Mar 20 presentation #2

Company and Marketing Strategy: Partnering to Build

Customer Relationships

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““If you fail to plan, If you fail to plan, you plan to fail”you plan to fail”

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Strategic Planning

•Strategic planning is defined Strategic planning is defined as:as: ““The process of developing and The process of developing and

maintaining a strategic fit maintaining a strategic fit between the organization’s between the organization’s goals and capabilities and its goals and capabilities and its changing marketing changing marketing opportunities.”opportunities.”

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Strategic Planning

• Planning activities occur at the Planning activities occur at the business unit, product, and business unit, product, and market levels, and include:market levels, and include: Defining the purpose and missionDefining the purpose and mission Setting objectives and goalsSetting objectives and goals Designing the business portfolioDesigning the business portfolio Developing detailed marketing Developing detailed marketing

and departmental plansand departmental plans

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Strategic Planning

• Mission statements should . . .Mission statements should . . . serve as a guide for what the serve as a guide for what the

organization wants to accomplish.organization wants to accomplish. be “market-oriented” rather than be “market-oriented” rather than

“product-oriented”.“product-oriented”. be neither too narrow, nor too be neither too narrow, nor too

broad.broad. fit with the market environment.fit with the market environment. be motivating.be motivating.

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Defining the Organization’s

Mission•A mission may begin with these A mission may begin with these questions:questions: What business are we in?What business are we in? What customers should we What customers should we

serve?serve? How should we develop the firm’s How should we develop the firm’s

capabilities and focus its efforts?capabilities and focus its efforts?

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http://www.southwest.com/travel_center/customer_service_commitment.html

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Evolution of Harley Davidson Mission

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Evolution of Harley Davidson Mission

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Virgin Mission Statement

We believe in making a difference. In our We believe in making a difference. In our customers' eyes, Virgin stands for value for customers' eyes, Virgin stands for value for money, quality, innovation, fun and a sense money, quality, innovation, fun and a sense of competitive challenge. We deliver a of competitive challenge. We deliver a quality service by empowering our quality service by empowering our employees and we facilitate and monitor employees and we facilitate and monitor customer feedback to continually improve customer feedback to continually improve the customer's experience through the customer's experience through innovation. innovation.

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http://www.celestialseasonings.com/whoweare/corporatehistory/mission.php

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Strategic Planning

•Business portfolio: Business portfolio: “the collection of businesses “the collection of businesses and products that make up and products that make up the company.”the company.”

•Designing the business Designing the business portfolio portfolio is a key element of the is a key element of the strategic planning process.strategic planning process.

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Limited Brands

Limited Brands is committed to building a family of the world's best fashion brands offering captivating customer experiences that drive long-term loyalty and deliver sustained growth for our shareholders.

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Limited Brands• Current Brands Sold or Closed Co.• The Limited Abercrombie & Fitch• Express Women & Men Lane Bryant• (Structure) Lerner’s• Intimate Brands New York & Co.• Victoria’s Secret Gaylan’s • Bath and Body Works Cacique• White Barn Candle Penhaligons• Aura Science Limited Too

• Henri Bendel• Mast Industries• C.O. Bigelow

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Strategic Planning

• Step 1:Step 1: Analyze the Analyze the current business current business portfolioportfolio

• Step 2: Step 2: Shape the future Shape the future business portfoliobusiness portfolio

• Identify strategic Identify strategic business units (SBUs)business units (SBUs)

• Assess each SBU:Assess each SBU: The BCG growth-The BCG growth-

share matrix share matrix classifies SBUs into classifies SBUs into one of four categories one of four categories using the:using the:

Market growth rate Market growth rate SBU’s relative SBU’s relative

market share within market share within the market.the market.

