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Chapter 2: Company and Marketing Strategy

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Josh Johnstone

on 3 October 2014

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Transcript of Chapter 2: Company and Marketing Strategy

Company and Marketing Strategy
Partnering to Build Customer Relationships

Chapter 2
Strategic Planning...
Strategic planning is the process of developing and maintaining a strategic fit between the organization’s goals, capabilities and its changing marketing opportunities
Strategic Planning: Defining a Market-Oriented Mission



Strategic Planning: Defining a Market-Oriented Mission
Setting Company Objectives and Goals
Steps in Strategic Planning
Mission: is to organize the world’s information and make it universally accessible and useful.
Designing the Business Portfolio
Business Portfolio: The collection of businesses and products that make up the company
Portfolio Analysis: A major activity in strategic planning whereby management evaluates the products and businesses that make up the company
Analyzing the Current Business Portfolio
Strategic business (SBU)
Company division
Product line within a division
Single product or brand

Analyzing the Current Business Portfolio



Companywide Strategic Planning:
Problems with Matrix Approaches


Difficulty in defining SBUs and measuring market share and growth
Time consuming
Focus on current businesses, not future planning
Expensive
Product/market expansion grid: A tool for identifying company growth opportunities
Developing Strategies for Growth and Downsizing
Value chain is a series of departments that carry out value-creating activities to design, produce, market, deliver, and support a firm’s products


Marketing: Partnering to Build Customer Relationships

Designing a Customer-Driven Marketing Strategy
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
Marketing Strategy and the Marketing Mix
Marketing Strategy and the Marketing Mix
Market segmentation: The division of a market into distinct groups of buyers who have different needs, characteristics, or behavior and who might require differentiated products
Market segment: A group of consumers who respond in a similar way to a given set of marketing efforts
Marketing Strategy and the Marketing Mix
Market targeting: 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 the target consumer

Marketing Strategy and the Marketing Mix
Marketing mix: The set of controllable tactical marketing tools (4Ps) that the firm blends to produce the response it wants in the target market
Product = Customer solution
Price = Customer cost
Place = Convenience
Promotion = Communication

4P's...Again (Customer Centric this time)
Managing the Marketing Effort
Managing the marketing function begins with a complete analysis of the company’s situation.
SWOT analysis
Marketing Implementation




Marketing implementation: The process that turns marketing plans into marketing actions to accomplish strategic marketing objectives.
Marketing planning: addresses the what and why of marketing activities,
Implementation: addresses the who, where, when, and how.
Marketing Department Organization
Functional organization: This is the most common form of marketing organization with different marketing functions headed by a functional specialist.
Geographic organization: Useful for companies that sell across the country or internationally. Managers are responsible for developing strategies and plans for a specific region.
Marketing Control
Controlling
Evaluation
Operating control
Strategic control
Corrective action
Return on Marketing Investment (Marketing ROI)


Return on marketing investment
is net return from a marketing investment divided by the costs of the marketing investment.
provides a measurement of the profits generated by investments in marketing activities.

The mission statement is the organization’s purpose, what it wants to accomplish in the larger environment
Market-oriented mission statement defines the business in terms of satisfying basic customer needs
Companywide Strategic Planning:
Stars: high-growth, high-share businesses or products requiring heavy investment to finance rapid growth. They will eventually turn into cash cows.

Companywide Strategic Planning:
Cash cows: Low-growth, high-share businesses or products that are established and successful SBUs requiring less investment to maintain market share.

Companywide Strategic Planning:
Question marks: Low-share business units in high-growth markets requiring a lot of cash to hold their share.

Companywide Strategic Planning:
Dogs: 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.
Market penetration is a growth strategy increasing sales to current market segments without changing the product
Market development is a growth strategy that identifies and develops new market segments for current products

Developing Strategies for Growth and Downsizing
Product development is a growth strategy that offers new or modified products to existing market segments
Diversification is a growth strategy through starting up or acquiring businesses outside the company’s current products and markets
Developing Strategies for Growth and Downsizing
Downsizing is the reduction of the business portfolio by eliminating products or business units that are not profitable or that no longer fit the company’s overall strategy
Developing Strategies for Growth and Downsizing
Designing a Customer-Driven Marketing Strategy
Marketing can't do it alone. Under the company-wide strategic plan, marketers must work closely with other departments to form an effective internal company value chain. They must also work with other companies in the marketing system to create an overall external value delivery network that jointly serves customers.
Strategic Planning: Defining a Market-Oriented Mission
Mission Statement Should:
Not be myopic in product terms
Meaningful and specific
Motivating
Emphasize the company’s strengths
Contain specific workable guidelines
Not be stated as making sales or profits
Defining a mission begins with the following questions: What is our business? Who is the customer? What do our consumers value? What should our business be?
Designing a Customer-Driven Marketing Strategy
Marketing plays a key role in the company’s strategic planning:
First, marketing provides a guiding philosophy—the marketing concept—that suggests the company strategy should revolve around building profitable relationships with important consumer groups.
Second, marketing provides inputs to strategic planners by helping to identify attractive market opportunities and assessing the firm’s potential to take advantage of them.
Third, within individual business units, marketing designs strategies for reaching the unit’s objectives. Once the unit’s objectives are set, marketing’s task is to help carry them out profitably.
Marketing Strategy and the Marketing Mix
Useful Segments:
Geographic
Demographic
Psychographic
Behavioral
Marketing Strategy and the Marketing Mix
A company can offer greater customer value by either charging lower prices than competitors or offering more benefits to justify higher prices.
But....if the company promises greater value, it must then deliver that greater value. Effective positioning begins with differentiation
The marketing mix consists of everything the firm can do to influence the demand for its product.
Many managers think that “doing things right” (implementation) is as important as, or even more important than, “doing the right things” (strategy). The fact is that both are critical to success
Marketing Department Organization
Product management organization: Useful for companies with different products or brands. Managers are responsible for developing strategies and plans for a specific product or brand.
Customer management organization: involves a customer focus and not a product focus for managing customer profitability and customer equity.
Marketing Department Organization
Market or customer management organization: Useful for companies with one product line sold to many different markets and customers. Managers are responsible for developing strategies and plans for their specific markets or customers.
Marketing Control
Evaluation
Management first sets specific marketing goals. It then measures its performance in the marketplace and evaluates the causes of any differences between expected and actual performance
Companywide Strategic Planning: Defining Marketing’s Role
Designing the Business Portfolio
Planning Marketing: Partnering to Build Customer Relationships
Marketing Strategy and the Marketing Mix
Managing the Marketing Effort
Measuring and Managing Return on Marketing Investment

Marketing Control
Operating Control
Checking ongoing performance against the annual plan and taking corrective action when necessary. Its purpose is to ensure that the company achieves the sales, profits, and other goals set out in its annual plan. It also involves determining the profitability of different products, territories, markets, and channels.
Marketing Control
Strategic Control
Strategic control involves looking at whether the company’s basic strategies are well matched to its opportunities. Marketing strategies and programs can quickly become outdated, and each company should periodically reassess its overall approach to the marketplace.
Marketing Control
Corrective Action
Close the gaps between goals and performance. This may require changing the action programs or even changing goals.
Full transcript