Marketing CHAPTER 2

PRINCIPLES OF MARKETING
MKT1014/ MKT2224
WEEK 3 – LECTURE 3
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Our Vision: To be a World Class University

Copyright © 2021, 2018, 2016 Pearson Education, Inc.
Principles of Marketing
Eighteenth Edition
Chapter 2
Company and Marketing Strategy
Partnering to Build Customer
Engagement, Value, and
Relationships

Learning Objectives
2.1 Explain company-wide strategic planning and its four steps.
2.2 Discuss how to design business portfolios and develop
growth strategies.
2.3 Explain marketing’s role in strategic planning and how
marketing works with its partners to create and deliver
customer value.
2.4 Describe the elements of a customer value-driven marketing
strategy and mix and the forces that influence them.
2.5 List the marketing management functions, including the
elements of a marketing plan, and discuss the importance of
measuring and managing marketing return on investment.

NIKE: Building Customer Value
through Brand Engagement and
Community
“Nike’s outstanding success results from much more than

just making good sports gear. The iconic company’s strategy
is to build deep engagement and a sense of community with
and between the Nike brand and its customer.”
Learning Objective 1
Explain company-wide strategic planning and its four steps.

Company-Wide Strategic Planning
(1 of 5)
Strategic planning is the process of developing and
maintaining a strategic fit between the organization’s goals
and capabilities, and its changing marketing opportunities.

(2 of 5)
Figure 2.1 Steps in Strategic Planning

(3 of 5)
The mission statement is the organization’s purpose; what
it wants to accomplish in the larger environment.
CVS Health’s overall mission is to be a “pharmacy
innovation company,” one that is “helping people on their
way to better health.” Its marketing strategies and programs
must support this mission.

Apple’s Corporate Mission Statement
Apple’s corporate mission is “to bring the best personal computing
products and support to students, educators, designers, scientists,
engineers, businesspersons and consumers in over 140 countries around
the world.”
(4 of 5)
Product- versus Market-Oriented Business Definitions
Company Product-Oriented Definition Market-Oriented Definition
Starbucks We sell coffee and snacks. We sell “The Starbucks

Experience,” one that
enriches people’s lives in
one moment, one human
being, one extraordinary cup
of coffee at a time.
Panera We sell fast-casual food in our We give customers “Food
restaurants. as it should be”: food that
tastes good; food that feels
good; food that does good
things for them and the
world around them.

(5 of 5)
Setting Company Objectives and Goals
• Business objectives
– Build profitable customer relationships
– Invest in research
– Improve profits
• Marketing objectives
– Increase market share
– Create local partnerships
– Increase promotion

Real Marketing 2.1: Airbnb’s Mission
Belong Anywhere–Don’t Stay There. Live There.

Discuss how to design business portfolios and develop growth strategies.

Designing The Business Portfolio
(1 of 8)
The business portfolio is the collection of businesses and products that make
up the company.
Portfolio analysis is a major activity in strategic planning whereby management

evaluates the products and businesses that make up the company.
Mars Inc. is not only the world’s number-one candy maker; it is also a world-
leading pet nutrition and health-care company.

(2 of 8)
Strategic business units can be a
• Company division
• Product line within a division
• Single product or brand

(3 of 8)
Analyzing The Current Business Portfolio
• Identify strategic business units (SBUs)

• Assess the attractiveness of its various SBUs
• Decide how much support each SBU deserves

(4 of 8)
Figure 2.2 The BCG Growth-Share Matrix

The best-known portfolio-planning method is the now-classic Boston Consulting Group (BCG) approach.
The growth-share matrix defines four types of SBUs.
• Stars are high-growth, high-share businesses or products requiring heavy investment to finance rapid growth.
They will eventually turn into cash cows.
• Cash cows are low-growth, high-share businesses or products that are established and successful SBUs requiring
less investment to maintain market share.
• Question marks are low-share business units in high-growth markets requiring a lot of cash to hold their share.
• Dogs are low-growth, low-share businesses and products that may generate enough cash to maintain themselves
but do not promise to be large sources of cash.

