1. Company and Marketing Strategy: Partnering to Build Customer Relationships
Chapter 2
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Principles of Marketing: 6th Canadian Edition

2. Strategic Planning Strategic planning:
Developing/maintaining a strategic fit between
organizational goals and capabilities, and
changing marketing opportunities
Strategic planning sets the stage for other planning
Steps in strategic planning:
Figure 2.1
Principles of Marketing: 6th Canadian Edition

3. Mission Statements
Mission statement: statement of an organization’s purpose; what it wants to accomplish in the larger environment; needs to be specific, realistic, and motivating; today’s statements are market-oriented
Table 2.1
Principles of Marketing: 6th Canadian Edition

4. Designing the Business Portfolio
Business portfolio: collection of businesses within the overall company
Portfolio analysis: management tool to identify/evaluate businesses; make resource allocation decisions
Strategic business unit (SBU):
Figure 2.2
Unit with separate mission and objectives
Planned independently from other company businesses
Used as the building block of portfolio analysis
Principles of Marketing: 6th Canadian Edition

5. BCG Growth-Share Matrix
Portfolio planning method that evaluates SBU’s
Classifys SBU’s based on market growth rate and relative market share
Four categories of companies:
Stars: need heavy investment to maintain rapid growth; become future cash cows
Cash cows: successful products that generate cash to fund other SBU’s
Question marks: need cash to hold share, could go either way
Dogs: may be self-sustaining, but with low prospects for growth; targets for divesting
Figure 2.2
Principles of Marketing: 6th Canadian Edition

6. Competitive Strategy Five forces determining profitability:
Competitive strategy chosen will be influenced by:
Industry structure
Competitive position within that industry
Five forces determining profitability:
Barriers to entry to industry (patents in pharmaceutical industry)
Power of the customer relative to the firm (Walmart)
Power of suppliers relative to the firm (Jean Coutu as a wholesaler)
Presence of substitutes for the products offered (direct and indirect)
Degree of competitive rivalry within industry
Principles of Marketing: 6th Canadian Edition

7. Strategies for SBU’s Porter’s winning strategies:
Overall cost leadership: achieving lowest costs of production and distribution to allow low pricing strategy, sell standardized products and use low cost media to promote. Ex. Wal-Mart
Differentiation: creating a highly differentiated product line and marketing program; targeted customers, pursue quality leadership. Ex. Caterpillar (customers with intense needs)
Focus: serving only a few market segments, offering products closely aligned with their needs. Ex. MEC (Mountain Equipment Co-op)
Losing strategy: middle of the road, not standing out on any dimension. Ex. Sears, Chrylser
Principles of Marketing: 6th Canadian Edition

8. Strategies for SBU’s Treacy and Wiersema:
Operational excellence: providing superior value by leading in price and convenience; reliable, good-quality products; similar to cost leadership strategy. Ex. Dell, IKEA
Product leadership: provide superior value by continuous stream of new, leading-edge products; focus on new product development. Ex. Cognos, PeopleSoft
Customer intimacy: providing superior value by precise segmentation of markets and matching product offering to those needs; focus on being responsive to the target customer’s needs. Ex. FedEx
Principles of Marketing: 6th Canadian Edition

9. Strategies for Growth Product-market expansion grid:
Portfolio planning tool for identifying company growth opportunities
Uses products (new/existing) and markets (new/existing)
Four strategies for growth
Growth is necessary (but not at any cost)
Marketing’s job to:
Identify,
Evaluate, and
Select growth opportunities
Figure 2.3
Principles of Marketing: 6th Canadian Edition

10. Strategies for Growth: Tim Horton’s
Marketing penetration:
Opening more locations in existing markets, advertising
Continuous improvement of facilities and operations
Market development:
New demographic age groups, or geographical locations (U.S.A)
Product development:
Expanding the product line to attract lunch crowd
Diversification:
Entering new markets with new products
Growth by acquisition or development
Figure 2.3
Principles of Marketing: 6th Canadian Edition

11. Strategic Planning and Small Business
Strategic planning is not just for large businesses
Can provide a basis for contingency planning
Steps:
Identify major elements in the business environment
Describe mission of the company
Explain internal and external forces that will have an impact
Identify the basic driving force that will direct the company
Develop long-term objectives
Outline general plan:
Logistical factors
Financial factors
Personnel factors
Principles of Marketing: 6th Canadian Edition

