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Company and Marketing
Strategy: Partnering to Build
Customer Relationships
22
Principles of Marketing
Learning Objectives
After studying this chapter, you should be able to:
1. Explain companywide strategic planning in its four steps
2. Discuss how to design business portfolios and develop growth
strategies
3. Explain marketing’s role in strategic planning and how
marketing works with its partners to create and deliver
customer value
4. Describe the elements of a customer-driven marketing
strategy and mix, and the forces that influence it
5. List the marketing management functions, including the
elements of a marketing plan, and discuss the importance of
measuring return on marketing investment
2-2
Chapter Outline
1. Companywide Strategic Planning: Defining
Marketing’s Role
2. Planning Marketing: Partnering to Build
Customer Relationships
3. Marketing Strategy and the Marketing Mix
4. Managing the Marketing Effort
5. Measuring and Managing Return on
Marketing Investment
2-3
Companywide Strategic Planning:
Defining Marketing’s Role
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
2-4
Companywide Strategic Planning:
Defining Marketing’s Role
Defining a Market-Oriented Mission
Mission statement: The organization’s
purpose, what it wants to accomplish in the
larger environment
Market-oriented mission statement:
Defines the business in terms of satisfying
basic customer needs
2-5
Companywide Strategic Planning:
Defining Marketing’s Role
Setting Company Objectives and Goals
• Business objectives
• Marketing objectives
2-6
Companywide Strategic Planning:
Defining Marketing’s Role
Designing the Business Portfolio
The business portfolio is the collection of
businesses and products that make up the
company
2-7
Companywide Strategic Planning:
Defining Marketing’s Role
Analyzing the Current Business Portfolio
Analyzing the current business portfolio
is the process by which management
evaluates the products and businesses
making up the company
2-8
Companywide Strategic Planning:
Defining Marketing’s Role
Steps in Analyzing the Current Business Portfolio
1. Identify key businesses making up the
company
2. Assess the attractiveness of its various
SBUs
3. Decide how much support each SBU
deserves
2-9
Companywide Strategic Planning:
Defining Marketing’s Role
Steps in Analyzing the Current Business Portfolio
Identify key businesses making up the company
• Strategic business unit (SBU) is a unit of the
company that has a separate mission and
objectives that can be planned separately from
other company businesses
• Company division
• Product line within a division
• Single product or brand
2-10
Companywide Strategic Planning:
Defining Marketing’s Role
Steps in Analyzing the Current Business Portfolio
Assess the attractiveness of various SBUs and
decide how much support each deserves
2-11
Companywide Strategic Planning:
Defining Marketing’s Role
Analyzing the Current Business Portfolio
The Boston Group Approach
Growth share matrix is a portfolio planning method that
evaluates a company’s strategic business units in terms of
their market growth rate and relative share
Strategic business units are classified as:
• Stars
• Cash Cows
• Question marks
• Dogs
2-12
Companywide Strategic Planning:
Defining Marketing’s Role
Analyzing the Current Business Portfolio
The Boston Group Approach
Stars are high-growth, high-share businesses or products
requiring heavy investment to finance rapid growth.
They will eventually turn into cash cows.
