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

3. Rest Stop: Previewing the Concepts
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 return on marketing investment

4. First Stop - McDonald’s: A Customer-Focused “Plan to Win” Strategy
Loss of identity
Rapid expansion causes McDonald’s to lose product focus
Faces criticism for nutritional quality and service standards
The turnaround
From “being the world’s best quickservice restaurant” to “being our customers’ favorite place and way to eat”
Increase in share price, sales, and profits
Note for Instructors: In the mid-1990s, McDonald’s was struggling to find its identity amid a flurry of new competitors and changing consumer tastes. It experimented with its menu and expanded into non-burger products, all the while opening new restaurants. Customer service and cleanliness declined because the company couldn’t hire and train good workers fast enough. McDonald’s increasingly became a target for nutritionists and social activists, who accused the chain of contributing to the nation’s obesity epidemic. Sales growth slumped, and its market share fell by more than 3 percent between 1997 and To turn the company around, the company’s mission was changed from “being the world’s best quickservice restaurant” to “being our customers’ favorite place and way to eat.” The company halted rapid expansion and instead poured money back into improving the food, the service, the atmosphere, and marketing at existing outlets. A reworked menu provides more choice and variety, including healthier options. McDonald’s rediscovered dedication to customer value sparked a remarkable turnaround.

5. The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities
Strategic planning .

6. Figure 2.1 - Steps in Strategic Planning
Note to Instructor: Strategic planning sets the stage for the rest of planning in the firm. 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.

7. A statement of the organization’s purpose—what it wants to accomplish in the larger environment
Mission statement
Note to Instructors: Ask students to find the mission statements of a few well-known companies from company Web sites. They can then analyze the statements to determine whether they are product-oriented or market-oriented, and suggest changes, if necessary.

8. The Mission Statement Questions the mission statement should answer
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
Note to Instructors: Use any of the company mission statements provided in the text and ask students to analyze how it answers each of the questions given above.

9. Fuel for Thought
Evaluate the following mission statement for a real estate agency against the criteria previously discussed: “We sell houses and commercial property.” Rewrite the mission statement.

10. Setting Company Objectives and Goals
The mission should be translated into supporting objectives for each level of management
Marketing strategies and programs must be developed to support these objectives
Heinz ties its diverse product portfolio together under the mission: “As the trusted leader in nutrition and wellness, Heinz—the original Pure Food Company—is dedicated to the sustainable health of people, the planet, and our company”

11. The collection of businesses and products that make up the company
Business portfolio

12. Designing the Business Portfolio
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

13. Marketing at Work ESPN’s business portfolio includes Television Radio
Digital media
Publishing
Event management

14. The process by which management evaluates the products and businesses that make up the company
Portfolio analysis

15. Portfolio Analysis Purpose of portfolio analysis Basis of evaluation
To direct resources toward more profitable businesses while phasing out or dropping weaker ones
Basis of evaluation
Attractiveness of SBU’s market or industry
Strength of SBU’s position within that market or industry

16. Figure 2.2 - The BCG Growth-Share Matrix
Note to Instructor: On the vertical axis, market growth rate provides a measure of market attractiveness. On the horizontal axis, relative market share serves as a measure of company strength in the market. Under the classic BCG portfolio planning approach, the company invests funds from mature, successful products and businesses (cash cows) to support promising products and businesses in faster-growing markets (stars and question marks), hoping to turn them into future cash cows. The company must decide how much it will invest in each product or business (SBU). For each SBU, it must decide whether to build, hold, harvest, or divest.

17. BCG Growth-Share Matrix
Strategies for categories of the BCG Matrix
Stars need heavy investments to finance their rapid growth
Cash cows need less investment to hold their market share
Question marks require a lot of cash to hold their share, let alone increase it
Dogs do not promise to be large sources of cash

18. Figure 2.3 - The Product/Market Expansion Grid
Note to Instructor: Companies can grow by better penetrating current markets with current products. Through diversification, companies can
grow by starting up or buying businesses outside their current product/markets.

19. Market penetration Market development
Increasing sales of current products to current market segments without changing the product
Market penetration
Identifying and developing new market segments for current company products
Market development
Note to instructor: Ask students to develop market penetration and market development strategies for a product or service.

20. Product development Diversification
Offering modified or new products to current market segments
Product development
Starting up or acquiring businesses outside the company’s current products and markets
Diversification
Note to instructor: Ask students to develop product development and diversification strategies for a product or service.

21. Developing Strategies for Growth
Under Armour has grown at a blistering rate under its multipronged growth strategy
Note to Instructor: The text offers the example of Under Armor and its use of the strategies on the product/market expansion grid.

22. 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
Reasons for downsizing
Rapid growth of the company
Lack of experience in a market
Change in market environment
Decline of a particular product
Note to Instructor: When a firm finds brands or businesses that are unprofitable or that no longer fit its overall strategy, it must carefully prune, harvest, or divest them. For example, in recent years, GM has pruned several underperforming brands from its portfolio, including the Oldsmobile, Pontiac, Saturn, and Hummer car brands and the Goodwrench parts line. Similarly, Ford recently shed its Mercury brand and sold off Jaguar, Land Rover, and Volvo.
Weak businesses usually require a disproportionate amount of management attention. Managers should focus on promising growth opportunities, not fritter away energy trying to salvage fading ones.

