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Introduction to Marketing
#2 Company and Marketing Strategy:
Partnering to Build Customer Relationships
2014 Fall
Group Formation
• 5-6 students in each group (total 12 groups)
• Group case study
Case will be distributed on October 6
The deadline is October 20
Objective Outline
• Company-wide strategic planning: Defining marketing’s role
• Designing the business portfolio (SBUs)
• Planning marketing: Partnering to build customer relationships
• Marketing strategy and the Marketing Mix (4Ps)
• Managing marketing effort
• Measuring and managing return on marketing investment
McDonald’s: A Customer-Focused “Plan to Win” Strategy
In the mid-1990s…
• Customers were looking for fresher and better-tasting food
• Customers wanted more contemporary atmospheres
McDonald’s: A Customer-Focused “Plan to Win” Strategy
FAILED FAILED
FAILED Social activists & nutritionists
blamed the fat- and sugar-laden
menu
McDonald’s: A Customer-Focused “Plan to Win” Strategy
Plan to Win • Refocused the company on its customers
• Five basics: People, Products, Place, Price, and Promotion
• Clean, simple, more-modern interiors and amenities
• Stayed open longer to serve late-night dinners
• More variety and healthier options
Strategic Planning
The process of developing and maintaining a strategic fit
between the organization's goals and capabilities and its
changing marketing opportunities.
Strategic Planning involves developing an overall company strategy for long-run survival and growth. This process involves: 1) Defining the Company Mission: Statement of an organization’s
purpose; should be market oriented. 2) Setting Company Objectives: Supporting goals and objectives to
guide the entire company. 3) Designing the Business Portfolio: Collection of businesses and
products that make up the company. 4) Planning Marketing Strategies: Detailed planning for each
department designed to accomplish strategic objectives.
Strategic Planning Process
Defining the Company Mission
Setting Company Objectives
Designing the Business Portfolio
Planning Marketing Strategies
Strategic Planning Process
Defining a Mission
Characteristics of a good mission
statement
Market- oriented
Realistic
Specific
Fit market environment
Distinctive competencies
Motivating
3 essential components 1. Key market (customers) – who is your target client/customer?
(generalize if needed) 2. Contribution (products/services) – what product or service do
you provide to that client? 3. Distinction (competences) – what makes your product or
service unique, so that the client would choose you?
Mission Statements
Mission Statements
Market-oriented mission: “Food with great integrity” Highlights its commitment to good food made from natural, local, and sustainably raised ingredients.
Good or Bad Mission Statement?
Mission Statement Our goal for Citigroup is to be the most respected global financial services company. Like any other public company, we're obligated to deliver profits and growth to our shareholders. Of equal importance is to deliver those profits and generate growth responsibly.
1. Key market? Target customers? 2. Contribution? Main products/services? 3. Distinction? Unique selling points?
Good or Bad Mission Statement?
Mission Statement FedEx will produce superior financial returns for shareowners by providing high value-added supply chain, transportation, business and related information services through focused operating companies. Customer requirements will be met in the highest quality manner appropriate to each market segment served……Safety will be the first consideration in all operations. Corporate activities will be conducted to the highest ethical and professional standards.
1. Key market? Target customers? 2. Contribution? Main products/services? 3. Distinction? Unique selling points?
Good or Bad Mission Statement?
Mission Statement The mission of The Walt Disney Company is to be one of the world's leading producers and providers of entertainment and information. Using our portfolio of brands to differentiate our content, services and consumer products, we seek to develop the most creative, innovative and profitable entertainment experiences and related products in the world.
1. Key market? Target customers? 2. Contribution? Main products/services? 3. Distinction? Unique selling points?
Mission Statement To Bring Inspiration and innovation to every athlete in the world.
Good or Bad Mission Statement?
Defining the Company Mission
Setting Company Objectives
Designing the Business Portfolio
Planning Marketing Strategies
Strategic Planning Process
Strategic Planning Process
Companies often define themselves in terms of products: They are in the “auto business” or the “clothing business.” Market definitions of a business, however, describe the business as a customer satisfying process. Viewing businesses in terms of customer needs can suggest additional growth opportunities.
Product Orientation vs. Market Orientation
Product-oriented objective
“We are an online social network.”
Market-oriented objective
“We connect people around the world and help them share important moments in their lives.”
Product Orientation vs. Market Orientation
Xerox
Product-oriented objective
“We make copying equipment.”
Market-oriented objective
“We improve office productivity.”
Product Orientation vs. Market Orientation
NASA
Product-oriented objective
“We explore outer space.”
