Chapter Two

Company and Marketing

Strategy:
Partnering to Build
Customer Relationships
 Roadmap: 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.
Copyright 2007, Prentice Hall, Inc. 2-2
 Case Study
NIKE – Strategy: Then & Now
Early Days
 Characterized by “seat of
the pants” management.
 Innovative sneaker tread
drove early success.
 Technological product
superiority, big-name
endorsements and “Just
Do It” ads revolutionized
sport marketing.
 1980s – 1990s: Nike
leverages brand strength
into new product areas.
Copyright 2007, Prentice Hall, Inc.
Late 1990s - Present
 Changes in consumer
shoe preference, declining
product innovation, and
negative PR plague Nike.
 Anti-establishment image
no longer works: brand
backlash occurs.
 Strategic planning is
embraced and Nike
focuses on innovation and
exploring new market
opportunities.
 Nike has global success.
2-3
 Strategic Planning

 The process of developing and

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

Copyright 2007, Prentice Hall, Inc. 2-4

 Steps in Strategic Planning

1. Defining the company mission.

2. Setting company objectives and
goals.
3. Designing the business portfolio.
4. Planning marketing and other
functional strategies.

Copyright 2007, Prentice Hall, Inc. 2-5

 The Mission Statement

 A statement of the organization’s

purpose.
– What it wants to accomplish in the larger
environment.

 Should be market oriented and defined

in terms of customer needs.

Copyright 2007, Prentice Hall, Inc. 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?

Copyright 2007, Prentice Hall, Inc. 2-7

 The Mission Statement:

 Should be realistic.
 Should be specific.
 Should fit the market environment.
 Should be based on distinctive
competencies.
 Should be motivating.

Copyright 2007, Prentice Hall, Inc. 2-8

 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),
– decide which SBUs should receive more, less, or
no investment,
– develop growth strategies for growth or
downsizing.

Copyright 2007, Prentice Hall, Inc. 2-9

 Portfolio Analysis

 An evaluation of the products and

business making up the company.

 Resources are directed to more

profitable businesses and weaker ones
are phased down or dropped.

Copyright 2007, Prentice Hall, Inc. 2-10

 Strategic Business Unit (SBU)

 A unit of the company that has a

separate mission and objectives and
that can be planned independently from
other company businesses.

 Can be a company division, a product

line within a division, or sometimes a
single product or brand.

Copyright 2007, Prentice Hall, Inc. 2-11

 BCG Growth-Share Matrix
 Stars
– High share of low growth market.
– Build into cash cow via investment.
 Cash Cows
– High share of low growth market.
– Maintain or harvest for cash to build STARS.
 Question Marks
– Low share of high growth market.
– Build into STAR via investment if warranted, or
reallocate financing and let slip into DOG status.
 Dogs
– Low share of low growth market. Maintain or
divest.
Copyright 2007, Prentice Hall, Inc. 2-12
 Problems with Matrix Approaches

 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.
 Can place too much emphasis on growth.
 Can lead to poorly planned diversification.

Copyright 2007, Prentice Hall, Inc. 2-13

 Product/Market Expansion Grid

 Market Penetration
– Existing markets, existing products
 Market Development
– New markets, existing products
 Product Development
– Existing markets, new products
 Diversification
– New products, new markets
Copyright 2007, Prentice Hall, Inc. 2-14
 Planning Marketing

 Marketing plays a key role in strategic

planning:
– Provides a guiding philosophy.
• The Marketing Concept
– Provides inputs to strategic planners.
– Designs strategies to reach objectives.

Copyright 2007, Prentice Hall, Inc. 2-15

 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 2007, Prentice Hall, Inc. 2-16
 Market Segmentation

 The process of dividing a market into

distinct groups of buyers with different
needs, characteristics, or behavior who
might require separate products of
marketing programs.
 A market segment consists of
consumers who respond in a similar
way to a given set of marketing efforts.

Copyright 2007, Prentice Hall, Inc. 2-17

 Target Marketing

 Involves evaluating each market

segment’s attractiveness and selecting
one or more segments to enter.

 Target segments that can sustain

profitability.

Copyright 2007, Prentice Hall, Inc. 2-18

 Market Positioning

 Arranging for a product to occupy a

clear, distinctive, and desirable place
relative to competing products in the
minds of target consumers.

 Begins with differentiating the

company’s marketing offer so it gives
consumers more value.

Copyright 2007, Prentice Hall, Inc. 2-19

 The Marketing Mix

 The set of controllable, tactical

marketing tools that the firm blends to
produce the response it wants in the
target market.
– Product
– Price
– Place (distribution)
– Promotion

Copyright 2007, Prentice Hall, Inc. 2-20

 The Marketing Mix

 Product:  Place:
– Variety, quality, – Channels, coverage,
design, features, logistics, locations,
brand name, transportation,
packaging and assortments and
services. inventory.
 Promotion:  Price:
– Advertising, sales – List price, discounts,
promotion, public allowances, payment
relations and period and credit
personal selling. terms.
Copyright 2007, Prentice Hall, Inc. 2-21
 The 4 Ps & 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 2007, Prentice Hall, Inc. 2-22

 Managing the Marketing Effort

 Four marketing management functions:

– Marketing Analysis
• SWOT analysis is key.
– Marketing Planning
• Create brand marketing plan.
– Marketing Implementation
• Determine who, where, when, and how.
– Marketing Control
• Evaluate results, take corrective action.

Copyright 2007, Prentice Hall, Inc. 2-23

 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 2007, Prentice Hall, Inc. 2-24

 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 2007, Prentice Hall, Inc. 2-25

 Brand / Product Marketing Plan

1. Executive summary
2. Current marketing situation
3. Analysis of threats and opportunities
4. Objectives for the brand
5. Marketing strategy
6. Action programs
7. Marketing budget
8. Controls
Copyright 2007, Prentice Hall, Inc. 2-26
 Marketing Department
Organization

 Functional Organization:
Each marketing activity is headed by a
functional specialist.
– Sales Manager
– Advertising Manager
– Director of Marketing Research
– Customer Service Manager
– New Product Manager

Copyright 2007, Prentice Hall, Inc. 2-27

 Marketing Department
Organization

 Geographic Organization:
Sales and marketing people are
assigned to specific countries, regions,
and districts.

 Product Management Organization:

One person given responsibility for
complete strategy and marketing program
for a single product.
Copyright 2007, Prentice Hall, Inc. 2-28
 Marketing Department
Organization

 Market or Customer Organization:

Manager responsible for particular
market or customer.

 Combination Organization:
Use some combination of the previous
four approaches.
– This is especially true in large companies
(e.g., Procter & Gamble)
Copyright 2007, Prentice Hall, Inc. 2-29
 Marketing Control Process

 Set Goals
 Measure Performance
 Evaluate Performance
 Take Corrective Action

Copyright 2007, Prentice Hall, Inc. 2-30

 Marketing Control Process

 Operating Control
– Evaluates performance against the plan
and takes corrective action.
 Strategic control
– Evaluates whether strategies match
opportunities.
• The marketing audit is major tool.

Copyright 2007, Prentice Hall, Inc. 2-31

 Return on Marketing

 Assessed using one or more methods:

– Standard marketing performance
measures
• Brand awareness, sales, market share
– Customer-centered measures
• Customer acquisition, customer
retention, customer lifetime value

Copyright 2007, Prentice Hall, Inc. 2-32

 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.
Copyright 2007, Prentice Hall, Inc. 2-33