1. Company and Marketing Strategy Partnering to Build Customer Relationships
Chapter 2

2. Rest Stop: 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 and discuss the importance of measuring and managing marketing ROMI.
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3. First Stop NIKE: Creating Brand Experiences & Community
Challenge and Solution
Late 1990s: Nike became a victim of its own success; sales slipped, ad creativity declined & customer relationships cooled.
Nike Turnaround: Refocused on product innovation, revised mission statement, sought deeper, stronger, customer relationships via interactions with customers.
Building Brand Experiences: Reduced mass media spending in favor of customer community building via social networking and in-person events, resulting in large market share gains.
Nike’s Early Success
1970s: Nike’s earliest success was the waffle trainer and by 1979 the firm owned 50% of U.S. running shoe market.
1980s: Endorsements, promotional events, and heavy ad spending on “Just Do It” campaign revolutionized sports marketing. Nike built customer relationships by marketing a way of life.
1990s: Nike Swoosh logo became prominent; firm expanded into other sports and product offerings.
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4. Strategic Planning Defined
The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities.
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5. Steps in Strategic Planning Process
Corporate level:
Defining the company mission.
Setting objectives and goals.
Designing the business portfolio.
Business unit, product, and market level:
Planning marketing strategy as well as other functional strategies.
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6. The Mission Statement Defined
A mission statement is a statement of the organization’s purpose–what it wants to accomplish in the larger environment.
Example: Nike’s mission is “to bring inspiration and innovation to every athlete* in the world (*if you have a body, you are an athlete).”
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The Mission Statement
Questions the mission statement should answer include:
What is our business?
Who is our customer?
What do consumers value?
What should our business be?
Mission statements should be market oriented, not product oriented.
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The Mission Statement
In addition to being market-oriented, well-defined mission statements should be:
Meaningful.
Specific.
Motivating.
Based on the firm’s strengths in the marketplace.
Focused on customers and the customer experience rather than on sales and profits.
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9. Setting Firm Objectives and Goals
The mission should be translated into supporting objectives for each level of management.
Creates a hierarchy of objectives that are consistent with one another. For example:
Business objective: Increase profits.
Marketing objective: Increase market share of domestic and international markets.
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10. 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) and decide which SBUs should receive more, less, or no investment.
Develop strategies for growth and downsizing that will shape the future business portfolio.
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11. 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.
An SBU can be a company division, a product line within a division, or sometimes a single product or brand.
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Portfolio Analysis
Portfolio analysis:
Process by which management evaluates the products and businesses making up the company.
Resources are directed toward more profitable businesses while weaker ones are phased out or dropped.
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Portfolio Analysis
Standard portfolio analysis evaluates SBUs on two important dimensions:
Attractiveness of SBUs market or industry.
Strength of SBUs position within that market or industry.
BCG Growth Share Matrix uses market growth rate and relative market share to classify SBUs into four groups.
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14. Boston Consulting Group Growth-share Matrix