23. Planning Marketing Marketing plays a key role in strategic planning by
Providing a guiding philosophy for the company strategy
Providing inputs to strategic planners
Designing strategies to help individual business units reach their objectives

24. 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

25. The series of internal departments that carry out value-creating activities to design, produce, market, deliver, and support a firm’s products
Value chain

26. Partnering with Other Company Departments
Wal-Mart’s ability to help buyers “Save money. Live better” depends on the contributions of its value chain – people in all of the company’s departments
Note to Instructor: Walmart’s ability to help you “Save Money. Live Better.” depends on the purchasing department’s skill in developing the needed suppliers and buying from them at low cost. Walmart’s information technology department must provide fast and accurate information about which products are selling in each store. And its operations people must provide effective, low-cost merchandise handling. At Walmart, if purchasing can’t obtain
the lowest prices from suppliers, or if operations can’t distribute merchandise at the lowest costs, then marketing can’t deliver on its promise of unbeatable low prices. Ideally, then, a company’s different functions should work in harmony to produce value for consumers.

27. 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
Value delivery network

28. The marketing logic by which the company hopes to create customer value and achieve profitable customer relationships
Marketing strategy

29. Figure 2.4 - Managing Marketing Strategies and the Marketing Mix
Note to Instructor: This figure summarizes the major activities involved in managing a customer-driven marketing strategy and the marketing mix.
Consumers are in the center. The goal is to create value for customers and build profitable customer relationships. Next comes marketing strategy —the marketing logic by which the company hopes to create this customer value and achieve these profitable relationships. The company decides which customers it will serve (segmentation and targeting) and how (differentiation and positioning). It identifies the total market and then divides it into smaller segments, selects the most promising segments, and focuses on serving and satisfying the customers in these segments. Guided by marketing strategy, the company designs an integrated marketing mix made up of factors under its control—product, price, place, and promotion (the four Ps). To find
the best marketing strategy and mix, the company engages in marketing analysis, planning, implementation, and control. Through these activities, the company watches and adapts to the actors and forces in the marketing environment.

30. . Market segmentation Market segment
Dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs
Market segmentation
A group of consumers who respond in a similar way to a given set of marketing efforts
Market segment .

31. The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter
Market targeting

32. Positioning Differentiation
Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers
Positioning
Actually differentiating the market offering to create superior customer value
Differentiation

33. Market Differentiation and Positioning
Burt’s Bees offers “Earth friendly natural personal care products for The Greater Good”, a deceptively simple statement that forms the backbone of its marketing strategy

34. Marketing at Work
Allegiant’s “Go where they ain’t” strategy focuses on serving niches neglected by competitors
Targets customers who might not otherwise fly
Note to Instructor: Allegiant’s strategy positions the company as the “un-airline”. It differentiates itself from competitors by flying to regions that are untouched by major airlines and attracting customers who would not usually travel by air. The company has identified differences that allow it to provide customer value and give it a competitive advantage on which to build its position.

35. The set of tactical marketing tools—product, price, place, and promotion—that the firm blends to produce the response it wants in the target market
Marketing mix .

36. Figure 2.5 - The Four Ps of the Marketing Mix

37. 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
Note to Instructor: One view of the four Ps of marketing 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. Thus, whereas marketers see themselves as selling products, customers see themselves as buying value or solutions to their problems. And customers are interested in more than just the price; they are interested in the total costs of obtaining, using, and disposing of a product. Customers want the product and service to be as conveniently available as possible. Finally, they want two-way communication.

38. Figure 2.6 - Managing Marketing: Analysis, Planning, Implementation, and Control
Note to Instructor: In addition to being good at the marketing in marketing management, companies also need to pay attention to the management . Managing the marketing process requires the four marketing management functions — analysis , planning , implementation, and control .

39. Figure SWOT Analysis
Note to Instructor: The goal of SWOT analysis is to match the company’s strengths to attractive opportunities in the environment, while eliminating or overcoming the weaknesses and minimizing the threats. Students can be asked to conduct a SWOT analysis for a particular product or service.

40. Contents of a Marketing Plan
Executive summary
Current marketing situation
Analysis of threats and opportunities
Objectives and issues
Marketing strategy
Action programs
Budgets
Controls

41. Fuel for Thought
External factors – including trends stemming from the economic, technological, social, legal-political, and competitive environments – may represent threats or opportunities to many businesses
How have recent technological changes impacted the marketing of various goods and services?

42. Marketing implementation
Turning marketing strategies and plans into marketing actions to accomplish strategic marketing objectives
Marketing implementation

43. Organizing Marketing Departments
Functional organization
Each marketing activity is headed by a functional specialist
Geographic organization
Sales and marketing people are assigned to specific countries, regions, and/or districts

44. 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

45. Measuring and evaluating the results of marketing strategies and plans and taking corrective action to ensure that the objectives are achieved
Marketing control

46. Marketing Control Operating control Strategic control
Evaluates performance against the annual plan and takes corrective action
Operating control
Evaluates whether strategies match opportunities
Strategic control

47. Return on Marketing Investment
The net return from a marketing investment (Marketing ROI) divided by the costs of the marketing investment
Marketing ROI is assessed using
Standard marketing performance measures
Brand awareness, sales, market share
Customer-centered measures
Customer acquisition, customer retention, customer lifetime value, customer equity

48. Figure 2.8 - Return on Marketing Investment
Note to Instructor: Marketing expenditures are viewed as investments that produce returns in the form of more profitable customer relationships. Marketing investments result in improved customer value and satisfaction, which in turn increases customer attraction and retention. This increases individual customer lifetime values and the firm’s overall customer equity. Increased customer equity, in relation to the cost of the marketing
investments, determines return on marketing investment.

49. 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

50. Rest Stop: Reviewing the Concepts
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 return on marketing investment

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