Company and Marketing Strategy Bluefield College August 31, 2010

Capturing Value From Customers Value is captured from customers via current and future sales, market share and profit. Superior customer value leads to highly satisfied loyal customers who buy more. Key outcomes of customer value include customer loyalty, retention, share of market, share of customer, & customer equity. Customer lifetime value The value of the entire stream of purchases that the customer would make over a lifetime of patronage. Share of customer The portion of the customer’s purchasing that a company gets in their product categories. Customer Equity The total combined customer lifetime values of all the company’s current and potential customers.

Customer Relationship Groups

An Expanded Model of the Marketing Process

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.

Steps in Strategic Planning Process Corporate level: Defining the company mission. Setting objectives and goals. Designing the business portfolio. Business unit, product, and market level: Planning marketing strategy as well as other functional strategies.

Mission Statement The mission statement is a statement of the organization’s purpose – what it wants to accomplish in the larger environment. Questions the mission statement should answer include: What is our business? Who is our customer? What do consumers value? What should our business be? Mission statements should be market oriented, not product oriented.

“We sell houses and commercial property.” The Mission Statement Well-defined mission statements should also be: Meaningful. Specific. Motivating. Based on the firm’s strengths in the marketplace. Focused on customers and the customer experience rather than on sales and profits. Evaluate the following mission statement for a real estate agency against the criteria above: “We sell houses and commercial property.” Rewrite the mission statement.

Setting Firm Objectives and Goals The mission should be translated into supporting objectives for each level of management. Creates a hierarchy of objectives that are consistent with one another. For example: Business objective: Increase profits. Marketing objective: Increase market share of domestic and international markets.

Business Portfolio The business portfolio is the collection of businesses and products that make up the company. In designing the business portfolio the company must: Analyze its current business portfolio or strategic business units (SBUs) and decide which SBUs should receive more, less, or no investment. Develop strategies for growth and downsizing that will shape the future business portfolio.

Strategic Business Unit A The strategic business unit is a segment of the company that has a separate mission and objectives and that can be planned independently from other company businesses. An SBU can be a company division, a product line within a division, or sometimes a single product or brand.

Portfolio Analysis Purpose of portfolio analysis: A Portfolio analysis is a process by which management evaluates the products and businesses making up the company. Purpose of portfolio analysis: Resources are directed toward more profitable businesses while weaker ones are phased out or dropped. Standard portfolio analysis evaluates SBUs on two important dimensions: Attractiveness of SBU’s market or industry. Strength of SBU’s position within that market or industry.

Portfolio Analysis The BCG Growth-Share Matrix

BCG Growth-Share Matrix Stars: High-share of high-growth market. Strategy: Build into cash cow via investment. Cash cows: High-share of low-growth market. Strategies: Maintain or harvest for cash to build STARS. Question marks: Low-share of high-growth market. Strategies: Build into STAR via investment OR reallocate funding and let slip into DOG status. Dogs: Low-share of low-growth market. Strategies: Maintain or divest.

Portfolio Analysis The Product/Market Expansion Grid

Managing Marketing Strategies & the Marketing Mix

Marketing Strategy and the Marketing Mix Goal: create value for customers and build customer relationships. Marketing strategy decisions include: Market segmentation and targeting Differentiation and positioning Marketing strategy must guide marketing mix decisions.

Segmentation Segmentation is the process of dividing the market into distinct groups of buyers who have different needs, characteristics, or behaviors and who might require separate marketing programs or products. Targeting: Involves evaluating each market segment’s attractiveness and selecting one or more segments to enter. Positioning: Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. http://www.pg.com/en_US/brands/household_care/index.shtml Differentiation: Creating superior customer value by actually differentiating the market offering.

“Powerful laundry detergent that is tough on stains” Product Positioning 26.0¢/oz “The smell says clean” “Dirt goes, color stays” 22.0¢/oz “Mild cleansing” 18.0¢/oz 2 5 3 “Powerful laundry detergent that is tough on stains” 20.0¢/oz 4 “For a clean you can trust” 28.0¢/oz 1 “Knows fabrics best” 6 16.8¢/oz

Marketing Mix These tools are often called the 4 P’s: Product Price The set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market. These tools are often called the 4 P’s: Product Price Place (distribution) Promotion

The Four Ps of the Marketing Mix

SWOT Analysis

Contents of a Marketing Plan Executive summary Current marketing situation Analysis of threats and opportunities Objectives and issues Marketing strategy Action programs Budgets Controls

Organizing Marketing Departments Functional organization: Each marketing activity is headed by a functional specialist. Geographic organization: Sales and marketing people are assigned to specific countries, regions, and/or districts. Product management organization: One person is given responsibility for complete strategy and marketing program for a single product. Market or customer organization: Manager responsible for particular market or type of customer (e.g., government buyers). Combination organization: Uses some combination of the previous four approaches.

Return on Marketing Investment