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Company and Marketing Strategy: Partnering to Build Customer Relationships

•Chapter 2

•Powerpoint slides

•Extendit! version

•Instructor name

•Course name

•School name

•Date

Principles of Marketing: 6th Canadian Edition

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Strategic Planning

• Strategic planning:– Developing/maintaining a strategic fit between

– organizational goals and capabilities, and

– changing marketing opportunities

• Strategic planning sets the stage for other planning

• Steps in strategic planning:

Figure 2.1

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Mission Statements

• Mission statement: statement of an organization’s purpose; what it wants to accomplish in the larger environment; needs to be specific, realistic, and motivating; today’s statements are market-oriented

Table 2.1

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Designing the Business Portfolio

• Business portfolio: collection of businesses within the overall company

• Portfolio analysis: management tool to identify/evaluate businesses; make resource allocation decisions

• Strategic business unit (SBU):

– Unit with separate mission and objectives

– Planned independently from other company businesses

– Used as the building block of portfolio analysis

Figure 2.2

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BCG Growth-Share Matrix

• Growth-share matrix: – Portfolio planning method that evaluates SBU’s

– Classifys SBU’s based on market growth rate and relative market share

– Four categories of companies:

• Stars: need heavy investment to maintain rapid growth; become future cash cows

• Cash cows: successful products that generate cash to fund other SBU’s

• Question marks: need cash to hold share, could go either way

• Dogs: may be self-sustaining, but with low prospects for growth; targets for divesting

Figure 2.2

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Competitive Strategy

• Competitive strategy chosen will be influenced by:

– Industry structure

– Competitive position within that industry

• Five forces determining profitability:– Barriers to entry to industry (patents

in pharmaceutical industry)– Power of the customer relative to the

firm (Walmart)– Power of suppliers relative to the firm

(Jean Coutu as a wholesaler)– Presence of substitutes for the

products offered (direct and indirect)– Degree of competitive rivalry within

industry

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Strategies for SBU’s

• Porter’s winning strategies:– Overall cost leadership: achieving lowest costs of production and

distribution to allow low pricing strategy, sell standardized products and use low cost media to promote. Ex. Wal-Mart

– Differentiation: creating a highly differentiated product line and marketing program; targeted customers, pursue quality leadership. Ex. Caterpillar (customers with intense needs)

– Focus: serving only a few market segments, offering products closely aligned with their needs. Ex. MEC (Mountain Equipment Co-op)

• Losing strategy: middle of the road, not standing out on any dimension. Ex. Sears, Chrylser

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Strategies for SBU’s

• Treacy and Wiersema:– Operational excellence: providing superior value by leading in price

and convenience; reliable, good-quality products; similar to cost leadership strategy. Ex. Dell, IKEA

– Product leadership: provide superior value by continuous stream of new, leading-edge products; focus on new product development. Ex. Cognos, PeopleSoft

– Customer intimacy: providing superior value by precise segmentation of markets and matching product offering to those needs; focus on being responsive to the target customer’s needs. Ex. FedEx

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Strategies for Growth

• Product-market expansion grid:– Portfolio planning tool for identifying company growth

opportunities

– Uses products (new/existing) and markets (new/existing)

– Four strategies for growth

• Growth is necessary (but not at any cost)

• Marketing’s job to:

– Identify,

– Evaluate, and

– Select growth opportunities

Figure 2.3

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Strategies for Growth: Tim Horton’s

• Marketing penetration:– Opening more locations in existing markets, advertising

– Continuous improvement of facilities and operations

• Market development:– New demographic age groups, or geographical locations (U.S.A)

• Product development:– Expanding the product

line to attract lunch crowd

• Diversification:– Entering new markets

with new products

– Growth by acquisition or development

Figure 2.3

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Strategic Planning and Small Business

• Strategic planning is not just for large businesses

• Can provide a basis for contingency planning

• Steps:– Identify major elements in the business environment

– Describe mission of the company– Explain internal and external forces

that will have an impact

– Identify the basic driving force that will direct the company

– Develop long-term objectives

– Outline general plan:• Logistical factors

• Financial factors

• Personnel factors

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Partnering to Build Customer Relationships

