1. Chapter Two Company and Marketing Strategy: Partnering to Build Customer Relationships

2. Roadmap: Previewing the Concepts Copyright 2007, Prentice Hall, Inc.2-2 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.

3. Copyright 2007, Prentice Hall, Inc.2-3 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.  Nike has global success.

4. Copyright 2007, Prentice Hall, Inc.2-4 Strategic Planning  The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities.

5. Copyright 2007, Prentice Hall, Inc.2-5 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.

6. Copyright 2007, Prentice Hall, Inc.2-6 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.

7. Copyright 2007, Prentice Hall, Inc.2-7 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?

8. Copyright 2007, Prentice Hall, Inc.2-8 The Mission Statement:  Should be realistic.  Should be specific.  Should fit the market environment.  Should be based on distinctive competencies.  Should be motivating.

9. Copyright 2007, Prentice Hall, Inc.2-9 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.

10. Copyright 2007, Prentice Hall, Inc.2-10 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.

11. Copyright 2007, Prentice Hall, Inc.2-11 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.

12. Copyright 2007, Prentice Hall, Inc.2-12 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.

13. Copyright 2007, Prentice Hall, Inc.2-13 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.

14. Copyright 2007, Prentice Hall, Inc.2-14 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

15. Copyright 2007, Prentice Hall, Inc.2-15 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.

16. Copyright 2007, Prentice Hall, Inc.2-16 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.

17. Copyright 2007, Prentice Hall, Inc.2-17 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.

18. Copyright 2007, Prentice Hall, Inc.2-18 Target Marketing  Involves evaluating each market segment’s attractiveness and selecting one or more segments to enter.  Target segments that can sustain profitability.

19. Copyright 2007, Prentice Hall, Inc.2-19 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.

20. Copyright 2007, Prentice Hall, Inc.2-20 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

21. Copyright 2007, Prentice Hall, Inc.2-21 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.

22. Copyright 2007, Prentice Hall, Inc.2-22 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

23. Copyright 2007, Prentice Hall, Inc.2-23 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.

24. Copyright 2007, Prentice Hall, Inc.2-24 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.

25. Copyright 2007, Prentice Hall, Inc.2-25 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.

26. Copyright 2007, Prentice Hall, Inc.2-26 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

27. Copyright 2007, Prentice Hall, Inc.2-27 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

28. Copyright 2007, Prentice Hall, Inc.2-28 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.

29. Copyright 2007, Prentice Hall, Inc.2-29 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)

30. Copyright 2007, Prentice Hall, Inc.2-30 Marketing Control Process  Set Goals  Measure Performance  Evaluate Performance  Take Corrective Action

31. Copyright 2007, Prentice Hall, Inc.2-31 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.

32. Copyright 2007, Prentice Hall, Inc.2-32 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

33. Rest Stop: Reviewing the Concepts Copyright 2007, Prentice Hall, Inc.2-33 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.