Market-oriented objective
“We reach for new heights and reveal the unknown so that what we do and learn will benefit all humankind.”
Product Orientation vs. Market Orientation
Columbia Pictures
Product-oriented objective
“We make movies.”
Market-oriented objective
“We entertain people.”
Product Orientation vs. Market Orientation
Ritz-Carlton Hotels & Resorts
Product-oriented objective
“We rent rooms.”
Market-oriented objective
“We create the Ritz-Carlton experience – a memorable stay that far exceeds guest’s already high expectations.”
Defining the Company Mission
Setting Company Objectives
Designing the Business Portfolio
Planning Marketing Strategies
Strategic Planning Process
Designing the Business Portfolio
The best portfolio is the one that best fits the company’s strengths and weaknesses to the opportunities in the environment. The company must: • 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
* strategic business unit (SBU) is a profit center which focuses on product offering and market segment. Large companies normally manage quite different businesses, each requiring its own strategy. At one time, General Electric classified its businesses into 49 strategic business units (SBUs).
An SBU must…
1. have its own mission, distinct from the missions of other SBU
2. have definable groups of competitors
3. prepare its own integrative plans, fairly distinct from those of
other SBU
4. manage its resources in key areas
5. have a proper size — neither too large nor too small
Strategic Business Units (SBU)
Strategic Business Units (SBU)
An SBU can be…
1. A company division
2. A product line within a division
3. A single product or brand
Examples of Strategic Business Units (SBU)
Kate Spade is a SBU under the Liz Claiborne corporate umbrella.
Examples of Strategic Business Units (SBU)
Procter & Gamble products (P&G) • Three categories:
1. Beauty 2. Household Care 3. Health & Well-Being
• More than 250 brands, including 23 brands
which have more than a billion dollars in net annual sales
Analyzing Current SBU’s:
Boston Consulting Group Approach
Growth-share matrix
A portfolio-planning method that evaluates a company’s SBUs in
terms of market growth rate and relative market share.
Analyzing Current SBU’s:
Boston Consulting Group Approach
high Low
high
Low
Analyzing Current SBU’s:
Boston Consulting Group Approach
Stars. High-growth, high-share business or products. Need heavy investments to finance their rapid growth Cash Cow. Low-growth, high-share business and products. Successful SBUs and need less investment to hold their market share.
Question Marks. High-growth, low-share business or products. Need a lot of cash to hold their share. Dogs. Low-growth, low-share business and products. May generate enough cash to maintain but not so promising.
Analyzing Current SBU’s:
Boston Consulting Group Approach
Under the classic BCG portfolio
planning approach, the company
invests funds from mature,
successful products and business
(cash cows) to support promising
products and businesses in faster-
growing markets (stars and question
markets), hoping to turn them into
future cash cows.
Product/ Market Expansion Grid
Product/Market Expansion Grid
A portfolio-planning tool for identifying company growth
opportunities.
Growth-share matrix Evaluating the current businesses.
Product/Market Expansion Grid Finding future business opportunities
Product/ Market Expansion Grid
Product/ Market Expansion Grid
• Market Penetration: increase sales to present customers with current products. How? Cut prices, increase advertising, get products into more stores.
• Market Development: develop new markets with current products. How? Identify new demographic or geographic markets.
• Product Development: offering modified or new products to current customers. How? New styles, flavors, colors, or modified products.
• Diversification: new products for new markets. How? Start up or buy new businesses.
Product/ Market Expansion Grid – Examples
Going for the China market with sesame-chocolate cubes is…
Diversification
Product/ Market Expansion Grid – Examples
Keeping launching new collections to its customers is…
Product development
Product/ Market Expansion Grid – Examples
Original usage of baking soda is for baking. It causes expansion of the batter and forms the characteristic texture and grain in pancakes, cakes, and quick breads.
Appealing to different usages is… Market development
Product/ Market Expansion Grid – Examples
Appealing to existing customers is… Market penetration
“If you love your children, Three times a day.”
Product/ Market Expansion Grid – Examples
Korea, 2001
“Milk consumption reduced by 3.7 % but
production increased by 8.4%.
Seoul Milk needed to do something about it.
Market penetration was no longer enough…”
Korea, 2002
“Seoul Milk sold 10,000,000 packs (200ml) a day…”
What happened?
