1. Principles of Marketing Chapter 2: Company & Marketing Strategy

2. Dr. James Carver – Auburn University
Strategic Planning
Managing the strategic fit between one’s goals and capabilities and its changing marketing opportunities.
Adapting the resources of the firm to the opportunities and threats of an ever-changing retail environment.
Focused not on current business but future opportunities
Dr. James Carver – Auburn University

3. Steps in Strategic Planning
Corporate level:
i.e., headquarters
Define mission statement
Set objectives and goals
Design business portfolio
Strategic Business Unit (SBU) level
e.g., a product line, division, single product, or brand
Plan functional strategies for delivering value
Includes marketing planning
Dr. James Carver – Auburn University

4. 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.
Can be:
A division,
A product line within a division,
A single product or even brand.
Dr. James Carver – Auburn University

5. Dr. James Carver – Auburn University
Mission Statement
A mission statement is a statement of the organization’s purpose–what it wants to accomplish in the larger environment.
It’s a basic description of the fundamental nature, rationale, and direction of the firm.
Basically answers “what business are we in?”
Less than 60% have a written mission statement*
Dr. James Carver – Auburn University

6. Mission Statement (Cont.)
Should be crafted at “the most meaningful level of generalization possible”
Should be market oriented, not product oriented
Risk Marketing Myopia
Focused on customer experience, not sales and profits.
Dr. James Carver – Auburn University

7. Dr. James Carver – Auburn University
Goals and Objectives
Established as a hierarchy of objectives that “feed” the lower levels:
Business objectives
More about “what” (e.g., increase profits)
Marketing objectives
More about “how” (e.g., increase market share domestically)
Dr. James Carver – Auburn University

8. Goals and Objectives (cont.)
Each manager should have objectives and be responsible for reaching them. Why?
Provide direction and guidance to the firm in the formulation of its strategies.
An [intermediate] “destination” for the firm
Establish a standard against which to measure and evaluate future firm performance.
They minimize the ability for ex post justification
Dr. James Carver – Auburn University

9. Designing the Business Portfolio
The collection of businesses and products that make up the company.
Portfolio planning involves two steps:
Analyze current portfolio & decide which should receive more, less, or no investment
Shape future portfolio through development and downsizing
Dr. James Carver – Auburn University

10. Dr. James Carver – Auburn University
Portfolio Analysis
Steps:
Identify key SBUs that make up company
Assess each SBU’s attractiveness
Decide how much support is deserved
Most analyses are based on 2 factors (BCG):
Attractiveness of market (i.e., growth rate)
Strength within each market (i.e., share)
Dr. James Carver – Auburn University

11. Boston Consulting Group (BCG) Growth-Share Matrix
Dr. James Carver – Auburn University

12. Strategies from the BCG Matrix
Stars: High-share / high-growth
Strategy: Build into cash cow via investment.
Cash cows: High-share / low-growth
Strategies: Maintain or harvest cash to support STARS.
Question marks: Low-share / high-growth
Strategies: Build into STAR via investment OR reallocate funding and let slip into DOG status.
Dogs: Low-share / low-growth
Strategies: Maintain or divest investments.
Dr. James Carver – Auburn University

13. Problems with Matrix Approaches
Several problems exist:
Can be difficult, time consuming, and costly
Difficult to define SBU’s market share & growth rate.
Focus on current businesses, not future planning.
Dr. James Carver – Auburn University

14. Product/Market Expansion Grid
An alternative to the Product Matrix approach:
Identify growth opportunities based more on “needs”
Dr. James Carver – Auburn University

15. From Strategic Planning to Building Relationships
Marketing plays a key role in strategic planning:
Provides a guiding philosophy.
The marketing concept
Provides input to strategic planners.
Identifies attractive market opportunities
Designs strategies to reach objectives.
Dr. James Carver – Auburn University

16. The “Integrated Effort” Portion of the Marketing Concept
Marketers play a vital role, but can’t do it alone
They Must:
Manage the internal value chain
Cross-functional management
Coordinate the external value delivery system
Interfirm management (e.g., channel management)
“Marketing is Everything” (McKenna HBR 1991)
Little “m” marketing buy-in is critical
Dr. James Carver – Auburn University

17. Marketing Strategy and the Marketing Mix
The goal of marketing strategy is:
Create value & build customer relationships
Marketing strategy decisions include:
Market segmentation
Targeting
Differentiation
Positioning
Marketing strategy guides the marketing mix
Dr. James Carver – Auburn University

18. Marketing Strategy Decisions
Segmentation:
The process of dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors and who might require separate products or marketing programs.
Targeting:
Involves evaluating each market segment’s attractiveness and selecting one or more segments to enter.
Dr. James Carver – Auburn University

19. Differentiation and Positioning
Creating superior customer value by actually meeting the needs better than the competition*
Note: Text defined differentiation with “differentiating”
Assists in later positioning
Positioning:
Arranging (perceptually*) a product to occupy a clear, distinctive, and desirable place relative to competing products
Dr. James Carver – Auburn University

20. Dr. James Carver – Auburn University
The Marketing Mix
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
Dr. James Carver – Auburn University

21. The 4 Ps and the 4 Cs of the Marketing Mix
4 Ps – Seller’s View
Product
Price
Place
Promotion
4 Cs – Buyer’s View
Customer Solution
Customer Cost
Convenience
Communication
Dr. James Carver – Auburn University

22. Dr. James Carver – Auburn University
Marketing Management
Four marketing management functions:
Marketing analysis
Marketing planning
Marketing implementation
Marketing control
Dr. James Carver – Auburn University

23. Developing a Differentiation Strategy
Firms begin with a SWOT analysis.
Internally:
What are the firm’s relative strengths and weaknesses?
Externally:
What potential threats and opportunities exist within the market?
Successful firms will…
Leverage strengths that minimize future threats, and
Correct weaknesses that coincide with market opportunities
Dr. James Carver – Auburn University

24. Dr. James Carver – Auburn University
SWOT Analysis
Strengths:
What major competitive advantage(s) do we have?
What are we good at?
What do customers perceive as our strong points?
Dr. James Carver – Auburn University

25. SWOT Analysis Weaknesses
What major competitive advantage(s) do competitors have over us?
What are competitors better at than we are?
What are our major internal weaknesses?

26. SWOT Analysis Opportunities
What favorable environmental trends may benefit our firm?
What is the competition doing in our market?
What areas of business that are closely related to ours are undeveloped?

27. SWOT Analysis
Threats
What unfortunate environmental trends may hurt our future performance?
What technology is on the horizon that may soon have an impact on our firm?

28. Marketing Implementation
Turns marketing plans into marketing actions by addressing:
Who
Where
When
How
Implementation can be difficult but is critical to success.
Dr. James Carver – Auburn University

29. Organizing Marketing Departments
Four general types of organizations:
Functional organization:
Each marketing activity is headed by a functional specialist.
e.g., sales manager, advertising manager, marketing research manager, etc.
Most common form
Geographic organization:
Sales and marketing people are assigned to specific countries, regions, and/or districts.
Best for firms that sell internationally or across country
Dr. James Carver – Auburn University

30. Marketing Department Organization (cont.)
Product management organization:
One person is responsible for complete strategy and marketing program for a single product
Best for firms that sell many different products and/or brands
Market (or customer) organization:
Manager responsible for particular market or type of customer
Best for firms that sell one product line to many different markets
Or some combination thereof…
Dr. James Carver – Auburn University

31. Marketing Control Process
Marketing control involves four steps:
Set goals
Measure performance
Evaluate performance
Take corrective action
In essence it’s “Closed Loop” marketing*
Dr. James Carver – Auburn University