1. Company and Marketing Strategy

2. Preview Case: Disney – What are its challenges?
Originally known for films, animation, theme parks.
Satisfying the customer is everyone’s job.
Mission: “make people happy” & “make a dream come true!”
Disney has grown via diversification.
Discussion Questions
Has Disney grown too large?
Will consumers accept new Disney businesses?

3. Strategic Marketing Planning
Companies should look ahead and develop long-term strategies ğ to meet changing conditions in their industries and ensure long-term survival
The task of selecting an overall company strategy for long-run survival and growth ğ “strategic planning”
Marketing’s key role in strategic planning

4. Formal Planning Benefits of formal plans:
Encouraging management to think ahead systematically.
Forcing managers to clarify objectives and policies.
Better coordination of company efforts.
Clearer performance standards for control.
Helping the company to anticipate and respond quickly to environmental changes and sudden developments.

5. What is Strategic Planning?
Strategic Planning defined:
The process of developing and maintaining a strategic fit between the organization’s resources, goals and capabilities and its changing market opportunities.

6. Strategic Planning
It sets the the stage for the rest of the planning in the firm
The aim ğ to shape and reshape company’s businesses and products in order to reach to targeted profits and growth.
Top-management job!
Part of a broader process: strategic management

7. Strategic Planning
Organizational levels subject to strategic planning:
Corporate level
Division level
Business unit level
Product level

8. Strategic Planning, Implementation, and Control Process
Corporate
planning
Division
Business
Product
Organizing
Implementing
Measuring
results
Diagnosing
Taking
corrective
action

9. Steps in Strategic Planning
Business unit,
product,
and market
level
Corporate Level
Planning
marketing
and other
functional
strategies
Setting Company
Objectives
and Goals
Defining the
Company
Mission
Designing
the Business
Portfolio

10. Market-Oriented Mission
Fundamental questions:
What is our business?
Who is the customer?
What do consumers value?
What should our business be?
A clear mission statement:
A statement of the organization’s purpose --- what it wants to accomplish in the larger environment
Acts as “invisible hand” that guides employees to work toward realizing the organization’s goals.

11. Company Mission Each company’s mission is shaped by five elements:
History
Current preferences of the owners and management
The market environment
Resources
Distinctive competences

12. Company Mission (cont.)
Limited number of goals
Stress major policies & values
Define competitive scopes

13. Company Mission (cont.)
“Market-oriented definitions” of a business ğ better than product or technological definitions (see page 38)
A market-oriented mission statement ğ defines the business in terms of satisfying basic customer needs
Mission statement ğ must avoid being too narrow or too broad
Mission statement ğ to be guided by a “vision” - an almost “impossible dream” that provides a direction for the company for the next 10 to 20 years

14. Characteristics of a Good Mission Statement:
Company Mission (cont.)
Characteristics of a Good Mission Statement:
Market Oriented
Realistic
Fit Market Environment
Distinctive Competencies
Motivating
Specific

15. Company Goals and Objectives
Company’s mission ğ needs to be turned into detailed, supporting objectives for each level of management
Mission ğ hierarchy of objectives
As specific as possible
Marketing strategies ğ must be developed to support these marketing objectives

16. Hierarchy of Objectives

17. The Business Portfolio
Business portfolio ğ collection of businesses and products that make up the company
Business portfolio planning involves 2 main steps:
Analyzing the current business portfolio and decide which business should receive more, less or no investment
Shaping the future portfolio by developing growth strategies to add new products/businesses to the current portfolio

18. Analyzing the Current Business Portfolio
Portfolio Analysis ğ to identify and evaluate the various businesses that make up the company
To identify key businesses ğ Strategic Business Units - SBU
SBU: unit of the company (separate mission and objectives / can be planned independently from other company businesses)
To assess the attractiveness of its various SBUs and decide how much support each deserves

19. Boston Consulting Group’s Growth-Share Matrix
20%-
18%-
16%-
14%-
12%-
10%-
8%-
6%-
4%-
2%-
Market Growth Rate
Stars 5 4 3 ?
Question marks 2 1
Cash cow 6
Dogs 8 7
10x x 2x 1.5x 1x
Relative Market Share
.5x .4x .3x .2x .1x

20. Boston Consulting Group’s Growth-Share Matrix
Stars
High growth & share
Profit potential
May need heavy
investment to grow
Question Marks
High growth, low share
Build into Stars or phase out
Require cash to hold
market share ?
Market Growth Rate
Low High
Cash Cows
Low growth, high share
Established, successful
SBU’s
Produce cash
Dogs
Low growth & share
Low profit potential
Relative Market Share
High Low

