2 Company and Marketing Strategy: Partnering to Build Customer Relationships

ROAD MAP: Previewing the Concepts Explain companywide strategic planning and its four steps. Discuss how to design business portfolios and growth strategies. Explain marketing’s role in strategic planning and how marketing works with its partners to create and deliver customer value. Describe the elements of a customer-driven marketing strategy and mix, and the forces that influence it. List the marketing management functions, including the elements of a marketing plan.

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.

Steps in Strategic Planning

Questions a Mission Statement Should Answer What is our Business? Who is the Customer? What do Consumers Value? What Should our Business Be?

The Mission Statement A statement of the organization’s purpose What it wants to accomplish in the larger environment Should be market oriented and defined in terms of customer needs.

The Mission of the Girl Scouts

Mission Statements Should: Be Realistic Be Specific Fit the Market Environment Be Based on Distinctive Competencies Be Motivating 2-11

Designing the 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.

Portfolio Analysis An evaluation of the products and business making up the company. Resources are directed to more profitable businesses and weaker ones are phased down or dropped.

Strategic Business Unit (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.

Analyzing Current SBU’s: BCG Growth-Share Matrix Relative Market Share High Low Stars High growth & share May need heavy investment to grow Eventually, growth will slow Question Marks Low share SBUs in high growth markets Require cash to hold market share Build into Stars or phase out ? Market Growth Rate Low High Cash Cows Low growth, high share Established, successful SBU’s Produce cash Dogs Low growth & share Generate cash to sustain self Do not promise to be cash sources

Problems With Matrix Approaches Can be Difficult, Time Consuming, Costly to Implement Difficult to Define SBUs & Measure Market Share/Growth Focus on Current Businesses, Not Future Planning Problems With Matrix Approaches Can Place too Much Emphasis on Growth Can Lead to Poorly Planned Diversification

Product/Market Expansion Grid Existing New Market Penetration Product Development Existing M A R K E T Market Development New Diversification 2-32

Growth at Starbucks To maintain its phenomenal growth in an increasingly over-caffeinated marketplace, Starbucks has brewed up an ambitious, multi-pronged growth strategy.

Product/Market Expansion Grid Based on Starbucks Market Penetration: make more sales to current customers without changing products. How? Add new stores in current market areas; improve advertising, prices, menu, service. Market Development: identify and develop new markets for current products. How? Review new demographic (seniors/ethnic consumers) or geographic (Asian, European, Australian, & South American) markets.

Product/Market Expansion Grid Based on Starbucks Product Development: offering modified or new products to current markets. How? Add food offerings, sell coffee in supermarkets, co-brand products. Diversification: start up or buy businesses outside current products and markets. How? Making and selling CDs, testing restaurant concepts, or branding casual clothing.

Marketing’s Role in Strategic Planning Provide a Guiding Philosophy Provide Inputs to Strategic Planners Design Strategies to Reach Objectives

Value Delivery Network Company’s Value Chain Distributors Suppliers Customers

The Value Chain Wal-Mart’s ability to offer the right products at low prices depends on the contributions from people in all of the company’s departments—marketing, purchasing, information systems, and operations.

Managing Marketing Strategy and Marketing Mix

Market Segmentation The process of dividing a market into distinct groups of buyers with different needs, characteristics, or behavior who might require separate products of marketing programs. A market segment consists of consumers who respond in a similar way to a given set of marketing efforts.

Click the picture above to play video Market Segmentation Marriott offers business travelers lodging designed to meet their particular needs. Click the picture above to play video

Target Marketing Involves evaluating each market segment’s attractiveness and selecting one or more segments to enter. Target segments that can sustain profitability. Example: Arm & Hammer’s baking soda. Click to See Arm & Hammer's Website

Market Positioning Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers (e.g., Chevy Blazer: “Like a rock”) Process begins with differentiating the company’s marketing offer so it gives consumers more value.

Positioning Toyota’s hybrid Prius is “a revelation brilliantly disguised as a car.” The Hummer is “Like nothing else—Sport utility? Define Sport!”

Product Price Place Promotion The Marketing Mix The set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market. Consists of the 4 P’s Product Price Place Promotion

The 4 P’s of the Marketing Mix

The 4 P’s & 4 C’s of the Marketing Mix 4 P’s - Seller’s View Product Price Place Promotion 4 C’s - Buyer’s View Customer Solution Customer Cost Convenience Communication

Managing the Marketing Effort

Major Sections of Product/Brand Plan Executive Summary Current Marketing Situation Analysis of Threats and Opportunities Objectives for the Brand Marketing Strategy Action Programs Marketing Budget Controls

Marketing Department Organization Functional Organization Market or Customer Organization Geographic Organization Product Management Organization Combination of Two or More

Marketing Department Organization Functional Organization: Each marketing activity is headed by a functional specialist. Sales Manager Advertising Manager Director of Marketing Research Customer Service Manager New Product Manager

DEMOGRAPHICS Population Female % Male % Average Age Education Average Income

Marketing Department Organization Geographic Organization: Sales and marketing people are assigned to specific countries, regions, and districts. Coca-Cola staff assigned to the South American market Product Management Organization: One person given responsibility for complete strategy and marketing program for a single product.

