1. Professor Marshall Queens College
Chapter 2 Company & Marketing Strategy Partnering to Build Customer Relationships
Professor Marshall
Queens College

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

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

4. Mission Statement
A statement representing the organization’s purpose – what it wants to accomplish.
Note: you can usually find a company’s mission statement on their website under ‘Investor Relations’ or ‘Corporate information’.
ebay’s Mission:

5. Mission Statement Guidelines
Should be market oriented and defined in terms of customer needs. Example: Charles Schwab – ‘guardian of its customers’ financial dreams’
Should be realistic
Should be specific (not too narrow or broad)
Should fit the market environment. Example: Girl Scouts old: ‘to prepare young girls for motherhood and wifely duties’ – new: ‘where girls grow strong’.
Should be motivating. Example: Walt Disney aims to ‘make people happy’.

6. 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.
An SBU can be a company division, a product line, or a single product or brand. It has a separate mission & can be planned independently from other company businesses.

7. The BCG Growth-Share Matrix
Star
Often need heavy investment to finance rapid growth. These turn into Cash Cows.
Question Mark
Require a lot of cash to hold market share. Some are built into stars and some are phased out.
High
Market Growth Rate
Cash Cow
Established. Need less investment to hold market share. These support other SBUs.
Dog
May generate enough cash to sustain themselves but do not support other SBUs.
Low
High
Low
Relative Market Share
The size of the circles is proportional to the SBU’s dollar sales.
Each SBU has a life cycle and over time, SBUs change positions in the matrix. The company needs to keep adding new products so that some will become stars & cash cows.

8. The BCG Growth-Share Matrix Example: Macintosh
Star
iPod
Question Mark
High
Market Growth Rate
Cash Cow
Mac Computers
Dog
MacOS
Low
High
Low
Relative Market Share
Relative Market Share: the ratio of sales of a particular brand to total sales of that product type in a defined region (country).

9. Ways to Research Market Share
10K Reports
SIC Codes (Standard Industry Classification)
NAICS Codes (North American Industry Classification)
Use Library Databases & Journals to look up articles related to the company/industry

10. Problems with Matrix Approaches
Difficult to quantify market share and market growth.
Focus on current business not future planning.
Companies have shifted toward customized, decentralized approaches to strategic planning.

11. Product/Market Expansion Grid
Strategies for company growth
Existing Products
New Products
Market Penetration
Increasing sales of current products to current market segments without changing the product.
Product Development
Offering modified or new products to current market segments.
Existing Markets
Market Development
Identifying and developing new market segments for current products.
Diversification
Starting up or acquiring businesses outside the company’s current products and markets.
New Markets

12. Product/Market Expansion Grid
Examples of Starbucks’ growth
Existing Products
New Products
Market Penetration
Starbucks is adding 23 stores per week.
Product Development
Starbucks recently added hot breakfast sandwiches to its menu.
Existing Markets
Market Development
Starbucks might consider new demographic markets (for example: senior citizens or different ethnic groups).
Diversification
Starbucks tested new restaurant concepts in San Francisco to enter a new related market.
New Markets

13. Marketing’s Role in Strategic Planning
The major functional departments in each unit of the company – marketing, finance, accounting, purchasing, operations, information systems, human resources, and others - must work together to accomplish the strategic objectives.
Provide a guiding philosophy (the marketing concept)
Provide inputs to strategic planners
Design strategies to reach objectives

14. Value Delivery Network
Company’s value chain – internal departments that must perform and coordinate activities
Distributors (for example Pepsi has partnered with the college dining halls)
Suppliers (for example Dell has partnered with Microsoft and Intel)

15. Marketing Strategy
The following steps help the company choose which customers to serve and how:
Market Segmentation
Target Marketing
Market Positioning

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.

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

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.

19. Marketing Mix Product Price Place Promotion
The set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market.
Consists of the 4 Ps
Product
Price
Place
Promotion

20. Product
Variety Quality Design Features Brand Name Packaging Services
Price
List Price Discounts Allowances Payment Period Credit Terms
Target Customers
Intended Positioning
Place
Channels Coverage Assortments Locations Inventory Transportation Logistics
Promotion
Advertising Personal Selling Sales Promotion Public Relations

21. The 4 P’s & the 4 C’s of the Marketing Mix
4 P’s - Seller’s View
Product
Price
Place
Promotion
4 C’s - Buyer’s View
Customer Solution
Customer Cost
Convenience
Communication

22. SWOT Analysis An analysis of your company verses competition
Strengths
Competitive Advantages
Weaknesses
Limitations the firm has in its marketing strategy
Threats
Barriers that may prevent the firm from reaching its goals
Opportunities
Favorable conditions that could yield rewards

23. SWOT Analysis An analysis of your company verses competition
Strengths
your specialist marketing expertise
a new, innovative product or service
location of your business
quality processes and procedures
any other aspect of your business that adds value to your product or service
Weaknesses
lack of marketing expertise
undifferentiated products or services (i.e. in relation to your competitors)
location of your business
poor quality goods or services
damaged reputation
Threats
a new competitor in your home market
price wars with competitors
a competitor has a new, innovative product or service
competitors have superior access to channels of distribution
taxation is introduced on your product or service
Opportunities
a developing market such as the Internet
mergers, joint ventures or strategic alliances
moving into new market segments that offer improved profits
a new international market
a market vacated by an ineffective competitor

24. Sections of Marketing Plan
Executive summary – summarizes main goals
Current marketing situation
Analysis of threats and opportunities that the product might face
Objectives for the brand
Marketing strategy
Action programs – what/when/who
Marketing budget – expected costs & revenues
Controls – how progress is monitored

25. Marketing Control Process
Set Goals
Measure Performance
Evaluate Performance
Take Corrective Action

26. Marketing Department Organization
Functional Organization – by marketing activity (sales, advertising, etc.)
Geographic Organization – by location
Product Management Organization – by product or brand
Market or Customer Organization – by market/type of customer
Combination

27. Dunkin’ Donuts (10 minutes)
Video Case
Dunkin’ Donuts
(10 minutes)

28. Thoughts Is Dunkin’ Donuts more product-oriented or customer-oriented?
How would you prepare against the invasion of Starbucks and Krispy Kreme?