Company and Marketing Strategy: Partnering to Build Customer RelationshipsChapter 2

2- *Strategic PlanningStrategic planning is defined as:The process of developing and maintaining a strategic fit between the organizations goals and capabilities and its changing marketing opportunities.

2- *Strategic PlanningPlanning activities occur at the business unit, product, and market levels, and include:Defining the purpose and missionSetting objectives and goalsDesigning the business portfolioDeveloping detailed marketing and departmental plans

2- *Strategic PlanningMission statements should . . .serve as a guide for what the organization wants to accomplish.be market-oriented rather than product-oriented.be neither too narrow, nor too broad.fit with the market environment.be motivating.

2- *NikeWe sell athletic shoes & apparel.We bring inspiration & innovation to every athlete* in the world. (*If you have a body, you are an athlete.)

We are an online social network.We connect people around the world and help them share important moments in their lives.2- *

2- *Amazon.comWe sell books, videos, CDs, toys, consumer electronics, hardware, housewares, and other productsWe make the internet buying experience fast, easy, and enjoyablewere the place where you can find and discover anything you want to buy online.

Wal-MartWe run discount stores.We deliver low prices every day and give ordinary folks the chance to buy the same things as rich people.Save Money. Live Better.2- *

Ritz-CarltonHotels & ResortsWe rent rooms.We create the Ritz-Carlton experience-one that enlivens the senses, instills well-being, and fulfills even the unexpressed wishes and needs of our guests.2- *

2- *Strategic PlanningMission statements guide the development of objectives and goals.Objectives are developed at each level in the organization hierarchy.Strategies are developed to accomplish these objectives.

Setting Company Objectives and Goals

Heinz

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2- *Heinz (best known for its tomato ketchup)Mission Statement: 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.Overall objective: build profitable customer relationships by developing foods superior in quality, taste, nutrition, and convenience that embrace its nutrition and wellness mission.

2- *Need to invest in R & D.Fund this through profitsMarketing objectives: increase profits by increasing sales and reducing costsIncreasing sales in the US or entering new marketsMarketing strategies & program broaden product lines (breakfast wraps to weight watchers); bought Quero in Brazil and ABC in IndonesiaBecomes the marketing objectives

2- *Designing the Business PortfolioBusiness portfolio: the collection of businesses and products that make up the company.Designing the business portfolio is a key element of the strategic planning process.

2- *Strategic PlanningStep 1: Analyze the current business portfolioStep 2: Shape the future business portfolioIdentify strategic business units (SBUs)Assess each SBU:The BCG growth-share matrix classifies SBUs into one of four categories using the:Market growth rate SBUs relative market share within the market.Portfolio Design

2- *BCG Growth-Share MatrixStrategic PlanningHigh Relative Market ShareHigh Market GrowthLow Market GrowthStarsCash CowsQuestion MarksDogsLow Relative Market Share

2- *Strategic PlanningStep 1: Analyze the current business portfolioStep 2: Shape the future business portfolioDetermine the future role of each SBU and choose the appropriate resource allocation strategy:BuildHoldHarvestDivestSBUs change positions over timePortfolio Design

2- *Strategic PlanningMatrix approaches to formal planning share many problems:Difficult, time-consuming, and costly to implement.Focus only on current businesses.Too strongly emphasize market share growth or growth via diversification.

2- *Strategic PlanningDesigning the business portfolio also involves:Developing strategies for growth by identifying, evaluating, and selecting promising new market opportunities. Product/market expansion gridDeveloping strategies for downsizing the business portfolio.

2- *Product/Market Expansion GridStrategic PlanningExisting ProductsNew ProductsExisting MarketsNew MarketsMarket PenetrationMarket DevelopmentProduct DevelopmentDiversification

2- *Planning MarketingMarketing plays a key role in the strategic planning process.Marketers must practice CRM and Partner Relationship Management.Partnering with other departments in the company as well as other firms in the marketing system helps to build a superior value delivery-network.

Marketings role in strategic planningGuiding philosophy the marketing conceptInputs to strategic planners identify attractive market opportunitiesDesigns strategies for reaching units objectives2- *

Partnering with other company departmentsInternal value chainPurchasingProductionFinance, etc.All departments must understand marketing and their role in creating customer value.2- *

Partnering with Others in the Marketing SystemValue chainsSuppliersDistributorsCustomersCustomer Value Delivery Network2- *

2- *The Marketing StrategyThe marketing strategy the marketing logic by which the business unit hopes to create customer value and achieve profitable customer relationships.Selecting target markets

Developing the marketing mix

Managing the marketing effort

2- *The Marketing StrategyThe segmentation process divides the total market into market segments.Target marketing determines which segment(s) are pursued.The market positioning for the product is then determined.

Selecting target marketsDeveloping the marketing mixManaging the marketing effort

2- *The Marketing StrategyCompetitor analysis guides competitive marketing strategy development.Strategy leads to tactics by way of the marketing mix: The Four Ps product, price, place, promotion (seller viewpoint)The Four Cs customer solution, cost, convenience, and communication (customer viewpoint)

Selecting target marketsDeveloping the marketing mixManaging the marketing effort

2- *The Marketing StrategyMarketing analysisProvides information helpful in planning, implementation, and controlMarketing planningStrategies and tacticsMarketing implementationTurns plans into actionMarketing controlOperating controlStrategic controlMarketing auditSelecting target marketsDeveloping the marketing mixManaging the marketing effort

The Marketing PlanExecutive summaryCurrent marketing situationThreats and opportunities analysisObjectives and IssuesMarketing StrategyAction programsBudgetControls2- *

Measuring & Managing Return on Marketing InvestmentReturn on marketing investment (marketing ROI)The net return from marketing investment divided by the costs of the marketing investment.Measures profits generated by investments in marketing activities2- *

Marketing return on sales (marketing ROS)Net marketing contributionMarketing ROS =----------------- Net SalesNet marketing contribution (NMC) =Net sales cost of goods sold marketing expensesMarketing expenses: sales expenses, promotion expenses, managerial salaries & expenses2- *

Marketing return on investment Net marketing contributionMarketing ROI =----------------- Marketing Expenses 2- *

ApplicationBusiness A Marketing ROSNMC800 m 375 m 110 m = 315 millionMarketing ROS =315 800*For every $100 in sales; return is $39.38Business B Marketing ROSNMC900 m 400 m -160 m = 340 millionMarketing ROS = 340 900*For every $100 in sales; return is $37.78

2- *39.38%37.78%

Business A Marketing ROINMC800 m 375 m 110 m = 315 millionMarketing ROI=315 110May reach more than 100%; needs to be compared with other firms in the industryBusiness B Marketing ROINMC900 m 400 m -160 m = 340 millionMarketing ROS = 340 160May reach more than 100%; needs to be compared with other firms in the industry

2- *289.36%212.5%