21. Analyzing the Current Business Portfolio
After the classification of its SBUs ğ to determine what role each will play in the future
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

22. Problems With Matrix Approaches
Can be Difficult, Time-Consuming, & Costly to Implement
Difficult to Define SBU’s & Measure Market Share/ Growth
Problems With Matrix Approaches
Focus on Current Businesses; provide little advice for future planning
Can Lead to Unwise Expansion or Diversification

23. Growth Strategies - Ansoff’s Product / Market Expansion Grid
penetration
Existing
markets
products
3. Product
development
New
products
2. Market
development
New
markets
4. Diversification

24. Growth Strategies
Making more sales to current customers without changing its products.
Add new stores in current market areas,
improve advertising, prices, service or store design.
Existing products
New products
Market penetration
Product development
Existing markets
Market development
Diversifica-tion
New markets

25. Growth Strategies Develop new markets for current products
Identify new demographic or geographic markets
Domestic or international
Existing products
New products
Market penetration
Product development
Existing markets
Market development
Diversifica-tion
New markets

26. Growth Strategies
Offering modified or new products to current markets.
New styles, flavors, colors, or modified products
Existing products
New products
Market penetration
Product development
Existing markets
Market development
Diversifica-tion
New markets

27. Growth Strategies New products for new markets.
Existing products
New products
New products for new markets.
Start up or buy new businesses
Market penetration
Product development
Existing markets
Market development
Diversifica-tion
New markets

28. Downsizing
Some reasons that a company might want to abandon products or markets:
The market environment might change (making some of the company’s product or markets less profitable – e.g. economic recession)
The company may have grown too fast or entered areas where it lacks experience
Some of the company’s products or business units age and die.

29. Functional Planning
The company’s overall strategic plan ğ establishes what kind of businesses the company will be in future & its objectives for each business.
More detailed planning must take place within each business unit
The major functional departments in each unit ğ must work together to accomplish strategic objectives
Marketing plays a key role

30. Marketing’s Key Role in Strategic Planning
Provide a guiding philosophy
Identify attractive opportunities
Design effective strategies
Build strong value chains
Form superior value delivery networks

31. Marketing’s Key Role: Partner Relationship Management
working closely with partners in other departments (to form an effective “value chain” that serves the customer), and
partnering effectively with other companies in the marketing system for a superior “value delivery network” to jointly bring greater value to customers

32. Marketing’s Key Role: Partner Relationship Management
Each department in the company ğ as a link in the company’s value chain;
Each dept.carries out value-creating activities
The company’s overall success ğ depends also on how well the activities of various dept. are coordinated
Departmental relations are full of conflicts
Marketers must find ways to get all dept. to “think consumer” and to develop a smoothly functioning value chain

33. Marketing’s Key Role: Partner Relationship Management
The company needs to look beyond its own value chain in order to create customer value:
Value-delivery network ğ network made up of the company, suppliers, distributors, and customers who partner with each other to improve the performance of the entire sytem
Competition today takes place between the entire value delivery networks!

34. Business Unit Strategic Planning

35. Business Unit Strategic Planning
Business Mission ğ each SBU needs to define its specific mission within the broader company mission
External Environment Analysis ğ to build a MIS to monitor:
Key external macroenvironment forces
Significant microenvironment actors
Trends and important developments ğ to identify the associated opportunities and threats

36. Business Unit Strategic Planning
Internal Environment Analysis ğ Each business needs to evaluate its internal strengths and weaknesses periodically
“Checklist for Performing Strengths/Weaknesses Analysis”
Management or an outside consultant ğ reviews the business’s marketing, financial, manufacturing and organizational competencies and rates each factor as strength or weakness
SWOT ANALYSIS

37. Business Unit Strategic Planning / Example of a Checklist

38. Business Unit Strategic Planning
Goal Formulation (Goals ğ objectives that are specific with respect to magnitude and time)
Turning objectives ğ into measurable goals ğ facilitates management planning, implementation and control
Most businesses pursue a mix of objectives
Objectives must be arranged hieararchically; from the most to the least important
should be stated quantitatively whenever possible (e.g .“increase the ROI to 15% within two years”)
should be realistic
should be consistent

39. Business Unit Strategic Planning
Strategy Formulation
Strategy ğ A game plan for how to reach goals (while goals indicating what a business unit wants to achieve)
3 general type of strategy:
Cost Leadership ğ to achieve the lowest production and distribution costs / to price lower than its competitors and win a large market share
Differentiation ğ to concentrate on achieving performance in an important customer benefit area valued by a large part of the market
Focus ğ on one or more narrow market segments rather than going after a large market

