Company and Marketing Strategy - Partnering to Build Customer Relationships

Chapter 2

Rest Stop: Previewing the Concepts Explain companywide strategic planning and

its four steps Discuss how to design business portfolios and growth strategies Explain marketings role in strategic planning and how marketing works with its partners to create and deliver customer value

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Rest Stop: Previewing the Concepts

Describe the elements of a customer-driven
marketing strategy and mix, and the forces that influence it List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing return on marketing investment

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First Stop - McDonalds: A CustomerFocused Plan to Win Strategy

Loss of identity
Rapid expansion causes McDonalds to lose product focus Faces criticism for nutritional quality and service standards

The turnaround
From being the worlds best quickservice restaurant to being our customers favorite place and way to eat Increase in share price, sales, and profits
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Strategic planning
The process of developing and maintaining a strategic fit between the organizations goals and capabilities and its changing marketing opportunities

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Figure 2.1 - Steps in Strategic Planning

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Mission statement
A statement of the organizations purpose what it wants to accomplish in the larger environment

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The Mission Statement

Questions the mission statement should answer
What is our business? Who is our customer? What do consumers value? What should our business be?

Mission statements should be marketoriented, not product-oriented

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Fuel for Thought

Evaluate the following mission statement for a real estate agency against the criteria previously discussed:

We sell houses and commercial property.

Rewrite the mission statement.

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Setting Company Objectives and Goals

The mission should be translated into supporting objectives for each level of management Marketing strategies and programs must be developed to support these objectives

Heinz ties its diverse product portfolio together under the mission: As the trusted leader in nutrition and wellness, Heinzthe original Pure Food Company is dedicated to the sustainable health of people, the planet, and our company
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Business portfolio
The collection of businesses and products that make up the company

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Designing the Business Portfolio

The company must
Analyze its current business portfolio or strategic business units (SBUs) and decide which SBUs should receive more, less, or no investment Develop strategies for growth and downsizing that will shape the future business portfolio

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Marketing at Work
ESPNs business portfolio includes
Television Radio Digital media Publishing Event management

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Portfolio analysis
The process by which management evaluates the products and businesses that make up the company

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Portfolio Analysis
Purpose of portfolio analysis
To direct resources toward more profitable businesses while phasing out or dropping weaker ones

Basis of evaluation
Attractiveness of SBUs market or industry Strength of SBUs position within that market or industry

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Figure 2.2 - The BCG Growth-Share Matrix

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BCG Growth-Share Matrix

Strategies for categories of the BCG Matrix
Stars need heavy investments to finance their rapid growth Cash cows need less investment to hold their market share Question marks require a lot of cash to hold their share, let alone increase it Dogs do not promise to be large sources of cash

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Figure 2.3 - The Product/Market Expansion Grid

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Market penetration
Increasing sales of current products to current market segments without changing the product

Market development
Identifying and developing new market segments for current company products

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Product development
Offering modified or new products to current market segments

Diversification
Starting up or acquiring businesses outside the companys current products and markets

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Developing Strategies for Growth

Under Armour has grown at a blistering rate under its multipronged growth strategy

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Downsizing
Reduces the business portfolio by eliminating products of business units that are not profitable or that no longer fit the companys overall strategy Reasons for downsizing
Rapid growth of the company Lack of experience in a market Change in market environment Decline of a particular product
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Planning Marketing
Marketing plays a key role in strategic planning by
Providing a guiding philosophy for the company strategy Providing inputs to strategic planners Designing strategies to help individual business units reach their objectives

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Creating Customer Value

Marketers must practice partner relationship management
Working with partners internally within the company can create an effective value chain Working with external partners in the marketing system helps to form a superior value delivery network

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Value chain
The series of internal departments that carry out value-creating activities to design, produce, market, deliver, and support a firms products

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Partnering with Other Company Departments

Wal-Marts ability to help buyers Save money. Live better depends on the contributions of its value chain people in all of the companys departments

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Value delivery network

The network made up of the company, its suppliers, its distributors, and, ultimately, its customers who partner with each other to improve the performance of the entire system
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Marketing strategy
The marketing logic by which the company hopes to create customer value and achieve profitable customer relationships

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Figure 2.4 - Managing Marketing Strategies and the Marketing Mix

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Market segmentation
Dividing a market into distinct groups of buyers who have different needs, . characteristics, or behaviors, and who might require separate products or marketing programs

Market segment
A group of consumers who respond in a similar way to a given set of marketing efforts
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Market targeting
The process of evaluating each market segments attractiveness and selecting one or more segments to enter

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

Differentiation
Actually differentiating the market offering to create superior customer value
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Market Differentiation and Positioning

Burts Bees offers Earth friendly natural personal care products for The Greater Good, a deceptively simple statement that forms the backbone of its marketing strategy
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Marketing at Work
Allegiants Go where they aint strategy focuses on serving niches neglected by competitors Targets customers who might not otherwise fly

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Marketing mix .
The set of tactical marketing tools product, price, place, and promotion that the firm blends to produce the response it wants in the target market

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Figure 2.5 - The Four Ps of the Marketing Mix

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The 4 Ps and the 4 Cs of the Marketing Mix

4 Ps - Sellers view 4 Cs - Buyers view
Product Price Place Promotion Customer Solution Customer Cost Convenience Communication

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Figure 2.6 - Managing Marketing: Analysis, Planning, Implementation, and Control

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Figure 2.7 - SWOT Analysis

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Contents of a Marketing Plan

Executive summary Current marketing situation Analysis of threats and opportunities Objectives and issues Marketing strategy Action programs Budgets Controls
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Fuel for Thought

External factors including trends stemming from the economic, technological, social, legal-political, and competitive environments may represent threats or opportunities to many businesses How have recent technological changes impacted the marketing of various goods and services?
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Marketing implementation
Turning marketing strategies and plans into marketing actions to accomplish strategic marketing objectives

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Organizing Marketing Departments

Functional organization
Each marketing activity is headed by a functional specialist

Geographic organization
Sales and marketing people are assigned to specific countries, regions, and/or districts

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Marketing Department Organization

Product management organization
One person is given responsibility for complete strategy and marketing program for a single product

Market or customer organization

Manager responsible for particular market or type of customer (e.g., government buyers)

Combination organization
Uses some combination of the previous four approaches
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Marketing control
Measuring and evaluating the results of marketing strategies and plans and taking corrective action to ensure that the objectives are achieved

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Marketing Control
Operating control
Evaluates performance against the annual plan and takes corrective action

Strategic control
Evaluates whether strategies match opportunities
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Return on Marketing Investment

The net return from a marketing investment (Marketing ROI) divided by the costs of the marketing investment Marketing ROI is assessed using
Standard marketing performance measures
Brand awareness, sales, market share

Customer-centered measures
Customer acquisition, customer retention, customer lifetime value, customer equity
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Figure 2.8 - Return on Marketing Investment

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Rest Stop: Reviewing the Concepts Explain companywide strategic planning and

its four steps Discuss how to design business portfolios and growth strategies Explain marketings role in strategic planning and how marketing works with its partners to create and deliver customer value

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Rest Stop: Reviewing the Concepts Describe the elements of a customer-driven

marketing strategy and mix, and the forces that influence it List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing return on marketing investment

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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.

Copyright 2013 Pearson Education, Inc. Publishing as Prentice Hall

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