1. Partnering to Build Customer Relationships
Priciples of Marketing
by Philip Kotler and Gary Armstrong
Chapter 2
Company and Marketing Strategy
Partnering to Build Customer Relationships
PEARSON

2. Objective Outline
Companywide Strategic Planning: Defining Marketing’s Role
Explain company-wide strategic planning and its four steps. 1
Designing the Business Portfolio
Discuss how to design business portfolios and develop growth strategies. 2

3. Objective Outline
Planning Marketing: Partnering to Build Customer Relationships
Explain Marketing’s role in strategic planning and how marketing works with its partners to create and deliver customer value. 3
Marketing Strategy and the Marketing Mix
Describe the elements of a customer-driven marketing strategy and mix and the forces that influence it. 4

4. Objective Outline Managing the Marketing Effort
Measuring and Managing Return on Marketing Investment
List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing return on marketing investment. 5

5. Companywide Strategic Planning: Defining Marketing’s Role
Strategic planning is the process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities.
Companies usually prepare annual plans, long-range plans, and strategic plans.
The annual and long-range plans deal with the company’s current businesses and how to keep them going.
In contrast, the strategic plan involves adapting the firm to take advantage of opportunities in its constantly changing environment.

6. Companywide Strategic Planning: Defining Marketing’s Role
Like the marketing strategy, the broader company strategy must be customer focused.
Company-wide strategic planning guides marketing strategy and planning.

7. Defining a Market-Oriented Mission
The mission statement is the organization’s purpose, what it wants to accomplish in the larger environment.
Market-oriented mission statement defines the business in terms of satisfying basic customer needs.

8. Defining a Market-Oriented Mission

9. Setting Company Objectives and Goals
Business objectives
Build profitable customer relationships
Invest in research
Improve profits
Marketing objectives
Increase market share
Create local partnerships
Increase promotion

10. Designing the Business Portfolio
The business portfolio is the collection of businesses and products that make up the company.
Business portfolio planning involves two steps:
the company must analyze its current business portfolio and determine the investment
shape the future portfolio by developing strategies for growth and downsizing

11. Analyzing the Current Business Portfolio
Portfolio analysis is a major activity in strategic planning whereby management evaluates the products and businesses that make up the company
Management’s first step is to identify the key businesses that make up the company, called strategic business units (SBUs).
SBU
Company division
Product line within a division
Single product or brand

12. Analyzing the Current Business Portfolio
The company next assesses the attractiveness of its various SBUs and decides how much support each deserves.
Tthe attractiveness of the SBU’s market or industry and the strength of the SBU’s position in that market or industry.
The best-known portfolio-planning method was developed by the Boston Consulting Group, a leading management consulting firm.

13. The Boston Consulting Group Approach
Stars are high-growth, high-share businesses or products. They often need heavy investments to finance their rapid growth.
They require a lot of cash to hold their share, let alone increase it.
A company classifies all its SBUs according to the growth-share matrix. The growth-share matrix defines four types of SBU’s:
These established and successful SBUs need less investment to hold their market share.
They may generate enough cash to maintain themselves but do not promise to be large sources of cash.

14. The Boston Consulting Group Approach
It can pursue one of four strategies for each SBU.
Build：
It can invest more in the business unit.
Hold:
It can just enough to share at the current level.
Harvest：
It can harvest the SBU, milking its short-term cash.
Divest：
It can divest the SBU by selling it or phasing it out and using the resources elsewhere.

15. Problems with Matrix Approaches
It have some limitations:
Difficulty in defining SBUs and measuring market share and growth
Time consuming
Expensive
Focus on current businesses, not future planning
Methods to improve:
Dropped formal matrix methods in favor of more customized approaches that better suit their specific situations
Today’s strategic planning has been decentralized

16. Developing Strategies for Growth and Downsizing
Market development ─ Companies can grow by developing new markets for existing products. For example, Starbucks is expanding rapidly in China, which by 2015 will be its second-largest market, behind only the United States.
Diversification ─ Through diversification, companies can grow by starting or buying businesses outside their current product/markets. For example, Starbucks is entering the “health and wellness” market with stores called Evolution By Starbucks.
Product/market expansion grid is a portfolio- planning tool for identifying company growth opportunities through market penetration, market development, product development, or diversification.

17. Developing Strategies for Growth and Downsizing
Market penetration
Company growth by increasing sales of current products to current market segments without changing the product
Market development
The company growth by identifying and developing new market segments for current company products.
Product development
Company growth by offering modified or new products to current market segments.
Diversification
Company growth through starting up or acquiring businesses outside the company’s current products and markets.

18. Planning Marketing: Partnering to Build Customer Relationships
Marketing plays a key role in the company’s strategic planning in several ways:
First, marketing provides a guiding philosophy—the marketing concept—that suggests the company strategy should revolve around building profitable relationships with important consumer groups.
Second, marketing provides inputs to strategic planners by helping to identify attractive market opportunities and assessing the firm’s potential to take advantage of them.
Finally, within individual business units, marketing designs strategies for reaching the unit’s objectives. Once the unit’s objectives are set, marketing’s task is to help carry them out profitably.

