Marketing : An Introduction Armstrong, Kotler & da Silva Marketing : An Introduction An Asian Perspective 2 Company and Marketing Strategy: Partnering to Build Customer Relationships

Important Concepts Explain companywide strategic planning and its four steps. 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.

Opening Case Study- Walt Disney Company

Disney Land 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 Disney’s strong presence will be enhanced in Asia with the opening of Hong Kong

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 Figure 2.1

Outcomes of effective marketing strategies: Achieve clear competitive advantages over the firm’s rivals Create positive responses among its target customers Turn in positive contributions to its bottom-line

Strategies Over Time-Singapore Airlines Figure 2.3

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.

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

Mission Statements : Examples Amazon.com: We sell books, videos, CDs, Consumer electronics, hardware and other products. Canon: We make copying machines, fax machines and scanners

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.

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.

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.

Step I. Analyzing the Current Business Portfolio: Management’s first step is to identify the key businesses making up the company. These can be called Strategic Business Units (SBUs). The next step in the business portfolio analysis calls for management to assess the attractiveness of various SBUs and decide how much support each deserves. The best known portfolio planning method was developed by the Boston Consulting Group (BCG), a leading management consulting firm.

Analyzing Current SBU’s: BCG Growth-Share Matrix Relative Market Share High Low Question Marks Low share SBUs in high growth markets Require cash to hold market share Build into Stars or phase out ? Stars High growth & share May need heavy investment to grow Eventually, growth will slow 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

Strategies in Managing the SBUs in the Portfolio Figure 2.6

The BCG Growth-Share Matrix Figure 2.4

Comparison of Business Portfolios Figure 2.5

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

Step II. Developing strategies for growth and Downsizing Marketing has the main responsibility for achieving profitable growth for the company. Marketing must identify, evaluate, and select market opportunities and lay down strategies for collecting them. One useful device for identifying growth opportunities is the Product/Market Expansion Grid.

Product/Market Expansion Grid Figure 2.7 P R O D U C T Existing New Market Penetration Product Development Existing M A R K E T Market Development New Diversification 2-32

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.

Market Penetration Started the first shop in 2004 In 2009, the number of shops reached 41 including 8 University campuses Surej P John 1/ 2011

Market Development The matrix shows that market development is defined as taking existing products into new markets. Wal-Mart’s expansion into Guatemala and other Central American countries is an example of this strategy. Diversification is developing new products for new markets. South Korea’s LG Electronics has created new products for the American home appliance market. Innovations such as a $3,000 refrigerator with a built-in flat panel LVD TV have been instrumental in Home Depot’s decision to carry the appliance product line.

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.

Product Development Surej P John 1/ 2011

Diversification Diversification is developing new products for new markets Surej P John 1/ 2010

Downsizing: Reducing the business portfolio by eliminating the products or business units that are not profitable or that no longer fit the company’s overall strategy. Surej P John 1/ 2011

Managing Marketing Strategy and Marketing Mix Figure 2.13

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.

Market segmentation

What is the target market?

Target Marketing Involves evaluating each market segment’s attractiveness and selecting one or more segments to enter. Target segments that can sustain profitability.

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. “in a perfect world everyone would drive a Mercedes Benz”) 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. Consists of the 4 P’s Product Price Place Promotion

The 4 P’s of the Marketing Mix Figure 2.14

Achieving Competitive Advantage, Integration and Positioning in the Marketing Mix Figure 2.15 (a)

Product strategies Any kind of strategies that are related to make product improvements. Product quality Product design Product features Brand Name Packaging Services

Price Strategies Any kind of business decisions that directly related to the price of the product or service offered List price Discounts Allowances Credit terms etc.

Place Strategies Place includes the company activities that make the product available to target customers. Place includes Channels, Coverage, Locations, Inventory, transportation, logistics etc.

Promotion Strategies Promotion means activities that communicate the merits of the products and persuade the target customers to buy it. Advertising, Sales promotion, personal selling, public relations etc. are coming under the Promotion concept.

SWOT ANALYSIS An overall evaluation if the company’s strength (S), weakness (W), Opportunities (O), and Threats (T) is called SWOT analysis.

Strengths Good brand name Low cost of production Cheap Labor Internal abilities that help the company to achieve its objectives Good brand name Low cost of production Cheap Labor Enough budget for advertisement or promotions Ability to introduce the new product into market

Weakness High Competition Lack of enough money Poor Quality Internal limitations that may interfere or block the company’s ability to achieve its objectives High Competition Lack of enough money Poor Quality Cheap Brand name

Opportunities' External factors of the market that the company may be able to take advantage. Large potential market Lack of competitors Moving into new market segment that offer more profits

Threat External factors that may challenge the company’s performance A new competitor in your home market. Price wars with competitors. A competitor has a new, innovative product or service. Competitors have superior access to channels of distribution.