40. The Marketing Process
Planning at the corporate, division and business levels ğ integral part of the marketing process
Marketing Process (definition) ğ
consists of analyzing mktg opportunities, selecting target markets, developing the mktg mix, and managing the mktg effort

41. The Marketing Process Demographic- Economic Environment Technological-
Natural
Environment
Marketing
Intermediaries
Profitable
Customer
Relshps.
Product
Place
Price
Promotion
Implementation
Marketing
Planning
Control
Analysis
Suppliers
Publics
Political-
Legal
Environment
Social-
Cultural
Environment
Competitors

42. The Marketing Process (cont.)
Analyzing marketing opportunities
Researching and selecting target markets
Designing marketing strategies
Planning marketing programs
Organizing, implementing, controlling the marketing effort

43. The Marketing Process (cont.)
Analyzing marketing opportunities
A reliable marketing and information system
To evaluate consumer wants and behavior
To assess market size
To gather information about the marketing environment
To understand consumer markets, business markets and their behaviors
To monitor competitors

44. The Marketing Process (cont.)
Researching and selecting target markets
To divide the market into specific segments
To evaluate each segment and choose market segments to be served best
To develop a clear position relative to competitors in the minds of consumers

45. Strategy Market Segmentation Target marketing Market Positioning
Customers grouped by:
Geographic
Demographic
Psychographic
Behavioral
Market segment is a groups of consumers who respond in similar ways to marketing efforts.
Market Segmentation
Target marketing
Market Positioning

46. Strategy Market Segmentation Target marketing Market Positioning
Evaluation of each segment’s attractiveness
Selection of segments with greatest long-term profitability
A company can choose one or several segments to target
Market Segmentation
Target marketing
Market Positioning

47. Strategy Market Segmentation Target marketing 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
Market Segmentation
Target marketing
Market Positioning

48. The Marketing Process (cont.)
Designing marketing strategies for competitive advantage
Market leader strategies
Market challenger strategies
Market follower strategies
Market nicher strategies

49. The Marketing Process (cont.)
Planning marketing programs
Decisions on:
Marketing expenditures
Marketing mix – 4Ps
Marketing budget allocation
The marketing mix includes controllable and tactical marketing tools known as the 4P’s
The 4P’s include:
Product
Place
Promotion
Price

50. The Marketing Process (cont.)
Managing the marketing effort
Marketing Analysis
Marketing Planning
Marketing Implementation
Marketing Control

51. Managing the Marketing Effort
Marketing Functions
Finding opportunities : the company must analyze
its market & mktg environment
company strengths & weaknesses
current and possible mktg actions
Avoiding threats
Understanding strengths
Analyzing weaknesses
Analysis
Planning
Implementation
Control

52. Managing the Marketing Effort
Marketing Functions
Marketing plans include:
Executive summary
Analysis of current situation
Objectives
Targets and positioning
Marketing mix
Budget
Controls
Analysis
Planning
Implementation
Control

53. Marketing Planning
Through strategic planning ğ the company decides what it wants to do with each business unit
Marketing planning ğ involves deciding on marketing strategies that will help the company reach its strategic objectives
Marketing plan ğ 2 levels:
Strategic mktg plan ğ develops the broad mktg objectives and strategy based on an analysis of the current market situation and opportunities
Tactical mktg plan ğ outlines specific mktg tactics, including advertising, merchandising, pricing, channels, service, etc.

54. Contents of a Marketing Plan
Executive Summary & Table of Contents
Current Marketing Situation
Threats and Opportunity Analysis
Objectives and Issues
Marketing Strategy
Action Programs
Budgets
Controls

55. Managing the Marketing Effort
Marketing Functions
The process that turns mktg plans into mktg actions in order to achieve strategic mktg objectives
Deals with “who”, “where”, “when”, “how” (while mktg planning dealing with “what” and “why”)
Companies can gain competitive advantages through effective implementation
Analysis
Planning
Implementation
Control

56. Managing the Marketing Effort
Marketing Functions
Evaluation of the results of marketing strategies
Checks for differences between goals and performance
Analysis
Planning
Implementation
Control

57. Measuring Effectiveness
Return on marketing (marketing ROI)
The net return from a marketing investment divided by the costs of the investments

58. Marketing Implementation
Marketing Analysis of Company’s Situation
Marketing Implementation
Control
Marketing
Planning
Develop Strategic
Plans
Develop
Marketing
Implementation
Carry Out
The
Plans
Measure
Results
Evaluate
Results
Take
Corrective
Action