Topic 2

Chapter 2
Company and Marketing Strategy:
Partnering to Build
Customer Relationships
 Learning Outcomes

1. Explain the marketing concepts, theories and

strategies in making effective and efficient
marketing decisions.
 Learning Objectives
1. Explain companywide strategic planning and
its four steps
2. Discuss how to design business portfolios
and develop 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
 Learning Objective 1

Explain companywide strategic planning and its

four steps
 Companywide Strategic Planning:
Defining Marketing’s Role
Strategic Planning
The process of developing
and maintaining a strategic fit GOAL
between the organization’s
goals and capabilities and
its changing marketing
opportunities.

Current capabilities
 4 Steps in Strategic Planning

What is the significance of the perforated line separating the first 3 steps from
the 4th step?
 Step 1: Defining Company Mission

A mission statement is a statement of the organization’s purpose -

what it wants to accomplish in the larger environment.

• Organization’s purpose.
• As a foundation of any marketing plan.
• A clear mission statement acts as an “invisible hand”
that guides people in the organization.
• A market-oriented mission statement defines the
business in terms of satisfying basic customer needs.
 Step 2: Setting company objectives
and goals
Company needs to turn its mission into detailed objectives
for each level of management.

 Each manager should have objectives & be

responsible for reaching them.

 Marketing strategies and programs must be

developed to support these marketing
objectives.
 Step 2: Setting company objectives
and goals
Poorly stated objective:
To increase sales.
Well-stated objective:
To increase sales about RM500,000
by 2025.
Note: Open discussion
 Example:

Starbucks stated objective is:

“to establish Starbucks as the most recognized
and respected brand of coffee in the worlds.”
 Learning Objective 2

Discuss how to design business portfolios and

develop growth strategies
 Step 3: Designing the
Business Portfolio
The business portfolio is the collection of
businesses and products that make up the
company.
• The best business portfolio is the one that best fits
the company’s strengths and weaknesses to
opportunities in the environment.
• Business portfolio planning involves two steps:
1. Analyze its current business portfolio and decide
which businesses should receive more, less, or
no investment.
2. Shape the future portfolio by developing
strategies for growth and downsizing.
 Analyzing the Current Business
Portfolio
Strategic business units can be:
 Company division
 Product line within a division
 Single product or brand
Shape the Future Portfolio by Developing
Strategies for Growth and Downsizing
 A company’s objective must be “profitable growth.”
 Marketing has the main responsibility for achieving
profitable growth for the company

Growth strategies:
Downsizing strategies:
product / market
eliminate product /
expansion grid
SBUs that are not
(Product/market
profitable
development)
 Growth strategies:
Product/Market Expansion Grid
 The product/market expansion grid is
a planning tool and used in identifying
growth opportunities.

a) Market penetration
b) Market development
c) Product development
d) Diversification
 Growth strategies:
Product/Market Expansion Grid
 (A) Market Penetration
(existing product / existing market)
 Strategy:
 Making more sales to current customers without
changing its products.
 How?:
 Adding new stores in current market areas, improving
advertising, lowering prices, adding services, and etc.
Example:
 Starbucks can penetrate the market by:
a) Add new stores in current market areas to make
it easier for customer to visit.
b) Improvement in advertising, prices, service,
menu selection or store design to encourage
customers to stop more often and stay longer.
 (b) Market Development
(existing product / new market)
• Strategy:
• Identify and develop new markets for its current products.
• How?:
• Enter new demographics or geographic area with same products.
Current products
New markets New markets
New markets

Ikea Malaysia Ikea Sweden Ikea China

Example:
 Management of Starbucks can look or identify
the demographic markets ( seniors or ethnics)
and geographic markets (smaller cities) in
developing their market.

 1996 – 11 coffeehouse outside North America

 Now – 4000 coffeehouse

 (c) Product Development
(new product / existing market)
 Strategy:
 Offering modified or new products to current markets.
 How?
 Adding new sizes & flavors to the current products.
Example:
 Starbucks added Fruit Juice Frappuchino beverages
to its menu.
 To grow in more non-coffee drinkers
 Offer sandwiches to bolster its morning business.
 (d) Diversification
(new product / new market)
 Strategy:
 Starting up or buying businesses outside of its
current products and markets.
 How?:
Create new category of product or buy other business.
E.g.: Starbucks’ 1999 purchase of Hear Music and
create a new Starbucks Entertainment division.
 Downsizing strategies

 Companies must also develop strategies for

downsizing.

