This document discusses marketing strategy and planning. It explains that marketing plays a key role in strategic planning by providing customer insights and helping design business unit strategies. Marketing also partners with other departments to create customer value through the value chain and value network. Effective marketing strategy involves market segmentation, targeting, positioning and an integrated marketing mix. Managing marketing requires analyzing markets, planning strategies, implementing plans, and controlling performance through metrics like return on marketing investment.
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Chapter 2
1. Company and Marketing Strategy
Partnering to Build Customer
Relationships
Chapter 2
Priciples of Marketing
by Philip Kotler and Gary Armstrong
PEARSON
2. 1
Companywide Strategic Planning: Defining
Marketingâs Role
Explain company-wide strategic planning and its four
steps.
2
Designing the Business Portfolio
Discuss how to design business portfolios and
develop growth strategies.
Objective Outline
3. 3
Planning Marketing: Partnering to Build
Customer Relationships
Explain Marketingâs role in strategic planning and
how marketing works with its partners to create and
deliver customer value.
4
Marketing Strategy and the Marketing Mix
Describe the elements of a customer-driven marketing
strategy and mix and the forces that influence it.
Objective Outline
4. 5
Managing the Marketing Effort
Measuring and Managing Return on
Marketing Investment
List the marketing management functions, including
the elements of a marketing plan, and discuss the
importance of measuring and managing return on
marketing investment.
Objective Outline
5. Companywide Strategic Planning:
Defining Marketingâs Role
ďŹ Strategic planning is the process of developing and
maintaining a strategic fit between the organizationâs goals and
capabilities and its changing marketing opportunities.
ďŹ Companies usually prepare annual plans, long-range plans, and
strategic plans.
ďŹ The annual and long-range plans deal with the companyâs
current businesses and how to keep them going.
ďŹ In contrast, the strategic plan involves adapting the firm to take
advantage of opportunities in its constantly changing
environment.
6. Companywide Strategic Planning:
Defining Marketingâs Role
⢠Like the marketing strategy, the broader company
strategy must be customer focused.
⢠Company-wide strategic planning guides marketing
strategy and planning.
7. Defining a Market-Oriented Mission
ďŹ The mission statement is the organizationâs
purpose, what it wants to accomplish in the larger
environment.
ďŹ Market-oriented mission statement defines the
business in terms of satisfying basic customer
needs.
9. Setting Company Objectives and Goals
Business
objectives
⢠Build profitable
customer
relationships
⢠Invest in
research
⢠Improve profits
Marketing
objectives
⢠Increase market
share
⢠Create local
partnerships
⢠Increase
promotion
10. Designing the Business Portfolio
ďŹ The business portfolio is the collection of
businesses and products that make up the
company.
ďŹ Business portfolio planning involves two steps:
the company must
analyze its current
business portfolio and
determine the
investment
shape the future
portfolio by
developing strategies
for growth and
downsizing
11. Analyzing the Current Business Portfolio
ďŹ Portfolio analysis is a major activity in strategic
planning whereby management evaluates the
products and businesses that make up the
company
ďŹ Managementâs first step is to identify the key
businesses that make up the company, called
strategic business units (SBUs).
SBU
Company
division
Product line
within a
division
Single product
or brand
12. Analyzing the Current Business Portfolio
The company next assesses the
attractiveness of its various SBUs and
decides how much support each deserves.
Tthe attractiveness of the SBUâs market
or industry and the strength of the SBUâs
position in that market or industry.
The best-known portfolio-planning
method was developed by the Boston
Consulting Group, a leading
management consulting firm.
13. The Boston Consulting Group Approach
ďŹ A company classifies all its SBUs according to
the growth-share matrix. The growth-share
matrix defines four types of SBUâs:
Stars are high-growth,
high-share businesses
or products. They often
need heavy investments
to finance their rapid
growth.
These established
and successful SBUs
need less investment
to hold their market
share.
They may generate
enough cash to
maintain themselves
but do not promise to
be large sources of
cash.
They require a lot of
cash to hold their
share, let alone
increase it.
14. The Boston Consulting Group Approach
ďŹ It can pursue one of four strategies for each SBU.
Buildďź
It can invest more in the
business unit.
Hold:
It can just enough to
share at the current level.
Harvestďź
It can harvest the SBU,
milking its short-term
cash.
Divestďź
It can divest the SBU by
selling it or phasing it
out and using the
resources elsewhere.
15. Problems with Matrix Approaches
ďŹ It have some limitations:
⢠Difficulty in defining SBUs and measuring market share and
growth
⢠Time consuming
⢠Expensive
⢠Focus on current businesses, not future planning
ďŹ Methods to improve:
⢠Dropped formal matrix methods in favor of more customized
approaches that better suit their specific situations
⢠Todayâs strategic planning has been decentralized
16. Developing Strategies for Growth and
Downsizing
ďŹ Product/market expansion grid is a portfolio-
planning tool for identifying company growth
opportunities through market penetration, market
development, product development, or
diversification.
⢠Market development â Companies can grow by developing new markets
for existing products. For example, Starbucks is expanding rapidly in
China, which by 2015 will be its second-largest market, behind only the
United States.
⢠Diversification â Through diversification, companies can grow by starting
or buying businesses outside their current product/markets. For example,
Starbucks is entering the âhealth and wellnessâ market with stores called
Evolution By Starbucks.
17. Developing Strategies for Growth
and Downsizing
⢠Company growth by increasing sales of
current products to current market
segments without changing the product
Market
penetration
⢠The company growth by identifying and
developing new market segments for
current company products.
Market
development
⢠Company growth by offering modified
or new products to current market
segments.
Product
development
⢠Company growth through starting up or
acquiring businesses outside the
companyâs current products and markets.
