Download Chapter 2

Company and Marketing
Strategy
Partnering to Build Customer
Relationships
Chapter 2
Rest Stop: Previewing the Concepts
1.
2.
3.
4.
5.
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
2-2
First Stop
NIKE: Creating Brand Experiences & Community
•
•
•
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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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.
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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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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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The Mission Statement Defined
• A mission statement is a statement of
the organization’s purpose–what it
wants to accomplish in the larger
environment.
Nike’s mission is “to bring
inspiration and innovation to every
athlete* in the world (*if you have a
body, you are an athlete).”
 Example:
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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, welldefined 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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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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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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Strategic Business Unit (SBU)
• Strategic business unit:
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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Boston Consulting Group
Growth-share Matrix
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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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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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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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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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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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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Market Segmentation and Targeting
• 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.
• Targeting:
 Involves
evaluating each market segment’s
attractiveness and selecting one or more
segments to enter.
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Differentiation and Positioning
• 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:
• Place:
Variety, features,
brand name, quality,
design, packaging,
and services.
• Promotion:
Advertising, sales
promotion, public
relations, and
personal selling.
Channels, coverage,
logistics, locations,
transportation,
assortments, and
inventory.
• Price:
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List price, discounts,
allowances, payment
period, and credit terms.
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The 4 Ps and the 4 Cs
of the Marketing Mix
• 4 Ps –
Seller’s View
• 4 Cs –
 Product
 Price
 Place
 Promotion
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Buyer’s View
 Customer
Solution
 Customer Cost
 Convenience
 Communication
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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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Contents of a Marketing Plan
1.
2.
3.
4.
5.
6.
7.
8.
Executive summary
Current marketing situation
Analysis of threats and opportunities
Objectives and issues
Marketing strategy
Action programs
Budgets
Controls
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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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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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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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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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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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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
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Rest Stop: Reviewing the Concepts
1.
2.
3.
4.
5.
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
2 - 39