12. Partnering to Build Customer Relationships
Marketing’s role in strategic planning:
Provides a guiding philosophy (the type of relationship with customers, quality product, servicing, delivery time, etc.)
Provide inputs to help identify marketing opportunities and assess potential for taking advantage of them (choice of products)
Designs strategies for reaching objectives
Partner relationship management:
Working closely with partners from
Other company departments
Outside the company to
Jointly bring greater value to customers
Principles of Marketing: 6th Canadian Edition

13. Partnering to Build Customer Relationships
Value chain:
Series of departments that carry out value-creating activities
Design, produce, market, deliver, and support a firm’s products
Value delivery network:
Company, suppliers, distributors, and customers
Partner with each other to
Improve the performance of the whole system
Principles of Marketing: 6th Canadian Edition

14. The Marketing Process The marketing process: Three key steps:
Analyzing marketing opportunities
Selecting target markets
Figure 2.4
Developing the marketing mix, and
Managing the marketing effort
Three key steps:
Market segmentation
Target marketing
Market positioning
Principles of Marketing: 6th Canadian Edition

15. The Marketing Process (continued)
Market segmentation:
Dividing a market into groups with distinct needs
Who might require (respond to) different marketing mix
Target marketing:
Evaluating the attractiveness of each market segment
Deciding which segment(s) to enter
Most profitably serve
Market positioning:
Occupying a clear, distinctive, and desirable place
Relative to competing products
In the minds of target customers
Figure 2.4
Principles of Marketing: 6th Canadian Edition

16. Strategies for Competitive Advantage
To be successful, companies must do a better job of satisfying customer needs than their competition (keep customers and grow with them)
Marketing strategy is not formulated in a vacuum
Competitive intelligence is necessary to keep track
Marketing strategy choice dependent on industry position, resources, distinctive competencies, and objectives
Strategic industry positions:
Market leader
Market challenger
Market followers
Market nichers
Principles of Marketing: 6th Canadian Edition

17. The Four P’s of the Marketing Mix
Set of controllable, tactical marketing tools
Product, price, place, and promotion
Blended to produce the desired response in the target market
Internal consistency helps to be successful
Represents the seller’s view of the market
Figure 2.5
Principles of Marketing: 6th Canadian Edition

18. The 4 P’s Versus 4 C’s
A different (buyer’s) way of looking at the four P’s
Product
Customer solution
Price
Customer cost
Place
Convenience
Promotion
Communication
Principles of Marketing: 6th Canadian Edition

19. Managing the Marketing Effort
Four marketing management functions:
Marketing analysis
Marketing planning
Implementation
Control
Marketing strategy:
The marketing logic by which the business unit
Hopes to achieves its marketing objectives
Figure 2.6
Principles of Marketing: 6th Canadian Edition

20. Contents of a Marketing Plan (Table 2.2)
Executive summary:
Table of contents
Current marketing situation:
Market description, product review, competition, and distribution
Threat and opportunity analysis:
Marketing objectives and issues:
Marketing strategy:
Target markets, positioning, expenditure levels, and marketing mix
Action program:
Budget:
Controls:
Principles of Marketing: 6th Canadian Edition

21. Marketing Plan Implementation
Marketing implementation:
Process that turns strategies and plans
Into marketing actions
That accomplish strategic marketing objectives
Marketing department organization:
Functional organization
Geographic organization
Product management organization
Customer equity management (customer profitability – total customer relationship)
Market or customer management organization (one product and several market segments)
Principles of Marketing: 6th Canadian Edition

22. The Control Process Marketing audit:
Comprehensive, systematic, independent, periodic
Examination of a company’s environment, objectives, strategies, and activities
To identify problems, opportunities, and plans of action
Figure 2.7
Set goals
What do we
want to achieve?
Measure
performance
What is
happening?
Evaluate
performance
Why is it
happening?
Take corrective
action
What should
we do about it?
Principles of Marketing: 6th Canadian Edition

23. In Conclusion… The learning objectives for this chapter were:
Explain company-wide strategic planning and its four steps
Discuss how to design business portfolios and develop strategies for 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 marketing process and the forces that influence it
List the marketing management functions, including the elements of a marketing plan
Principles of Marketing: 6th Canadian Edition