Because learning changes everything.

CHAPTER 2
Developing Successful Organizational
and Marketing Strategies

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 TODAY’S ORGANIZATIONS
KINDS OF ORGANIZATIONS

Organizations are legal entities of people sharing a common

mission
Offerings that create value:
1. For-profit organization (business firm)
2. Nonprofit organization
3. Government agency

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 TODAY’S ORGANIZATIONS
STRATEGY AND ORGANIZATIONAL STRUCTURE

Strategy – takes into account limited

resources
Strategy helps organizations focus its
efforts
Marketing helps set direction, and
move organization

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 TODAY’S ORGANIZATIONS
STRATEGY AND ORGANIZATIONAL STRUCTURE
Large organizations are extremely complex
Three levels with strategies linked to
marketing:
1. Corporate level – top management directs
overall strategy for entire organization
2. Strategic Business Unit (SBU)level –
manages a portfolio or group of businesses
3. Functional level – Departments and groups
that create value for the organization
• Cross-functional teams – People from
different department.
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 FIGURE 2-1 The board of directors oversees the three levels of
strategy in organizations: corporate, business unit, and functional

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 FIGURE 2-2 Visionary organizations use key elements
to

(1) establish a foundation (2) set a direction using (3) strategies that enable them
to develop and market their
products successfully

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 STRATEGY IN VISIONARY ORGANIZATIONS
ORGANIZATIONAL FOUNDATION (WHY)
Organizations exist to create value for someone
Organizational purpose – describes why it exists,
problems to solve, who it wants to be
Core values – fundamental principles that guide
conduct
• Stakeholders – employees, shareholders, BOD,
suppliers, etc.
Mission or vision of organization’s function in
society
• Mission Statement
Organizational culture
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An organizational culture consists of the set of values, ideas, attitudes, and
norms of behavior that is learned and shared among the members of an
organization
A mission is a statement of the organization’s function in society that often
identifies its customers, markets, products, and technologies. The term is often
used interchangeably with vision

Core values are the fundamental, passionate, and enduring principles of an

organization that guide its conduct over time

Goals or objectives are the statements of an accomplishment of a task to be

achieved, often by a specific time
Strategy is an organization’s long-term course of action designed to deliver a
unique customer experience while achieving its goals
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 Airbnb’s Mission

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Belong Anywhere–Don’t Stay There. Live
 CVS’s Mission
C V S 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.

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 Company needs to turn its broad mission into detailed supporting
objectives for each level of management

CVS
Reshaped and broadened its lines of


products and services


It stopped selling tobacco products –
not compatible with “better health”
Expanded “MinuteClinic Services


Tailored advertising to customers



managing chronic and specialty health

conditions

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 Mission Statement

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 FIGURE 2-2 Visionary organizations use key elements
to

(1) establish a foundation (2) set a direction using (3) strategies that enable them
to develop and market their
products successfully

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 STRATEGY IN VISIONARY ORGANIZATIONS
ORGANIZATIONAL DIRECTION (WHAT)
Business – the industry or market sector of an
organization
• What do we do?
• What business are we really in?
Business model – the strategies an organization
develops to provide value to customers

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 STRATEGY IN VISIONARY ORGANIZATIONS
ORGANIZATIONAL DIRECTION (WHAT)

Goals or objectives – statements of accomplishments to achieve

• Profit
• Sales (dollars or units)
• Market Share
• Quality
• Customer satisfaction
• Employee welfare
• Social responsibility
• Efficiency (nonprofit organizations)

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 FIGURE 2-2 Visionary organizations use key elements
to

(1) establish a foundation (2) set a direction using (3) strategies that enable them
to develop and market their
products successfully

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 SBU – Strategic Business Unit

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 STRATEGY IN VISIONARY ORGANIZATIONS
ORGANIZATIONAL STRATEGIES (HOW)
Strategies can vary by level and product offering:
• Corporate
• SBU By Level
• Functional
• Product
• Service By Product
• Idea
Marketing plan – roadmap of marketing actions for time period
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 SETTING STRATEGIC DIRECTIONS
A LOOK AROUND: WHERE ARE WE NOW?
Answer two difficult questions:
1. Where are we now?
2. Where do we want to go?
Competencies
What do we do best?
Competitive advantage
Where are we strong vs competitors?
Customers’ preferences
Difference from competitors
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 SETTING STRATEGIC DIRECTIONS
WHERE DO WE WANT TO GO?
Business portfolio analysis (BCG Matrix)
1. Question marks: Low share of high-growth market
2. Stars: High share of high-growth markets
3. Cash cows: Generate large amounts of cash
4. Dogs: Low share of slow-growth markets
Business portfolio analysis is a technique that
managers use to quantify performance measures and
growth targets to analyze their firms’strategic business
units (SBUs) as though they were a collection of
separate investments

