Company and Marketing Strategy: Partnering to Build Customer Relationships 2

2-1 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.

2-2 Steps in Strategic Planning

2-3 Questions a Mission Statement Should Answer What is our Business? Who is the Customer? What do Consumers Value? What Should our Business Be?

2-4 The Mission Statement A statement of the organization’s purpose 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. Should be market oriented and defined in terms of customer needs.

2-5 Mission Statements Should: Be SpecificBe Based on Distinctive CompetenciesBe Motivating

2-6 Designing the Business Portfolio The business portfolio is the collection of businesses and products that make up the company. The business portfolio is the collection of businesses and products that make up the company. The company must: 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.

2-7 Portfolio Analysis An evaluation of the products and business making up the company. 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. Resources are directed to more profitable businesses and weaker ones are phased down or dropped.

2-8 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. 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. Can be a company division, a product line within a division, or sometimes a single product or brand.

2-9 Analyzing Current SBU’s: BCG Growth-Share Matrix Question Marks Low share SBUs in high growth markets Require cash to hold market share Build into Stars or phase out Question Marks Low share SBUs in high growth markets Require cash to hold market share Build into Stars or phase out Stars High growth & share May need heavy investment to grow Eventually, growth will slow Relative Market Share High Low Market Growth Rate Low High ? 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 Generate cash to sustain self Do not promise to be cash sources Dogs Low growth & share Generate cash to sustain self Do not promise to be cash sources

2-10 Can be Difficult, Time Consuming, Costly to Implement Difficult to Define SBUs & Measure Market Share/Growth Can Place too Much Emphasis on Growth Problems With Matrix Approaches Can Lead to Poorly Planned Diversification

2-11 Market Penetration Product Development Market Development ExistingNew P R O D U C T New M A R K E T Diversification Existing Product/Market Expansion Grid

2-12 Product/Market Expansion Grid Based on Starbucks Market Penetration: make more sales to current customers without changing products. Market Penetration: make more sales to current customers without changing products. –How? Add new stores in current market areas; improve advertising, prices, menu, service. Market Development: identify and develop new markets for current products. Market Development: identify and develop new markets for current products. –How? Review new demographic (seniors/ethnic consumers) or geographic (Asian, European, Australian, & South American) markets.

2-13 Product/Market Expansion Grid Based on Starbucks Product Development: offering modified or new products to current markets. Product Development: offering modified or new products to current markets. –How? Add food offerings, sell coffee in supermarkets, co-brand products. Diversification: start up or buy businesses outside current products and markets. Diversification: start up or buy businesses outside current products and markets. –How? Making and selling CDs, testing restaurant concepts, or branding casual clothing.

2-14 Marketing’s Role in Strategic Planning Provide a Guiding Philosophy Provide Inputs to Strategic Planners Design Strategies to Reach Objectives

2-15 Value Delivery Network Company’s Value Chain DistributorsSuppliers Customers

2-16 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. 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 A market segment consists of consumers who

2-17 Target Marketing Involves evaluating each market segment’s attractiveness and selecting one or more segments to enter. Involves evaluating each market segment’s attractiveness and selecting one or more segments to enter. Target segments that can sustain profitability. Target segments that can sustain profitability. Example: Example: –Arm & Hammer’s baking soda. –

2-18 Market Positioning Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers (e.g., Chevy Blazer: “Like a rock”) Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers (e.g., Chevy Blazer: “Like a rock”) Process begins with differentiating the company’s marketing offer so it gives consumers more value. Process begins with differentiating the company’s marketing offer so it gives consumers more value.

2-19 The Marketing Mix The set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market. The set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market. Consists of the 4 P’s Consists of the 4 P’s 1.Product 2.Price 3.Place 4.Promotion

2-20 The 4 P’s of the Marketing Mix

2-21 The 4 P’s & 4 C’s of the Marketing Mix 4 P’s - Seller’s View 4 P’s - Seller’s View –Product –Price –Place –Promotion 4 C’s - Buyer’s View 4 C’s - Buyer’s View

2-22 Managing the Marketing Effort

2-23 Major Sections of Product/Brand Plan Executive Summary Current Marketing Situation Analysis of Threats and Opportunities Objectives for the Brand Marketing Strategy Action Programs Marketing Budget Controls

2-24 Geographic Organization Geographic Organization Market or Customer Organization Market or Customer Organization Functional Organization Functional Organization Product Management Organization Product Management Organization Marketing Department Organization

2-25 Functional Organization: Each marketing activity is headed by a functional specialist. 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 Marketing Department Organization

2-26 Marketing Department Organization Geographic Organization: Sales and marketing people are assigned to specific countries, regions, and districts. Geographic Organization: Sales and marketing people are assigned to specific countries, regions, and districts. –Coca-Cola staff assigned to the South American market Product Management Organization: One person given responsibility for complete strategy and marketing program for a single product. Product Management Organization: One person given responsibility for complete strategy and marketing program for a single product.

2-27 Marketing Department Organization Market or Customer Organization: Manager responsible for particular market or customer. Market or Customer Organization: Manager responsible for particular market or customer. Combination Organization: Use some combination of the previous four approaches. Combination Organization: Use some combination of the previous four approaches. –This is especially true in large companies (e.g., Procter & Gamble) –

2-28 Marketing Control Process