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

In this chapter: Explain companywide strategic planning and its four steps, discuss how to design business portfolios and growth strategies, discuss how to design business portfolios and growth strategies, describe the elements of a customer-driven marketing strategy and mix and the forces that influence it, list the marketing management functions, including the elements of a marketing plan.

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

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.

NIKE – Strategy: Then & Now

Case Study

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.

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 Defining the company mission.

2 Setting company objectives and

goals.

3 Designing the business portfolio.

4 Planning marketing and other

functional strategies.

The Mission Statement

 A statement of the organization’s

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

Problems with Matrix Approaches

 Can be difficult, time consuming, and costly

 Can place too much emphasis on growth.

 Can lead to poorly planned diversification.

Product/Market Expansion Grid

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

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)

The Marketing Mix

assortments and inventory

 Price:

– List price, discounts,

allowances, payment period and credit

terms.

The 4 Ps & the 4 Cs

of the Marketing Mix

– Customer Solution – Customer Cost

– Convenience – Communication

Managing the Marketing Effort

 Four marketing management functions:

SWOT Analysis

 Strengths:

Internal capabilities that may help a

company reach its objectives.

 Weaknesses:

Internal limitations that may interfere

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.

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

Marketing Department Organization

– Director of Marketing Research

– Customer Service Manager

– New Product Manager

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

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)

Marketing Control Process

Marketing Control Process

 Operating Control

– Evaluates performance against the plan

and takes corrective action.

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

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,