Wide Strategic Planning Company Mission and Company Objectives Design Business Portfolio BCG Matrix Strategies for Growth Product Market Expansion Developing Customer Driven Marketing Strategy Segmentation, Targeting and Positioning Developing the Integrated Marketing Mix Product, Price, Place, Promotion

Company Wide Strategic Planning Defining a Clear Company Mission States the organization’s purpose. Market and customer-oriented. Provides direction to internal stakeholders. Setting Company Objectives and Goals The mission of the organization is translated to detailed, quantifiable objectives The rest of the planning process is supported by these objectives

Mission Statements Mission statement A statement of the organization’s purpose -what it wants to accomplish in the larger environment. It answers basic questions What is our business? Who is the customer? What does the customer value? What should our business be?

Defining a Market Oriented Mission A market oriented mission statement Defines the business in terms of satisfying customer needs Will not be too narrow or too broad Will be in tune with the current market environment

Company Objectives and Goals Goals must be sustainable and lead to growth Corporate objectives include marketing objectives (specific, measurable, obtainable): Invest in research and development Improve or develop new products Develop customer relationships

Strategic Business Units (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

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 and portfolio planning using tools such as the BCG matrix.

The BCG Growth Share Matrix Rising Stars Question Marks Cash Cows Dogs Fix or abandon Use cash to make into a star Nurture to generate cash Defend position Industry attractiveness, market share, cash generation Business strength, growth rate, cash use

Analyze Opportunities Product-Market Expansion Grid identifies four potential growth areas. Market Penetration Product Development Diversification Existing Products New Markets

Product/Market Expansion Grid in-class notes Product/Market Expansion Grid Strategies for growth Market penetration strategy Market development strategy Product development strategy Diversification strategy Strategies for international growth Company must decide whether to go international, then which markets, how many, and which types to enter

Partners Create and Deliver Customer Value Partnering to build customer relationships In building profitable customer relationships companies partner with the value chain to deliver value to its customers The value chain is the collective system of internal company departments and external business partners that together provide customer value by producing, delivering, marketing, and supporting the company’s products

Marketing Strategy and the Marketing Mix Mission Statement Corporate Objectives Business Objectives Marketing Objectives Marketing Strategies - The marketing logic by which the company creates customer value and achieves profitable customer relationships. Marketing Mix Strategies – guided by marketing strategies made up of factors under its control - product, price, place, and promotion.

Customer Driven Marketing Strategy Market Segmentation – sub dividing the target market Market Targeting – evaluating each segment and selecting one or more segments Market Differentiation and Positioning – occupy a clear distinctive place in consumer’s mind

Market Segmentation The process of dividing a market into distinct groups of buyers with different needs, characteristics or behaviours who might require separate products or marketing programs. Consumers are grouped into market segments based on: Geographic Demographic Psychographic Behavioral factors (e.g.: bought here before-loyalty)

Market Segmentation - exercise PLEASE TAKE 5 MINUTES TO: Get into your case team groups. Choose a company you are familiar with as a team. Identify one of the typical customers they sell to. Determine what form of market segmentation would work for them best to reach this type of customer (as a group/segment)? Be prepared to explain to the class why you think this type of segmentation is the best approach.

Market Differentiation and Positioning Arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of target consumers. Process begins with differentiating the company’s marketing offer so it gives consumers more value.

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

Creating the Integrated Marketing Mix Product – offers the right product, service or experience. Price – controls perceived value and satisfaction. Place – allows customers’ easy access to product and support. Promotion – communicates the offer and the value proposition. Include this after the section “developing the integrated marketing mix”

The Four Ps and the Four Cs PRODUCT provides CUSTOMER SOLUTION PRICE represents CUSTOMER COST PLACE provides CONVENIENCE PROMOTION is two-way COMMUNICATION

Managing the Marketing Effort Marketing Analysis – A detailed description and analysis of the current situation facing the company (e.g.: SWOT) Marketing Planning – a detailed plan for each business unit Marketing Implementation – turning plans into action Marketing Department Organization – Functional organizations Product organizations Market based organizations Geographic organizations Combinational organizations Marketing Control – evaluating the results

Measuring and Managing Return on Marketing Investment Can you PROVE it will or it did work? The return on investment that can be calculated and attributed directly to the efforts of marketing Calculated by dividing net return from marketing by the cost of marketing investment Measures the profits generated by investments in marketing activities

A Marketing Plan Outline Executive summary. Current marketing situation. Market description. Product review. Competitive review. Review of distribution. Threat and opportunity analysis (SWOT). Objectives and issues. Marketing strategy. Action program. Budgets. Controls.

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