Chapter 2 Marketing Strategy: Partnering to Build Customer Relationships

Jian Hong SHAO USTB Concept Connections Define strategic planning and its four steps. Discuss how to design business portfolios and growth strategies. Explain how to build profitable customer relationships. 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.

Jian Hong SHAO USTB Formal Planning? Many companies operate without formal plans, yet these plans can provide many benefits: 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.

Jian Hong SHAO USTB Strategic Planning Strategic Planning is the Process of Developing and Maintaining a Strategic Fit Between the Organization’s Goals and Capabilities and Its Changing Marketing Opportunities.

Jian Hong SHAO USTB Steps in Strategic Planning Defining the Company Mission Setting Company Objectives and Goals Designing the Business Portfolio Planning, marketing, and other functional Strategies Corporate Level Business unit, product, and market level

Jian Hong SHAO USTB 1 Defining the Company Mission

Jian Hong SHAO USTB Mission Statement “To provide a global trading platform where practically anyone can trade practically anything —you can get it at eBay”. “It connects individual buyers and sellers in the world’s online marketplace.”

Jian Hong SHAO USTB Market Oriented Realistic Fit Market Environment Distinctive Competencies Motivating Specific Characteristics of a Good Mission Statement: A Mission Statement is a Statement of the Organization’s Purpose. Defining the Company’s Business and Mission

Jian Hong SHAO USTB 2. Setting Company Objectives and Goals

Jian Hong SHAO USTB Setting Company Objectives and Goals

Jian Hong SHAO USTB Steps in Strategic Planning Defining the Company Mission Setting Company Objectives and Goals Designing the Business Portfolio Planning, marketing, and other functional Strategies Corporate Level Business unit, product, and market level

Jian Hong SHAO USTB Designing the Business Portfolio

Jian Hong SHAO USTB Designing the Business Portfolio The business portfolio is the collection of businesses and products that make up the company. The company must do Portfolio Analysis : analyze its current business portfolio or Strategic Business Units (SBU’s) decide which SBU’s should receive more, less, or no investment develop growth strategies for adding new products or businesses to the portfolio

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

Jian Hong SHAO USTB Business Strength High Medium Low StrongAverageWeak A B C D Industry Attractiveness Analyzing Current SBU’s: -- GE’s Strategic Business- Planning Grid

Jian Hong SHAO USTB Can be Difficult, Time-Consuming, & Costly to Implement Difficult to Define SBU’s & Measure Market Share/ Growth Focus on Current Businesses, But Not future Planning Can Lead to Unwise Expansion or Diversification Problems With Matrix Approaches Can Place too Much Emphasis on Growth

Jian Hong SHAO USTB Market Penetration Market Development Product Development Diversification Existing Markets New Markets Existing Products New Products Product/ Market Expansion Grid Developing Growth Strategies

Jian Hong SHAO USTB Developing Growth Strategies -Downsizing Downsizing : The reduction of the business portfolio. Reasons ? The market environment might change The company may have grown too fast or entered areas where it lacks experience Product life cycle

Jian Hong SHAO USTB Partnering To Build Customer Relationship With Other Company Departments -Value chain is a series of departments that carry out value- creating activities to design, produce, market, deliver, and support a firm’s products.

Jian Hong SHAO USTB With Others in the Marketing System End User Market End User Market Marketing Intermediaries Marketing Intermediaries Competitors Company (Marketer) Company (Marketer) Suppliers Environment

Jian Hong SHAO USTB Target Consumers Product PlacePrice Promotion Marketing Implementation Marketing Planning Marketing Control Marketing Analysis Competitors Marketing Intermediaries Publics Suppliers Demographic- Economic Environment Technological- Natural Environment Political- Legal Environment Social- Cultural Environment Marketing Strategy

Jian Hong SHAO USTB Customer Centered Marketing Strategy Market Segmentation : Determining distinct groups of buyers (segments) with different needs, characteristics, or behavior.

Jian Hong SHAO USTB Target Marketing: Involves evaluating each market segment’s attractiveness and selecting one or more segments to enter. Customer Centered Marketing Strategy

Jian Hong SHAO USTB Market Positioning : arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. Customer Centered Marketing Strategy

Jian Hong SHAO USTB Marketing Strategy Target Consumers Product PlacePrice Promotion Marketing Implementation Marketing Planning Marketing Control Marketing Analysis Marketing Intermediaries Competitors Suppliers Publics Demographic- Economic Environment Political- Legal Environment Technological- Natural Environment Social- Cultural Environment

Jian Hong SHAO USTB Developing the Marketing Mix

Jian Hong SHAO USTB Price Pricing Strategy Importance of: knowing the market elasticity keeping an eye on rivals Influence factors

Jian Hong SHAO USTB Product

Jian Hong SHAO USTB Promotion Strategies to make the consumer aware of the existence of a product or service NOT just advertising

Jian Hong SHAO USTB Place The means by which products and services get from producer to consumer and where they can be accessed by the consumer.

Jian Hong SHAO USTB Marketing Planning Develop Strategic Plans Develop Marketing Plans Marketing Planning Develop Strategic Plans Develop Marketing Plans Marketing Implementation Carry Out The Plans Marketing Implementation Carry Out The Plans Marketing Analysis of Company’s Situation Control Measure Results Evaluate Results Take Corrective Action Managing the Marketing Effort

Jian Hong SHAO USTB Marketing Analysis Analysis is the complete analysis of the company’s situation. SWOT -Internal -External

Jian Hong SHAO USTB Executive Summary Current Marketing Situation Threats and Opportunity Analysis Objectives and Issues Marketing Strategy Action Programs Budgets Controls Marketing Plan

Jian Hong SHAO USTB Marketing Strategy Marketing Performance Implementation Climate and Culture Action Programs Decision and Reward Organizational Structure Human Resources Marketing Implementation

Jian Hong SHAO USTB Market Management Combination Plan Product Management Geographic Functional Ways to Carry Out Marketing Activities Marketing Department Organization

Jian Hong SHAO USTB Marketing Control Process Set Goals Measure Performance Evaluate Performance Take Corrective Action The process of evaluating the results of marketing strategies and taking corrective action to ensure that marketing objectives are attained

Jian Hong SHAO USTB Review of Concept Connections Define strategic planning and its four steps. 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.