19. Partnering with Other Company Departments
Value chain is a series of departments that carry out value-creating activities to design, produce, market, deliver, and support a firm’s products.
That is, each department carries out value-creating activities to design, produce, market, deliver, and support the firm’s products.

20. Partnering with Others in the Marketing System
Value delivery network is the network made up of the company, its suppliers, its distributors, and, ultimately, its customers who partner with each other to improve the performance of the entire system.
Toyota’s performance against Ford depends on the quality of Toyota’s overall value delivery network versus Ford’s.

21. Marketing Strategy and the Marketing Mix
Next comes marketing strategy—the marketing logic by which the company hopes to create this customer value and achieve these profitable relationships.

22. Customer-Driven Marketing Strategy
Most companies are in a position to serve some segments better than others.
Thus, each company must divide up the total market, choose the best segments, and design strategies for profitably serving chosen segments.
This process involves:
Marketing segmentation
Market targeting
Positioning

23. Market Segmentation
The process of dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs, is called market segmentation.
Market segment is a group of consumers who respond in a similar way to a given set of marketing efforts.

24. Marketing Targeting
Market targeting is the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter.
A company with limited resources might decide to serve only one or a few special segments or market niches.
Most companies enter a new market by serving a single segment; if this proves successful, they add more segments.

25. Marketing Differentiation and Positioning
Positioning is arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of the target consumer.
Thus, effective positioning begins with differentiation— actually differentiating the company’s market offering so that it gives consumers more value.

26. Developing an Integrated Marketing Mix
Product means the goods-and-services combination the company offers to the target market.
Price is the amount of money customers must pay to obtain the product.
Developing an Integrated Marketing Mix
The marketing mix ─ or the four Ps ─ consists of tactical marketing tools blended into an integrated marketing program that actually delivers the intended value to target customers.
Marketing mix is the set of controllable tactical marketing tools—product, price, place, and promotion—that the firm blends to produce the response it wants in the target market.
Promotion refers to activities that communicate the merits of the product and persuade target customers to buy it.
An effective marketing program blends the marketing mix elements into an integrated marketing program designed to achieve the company’s marketing objectives by delivering value to consumers. The marketing mix constitutes the company’s tactical tool kit for establishing strong positioning in target incentives.
Place includes company activities that make the product available to target consumers.

27. Developing an Integrated Marketing Mix
It holds that the four Ps concept takes the seller’s view of the market, not the buyer’s view. From the buyer’s viewpoint, in this age of customer value and relationships, the four Ps might be better described as the four Cs:
4Ps
Product
Price
Place
Promotion
4Cs
Customer solution
Customer cost
Convenience
Communication

28. Managing the Marketing Effort
Managing the marketing process requires the four marketing management functions:

29. Marketing Analysis
The marketer should conduct a SWOT analysis ,by which it evaluates the company’s overall strengths (S), weaknesses (W), opportunities (O), and threats (T).

30. Marketing expenditure level
Marketing Planning
Through strategic planning, the company decides what it wants to do with each business unit. Marketing planning involves choosing marketing strategies that will help the company attain its overall strategic objectives.
Positioning
Market mix
Marketing expenditure level
Target markets
Marketing Strategy:
It outlines how the company intends to create value for target customers in order to capture value in return.
Marketing strategy

31. Marketing Implementation
Marketing implementation is the process that turns marketing plans into marketing actions to accomplish strategic marketing objectives.
Whereas marketing planning addresses:
what
why
who
where
when
how
Many managers think that “doing things right” (implementation)
is as important as, or even more important than, “dong the right
things”(strategy).

32. Marketing Department Organization
Functional organization
This is the most common form of marketing organization with different marketing functions headed by a functional specialist.
Geographic organization
Useful for companies that sell across the country or internationally. Managers are responsible for developing strategies and plans for a specific region.
Product management
Useful for companies with different products or brands. Managers are responsible for developing strategies and plans for a specific product or brand.
Market or customer management organization
Useful for companies with one product line sold to many different markets and customers. Managers are responsible for developing strategies and plans for their specific markets or customers.

33. Marketing Control Four steps of marketing control:
Marketing control is the measuring and evaluating the results of marketing strategies and plans and taking corrective action to ensure that the objectives are achieved.
Management first sets specific marketing goals.
Measures its performance in the market place
Evaluates the causes of any differences between expected and actual performance
Management takes corrective action to close the gaps between goals and performance
Four steps of marketing control:

34. Measuring and Managing Return on Marketing Investment
Return on marketing investment (or marketing ROI) is the net return from a marketing investment divided by the costs of the marketing investment.
It measures the profits generated by investments in marketing activities.
Many companies are assembling such measures into marketing dashboards ─ meaningful sets of marketing performance measures in a single display used to monitor strategic marketing performance.

35. Measuring and Managing Return on Marketing Investment

36. The End