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 The B C G Growth-Share Matrix

10 circles represent 10 current SBUs

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 FIGURE 2-4 BCG business portfolio analysis for Apple’s consumer
SBUs

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 B C G and Product Life Cycle

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 SETTING STRATEGIC DIRECTIONS
WHERE DO WE WANT TO GO?

Diversification Analysis - The Product/Market Expansion Grid

1. Market penetration: Increase sales of current product in current markets
2. Market development: Sell current products to new markets
3. Product development: Sell new products to current markets
4. Diversification: Develop new products to sell in new market

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 Diversification Analysis

Diversification analysis is a technique that helps a firm search for

growth opportunities from among current and new markets as well as
current and new products

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 FIGURE 2-5 Four market-product strategies: alternative ways to
expand sales revenues for Ben & Jerry’s using diversification
analysis

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 Portfolio Planning
Strategies for growth: To maintain its incredible growth,
Starbucks has brewed up an ambitious, multipronged growth
strategy
Market Market
penetration Development Diversification

Product
Development

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 THE STRATEGIC MARKETING PROCESS

Strategic marketing process – allocates marketing mix resources to reach its

target markets and achieve competitive advantage
3 phases:
Planning, Implementation, and Evaluation
Four principles and assumptions:
1. Customers are different
2. Customers change
3. Competitors change and react
4. Organizational resources are limited
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 FIGURE 2-6 The strategic marketing process has three phases:
Planning, Implementation, and Evaluation

STP (9-10)

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 THE STRATEGIC MARKETING PROCESS
THE PLANNING PHASE
Step 1: Conduct a situation analysis (SWOT) (Chapter 2-8)
Situation analysis
A situation analysis involves taking stock of where the firm or product has been
recently, where it is now, and where it is headed in terms of the organization’s
marketing plans and the external forces and trends affecting it
SWOT analysis
A SWOT analysis is an acronym describing an organization’s appraisal of its
internal Strengths and Weaknesses and its external Opportunities and Threats

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 SWOT Analysis

SWOT analysis
• Identify changes and trends in the
industry
• Analyze current and potential
competitors
• Asses the organization and available
resources
• Research the current and prospect
customers
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 THE STRATEGIC MARKETING PROCESS
THE PLANNING PHASE
Step 1: Situation (SWOT) analysis SWOT Analysis actions

Build on a strength

Correct a weakness

Exploit an opportunity

Avoid a disaster-laden threat

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 FIGURE 2-7 Ben & Jerry’s SWOT analysis that serves as the basis
for management actions regarding growth

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 THE STRATEGIC MARKETING PROCESS
THE PLANNING PHASE
Step 2: Develop a market-product focus, customer value proposition, and goals (Chapter
9-10)
Market segmentation
Market segmentation involves aggregating prospective buyers into groups, or segments, that
(1) have common needs and
(2) will respond similarly to a marketing action
Customer value proposition
- the cluster of benefits that an organization promises customers to satisfy their needs
Points of difference
- those characteristics of a product that make it superior to competitive substitutes

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 Customer Value-Driven Marketing Strategy

Market Segmentation

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 Customer Value-Driven Marketing Strategy

Market Segment

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 Customer Value-Driven Marketing Strategy

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 FIGURE 2-8 Consumers value important customer experiences

Customer Value Proposition

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 Points of Difference

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 THE STRATEGIC MARKETING PROCESS
THE PLANNING PHASE
Step 3: Design a marketing program
(Chapter 10-21)
• Product strategy
• Price strategy
• Promotion strategy
• Marketing
Place (distribution) strategy
strategy is the means by
which a marketing goal is to be
achieved, usually characterized by a
specified target market and a
marketing program to reach it
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 FIGURE 2-9 The four Ps elements of the marketing mix must be
blended to produce a cohesive marketing program

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