Chapter 2

Objectives Explain strategic planning Describe business portfolios and growth

strategies Detail marketing’s role in strategic

planning Describe elements of customer-driven

marketing strategy List the marketing management

functions

Marketing Process

Research Research customer customer and the and the

market placemarket placeManaging Managing marketing marketing

information information and and

customer customer datadata

Select Select customer to customer to

serve: market serve: market segmentation segmentation and targetingand targeting

Decide on Decide on value value

proposition: proposition: differentiation differentiation

and and positioningpositioning

Product and Product and service service design: design:

building a building a strong brandstrong brand

Price Create Price Create real value real value

DistributionDistributionmanage manage

demand and demand and supply chain supply chain

Promotion Promotion CommunicatinCommunicatin

g the value g the value

Customer Customer relationship relationship

management: management: build strong build strong relationship relationship with chosen with chosen customerscustomers

Partner Partner relationship relationship

management : management : build a strong build a strong relationship relationship

with marketing with marketing partners partners

Create Create satisfied loyal satisfied loyal

customer customer

Capture Capture customer life customer life time value time value

Increase share Increase share of market and of market and

share of share of customer customer

Company Wide Strategy Planning: Defining Marketing’s Role Strategic Planning Defined:

The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities

Strategic planning sets the stage for the rest of the planning of the firm.

Market Oriented-Mission A mission statement asks..

What is our business? Who is the customer? What do consumers value? What should our business be?

A mission statement should be:serve as a guide for what the organization wants to

accomplish.be “market-oriented” rather than “product-oriented”.(Example: eBay’s mission statement isn’t simply to hold online trading.

Instead, it connect individual buyers to sellers in “the world’s online marketplace”

be neither too narrow, nor too broad.fit with the market environment.be motivating.

A mission statement is:“ A statement of the organization purpose – what it want to

accomplish in a larger environment.”

Setting Company Objectives and Goals The company’s mission needs to be turned

into detailed supporting objectives for each level of management.

The mission leads to a hierarchy of objectives, including business objectives and marketing objectives.

Marketing strategies and programs must be developed to support these objectives.

Setting Company Objectives and Goals

Designing The Business Portfolio The business portfolio is:The collection of businesses and products

that make up the company.

Business portfolio planning involves two steps:1. Analyzing the current business portfolio &

Determine what role each SBU will play in the future

2. designing strategies for growth and downsizing.

Designing The Business Portfolio Step 1:

A. Analyze the current business portfolio○ Identify strategic business units (SBUs)○ Assess each SBU:

The BCG growth-share matrix classifies SBUs into one of four categories using the:- Market growth rate

- SBU’s relative market share within the market.

Designing The Business Portfolio

BCG Growth – Share Matrix

High High Market Market GrowthGrowth

Low Low Market Market GrowthGrowth

High RelativeHigh RelativeMarket ShareMarket Share

Low RelativeLow RelativeMarket ShareMarket Share

StarsStars

Cash CowsCash Cows

Question MarksQuestion Marks

DogsDogs

Designing The Business PortfolioB. Determine the future role of each SBU and

choose the appropriate resource allocation strategy:

Build○ Increase market share○ Works well for question marks

Hold○ Preserve market share○ Good for cash cow

Harvest○ Increases short-term cash flow○ Good for weak cash cows, question marks and dogs

Divest○ Sell or liquidate○ Good for dogs and question marks

SBUs change positions over time

Designing The Business Portfolio Step 2:Designing strategies for growth and downsizing. Developing strategies for growth by identifying,

evaluating, and selecting promising new market opportunities.

○ Product/market expansion grid

Developing strategies for downsizing the business portfolio.

“ Reducing the business portfolio by eliminating products or business units that are not profitable or that no longer fit the company’s overall strategy”

Designing The Business Portfolio Product/Market Expansion Grid

Existing Products New Products

Existing Markets

New Markets

Market PenetrationA strategy for company

growth by increasing sales of current products to

current market segment without changing the

product

Product DevelopmentA strategy for company

growth by offering modified or new product to current market segments

Market DevelopmentA strategy for company

growth by identifying and developing new market segments for current

company product

DiversificationA strategy for company

growth through starting up or acquiring businesses outside the company’s current products and

markets

Marketing’s Role in Strategic Planning Marketing plays a key role in the

strategic planning process.Provide a guiding philosophy (the marketing

concept)Identify attractive opportunitiesDesign effective strategies for reaching

unit’s objectives. Build strong value chainsForm superior value delivery networks

Marketing Strategy and The Marketing Mix

Marketing Intermediary Marketing Intermediary CompetitorsCompetitors

supplierssuppliers PublicPublic

Marketing Strategy

Strategy

1. Market segmentation

2. Target marketing 3. Market positioning

The segmentation process divides the total market into market segments.

Market segment is a groups of consumers who respond in similar ways to marketing efforts.

Customers grouped by: Geographic Demographic Psychographic Behavioral

Marketing Strategy

Strategy

1. Market segmentation

2. Target marketing

3. Market positioning

valuation of each segment’s attractiveness

Selection of segments with greatest long-term profitability

A company can choose one or several segments to target

Marketing Strategy

Strategy

1. Market segmentation

2. Target marketing

3. Market positioning

The place the product occupies in the consumer’s mind

Products are positioned relative to competing products

Marketers look for clear, distinctive and desirable place in positioning

Marketing Mix

The marketing mix includes controllable and tactical marketing tools knows as the 4P’s

The 4P’s includeProduct PricePromotion place

Marketing Mix

Marketing Mix

The marketing mix from buyer’s viewpoint

Managing The Marketing Effort Managing the marketing process require

four marketing management function

Analysis Analysis

PlanninPlanning g

Develop a strategic

plane plane

Develop Develop Marketing Marketing

Plane Plane

IImplementationmplementation Carry out the plans Carry out the plans

Control Control Measure resultMeasure result

Evaluate ResultEvaluate Result

Take corrective Take corrective actionsactions

Market Analysis

Internal

External

Positive Negative

Finding opportunities

Avoiding threatsUnderstanding

strengthsAnalyzing

weaknesses

• Analysis

• Planning

• Implementation

• Control

Managing the Marketing EffortMarketing FunctionsMarketing Functions

Marketing plans include: ○ Executive summary○ Analysis of current situation○ Objectives○ Targets and positioning○ Marketing mix○ Budget○ Controls

Managing the Marketing EffortMarketing FunctionsMarketing Functions

• Analysis

• Planning

• Implementation

• Control

Plans are turned into action with day-to-day activities

Good implementation is a challenge

Managing the Marketing EffortMarketing Functions

• Analysis

• Planning

• Implementation

• Control

Evaluation of the results of marketing strategies

Checks for differences between goals and performance

Managing the Marketing EffortMarketing Functions

• Analysis

• Planning

• Implementation

• Control