Cash cows are low-growth, high-share businesses or products
that are established and successful SBUs requiring less
investment to maintain market share
2-13
Companywide Strategic Planning:
Defining Marketing’s Role
Analyzing the Current Business Portfolio
The Boston Group Approach
Question marks are low-share business units in high-growth
markets requiring a lot of cash to hold their share
Dogs are low-growth, low-share businesses and products that
may generate enough cash to maintain themselves but do
not promise to be large sources of cash
2-14
Companywide Strategic Planning:
Defining Marketing’s Role
Analyzing the Current Business Portfolio
Problems with Matrix Approaches
• Difficulty in defining SBUs and measuring
market share and growth
• Time consuming
• Expensive
• Focus on current businesses, not future
planning
2-15
Companywide Strategic Planning:
Defining Marketing’s
Role
Developing Strategies for Growth and Downsizing
Product/market expansion grid is a tool for
identifying company growth opportunities
through market penetration, market
development, product development, or
diversification
2-16
Companywide Strategic Planning:
Defining Marketing’s
Role
• Product/market expansion grid strategies
• Market penetration
• Market development
• Product development
• Diversification
2-17
Developing Strategies for Growth and Downsizing
Companywide Strategic Planning:
Defining Marketing’s Role
Developing Strategies for Growth and Downsizing
Market penetration is a growth strategy
increasing sales to current market segments
without changing the product
Market development is a growth strategy
that identifies and develops new market
segments for current products
2-18
Companywide Strategic Planning
Defining Marketing’s Role
Developing Strategies for Growth and Downsizing
Product development is a growth strategy
that offers new or modified products to
existing market segments
Diversification is a growth strategy through
starting up or acquiring businesses outside
the company’s current products and markets
2-19
Companywide Strategic Planning
Defining Marketing’s Role
Developing Strategies for Growth and Downsizing
Downsizing is the reduction of the business
portfolio by eliminating products or business
units that are not profitable or that no longer
fit the company’s overall strategy
2-20
Planning Marketing: Partnering
to Build Customer Relationships
Partner Relationship Management
Partner relationship management is the
process of working closely with partners in
other company departments to form an
effective value chain that serves the
customer, as well as partnering effectively
with other companies in the marketing
system to form a competitively superior
value-delivery network
2-21
Planning Marketing: Partnering
to Build Customer Relationships
Value chain is a series of departments that
carry out value-creating activities to
design, produce, market, deliver, and
support a firm’s products
2-22
Partnering with Other Company Departments
Planning Marketing: Partnering
to Build Customer Relationships
Value delivery network is made up of the
company, suppliers, distributors, and
ultimately customers who partner with
each other to improve performance of the
entire system
2-23
Partnering with Others in the Marketing System
Marketing Strategy and the
Marketing Mix
Marketing Strategy
Marketing strategy is the marketing logic by
which the business unit hopes to achieve its
marketing objectives
2-24
Marketing Strategy and the
Marketing Mix
Customer-Driven Marketing Strategy
Market segmentation is the division of a
market into distinct groups of buyers who
have distinct needs, characteristics, or
behavior and who might require separate
products or marketing mixes
2-25
Marketing Strategy and the
Marketing Mix
Customer-Driven Marketing Strategy
Market segment is a group of consumers
who respond in a similar way to a given set
of marketing efforts
Target marketing is the process of evaluating
each market segment’s attractiveness and
selecting one or more segments to enter
2-26
Marketing Strategy and the
Marketing Mix
Customer-Driven Marketing Strategy
Market positioning is the arranging for a
product to occupy a clear, distinctive, and
desirable place relative to competing
products in the minds of the target
consumer
2-27
Marketing Strategy and the
Marketing Mix
Developing an Integrated Marketing Mix
Marketing mix is the set of controllable
tactical marketing tools—product, price,
place, and promotion—that the firm blends
to produce the response it wants in the
target market
2-28
Marketing Strategy and the
Marketing Mix
The four Ps
• Product
• Price
• Place
• Promotion
2-29
Developing an Integrated Marketing Mix
Marketing Strategy and the
Marketing Mix
Developing an Integrated Marketing Mix
The four Ps
Product is the goods and services in
combination that the company offers to the
target market
Price is the amount of money customers have
to pay to obtain the product
2-30
Marketing Strategy and the
Marketing Mix
Developing an Integrated Marketing Mix
The four Ps
Place is the company activities that make the
product available to target customers