Marketing Department Organization Market or Customer Organization: Manager responsible for particular market or customer. Combination Organization: Use some combination of the previous four approaches. This is especially true in large companies (e.g., Procter & Gamble) Click to Visit P&G's Website

Marketing Control Process

Rest Stop: Reviewing the Concepts Explain companywide strategic planning and its four steps. Discuss how to design business portfolios and develop strategies 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 elements of a customer-driven marketing strategy and mix, and the forces that influence it. List the marketing management functions, including the elements of a marketing plan.

Q: Marketing planning takes place at the: 1. business unit level. 2. product level. 3. market level. 4. all of the above. AK, 7e – Chapter 2

Q: Strategic planning consists of the four steps below Q: Strategic planning consists of the four steps below. What is the correct sequence of these steps? 1. Define company mission 2. Design business portfolio 3. Plan functional strategies 4.Set company goals and objectives 1. 1 - 2 - 3 - 4 2. 4 - 2 - 3 - 1 3. 4 - 1 - 2 - 3 4. 1 - 4 - 2 - 3 AK, 7e – Chapter 2

Q: A mission statement should be: product oriented. 2. market oriented. 3. sales oriented. 4. production oriented. AK, 7e – Chapter 2

Q: Which of the following mission statements is market oriented? 1. Revlon: We sell cosmetics. 2. Disney: We run theme parks. 3. Wal-Mart: We deliver value through low prices. 4. Xerox: We make copying, fax, and other office machines. AK, 7e – Chapter 2

Q: A strategic business unit: 1. is a unit of a company that focuses on a single product. 2. is a unit of a company that focuses on a line of products. 3. is a unit of a company that can be planned independently. 4. is a unit of a company with authority over all other units. AK, 7e – Chapter 2

Q: Acme Bicycle Company wants to grow by diversification Q: Acme Bicycle Company wants to grow by diversification. To accomplish this, Acme will: 1. introduce new bicycle models. 2. introduce modifications to its existing bicycle products. 3. identify new market segments for its current products. 4. start up or acquire businesses outside of its current products and markets. AK, 7e – Chapter 2

Q: A company that is seeking to make more sales to its current customers without changing its products is pursuing a ________ strategy. 1. market penetration 2. market development 3. product development 4. diversification AK, 7e – Chapter 2

Q: Mega-corporations can become so powerful that they can easily displace small competitors from the marketplace. Do you think such mergers are good for the overall economy and the consumer? 1. Yes 2. No AK, 7e – Chapter 2

Q: "Value delivery network" refers to: 1. a company's ability to ship products on time and at low cost. 2. relationships among the marketing department and other departments within a company. 3. partnerships among different companies to enhance customer value. 4. the marketing of communication services. AK, 7e – Chapter 2

Q: Acme Marketing has divided the shampoo market into five groups based on age. This is an example of: 1. market segmentation.  2. market positioning.  3. market targeting.  4. marketing mix. AK, 7e – Chapter 2

Q: Acme Marketing decides to focus exclusively on the kids market (ages 2-12) for selling its shampoos. This is an example of: 1. market segmentation.  2. market positioning.  3. market targeting.  4. marketing mix. AK, 7e – Chapter 2

Q: To attract kids, Acme positions its shampoo as the only premium-priced, "no-tears" shampoo that's packed in bottles shaped like Disney characters. This is an example of: 1. market segmentation.  2. market positioning.  3. market targeting.  4. marketing mix. AK, 7e – Chapter 2

Q: By focusing on the kids market, Acme is able to avoid all large competitors because they tend to overlook this specialized, small market. This is an example of: 1. market leader strategy.  2. market challenger strategy.  3. market follower strategy.  4. market nicher strategy. AK, 7e – Chapter 2

Q: A marketing audit includes an examination of a: 1. company’s environment.  2. company’s objectives and strategies.  3. company’s activities and strategies.  4. all of the above. AK, 7e – Chapter 2

Q: While __________ addresses the what and why of marketing activities, _________ addresses the who, where, when, and how. 1.marketing mix, marketing planning  2.marketing segmentation, marketing implementation  3.marketing planning, marketing implementation  4.marketing implementation, marketing positioning AK, 7e – Chapter 2

Q: Companies that sell one product line to many different types of markets should have: a.functional organization.  b.geographic organization.  c.product management organization.  d.market management organization. AK, 7e – Chapter 2