Company and Marketing Strategy Chapter 2

Discussion: How Can Disney Recover? Walt Disney Known for films, animation, theme parks and customer orientation Parks offer a variety of attractions as well as cleanliness, order, and warmth Satisfying the customer is everyone’s job Disney has grown via diversification Sales and net income have fallen Discussion: How Can Disney Recover?

Objectives Understand companywide strategic planning and its four steps. Learn how to design business portfolios and develop strategies for growth and downsizing. .

Objectives Be able to describe the marketing process and the forces that influence it. Understand the marketing management functions, including the elements of the marketing plan.

Strategic Planning* Strategic planning is defined as: “The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities.”

Steps in the Strategic Planning Process Figure 2-1: Steps in the Strategic Planning Process

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

Strategic Planning Mission statements guide the development of objectives and goals. Objectives are developed at each level in the organization hierarchy. Strategies are developed to accomplish these objectives.

Example: Monsanto Company Mission: Helping to feed the world population and sustain the environment. Overall objective: To create environmentally better products and get them to market faster at lower cost. Objective of agricultural division: To increase agricultural productivity and reduce chemical pollution. General Electric Boundaryless…Speed…Stretch

Strategic Planning Business portfolio: “the collection of businesses and products that make up the company.” Designing the business portfolio is a key step in the strategic planning process.

Strategic Planning Portfolio Design Identify strategic business units (SBUs) Assess each SBU: The BCG growth-share matrix classifies SBUs into one of four categories using: Market growth rate The SBU’s relative market share within the market. Portfolio Design Step 1: Analyze the current business portfolio Step 2: Shape the future business portfolio

Portfolio Analysis: On Your Firm’s Strength What share of the market ? what does market share mean?

Portfolio Analysis: On Market Attractiveness Is the market growing?

Analyzing Current SBU’s: Boston Consulting Group Approach Relative Market Share High Low 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

Analyzing Current SBU’s: GE’s Strategic Business-Planning Grid Business Strength Strong Average Weak C High A Medium Industry Attractiveness D B Low

General Electric Approach how attractive is the industry? Market size Industry profit margin Competitive intensity Industry cost structure what is the business strength? Quality and price competitiveness Customer knowledge Geographic advantage

Strategic Planning Portfolio Design Determine the future role of each SBU and choose the appropriate resource allocation strategy: Build Hold Harvest Divest SBUs change positions over time Portfolio Design Step 1: Analyze the current business portfolio Step 2: Shape the future business portfolio

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, But Not future Planning Can Lead to Unwise Expansion or Diversification

Strategic Planning Designing the business portfolio also involves: Developing strategies for growth by identifying, evaluating, and selecting promising new market opportunities. Developing strategies for downsizing the business portfolio.

Strategies for Growth Products Markets

Product / Market Expansion Grid* Figure 2-3: Product / Market Expansion Grid*

Product/ Market Expansion Grid Market Penetration: making more sales to current customers without changing its products. How? Add new stores in current market areas, improve advertising, prices, service or store design. Market Development: develop new markets for its current products. How? Identify new demographic or geographic markets.

Product/ Market Expansion Grid Product Development: offering modified or new products to current markets. How? New styles, flavors, colors, or modified products. Diversification: new products for new markets. How? Start up or buy new businesses.

The Marketing Process* The strategic planning and business portfolio analysis processes help to identify and evaluate marketing opportunities. The purpose of the marketing process is to help the firm plan how to capitalize on these opportunities. Key Elements Analyzing marketing opportunities Selecting target markets Developing the marketing mix Managing the marketing effort

The Marketing Process Key Elements The segmentation process divides the total market into market segments. Target marketing chooses which segment(s) are pursued. Market positioning for the product is then determined. Key Elements Analyzing marketing opportunities Selecting target markets Developing the marketing mix Managing the marketing effort

Connecting With Customers Market Positioning: arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. i.e. Chevy Blazer is “like a rock.”

The Marketing Process Key Elements Analyzing marketing opportunities Competitor analysis guides competitive marketing strategy development. Strategy leads to tactics via the marketing mix: The “Four Ps” – product, price, place, promotion (seller viewpoint) The “Four Cs” – customer solution, cost, convenience, and communication (customer viewpoint) Key Elements Analyzing marketing opportunities Selecting target markets Developing the marketing mix Managing the marketing effort

Figure 2-5: The Marketing Mix

Developing the Marketing Mix Quality Design Features Packaging Sizes Services Price Place Promotion Product Goods and services offered to consumer

Developing the Marketing Mix Price Place Promotion Product Advertising Personal selling Sales Promotion Publicity Activities that communicate merits of product

Developing the Marketing Mix Price Place Promotion Product Channels Locations Assortments Inventory Transportation Activities that make products available

Developing the Marketing Mix list price discounts credit terms payment period allowances Price Place Promotion Product Money paid to obtain product

The Marketing Process Key Elements Analyzing marketing opportunities Marketing analysis Provides information helpful in planning, implementation, and control Marketing planning Strategies and tactics Marketing implementation Turns plans into action Marketing control Operating control Strategic control Key Elements Analyzing marketing opportunities Selecting target markets Developing the marketing mix Managing the marketing effort

Managing the Marketing Effort Figure 2-6: Managing the Marketing Effort

Marketing Control Process (Fig. 2.8) Measure Performance Evaluate Performance Take Corrective Action Set Goals

Marketing Plan Where you want to go BA 499 write a marketing plan

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