 When a firm finds brands/businesses that are

unprofitable or no longer fit the overall strategy, it
may prune, harvest, or divest them.
 Learning Objective 3

Explain marketing’s role in strategic planning and

how marketing works with its partners to create and
deliver customer value
 Step 4: Planning Marketing and
other functional strategies
 Marketing plays a key role in the company’s strategic
planning.
 Marketing provides a guiding philosophy—the
marketing concept.
 Marketing provides inputs to strategic planners.
 Marketing designs strategies for reaching the unit’s
objectives.
 Customer value is the key ingredient in the
marketer’s formula for success.
 In addition to customer relationship management,
marketers must also practice partner relationship
management.
 Partnering within the Company’s
Departments
 Each company department is a link in the
company’s value chain.
 Such departments (R&D, Finance, Operation and
Marketing) cooperate together to create value
chain.
 Success depends on how well the various
departments coordinate their activities.
 Ideally, a company’s different functions should
work in harmony to produce value for
customers/consumers.
 Marketers must find ways to get all departments
to “think customer/consumer”
Example:
 Wal-Mart’s goal is to create customer value &
satisfaction by providing shoppers with
products at the lowest possible prices.

 Marketers must find ways to get all

departments to “think customer” and to
develop a smooth functioning value chain.
 Marketing Strategy and the
Marketing Mix
 Marketing strategy is next—this is the broad
logic under which the company attempts to
develop profitable relationships.

 Guided by the strategy, the company develops its

marketing mix—product, price, place, and
promotion.
Marketing Strategy and the
Marketing Mix

Market
Positioning
 Learning Objective 4

Describe the elements of a customer-driven

marketing strategy and mix, and the forces that
influence it
 Customer-Driven Marketing
Strategy
 Marketing requires a deep understanding of
customers.
 Companies must divide up the total market,
choose the best segments, and design strategies
for profitably serving chosen segments.
 This process involves:
 Market segmentation
 Market targeting
 Market differentiation, and positioning.
 • Process of dividing a market into distinct
groups of buyers who have different needs,
Market
characteristics, or behaviour who might
Segmentation
require separate products or marketing
programs.
• Evaluating each market segment’s
Market
attractiveness and selecting one or more
Targeting
segments to enter.
• Differentiation is differentiating the
company’s market offering so that it gives
Market consumers more value.
Differentiation • Positioning is arranging for a product to
& Positioning occupy a clear, distinctive, and desirable
place relative to competing products in the
minds of target consumers.
 Developing an Integrated Marketing
Mix
 The marketing mix is the set of controllable,
tactical marketing tools that the firm blends to
produce the response it wants in the target market.
 The marketing mix consists of the “four Ps”:
product, price, place, and promotion.
The goods and services combination the company
Product
offers to the target market. (Consumer solution)
The amount of money customers have to pay to
Price
obtain the product. (Consumer cost)
The company activities that make the product
Place
available to target consumers. (Convenience)
The activities that communicate the merits of the
Promotion
36
product. (Communication)
 Managing the Marketing Effort

 Managing the marketing process requires the four

marketing management functions of analysis,
planning, implementation, and control.

 Marketing Analysis: Analysis should be

performed to understand the markets and
marketing environment the company faces.
 SWOT Analysis
 SWOT ANALYSIS
 SWOT Analysis is used to evaluate the
company’s strengths (S), weaknesses (W),
opportunities (O), and threats (T).
 Strengths: capabilities, resources, and
positive situational factors.
 Weaknesses: negative internal factors and
negative situational factors.
 Opportunities: favorable external factors.
 Threats: unfavorable external factors.
SWOT ANALYSIS
 (a) Internal Environment
• All controllable elements inside a firm that
influence how well the firm operates.

Strengths

▪ Physical facilities

ENVIRONMENT
▪ Quality product
INTERNAL

▪ Strong brand
▪ Financial resources
▪ Image/reputation
▪ Technology

Weaknesses
 (b) External Environment
• Elements outside the firm that may affect it either
positively or negatively.
• Firm cannot directly control external factors but can
respond to them via planning

Opportunities

ENVIRONMENT
▪ Socio cultural trend
EXTERNAL

▪ Demographic
▪ Economic
▪ Technological
▪ Political / legal
▪ Competition

Threats
 SWOT ANALYSIS

 The company should analyze its market and

marketing environment to find attractive
opportunities & identify the environmental
threats.

 Analyze company strength & weaknesses as

well as current & possible marketing actions to
determine which opportunities can be pursued.

 The goal is to match the strengths to attractive

opportunities in the environment, while
eliminating or overcoming the weaknesses
and minimizing the threats
QUESTIONS (TRUE OR FALSE)
1) The product strategy is how marketers
communicate product benefits and features to the
target market.
2) The packaging relates most closely to the product
element of the marketing mix.
3) Price is the assignment of value, or the amount
the consumer must exchange to receive the
offering.
4) The promotion element of the marketing mix
includes the design of the product.
5) Within the context of the marketing mix, place
refers to the availability of the product to the
customer at the desired time and location.
 STRUCTURED QUESTIONS

Q1. According to the growth strategies

that you have learned, identify FOUR
(4) strategies with examples that
Samsung Company could use in the
future. (8 marks)
 YouTube
 Growth strategies
https://www.youtube.com/watch?v=Frebra30H4c
 SWOT
https://www.youtube.com/watch?v=GNXYI10Po6A
 Marketing mix
https://www.youtube.com/watch?v=JIirzTdaey4
Chapter 2

The End