Relationship

Development Strategies

Partnering to Build Customer

Relationships

Lesson 7
 Rest Stop: 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 and discuss the
importance of measuring and managing marketing
ROMI.

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2-2

 First Stop
NIKE: Creating Brand Experiences & Community
Nike’s Early Success Challenge and Solution
• 1970s: Nike’s earliest success • Late 1990s: Nike became a
was the waffle trainer and by victim of its own success; sales
1979 the firm owned 50% of slipped, ad creativity declined &
U.S. running shoe market. customer relationships cooled.
• 1980s: Endorsements, • Nike Turnaround: Refocused
promotional events, and heavy on product innovation, revised
ad spending on “Just Do It” mission statement, sought
campaign revolutionized sports deeper, stronger, customer
marketing. Nike built customer relationships via interactions
relationships by marketing a with customers.
way of life.
• 1990s: Nike Swoosh logo
• Building Brand Experiences:
Reduced mass media spending
became prominent; firm in favor of customer community
expanded into other sports and building via social networking
product offerings. and in-person events, resulting
in large market share gains.
Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2-3
 Strategic Planning Defined

• The process of developing and

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

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2-4

Steps in Strategic Planning Process

• Corporate level:
 Defining the company mission.
 Setting objectives and goals.
 Designing the business portfolio.

• Business unit, product, and market

level:
 Planning marketing strategy as well as
other functional strategies.

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2-5

 The Mission Statement Defined

• A mission statement is a statement of

the organization’s purpose–what it
wants to accomplish in the larger
environment.
 Example: Nike’s mission is “to bring
inspiration and innovation to every
athlete* in the world (*if you have a
body, you are an athlete).”

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2-6

 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?

• Mission statements should be market

oriented, not product oriented.

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2-7

 The Mission Statement

• In addition to being market-oriented, well-

defined mission statements should be:
 Meaningful.
 Specific.
 Motivating.
 Based on the firm’s strengths in the
marketplace.
 Focused on customers and the customer
experience rather than on sales and profits.

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2-8

 Setting Firm Objectives and Goals

• The mission should be translated into

supporting objectives for each level of
management.
 Creates a hierarchy of objectives that are
consistent with one another. For
example:
• Business objective: Increase profits.
• Marketing objective: Increase market share
of domestic and international markets.
Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2-9
 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) and decide
which SBUs should receive more, less, or no
investment.
 Develop strategies for growth and downsizing
that will shape the future business portfolio.

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 10

 Strategic Business Unit (SBU)

• Strategic business unit:

A unit of the company that has a
separate mission and objectives and
that can be planned independently from
other company businesses.
 An SBU can be a company division, a
product line within a division, or
sometimes a single product or brand.

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 11

 Portfolio Analysis

• Portfolio analysis:
 Process by which management
evaluates the products and businesses
making up the company.
 Resources are directed toward more
profitable businesses while weaker ones
are phased out or dropped.

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 12

 Portfolio Analysis
• Standard portfolio analysis evaluates
SBUs on two important dimensions:
 Attractivenessof SBUs market or industry.
 Strength of SBUs position within that market
or industry.
• BCG Growth Share Matrix uses market
growth rate and relative market share to
classify SBUs into four groups.

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 13

 BCG Growth-Share Matrix
• Stars: High-share of high-growth market.
 Strategy: Build into cash cow via investment.
• Cash cows: High-share of low-growth market.
 Strategies: Maintain or harvest for cash to build
STARS.
• Question marks: Low-share of high-growth
market.
 Strategies: Build into STAR via investment OR
reallocate funding and let slip into DOG status.
• Dogs: Low-share of low-growth market.
 Strategies: Maintain or divest.

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 14

 Problems with Matrix Approaches

• Several problems exist:

 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.
• These problems have led to changes in the
strategic planning process used by firms.

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 15

 Product/Market Expansion Grid

• The product/market expansion grid can

identify growth opportunities.
 Market penetration
• Existing markets, existing products
 Market development
• New markets, existing products
 Product development
• Existing markets, new products
 Diversification
• New products, new markets

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 16

 Downsizing

• Downsizing reduces the business

portfolio by eliminating products of
business units that are not profitable
or that no longer fit the company’s
overall strategy.
 Many reasons exist for downsizing.