(5 of 8)
Problems with Matrix Approaches
• Difficulty in defining S B U s and measuring Over the years, ESPN has grown
market share and growth to become a huge and complex
• Time consuming brand portfolio consisting of more
than 50 different entities.
• Expensive
• Focus on current businesses, not future
planning

(6 of 8)
Figure 2.3 The Product/Market Expansion Grid

Market penetration involves making more sales to current customers without changing its original product
such as by adding new stores in current market areas to make it easier for customers to visit.
Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved.
Market development involves identifying and developing new markets for its current products.
Product development involves offering modified or new products to current markets such as by moving into
new product categories.
Diversification involves starting up or buying businesses beyond its current products and markets. For
example, the company could acquire a company that operates in different market segments with a different
product mix.
(7 of 8)
Developing Strategies for Growth and Downsizing
Strategies for growth: To maintain its incredible growth,
Starbucks has brewed up an ambitious, multipronged growth
strategy.

(8 of 8)
Developing Strategies for Growth and Downsizing
Downsizing is when a company must prune, harvest, or

divest businesses that are unprofitable or that no longer fit
the strategy.

Question 1
________ is the process of developing and maintaining a crucial fit
between the organization's goals and capabilities and its changing
marketing opportunities.
A) Benchmarking
B) SWOT analysis
C) Market segmentation
D) Strategic planning
E) Diversification
A C E
B D
Question 2
Which of the following is true with regard to strategic planning?
A) At the corporate level, the company starts the strategic planning
process by determining what portfolio of businesses and products is best
for the company.
B) A strategic plan deals with a company's short-term goals.
C) The focus of strategic planning is to define a game plan for long-run
survival and growth.
D) The strategic plan is a statement of an organization's purpose.
E) Strategic planning involves identifying segments of consumers with
identical preferences.
A C E
B D
Question 3
Which of the following is NOT a market-oriented business definition?
A) "We empower customers to realize their dreams."
B) "We make high-quality consumer food products."
C) "We sell success and status."
D) "We create the Hilton experience."
E) "We bring innovation to every home."
A C E
B D

Question 4
Which of the following best describes a strategic business unit?
A) the internal value chain of a company
B) the supply chain of a company
C) the key businesses that make up a company
D) the key channel intermediaries of a service company
E) the key competitors of a company
A C E
B D

Question 5
According to the Boston Consulting Group approach, ________ serves as
a measure of company strength in the market.
A) relative market share
B) product development
C) market diversification
D) product attribute
E) market segmentation
A C E
B D

Question 6
Which of the following is a portfolio-planning tool for identifying company
growth opportunities through market penetration, market development,
product development, or diversification?
A) BCG matrix
B) analysis of variance
C) product/market expansion grid
D) Harris matrix
E) SWOT analysis
A C E
B D

End of Chapter 2 Part – 1
✓ 2.1 Explain company-wide strategic planning and its four steps.

✓ 2.2 Discuss how to design business portfolios and develop growth
strategies.

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

Planning Marketing: Partnering to
Build Customer Relationships (1 of 3)
Partnering with Other Company Departments
Value chain is a series of departments that carry out value
creating activities to design, produce, market, deliver, and
support a firm’s products.

Partnering with Other Company Departments
The value chain: Walmart’s ability to help you “Save Money. Live Better.” by
offering the right products at lower prices depends on the contributions of people
in all of the company’s departments.

Partnering with Others in the Marketing System
Value delivery network is made up of the company,
suppliers, distributors, and ultimately customers who partner
with each other to improve performance of the entire system.

Describe the elements of a customer value-driven marketing strategy and mix and the forces that
influence them.

Marketing Strategy and the Marketing
Mix (1 of 7)

Mix (2 of 7)
Customer Value-Driven Marketing Strategy
Marketing strategy is the marketing logic by which the
company hopes to create customer value and achieve
profitable customer relationships.

Mix (3 of 7)
Market segmentation is the division of a market into distinct
groups of buyers who have different needs, characteristics,
or behaviors and who might require separate products or
marketing mixes.
Market segment is a group of consumers who respond in a
similar way to a given set of marketing efforts.

Mix (4 of 7)
Market targeting is the process of evaluating each market
segment’s attractiveness and selecting one or more
segments to enter.
Market positioning is the arranging for a product to occupy
a clear, distinctive, and desirable place relative to competing
products in the minds of target consumers.
Differentiation begins the positioning process.

