Company and Marketing Strategy: Partnering to Build Customer Relationships Strategic Planning The process of developing and maintaining a strategic fit between the organization's goal and capabilities and its changing marketing opportunities Steps in Strategic Planning Business unit, product and market level Corporate Level Defining the company mission Setting company objectives and goals Planning marketing and other functional strategies Designing the business portfolio

Defining a Market-Oriented Mission Forging a sound mission begins with the following questions What is our business ? Who is the customer? What do consumers value? What should our business be? Mission statement A statement of the organization’s purpose-what in wants to accomplish in the larger environment “Invisible Hand”- that guides people in the organization. Firms with well-crafted mission statement have better organizational and financial performance.

“We make and sell furniture” Some companies define their mission myopically in product or technology terms “We are a chemical-processing firm” Mission statements should be market oriented and define in terms of satisfying basic customer needs. Nokia “Sell mobile phones” “ Connect people” Mission statement should be meaningful and specific yet motivating. They should emphasize the company’s strengthens in the marketplace GremeenPhone “We are here to help” HSBC “World’s Local Bank”

Setting Company Objectives and Goals The company needs to turn its mission into detailed supporting objectives for each level of management. Each manager should have objectives and be responsible for reaching them This mission leads to a hierarchy of objectives, including business objectives and marketing objectives. Company Product-Oriented Definition Market-Oriented Definition Google We provide the world’s best online search engine. We help you organize the world’s information and make it universally accessible and useful. Nike We bring inspiration and innovation to every athlete in the world We sell athletic shoes and apparel We sell lifestyle and self-expression; success and status; memories, hopes, and dreams Revlon We make cosmetics

Designing the Business Portfolio The collection of business and product that make up the company. Business portfolio planning involves two steps First. The company must first analyzing its current business portfolio and decide which business should receive more, less, or no investment Second, it must shape the future portfolio by developing strategies for growth and downsizing. Analyzing the Current Business Portfolio Portfolio analysis The process by which management evaluates the products and business that make up the company The company will want to put strong resources into its more profitable business and phase down or drop its weaker ones.

Current Business Portfolio analysis involves two steps First step is to identify the key business that make up the company, called strategic business unit (SBUs) SBUs A company division A product line within a division Single product or brand Second step is to assess the attractiveness of its various SBUs and decides how mush support each deserves. The purpose of strategic planning is to find ways in which the company can best use its strength to take advantage of attractiveness opportunities in the environment . Evaluate SBUs on two important dimensions – The attractiveness of the SBU’s market or industry The strength of the SBU’s position in that market or industry

BOSTON CONSULTING GROUP (BCG) MATRIX is developed by BRUCE HENDERSON of the BOSTON CONSULTING GROUP IN THE EARLY 1970’s. According to this technique, businesses or products are classified as low or high performers depending upon their market growth rate and relative market share.

RELATIVE MARKET SHARE MARKET SHARE Market share is the percentage of the total market that is being serviced by your company, measured either in revenue terms or unit volume terms. RELATIVE MARKET SHARE RMS = Business unit sales this year Leading rival sales this year The higher your market share, the higher proportion of the market you control.

MARKET GROWTH RATE Market growth is used as a measure of a market’s attractiveness. MGR = Individual sales - individual sales this year last year Individual sales last year Markets experiencing high growth are ones where the total market share available is expanding, and there’s plenty of opportunity for everyone to make money.

THE BCG GROWTH-SHARE MATRIX It is a portfolio planning model which is based on the observation that a company’s business units can be classified in to four categories: Stars Question marks Cash cows Dogs It is based on the combination of market growth and market share relative to the next best competitor.

STARS High growth, High market share Stars are leaders in business. They also require heavy investment, to maintain its large market share. It leads to large amount of cash consumption and cash generation. Attempts should be made to hold the market share otherwise the star will become a CASH COW.

CASH COWS Low growth , High market share They are foundation of the company and often the stars of yesterday. They generate more cash than required. They extract the profits by investing as little cash as possible They are located in an industry that is mature, not growing or declining.

DOGS Low growth, Low market share Dogs are the cash traps. Dogs do not have potential to bring in much cash. Number of dogs in the company should be minimized. Business is situated at a declining stage.

QUESTION MARKS High growth , Low market share Most businesses start of as question marks. They will absorb great amounts of cash if the market share remains unchanged, (low). Why question marks? Question marks have potential to become star and eventually cash cow but can also become a dog. Investments should be high for question marks.

WHY BCG MATRIX ? To assess : Profiles of products/businesses The cash demands of products The development cycles of products Resource allocation and divestment decisions

MAIN STEPS OF BCG MATRIX Identifying and dividing a company into SBU. Assessing and comparing the prospects of each SBU according to two criteria : 1. SBU’S relative market share. 2. Growth rate OF SBU’S industry. Classifying the SBU’S on the basis of BCG matrix. Developing strategic objectives for each SBU.