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 17

 Planning Marketing

• Marketing plays a key role in strategic

planning:
 Provides a guiding philosophy.
• The marketing concept
 Provides input to strategic planners.
• Identifies opportunities
 Designs strategies to reach objectives.

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 18

 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.

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 19

 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.
Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 20
 Marketing Strategy
and the Marketing Mix

• Goal: create value for customers and

build customer relationships.
• Marketing strategy decisions include:
 Market segmentation and targeting
 Differentiation and positioning

• Marketing strategy must guide

marketing mix decisions.
Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 21
Market Segmentation and Targeting
• Segmentation:
 The process of dividing a market into distinct
groups of buyers who have different needs,
characteristics, or behaviors and who might
require separate products or marketing
programs.
• Targeting:
 Involves evaluating each market segment’s
attractiveness and selecting one or more
segments to enter.

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 22

 Differentiation and Positioning

• Positioning:
 Arranging for a product to occupy a clear,
distinctive, and desirable place relative to
competing products in the minds of target
consumers.
• Differentiation:
 Creating superior customer value by
actually differentiating the market offering.

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 23

 The Marketing Mix

• The set of controllable, tactical

marketing tools that the firm blends to
produce the response it wants in the
target market.
 These tools are often called the 4 P’s:
• Product
• Price
• Place (distribution)
• Promotion
Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 24
 The Marketing Mix

• Product: • Place:
Variety, features, Channels, coverage,
brand name, quality, logistics, locations,
design, packaging, transportation,
and services. assortments, and
• Promotion: inventory.
Advertising, sales • Price:
promotion, public List price, discounts,
relations, and allowances, payment
personal selling. period, and credit terms.
Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 25
 The 4 Ps and the 4 Cs
of the Marketing Mix

• 4 Ps – • 4 Cs –
Seller’s View Buyer’s View
 Product  Customer Solution
 Price  Customer Cost
 Place  Convenience
 Promotion  Communication

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 26

 Managing the Marketing Effort

• Four marketing management functions:

 Marketing analysis
• SWOT analysis is key.
 Marketing planning
• Create marketing plan consistent with strategic
plan.
 Marketing implementation
• Carry out the plans successfully.
 Marketing control
• Measure and evaluate results; take corrective
action as needed.

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 27

 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.
Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 28
 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.
Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 29
 Contents of a Marketing Plan
1. Executive summary
2. Current marketing situation
3. Analysis of threats and opportunities
4. Objectives and issues
5. Marketing strategy
6. Action programs
7. Budgets
8. Controls
Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 30
 Marketing Implementation

• Turns marketing plans into marketing

actions by addressing:
 Who
 Where
 When
 How

• Implementation can be difficult but is

critical to success.

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 31

 Organizing Marketing Departments

• Chief marketing officer (CMO) positions

are becoming more common.
• Functional organization:
 Each marketing activity is headed by a
functional specialist.
• E.g., sales manager, advertising manager,
marketing research manager, etc.
• Geographic organization:
 Sales and marketing people are assigned to
specific countries, regions, and/or districts.

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 32

 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.
Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 33
 Marketing Control Process

• Marketing control involves four steps:

 Setgoals
 Measure performance
 Evaluate performance
 Take corrective action
• May require changing action programs or
goals.

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 34

 Marketing Control Process

• Operating control
 Evaluates performance against the
annual plan and takes corrective action.
• Strategic control
 Evaluates whether strategies match
opportunities.

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 35

 Return on Marketing Investment

• Return on marketing investment is

assessed using one or more methods:
 Standard marketing performance
measures (marketing dashboards):
• Brand awareness, sales, market share.
 Customer-centered measures:
• Customer acquisition, customer retention,
customer lifetime value, customer equity.

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 36

 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 and discuss the
importance of measuring and managing marketing
ROMI.

Copyright 2011, Pearson Education Inc. Publishing as Prentice-Hall 2 - 37