Mix (5 of 7)
Positioning is arranging for a product to Positioning: Sharable urban
occupy a clear, distinctive, and desirable transportation company Lime
place relative to competing products from positions itself as “Smart mobility for
competing brands and give them the the modern world.” Such simple
greatest advantage in their target markets. statements form the backbone of a
brand’s marketing strategy.

Mix (6 of 7)
Developing an Integrated Marketing Mix
Marketing mix is the set of controllable, tactical marketing
tools—product, price, place, and promotion—that the firm
blends to produce the response it wants in the target market.

Mix (7 of 7)
Figure 2.5 The Four Ps of the Marketing Mix

List the marketing management functions, including the elements of a marketing plan, and
discuss the importance of measuring and managing marketing return on investment.

Managing the Marketing Effort (1 of 4)
Figure 2.6 Manging Marketing: Analysis, Planning,
Implementation, and Control

Figure 2.7 SWOT Analysis: Strengths (S), Weaknesses (W),
Opportunities (O), and Threats (T)

Market Planning—Parts of a Marketing Plan
• Executive summary
• Marketing situation
• Threats and opportunities
• Objectives and issues
• Marketing strategy
• Action programs
• Budgets
• Controls

Marketing Implementation
• Turning marketing strategies and plans into marketing

actions to accomplish strategic marketing objectives
• Addresses who, where, when, and how

Measuring and Managing Return on
Marketing Investment (1 of 2)
Return on Marketing Investment (Marketing ROI)
• Net return from a marketing investment divided by the
costs of the marketing investment
• Measurement of the profits generated by investments in
marketing activities

Measuring and Managing Return on
Marketing Investment (2 of 2)
Figure 2.8 Marketing Return on Investment

Question 1
Marketing plays a key role in the company's strategic planning in all of
these ways EXCEPT ________.
A) providing input to identify attractive market opportunities
B) designing new products from scratch
C) creating customer value and building profitable relationships with
customer groups
D) designing strategies for reaching a unit's objective
E) providing a guiding philosophy
A C E
B D
Question 2
Each department in a company that carries out value-creating activities
can be thought of as a link in the company's ________.
A) channel of intermediaries
B) external value stream
C) demand chain
D) internal value chain
E) supplier chain
A C E
B D
Question 2
Each department in a company that carries out value-creating activities
can be thought of as a link in the company's ________.
A) channel of intermediaries
B) external value stream
C) demand chain
D) internal value chain
E) supplier chain
A C E
B D
Question 3
Which of the following is an element of the marketing mix?
A) place
B) education
C) needs
D) wants
E) esteem
A C E
B D
Question 4
Which of the following is true with regard to a SWOT analysis?
A) It classifies SBUs into four distinct categories.
B) It measures customer response to a new product.
C) It evaluates the company's overall strengths.
D) It evaluates the growth potential of a market segment.
E) It ignores the threats faced by a company while assessing its situation
in the market.
A C E
B D
End of Chapter 2 Part – 2
✓ 2.3 Explain marketing’s role in strategic planning and how marketing

works with its partners to create and deliver customer value.
✓ 2.4 Describe the elements of a customer value-driven marketing
strategy and mix and the forces that influence them.
✓ 2.5 List the marketing management functions, including the elements
of a marketing plan, and discuss the importance of measuring and
managing marketing return on investment.

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PRINCIPLES OF MARKETING

Our Vision: To be a World Class University

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

“Nike’s outstanding success results from much more than

Our Vision: To be a World Class University

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Company Product-Oriented Definition Market-Oriented Definition

Starbucks We sell coffee and snacks. We sell “The Starbucks

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Our Vision: To be a World Class University

Portfolio analysis is a major activity in strategic planning whereby management

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

• Identify strategic business units (SBUs)

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Downsizing is when a company must prune, harvest, or

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

✓ 2.1 Explain company-wide strategic planning and its four steps.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Our Vision: To be a World Class University

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Our Vision: To be a World Class University

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Our Vision: To be a World Class University

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

• Turning marketing strategies and plans into marketing

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

✓ 2.3 Explain marketing’s role in strategic planning and how marketing

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

This work is protected by United States copyright laws and

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

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