15. BCG Growth-Share Matrix
Stars: High-share of high-growth market.
Strategy: Build into cash cow via investment.
Cash cows: High-share of low-growth market.
Strategies: Maintain or harvest for cash to build STARS.
Question marks: Low-share of high-growth market.
Strategies: Build into STAR via investment OR reallocate funding and let slip into DOG status.
Dogs: Low-share of low-growth market.
Strategies: Maintain or divest.
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16. Problems with Matrix Approaches
Several problems exist:
Can be difficult, time consuming, and costly to implement.
Difficult to define SBUs and measure market share and growth rate.
Focus is on current businesses; gives little help with future planning.
These problems have led to changes in the strategic planning process used by firms.
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18. Product/Market Expansion Grid
The product/market expansion grid can identify growth opportunities.
Market penetration
Existing markets, existing products
Market development
New markets, existing products
Product development
Existing markets, new products
Diversification
New products, new markets
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Downsizing
Downsizing reduces the business portfolio by eliminating products of business units that are not profitable or that no longer fit the company’s overall strategy.
Many reasons exist for downsizing.
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Planning Marketing
Marketing plays a key role in strategic planning:
Provides a guiding philosophy.
The marketing concept
Provides input to strategic planners.
Identifies opportunities
Designs strategies to reach objectives.
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21. Creating Customer Value
Marketers must practice partner relationship management.
Working with partners internally within the company can create an effective value chain.
Working with external partners in the marketing system helps to form a superior value delivery network.
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22. Value Delivery Network
Components include:
Company’s value chain
Each department is a link
Distributors
Suppliers
Customers
Improved performance in delivery value to customers is the goal.
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23. Marketing Strategy and the Marketing Mix
Goal: create value for customers and build customer relationships.
Marketing strategy decisions include:
Market segmentation and targeting
Differentiation and positioning
Marketing strategy must guide marketing mix decisions.
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24. Market Segmentation and Targeting
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.
Targeting:
Involves evaluating each market segment’s attractiveness and selecting one or more segments to enter.
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25. Differentiation and Positioning
Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.
Differentiation:
Creating superior customer value by actually differentiating the market offering.
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The Marketing Mix
The set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market.
These tools are often called the 4 P’s:
Product
Price
Place (distribution)
Promotion
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The Marketing Mix
Product:
Variety, features, brand name, quality, design, packaging, and services.
Promotion:
Advertising, sales promotion, public relations, and personal selling.
Place:
Channels, coverage, logistics, locations, transportation, assortments, and inventory.
Price:
List price, discounts, allowances, payment period, and credit terms.
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28. The 4 Ps and the 4 Cs of the Marketing Mix
4 Ps – Seller’s View
Product
Price
Place
Promotion
4 Cs – Buyer’s View
Customer Solution
Customer Cost
Convenience
Communication
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29. Managing the Marketing Effort
Four marketing management functions:
Marketing analysis
SWOT analysis is key.
Marketing planning
Create marketing plan consistent with strategic plan.
Marketing implementation
Carry out the plans successfully.
Marketing control
Measure and evaluate results; take corrective action as needed.
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SWOT Analysis
Strengths:
Internal capabilities that may help a company reach its objectives.
Weaknesses:
Internal limitations that may interfere with a company’s ability to achieve its objectives.
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SWOT Analysis
Opportunities:
External factors that the company may be able to exploit to its advantage.
Threats:
Current and emerging external factors that may challenge the company’s performance.
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32. Contents of a Marketing Plan
Executive summary
Current marketing situation
Analysis of threats and opportunities
Objectives and issues
Marketing strategy
Action programs
Budgets
Controls
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33. Marketing Implementation
Turns marketing plans into marketing actions by addressing:
Who
Where
When
How
Implementation can be difficult but is critical to success.
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34. Organizing Marketing Departments
Chief marketing officer (CMO) positions are becoming more common.
Functional organization:
Each marketing activity is headed by a functional specialist.
E.g., sales manager, advertising manager, marketing research manager, etc.
Geographic organization:
Sales and marketing people are assigned to specific countries, regions, and/or districts.
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35. Marketing Department Organization
Product management organization:
One person is given responsibility for complete strategy and marketing program for a single product.
Market or customer organization:
Manager responsible for particular market or type of customer (e.g., government buyers).
Combination organization:
Uses some combination of the previous four approaches.
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36. Marketing Control Process
Marketing control involves four steps:
Set goals
Measure performance
Evaluate performance
Take corrective action
May require changing action programs or goals.
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37. Marketing Control Process
Operating control
Evaluates performance against the annual plan and takes corrective action.
Strategic control
Evaluates whether strategies match opportunities.
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38. Return on Marketing Investment
Return on marketing investment is assessed using one or more methods:
Standard marketing performance measures (marketing dashboards):
Brand awareness, sales, market share.
Customer-centered measures:
Customer acquisition, customer retention, customer lifetime value, customer equity.
Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall

39. Rest Stop: Reviewing 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 and discuss the importance of measuring and managing marketing ROMI.
Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall