Chapter Two

Company and Marketing Strategy:

Partnering to Build Customer Relationships

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Roadmap: Previewing the Concepts

1. Explain companywide strategic planning and its four steps.

2. Discuss how to design business portfolios and growth strategies.

3. Explain marketing’s role in strategic planning and how marketing works with its partners to create and deliver customer value.

4. Describe the elements of a customer-driven marketing strategy and mix, and the forces that influence it.

5. List the marketing management functions, including the elements of a marketing plan.

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Early Days Characterized by “seat of

the pants” management. Innovative sneaker tread

drove early success. Technological product

superiority, big-name endorsements and “Just Do It” ads revolutionized sport marketing.

1980s – 1990s: Nike leverages brand strength into new product areas.

NIKE – Strategy: Then & NowNIKE – Strategy: Then & NowCase StudyCase Study

Late 1990s - Present Changes in consumer

shoe preference, declining product innovation, and negative PR plague Nike.

Anti-establishment image no longer works: brand backlash occurs.

Strategic planning is embraced and Nike focuses on innovation and exploring new market opportunities.

Nike has global success.

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Strategic Planning

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

1. Defining the company mission.

2. Setting company objectives and goals.

3. Designing the business portfolio.

4. Planning marketing and other functional strategies.

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The Mission Statement

A statement of the organization’s purpose.– What it wants to accomplish in the larger

environment.

Should be market oriented and defined in terms of customer needs.

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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?

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The Mission Statement:

Should be realistic. Should be specific. Should fit the market environment. Should be based on distinctive

competencies. Should be motivating.

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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),– decide which SBUs should receive more, less, or

no investment,– develop growth strategies for growth or

downsizing.

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Portfolio Analysis

An evaluation of the products and business making up the company.

Resources are directed to more profitable businesses and weaker ones are phased down or dropped.

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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.

Can be a company division, a product line within a division, or sometimes a single product or brand.

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BCG Growth-Share Matrix

Stars– High share of low growth market.– Build into cash cow via investment.

Cash Cows– High share of low growth market.– Maintain or harvest for cash to build STARS.

Question Marks– Low share of high growth market.– Build into STAR via investment if warranted, or

reallocate financing and let slip into DOG status. Dogs

– Low share of low growth market. Maintain or divest.

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Problems with Matrix Approaches

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.

Can place too much emphasis on growth. Can lead to poorly planned diversification.

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Product/Market Expansion Grid

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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Planning Marketing

Marketing plays a key role in strategic planning:– Provides a guiding philosophy.

• The Marketing Concept– Provides inputs to strategic planners.– Designs strategies to reach objectives.

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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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Market Segmentation

The process of dividing a market into distinct groups of buyers with different needs, characteristics, or behavior who might require separate products of marketing programs.

A market segment consists of consumers who respond in a similar way to a given set of marketing efforts.

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Target Marketing

Involves evaluating each market segment’s attractiveness and selecting one or more segments to enter.

Target segments that can sustain profitability.

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Market Positioning

Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.

Begins with differentiating the company’s marketing offer so it gives consumers more value.

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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.– Product– Price– Place (distribution)– Promotion

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The Marketing Mix

Product:– Variety, quality,

design, features, brand name, 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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The 4 Ps & 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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Managing the Marketing Effort

Four marketing management functions:– Marketing Analysis

• SWOT analysis is key.– Marketing Planning

• Create brand marketing plan.– Marketing Implementation

• Determine who, where, when, and how.– Marketing Control

• Evaluate results, take corrective action.

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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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Brand / Product Marketing Plan

1. Executive summary2. Current marketing situation3. Analysis of threats and opportunities4. Objectives for the brand5. Marketing strategy6. Action programs7. Marketing budget8. Controls

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Marketing Department Organization

Functional Organization: Each marketing activity is headed by a functional specialist.– Sales Manager– Advertising Manager– Director of Marketing Research– Customer Service Manager– New Product Manager

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Marketing Department Organization

Geographic Organization: Sales and marketing people are assigned to specific countries, regions, and districts.

Product Management Organization: One person given responsibility for complete strategy and marketing program for a single product.

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Marketing Department Organization

Market or Customer Organization: Manager responsible for particular market or customer.

Combination Organization: Use some combination of the previous four approaches.– This is especially true in large companies

(e.g., Procter & Gamble)

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Marketing Control Process

Set Goals Measure Performance Evaluate Performance Take Corrective Action

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Marketing Control Process

Operating Control– Evaluates performance against the plan

and takes corrective action.

Strategic control– Evaluates whether strategies match

opportunities.• The marketing audit is major tool.

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Return on Marketing

Assessed using one or more methods:– Standard marketing performance

measures• Brand awareness, sales, market share

– Customer-centered measures• Customer acquisition, customer

retention, customer lifetime value

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Rest Stop: Reviewing the Concepts

1. Explain companywide strategic planning and its four steps.

2. Discuss how to design business portfolios and growth strategies.

3. Explain marketing’s role in strategic planning and how marketing works with its partners to create and deliver customer value.

4. Describe the elements of a customer-driven marketing strategy and mix, and the forces that influence it.

5. List the marketing management functions, including the elements of a marketing plan.