Diversification
18. Planning Marketing: Partnering to Build
Customer Relationships
ďŹ Marketing plays a key role in the companyâs strategic
planning in several ways:
First, marketing provides a guiding philosophyâthe marketing
conceptâthat 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 firmâs
potential to take advantage of them.
Finally, within individual business units, marketing designs
strategies for reaching the unitâs objectives. Once the unitâs
objectives are set, marketingâs task is to help carry them out
profitably.
19. Partnering with Other Company
Departments
ďŹ Value chain is a series of departments that carry out
value-creating activities to design, produce, market,
deliver, and support a firmâs products.
ďŹ That is, each department carries out value-creating
activities to design, produce, market, deliver, and support
the firmâs products.
20. Partnering with Others in the Marketing
System
ďŹ Value delivery network is 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.
ďŹ Toyotaâs performance against Ford depends on the quality
of Toyotaâs overall value delivery network versus Fordâs.
21. Marketing Strategy and the Marketing
Mix
ďŹ Next comes marketing strategyâthe marketing
logic by which the company hopes to create this
customer value and achieve these profitable
relationships.
22. Customer-Driven Marketing Strategy
ďŹ Most companies are in a position to serve some segments
better than others.
ďŹ Thus, each company must divide up the total market, choose
the best segments, and design strategies for profitably serving
chosen segments.
ďŹ This process involves:
Marketing
segmentation
Market
targeting
Positioning
23. Market Segmentation
ďŹ 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, is called market segmentation.
ďŹ Market segment is a group of consumers who respond in
a similar way to a given set of marketing efforts.
24. Marketing Targeting
ďŹ Market targeting is the process of evaluating each
market segmentâs attractiveness and selecting one or more
segments to enter.
ďŹ A company with limited resources might decide to serve
only one or a few special segments or market niches.
ďŹ Most companies enter a new market by serving a single
segment; if this proves successful, they add more
segments.
25. Marketing Differentiation and Positioning
ďŹ Positioning is arranging for a product to occupy a clear,
distinctive, and desirable place relative to competing
products in the minds of the target consumer.
ďŹ Thus, effective positioning begins with differentiationâ
actually differentiating the companyâs market offering so
that it gives consumers more value.
26. Developing an Integrated Marketing Mix
ďŹ Marketing mix is the set of controllable tactical
marketing toolsâproduct, price, place, and
promotionâthat the firm blends to produce the
response it wants in the target market.
Product means the
goods-and-services
combination the
company offers to the
target market.
Price is the amount
of money customers
must pay to obtain
the product.
Promotion refers to
activities that
communicate the merits
of the product and
persuade target customers
to buy it.
Place includes
company activities
that make the
product available to
target consumers.
The
marketing
mix â or
the four Ps
â consists
of tactical
marketing
tools
blended
into an
integrated
marketing
program
that
actually
delivers the
intended
value to
target
customers.
An effective marketing program blends the
marketing mix elements into an integrated
marketing program designed to achieve the
companyâs marketing objectives by delivering
value to consumers. The marketing mix constitutes
the companyâs tactical tool kit for establishing
strong positioning in target incentives.
27. Developing an Integrated Marketing Mix
ďŹ It holds that the four Ps concept takes the sellerâs view of
the market, not the buyerâs view. From the buyerâs
viewpoint, in this age of customer value and relationships,
the four Ps might be better described as the four Cs:
4Ps
Product
Price
Place
Promotion
4Cs
Customer solution
Customer cost
Convenience
Communication
28. Managing the Marketing Effort
ďŹ Managing the marketing process requires the four marketing
management functions:
29. Marketing Analysis
ďŹ The marketer should conduct a SWOT analysis ,by which it
evaluates the companyâs overall strengths (S), weaknesses (W),
opportunities (O), and threats (T).
30. Marketing Planning
ďŹ Through strategic planning, the company decides what it wants
to do with each business unit. Marketing planning involves
choosing marketing strategies that will help the company attain
its overall strategic objectives.
Positioning
Market mix
Marketing
expenditure
level
Target
markets
Marketi
ng
strategy
Marketing Strategy:
It outlines how the
company intends to
create value for target
customers in order to
capture value in return.
31. Marketing Implementation
ďŹ Marketing implementation is the process that turns
marketing plans into marketing actions to accomplish
strategic marketing objectives.
ďŹ Whereas marketing planning addresses:
what
why
who
where
when
how
ďŹ Many managers think that âdoing things rightâ (implementation)
is as important as, or even more important than, âdong the right
thingsâ(strategy).
32. Marketing Department Organization
⢠This is the most common form of marketing
organization with different marketing functions
headed by a functional specialist.Functional organization
⢠Useful for companies that sell across the country or
internationally. Managers are responsible for
developing strategies and plans for a specific
region.
Geographic
organization
⢠Useful for companies with different products or
brands. Managers are responsible for developing
strategies and plans for a specific product or brand.Product management
⢠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.
Market or customer
management
organization
33. Marketing Control
ďŹ Marketing control is the measuring and evaluating the
results of marketing strategies and plans and taking
corrective action to ensure that the objectives are
achieved.Management first sets
specific marketing
goals.
Measures its
performance in the
market place
Evaluates the causes of
any differences
between expected and
actual performance
Management takes
corrective action to
close the gaps between
goals and performance
Four steps of
marketing
control:
34. Measuring and Managing Return on
Marketing Investment
ďŹ Return on marketing investment (or marketing ROI)
is the net return from a marketing investment divided by
the costs of the marketing investment.
ďŹ It measures the profits generated by investments in
marketing activities.
ďŹ Many companies are assembling such measures into
marketing dashboards â meaningful sets of marketing
performance measures in a single display used to monitor
strategic marketing performance.