Chapter 2 Company and Marketing Strategy: Partnering to Build Customer Relationships

2 - 2 Learning Goals 1.Explain strategic planning 2.Describe business portfolios and growth strategies 3.Detail marketing’s role in strategic planning 4.Describe elements of customer- driven marketing strategy 5.List the marketing management functions

Disney has grown via diversification. Is it too large? Originally known for films, animation, theme parks. Will consumers/investors accept new businesses? Case Study Disney –What are its challenges? Satisfying the customer is everyone’s job. Is this culture changing? What can it do during travel and economic downturns? 2 - 3

2 - 4 Learning Goals 1.Explain strategic planning 2.Describe business portfolios and growth strategies 3.Detail marketing’s role in strategic planning 4.Describe elements of customer- driven marketing strategy 5.List the marketing management functions

2 - 5 What is Strategic Planning? Strategic Planning Defined 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 - 7 Market-Oriented Mission A mission statement asks..  What is our business?  Who is the customer?  What do consumers value?  What should our business be? A mission statement should be:  An “invisible hand”  Neither too narrow nor too broad  Fitting of market environment  Based on distinctive competencies  Motivating

Market-Oriented Mission Click on screenshot for website 2 - 8

Discussion Questions Mission Statements  Under what circumstances would you suggest a company change its mission?  What challenges might it encounter as it implements a change in its mission? Marketing in Action 2 - 9

Strategic Planning Company Objectives must tie to Marketing Objectives Company Mission Business Objectives Marketing Objectives

Learning Goals 1.Explain strategic planning 2.Describe business portfolios and growth strategies 3.Detail marketing’s role in strategic planning 4.Describe elements of customer- driven marketing strategy 5.List the marketing management functions

The Business Portfolio A business portfolio is the collection of businesses and products that make up the company Business portfolio planning involves two steps: 1.Analyzing the current business portfolio 2.Shaping the future portfolio by developing strategies

The Business Portfolio BCG Matrix Figure

BCG Matrix For P&G, which categories are high growth? Low growth? Based on your experience, what market share does P&G have in these categories? Which products are cash cows, stars? Are there any question marks or dogs? Click on screenshot for website with products Marketing in Action

 Build  Increase market share  Works well for question marks  Hold  Preserve market share  Good for cash cow  Harvest  Increases short- term cash flow  Good for weak cash cows, question marks and dogs  Divest  Sell or liquidate  Good for dogs and question marks The Business Portfolio BCG Matrix

Product/Market Expansion Grid Figure

The Business Portfolio Which strategy is this? Market penetration Market development Product development Diversification Marketing in Action

The Business Portfolio Which strategy is this? Market penetration Market development Product development Diversification Marketing in Action

Learning Goals 1.Explain strategic planning 2.Describe business portfolios and growth strategies 3.Detail marketing’s role in strategic planning 4.Describe elements of customer- driven marketing strategy 5.List the marketing management functions

Marketing’s Role in Strategic Planning Provide a guiding philosophy Identify attractive opportunities Design effective strategies Build strong value chains Form superior value delivery networks

Learning Goals 1.Explain strategic planning 2.Describe business portfolios and growth strategies 3.Detail marketing’s role in strategic planning 4.Describe elements of customer- driven marketing strategy 5.List the marketing management functions

Marketing Strategy Figure

–Customers grouped by: Geographic Demographic Psychographic Behavioral –Market segment is a group of consumers who respond in similar ways to marketing efforts 1. Market Segmentation 2. Target marketing 3. Market Positioning Marketing Strategy Strategy Goal 4: Describe elements of customer-driven strategy

Market Segmentation Clinique for Men products are designed for a segment of men who will pay more for skin care products Marketing in Action

–Evaluation of each segment’s attractiveness –Selection of segments with greatest long-term profitability –A company can choose one or several segments to target Marketing Strategy Strategy Goal 4: Describe elements of customer-driven strategy 1. Market Segmentation 2. Target marketing 3. Market Positioning

Target Markets Lucky Magazine is targeted to younger women who are shoppers Marketing in Action

–The place the product occupies in the consumer’s mind –Products are positioned relative to competing products –Marketers look for clear, distinctive and desirable places in positioning Marketing Strategy Strategy Goal 4: Describe elements of customer-driven strategy 1. Market Segmentation 2. Target marketing 3. Market Positioning

Saturn Corporation Product Positioning Created in 1985 Saturn’s mission was to create a “Different Kind of Company” Realized people dreaded the purchase process and established no- hassle, no haggle pricing policy Works to build loyalty from consumer Marketing in Action

By 1990 Saturn was winning awards from Popular Science, Popular Mechanics, AAA, MotorWeek. First Saturn Homecoming in 1994 at its manufacturing complex had 38,000 Saturn owners attending Saturn Corporation Product Positioning Marketing in Action

Marketing Mix –The marketing mix includes controllable and tactical marketing tools knows as the 4P’s –The 4P’s include Product Place Promotion Price Video Snippet Starbucks’ “product” is the coffee house experience as much as the coffee

The Marketing Mix Figure

Learning Goals 1.Explain strategic planning 2.Describe business portfolios and growth strategies 3.Detail marketing’s role in strategic planning 4.Describe elements of customer- driven marketing strategy 5.List the marketing management functions

–Finding opportunities –Avoiding threats –Understanding strengths –Analyzing weaknesses Goal 5: List the marketing management functions Analysis Planning Implementation Control Managing the Marketing Effort Marketing Functions

Marketing plans include: –Executive summary –Analysis of current situation –Objectives –Targets and positioning –Marketing mix –Budget –Controls Managing the Marketing Effort Goal 5: List the marketing management functions Marketing Functions Analysis Planning Implementation Control

–Plans are turned into action with day-to-day activities –Good implementation is a challenge Managing the Marketing Effort Goal 5: List the marketing management functions Marketing Functions Analysis Planning Implementation Control

–Evaluation of the results of marketing strategies –Checks for differences between goals and performance Managing the Marketing Effort Goal 5: List the marketing management functions Marketing Functions Analysis Planning Implementation Control

The Relationship Between Analysis Planning Implementation and Control Figure

Measuring Effectiveness Return on marketing (marketing ROI) –The net return from a marketing investment divided by the costs of the investments

Learning Goals 1.Explain strategic planning 2.Describe business portfolios and growth strategies 3.Detail marketing’s role in strategic planning 4.Describe elements of customer- driven marketing strategy 5.List the marketing management functions