BCG MATRIX WITH CASH FLOW

BENEFITS BCG MATRIX is simple and easy to understand. It helps you to quickly and simply screen the opportunities open to you, and helps you think about how you can make the most of them. It is used to identify how corporate cash resources can best be used to maximize a company’s future growth and profitability.

LIMITATIONS BCG MATRIX uses only two dimensions, Relative market share and market growth rate. Problems of getting data on market share and market growth. High market share does not mean profits all the time. Business with low market share can be profitable too.

Growth Strategies Intensive Growth: Intensive growth strategies are appropriate when current products and current markets show the potential for sales increase. There are three main strategic options that seem to be appropriate to accomplish intensive growth: 1. Market Penetration. 2. Market development. 3. Product development. PRODUCT Current New Market penetration Product development Market development Diversification Current MARKET New

Diversification Growth This strategy involves developing new products to be sold in new markets. Markets Present Markets New Markets Horizontal diversification Conglomerate diversification Integrated diversification Concentric diversification Unrelated to Current Products New Products Related to Current Products Diversification Strategies

Planning Marketing: Partnering to Build Customer Relationships Partnering With The Other Company Departments Value chain The series of departments that carry out value-creating activities to design, produce, market, deliver, and support a firm’s products. Partnering With Others in the Marketing System Value delivery network The network made up of the company, supplies, distributors, and, ultimately, customers who “partner” with each other to improve the performance of the entire system. Toyota – Includes the phrase in its mission statement: “achieve suppliers satisfaction”

Marketing intermediaries Competitors Marketing Planning maar Marketing intermediaries Competitors Marketing Planning Product Marketing Analysis Segmentation Customer value and relationship Targeting Place Price Differentiation Positioning Marketing Implementation Marketing Control Promotion Suppliers Publics

Marketing Strategy and the Marketing Mix The marketing logic by which the business unit hopes to create customer value and achieve profitable customer relationships Customer Driven Marketing Strategy This process involves :- Market Segmentation Market Targeting Differentiation Positioning Market Segmentation Dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing program Market Segment A group of customers who respond in a similar way to a given set of marketing efforts

Market Targeting Positioning Differentiation GrameenPhone The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter. Positioning Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds to target customer. GMG Airlines – “First Class All the Way” Differentiation Actually differentiating the market offering to create superior customer value. GrameenPhone Djuice For teenagers Village Phone For village women Akota For small entrepreneur

Developing an Integrated Marketing Mix The set of controllable tactical marketing tools- products, price, place and promotion- that the firms blends to produce the response it wants in the target market Product It means the goods-and-services combination the company offers to the target market. Price It is the amount of money customer must pay to obtain the product. Place It includes company activities that make the product available to target consumers Promotion It means activities that communicate the merits of the product and persuade target customers to buy it.

Integrated positioning Product Variety Quality Design Features Brand Name Packaging Services Price List price Discount Allowances Payment period Credit Terms Target customers Integrated positioning Promotion Advertising Personal selling Sales promotion Public relations Place Channels Coverage Assortment Locations Inventory Transportation logistics

4 Ps 4Cs The 4Ps might be better described as the four Cs Product Customer solution Price Customer cost Place Convenience Promotion Communication

Analysis, Planning, Implementation, and Control Managing Marketing : Analysis, Planning, Implementation, and Control Analysis Planning Develop Strategic Plan Develop marketing plan Implementation Carry out the plans Control Measure Results Evaluate result Take Corrective Action

Marketing Analysis: SWOT Analysis An overall evaluation of the company’s strengths(S), weakness(W), opportunities (O), threats (T) Strengths Internal capabilities that may help a company reach its objectives Weakness Internal limitations that may interfere with a achieve its objectives Opportunities External factors that the company may be able to exploit to its advantage Threats Current and emerging external factors that may challenge the company’s performance Internal External Negative Positive

Contents of a Marketing Plan Marketing Planning Contents of a Marketing Plan Executive Summary Current Marketing Situation Threats and Opportunity Analysis Objectives and Issues Marketing Strategy Action Programs Budgets Controls

Marketing Implementation The process that turns marketing strategies and plans into marketing actions in order to accomplish strategic marketing objectives Marketing Department Organization Marketing Control The process of measuring and evaluating the results of marketing strategies and plans and taking corrective action to ensure that objectives are achieved.

Measuring and Managing Return on Marketing Investment Return on marketing investment (or marketing ROI) The net return from a marketing investment divided by the costs of the marketing investment.

Marketing Investments Improved customer value and satisfaction Marketing Returns Increased Customer Attraction Increased Customer Retention Increased Customer Lifetime Values And Customer Equity Cost of Marketing Investment Return on Marketing Investment