Portfolio Portfolio DesignDesign

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BCG Growth-Share MatrixBCG Growth-Share Matrix

Strategic Planning

High RelativeHigh RelativeMarket ShareMarket Share

High High Market Market GrowthGrowth

Low Low Market Market GrowthGrowth

StarsStars

Cash Cash CowsCows

Question Question MarksMarks

DogsDogs

Low RelativeLow RelativeMarket ShareMarket Share

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Strategic Planning

• Step 1: Step 1: Analyze the Analyze the current business current business portfolioportfolio

• Step 2:Step 2: Shape the future Shape the future business portfoliobusiness portfolio

• Determine the Determine the future role of each future role of each SBU and choose SBU and choose the appropriate the appropriate resource allocation resource allocation strategy:strategy: BuildBuild HoldHold HarvestHarvest DivestDivest

• SBUs change SBUs change positions over timepositions over time

Portfolio Portfolio DesignDesign

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Strategic Planning• Matrix approaches to formal Matrix approaches to formal

planning share many problems:planning share many problems: Difficult, time-consuming, and costly Difficult, time-consuming, and costly

to implement.to implement. Difficult to define SBU’s & Measure Difficult to define SBU’s & Measure

Market Share/GrowthMarket Share/Growth Focus only on current businesses.Focus only on current businesses. Too strongly emphasize market Too strongly emphasize market

share growth or growth via share growth or growth via diversification.diversification.

Can lead to unwise expansion or Can lead to unwise expansion or diversificationdiversification

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Product/Market Expansion Product/Market Expansion GridGrid

Strategic Planning

Existing ProductsExisting Products New ProductsNew Products

Existing Existing MarketsMarkets

New New MarketsMarkets

Market Market PenetrationPenetration

Market Market DevelopmentDevelopment

Product Product DevelopmentDevelopment

DiversificatioDiversificationn

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The Business Portfolio

Which strategy is Which strategy is this?this?

• Market Market penetrationpenetration

• Market Market developmentdevelopment

• Product Product developmentdevelopment

• DiversificationDiversification

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The Business Portfolio

Which strategy Which strategy

is this?is this?

• Market Market penetrationpenetration

• Market Market developmentdevelopment

• Product Product developmentdevelopment

• DiversificationDiversification

2 -

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Market Penetration• Strategy: Strategy:

to to increase sales increase sales to current buyers to current buyers without changing without changing the products the products being sold. being sold.

Market penetration can be achieved by adding new stores in current market areas, improving advertising, lowering prices, adding services, etc.

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Market Development• Strategy: Strategy:

identify and identify and develop new develop new markets – markets – demographidemographic or c or geographic geographic – for current – for current

productsproducts. . Bass Pro Shops has aggressively developed new geographic markets for its Outdoor World retail stores.

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Product Development•Strategy: Strategy: offering modified or offering modified or

new products to current new products to current markets. markets. How? Adding new sizes, How? Adding new sizes,

flavors, or offerings, co-flavors, or offerings, co-branding products, etc.branding products, etc.

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Diversification• Strategy: Strategy:

start up or buy businesses outside of start up or buy businesses outside of current products and markets.current products and markets. Diversification is the riskiest Diversification is the riskiest

strategy.strategy. Firms that diversify too broadly into Firms that diversify too broadly into

unfamiliar products or industries unfamiliar products or industries can lose their market focus.can lose their market focus.

www.timewarner.com/corp//

www.virgin.com

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Marketing’s Role in Strategic Planning

Provides a Guiding

Philosophy

Provides a Guiding

Philosophy

Provides Inputs to

Strategic Planners

Provides Inputs to

Strategic Planners

Designs Strategiesfor Reaching

Unit’s Objectives

Designs Strategiesfor Reaching

Unit’s Objectives

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The Marketing Process

TargetConsumers

Product

Place Price

Promotion

Mar

ketin

g

Im

plem

enta

tion

Marketing

Planning

Marketing

Control

Mar

ketin

g

Analys

is

Competitors

MarketingIntermediaries

PublicsSuppliers

Demographic-Economic

Environment

Technological-Natural

Environment

Political-Legal

Environment

Social-Cultural

Environment

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• The strategic The strategic planning planning and business and business portfolio analysis portfolio analysis processes help to processes help to identify and identify and evaluate marketing evaluate marketing opportunities.opportunities.

• The purpose of the The purpose of the marketing process is marketing process is to help the firm plan to help the firm plan how to capitalize on how to capitalize on these opportunities.these opportunities.

• Analyzing marketing Analyzing marketing opportunitiesopportunities

• Selecting target Selecting target marketsmarkets

• Developing the Developing the marketing mixmarketing mix

• Managing the Managing the marketing effortmarketing effort

Key ElementsKey Elements

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• The segmentation The segmentation process divides the process divides the total market into total market into market segments.market segments.

• Target marketingTarget marketing determines which determines which segment(s) are segment(s) are pursued.pursued.

• The The market market positioningpositioning for the for the product is then product is then determined.determined.