Product/ Market Expansion Grid – Examples
Product/ Market Expansion Grid – Examples
Product/ Market Expansion Grid – Examples
Korea, 2002
Seoul Milk sold 10,000,000 packs (200ml) a day…
Product/ Market Expansion Grid – Examples
http://www.youtube.com/watch?v=VGABv2RsmCQ
Product/ Market Expansion Grid – Examples
Milk Mania series
Market development
Diversification
Product/ Market Expansion Grid – Examples
“Nothing is going right for me since I met you!!” “Go away!!” I met her in my twenties. “You go away. Please go away…” “Fill me up..”
“Love is always thirsty. When 2% is lacking.”
http://www.youtube.com/watch?v=YxxOpRbpwL8
Defining the Company Mission
Setting Company Objectives
Designing the Business Portfolio
Planning Marketing Strategies
Strategic Planning Process
Marketing’s Role in Strategic Planning
• Process of Selecting Target Consumers (STP)
Market Segmentation: determining distinct groups of buyers
(segments) with different needs.
Market Targeting: evaluating and selecting which target
segments to enter.
Market Positioning: developing products’ distinctive and
desirable place in the minds of target segments compared to
competing products.
Marketing’s Role in Strategic Planning – Segmentation
http://www.bayesia.com/en/applications/marketing.php
Marketing’s Role in Strategic Planning – Segmentation
Marketing’s Role in Strategic Planning – Targeting
CVS Caremark's target market is women since they make up 80 percent of the pharmacy chain’s customers.
The Oreo cookie is a popular cookie in the U.S., known for its two discs of chocolate with a white cream filling. However, Kraft has formulated a different version of the Oreo to target consumers in China. The Chinese version consists of four layers of long, thin biscuits coated in chocolate.
Pepsi-Cola Company used target market analysis to broaden the audience for Mountain Dew. Experts in target marketing developed an ad campaign targeting urban youth that featured hip-hop music artist Busta Rhymes in a variety of extreme-sports antics and role-playing characterizations. The campaign was a hit, and sales increased in inner-city markets.
Marketing’s Role in Strategic Planning – Positioning
“Because you’re worth it”
http://www.youtube.com/watch?v=KiuAPc88pY4
http://www.youtube.com/watch?v=BbBqBoS9Wpc
Marketing’s Role in Strategic Planning – Positioning
How is your brand perceived?
Marketing’s Role in Strategic Planning – Positioning
MDS (Multidimensional Scaling )
What are images of actors? What are their relative “positions” in people’s mind?
MDS (Multidimensional Scaling)
• Allows researcher to determine perceived relative image of a set of objects (brands, products, endorsers etc.)
Multidimensional Scaling
How similar are?
vs.
vs.
vs.
___
___
___
Perceptual Map
MDS: SPSS Outputs
Example) MDS for car perceptions
BMW 328i Ford Explorer Infinity J30 Grand Cherokee Lexus ES300
Mercedes C280 Saab 9000 Chrysler Town & Country
Porsche Boxster Volvo V90
Each respondent ranked the list of 45 possible pairs
-2 -1 0 1
Dimension 1
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
Dim
en
sio
n 2
bmw
ford
infinty
jeep
lexus
chrysler mercedes
saab
porsche
volvo
Euclidean distance model
MDS: SPSS Outputs
Example) MDS for car perceptions
Marketing Mix- The Four P’s
4 P’s
“Goods-and-service” combination that a company offers to a
target market
Amount of money that consumers
have to pay to obtain the product
Activities that persuade target
customers to buy the product
Company activities that make the
product available
Product Pricing
Promotion Place
4 Ps and 4Cs
There is another concern that 4Ps take the seller’s view of the market, not the buyer’s view. From the buyer’s viewpoint, in this age of customer value and relationships, the four Ps might be better described as the four Cs.
4Ps
Product
Price
Place
Promotion
4Cs
Customer solution
Customer cost
Convenience
Communication
Managing the Marketing Effort
SWOT analysis. An overall evaluation of the company’s strengths, weaknesses, opportunities, and threats
Internal
External
Positive Negative
Marketing Implementation
The process that turns marketing strategies and plans into
marketing actions in order to accomplish strategic marketing
objectives
Marketing Implementation
Marketing Implementation
Marketing Control
The process of measuring and evaluating the results of
marketing strategies and plans, and taking corrective action to
ensure that objectives are achieved.
Marketing Control
Set Marketing Goals
Measure
Performance
Evaluate
Performance
Take Corrective
Action
Marketing Audit
A comprehensive, systematic, independent, and periodic
examination of a company's environment, objectives, strategies,
and activities to determine problem areas and to recommend a
plan of action to improve the company's marketing performance.
Return on marketing (or marketing ROI)
The net return from a marketing investment divided by the costs
of the marketing investment.