• Marketing’s role in strategic planning:– Provides a guiding philosophy (the type of relationship with

customers, quality product, servicing, delivery time, etc.)– Provide inputs to help identify marketing opportunities and

assess potential for taking advantage of them (choice of products)

– Designs strategies for reaching objectives• Partner relationship

management:– Working closely with partners from

• Other company departments• Outside the company to• Jointly bring greater value to

customers

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Partnering to Build Customer Relationships

• Value chain:– Series of departments that carry out value-creating

activities

– Design, produce, market, deliver, and support a firm’s products

• Value delivery network:– Company, suppliers,

distributors, and customers

– Partner with each other to

– Improve the performance of the whole system

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The Marketing Process

• The marketing process:– Analyzing marketing

opportunities

– Selecting target markets

– Developing the marketing mix, and

– Managing the marketing effort

• Three key steps:– Market segmentation

– Target marketing

– Market positioning

Figure 2.4

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The Marketing Process (continued)

• Market segmentation:– Dividing a market into groups with distinct needs

– Who might require (respond to) different marketing mix

• Target marketing:– Evaluating the attractiveness of each

market segment

– Deciding which segment(s) to enter

– Most profitably serve

• Market positioning:– Occupying a clear, distinctive, and

desirable place

– Relative to competing products

– In the minds of target customers

Figure 2.4

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Strategies for Competitive Advantage

• To be successful, companies must do a better job of satisfying customer needs than their competition (keep customers and grow with them)

• Marketing strategy is not formulated in a vacuum• Competitive intelligence is necessary to keep track• Marketing strategy choice dependent on industry position,

resources, distinctive competencies, and objectives

• Strategic industry positions:– Market leader

– Market challenger

– Market followers

– Market nichers

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The Four P’s of the Marketing Mix

• The marketing mix:– Set of controllable,

tactical marketing tools

– Product, price, place, and promotion

– Blended to produce the desired response in the target market

• Internal consistency helps to be successful

• Represents the seller’s view of the market

Figure 2.5

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The 4 P’s Versus 4 C’s

• A different (buyer’s) way of looking at the four P’s

Product

Price

Place

Promotion

Customer solution

Customer cost

Convenience

Communication

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Managing the Marketing Effort

• Four marketing management functions:– Marketing analysis

– Marketing planning

– Implementation

– Control

• Marketing strategy:Figure 2.6– The marketing logic

by which the business unit

– Hopes to achieves its marketing objectives

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Contents of a Marketing Plan (Table 2.2)

• Executive summary:– Table of contents

• Current marketing situation:– Market description, product review, competition, and distribution

• Threat and opportunity analysis:

• Marketing objectives and issues:• Marketing strategy:

– Target markets, positioning, expenditure levels, and marketing mix

• Action program:

• Budget:

• Controls:

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Marketing Plan Implementation

• Marketing implementation:– Process that turns strategies and plans

– Into marketing actions

– That accomplish strategic marketing objectives

• Marketing department organization:– Functional organization

– Geographic organization

– Product management organization

– Customer equity management (customer profitability – total customer relationship)

– Market or customer management organization (one product and several market segments)

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The Control Process

• Marketing audit:– Comprehensive, systematic, independent, periodic

– Examination of a company’s environment, objectives, strategies, and activities

– To identify problems, opportunities, and plans of action

Figure 2.7

Set goals

What do we want to achieve?

Measureperformance

What is happening?

Evaluateperformance

Why is it happening?

Take correctiveaction

What should we do about it?

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In Conclusion…

• The learning objectives for this chapter were:– Explain company-wide strategic planning and its four steps

– Discuss how to design business portfolios and develop strategies for growth and downsizing

– Assess marketing’s role in strategic planning and explain how marketers partner with others inside and outside the firm to build profitable customer relationships

– Describe the marketing process and the forces that influence it

– List the marketing management functions, including the elements of a marketing plan