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Process of Selecting Target Consumers• Market SegmentMarket Segment - consumers who respond in similar - consumers who respond in similar

way to a given set of marketing efforts.way to a given set of marketing efforts.

• Market Segmentation:Market Segmentation: process of dividing a market process of dividing a market into distinct groups buyers (segments) with different into distinct groups buyers (segments) with different needs, etc. who might require separate products.needs, etc. who might require separate products.

• Target MarketingTarget Marketing: evaluating each market segment’s : evaluating each market segment’s attractiveness and selecting one or more target attractiveness and selecting one or more target segments to enter.segments to enter.

• Market Positioning:Market Positioning: products and or services products and or services clear, distinctive and desirable place relative to clear, distinctive and desirable place relative to

competing products in the minds of target segments.competing products in the minds of target segments.

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What Market Segment is this targeted to ?

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Market Segmentation

Clinique for Men Clinique for Men products are products are designed for a designed for a segment of men segment of men who will pay who will pay more for skin more for skin care products.care products.

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Target Markets

Lucky Lucky Magazine is Magazine is targeted to targeted to

younger younger women who women who are shoppersare shoppers

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Saturn CorporationProduct Positioning

• Created in 1985Created in 1985• Saturn’s mission Saturn’s mission

was to create a was to create a “Different Kind of “Different Kind of Company”Company”

• Realized people Realized people dreaded the dreaded the purchase process purchase process and established and established no-hassle, no no-hassle, no haggle pricing haggle pricing policypolicy

• Works to build Works to build loyalty from loyalty from consumerconsumer

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• By 1990 Saturn was By 1990 Saturn was winning awards from winning awards from Popular Science, Popular Science, Popular Mechanics, Popular Mechanics, AAA, MotorWeek.AAA, MotorWeek.

• First Saturn First Saturn Homecoming in Homecoming in 1994 at its 1994 at its manufacturing manufacturing complex had 38,000 complex had 38,000 Saturn owners Saturn owners attendingattending

Saturn CorporationProduct Positioning

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Scion by Toyota

www.scion.com

What is the market segment?

Target Market?

Product Positioning?

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• Competitor analysis Competitor analysis guides competitive guides competitive marketing strategy marketing strategy development.development.

• Strategy leads to tactics Strategy leads to tactics by way of the marketing by way of the marketing mix:mix: The “Four Ps” – product, The “Four Ps” – product,

price, place, promotion price, place, promotion (seller viewpoint)(seller viewpoint)

The “Four Cs” – The “Four Cs” – customer solution, cost, customer solution, cost, convenience, and convenience, and communication communication (customer viewpoint)(customer viewpoint)






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Figure 2-5:

The Marketing Mix

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• Marketing analysisMarketing analysis Provides information Provides information

helpful in planning, helpful in planning, implementation, and implementation, and controlcontrol

• Marketing planningMarketing planning Strategies and tacticsStrategies and tactics

• Marketing Marketing implementationimplementation Turns plans into actionTurns plans into action

• Marketing controlMarketing control Operating controlOperating control Strategic controlStrategic control

Marketing auditMarketing audit






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Four Marketing Management Functions

Planning

Develop Strategic

Plans

DevelopMarketing

Plans

Planning

Develop Strategic

Plans

DevelopMarketing

Plans

Implementation

Carry Out the Plans

Implementation

Carry Out the Plans

Marketing Analysis of Company’s SituationMarketing Analysis of Company’s Situation

Control

MeasureResults

EvaluateResults

TakeCorrective

Action

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Figure 2-7SWOT Analysis

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• Brand / Product Marketing Plan:Brand / Product Marketing Plan:1.1. Executive summaryExecutive summary2.2. Current marketing situationCurrent marketing situation3.3. Analysis of threats and opportunitiesAnalysis of threats and opportunities4.4. Objectives for the brandObjectives for the brand5.5. Marketing strategyMarketing strategy6.6. Action programsAction programs7.7. Marketing budgetMarketing budget8.8. Controls Controls

Marketing Management: Planning

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Figure 2-8Return on Marketing

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Measuring Effectiveness

•Return on marketing Return on marketing (marketing ROI)(marketing ROI) The net return from a The net return from a

marketing investment marketing investment divided by the costs of the divided by the costs of the investmentsinvestments

Documents

Mar 20 presentation #2