Lecture Principles of Marketing - Chapter 2: Company and Marketing strategy

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

Late 1990s - Present

 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.

 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.


Strategic Planning
 The process of developing and

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


Steps in Strategic Planning
1.
2.
3.
4.

Defining the company mission.
Setting company objectives and
goals.
Designing the business portfolio.
Planning marketing and other
functional strategies.


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.

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?


The Mission Statement:
Should be realistic.
Should be specific.
Should fit the market environment.
Should be based on distinctive
competencies.
 Should be motivating.






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.


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.


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.


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.


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.


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


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.


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.


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.


Target Marketing
 Involves evaluating each market
segment’s attractiveness and selecting
one or more segments to enter.
 Target segments that can sustain
profitability.


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.


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


The Marketing Mix
 Product:
– Variety, quality,
design, features,
brand name,
packaging and
services.

 Promotion:
– Advertising, sales
promotion, public
relations and
personal selling.

 Place:
– Channels, coverage,
logistics, locations,
transportation,
assortments and
inventory.

 Price:

– List price, discounts,
allowances, payment
period and credit
terms.


The 4 Ps & the 4 Cs
of the Marketing Mix
 4 Ps –
Seller’s View
– Product
– Price
– Place
– Promotion

 4 Cs –
Buyer’s View
– Customer Solution
– Customer Cost
– Convenience
– Communication


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.


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.


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.