Promotion is the activities that communicate
the merits of the product and persuade
target customers to buy it
2-31
Marketing Strategy and the
Marketing Mix
Developing an Integrated Marketing Mix
The 4 Ps versus The 4 Cs
Product Customer solution
Price Customer cost
Place Convenience
Promotion Communication
2-32
Managing the Marketing Effort
Managing the marketing effort requires:
• Analysis
• Planning
• Implementing
• Controlling
2-33
Managing the Marketing Effort
Marketing Analysis
Analysis is the complete analysis of the
company’s situation in a SWOT analysis
that evaluates the company’s:
• Strengths
• Weaknesses
• Opportunities
• Threats
2-34
Managing the Marketing Effort
Marketing Analysis
Strengths include internal capabilities,
resources, and positive situational factors
that may help to serve company customers
and achieve company objectives
Weaknesses include internal limitations and
negative situational factors that may
interfere with company performance
2-35
Managing the Marketing Effort
Marketing Analysis
Opportunities are favorable factors or trends in
the external environment that the company
may be able to exploit to its advantage
Threats are unfavorable factors or trends that
may present challenges to performance
2-36
Managing the Marketing Effort
Market Planning
Planning is the development of strategic and
marketing plans to achieve company
objectives
Marketing strategy consists of the specific
strategies for target markets, positioning, the
marketing mix, and marketing expenditure
levels
2-37
Managing the Marketing Effort
Sections of a marketing plan include:
• Executive summary
• Current marketing situation
• Threats and opportunities
• Objective and issues
• Action programs
• Budgets
• Controls
2-38
Market Planning
Managing the Marketing Effort
Marketing Implementation
Implementing is the process that turns marketing
plans into marketing actions to accomplish strategic
marketing objectives
Successful implementation depends on how well the
company blends its people, organizational structure,
decision and reward system, and company culture
into a cohesive action plan that supports its
strategies
2-39
Managing the Marketing Effort
Marketing Department Organization
• Functional
• Geographic
• Product
• Market or customer management
2-40
Managing the Marketing Effort
Marketing Department Organization
Functional organization: This is the most
common form of marketing organization with
different marketing functions headed by a
functional specialist
• Sales manager
• Market research manager
• Customer service manager
• New product manager
2-41
Managing the Marketing Effort
Marketing Department Organization
Geographic organizations: Useful for companies
that sell across the country or internationally.
Managers are responsible for developing strategies
and plans for a specific region.
Product Management: Useful for companies with
different products or brands. Managers are
responsible for developing strategies and plans for
a specific product or band.
2-42
Managing the Marketing Effort
Marketing Department Organization
Market or customer management
organization: Useful for companies with
one product line sold to many different
markets and customers. Managers are
responsible for developing strategies and
plans for their specific markets or
customers.
2-43
Managing the Marketing Effort
Marketing Department Organization
Customer management involves a customer
focus and not a product focus for managing
customer profitability and customer equity
2-44
Managing the Marketing Effort
Marketing Control
Controlling is measuring and evaluating
results and taking corrective action as
needed
• Operating control
• Strategic control
2-45
Managing the Marketing Effort
Marketing Control
Operating control involves checking ongoing
performance against annual plan and taking
corrective action as needed
Strategic control involves looking at whether
the company’s basic strategies are well
matched to its opportunities
2-46
Managing the Marketing Effort
Marketing Control
Marketing audit is a comprehensive,
systematic, independent, and periodic
examination of a company’s environment,
objectives, strategies, and activities to
determine problem areas and opportunities
2-47
Measuring and Managing Return
on Marketing Investment
Return on Marketing Investment
(ROI)
Return on marketing investment (ROI)
is the net return from a marketing
investment divided by the costs of the
marketing investment. Marketing ROI
provides a measurement of the profits
generated by investments in marketing
activities.
2-48
Measuring and Managing Return on
Marketing Investment
Customer-Centered Measures
• Customer acquisition
• Customer retention
• Customer lifetime value
2-49

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Company and Marketing Strategy: Partnering to Build Customer Relationships

  • 1. Company and Marketing Strategy: Partnering to Build Customer Relationships 22 Principles of Marketing
  • 2. Learning Objectives After studying this chapter, you should be able to: 1. Explain companywide strategic planning in its four steps 2. Discuss how to design business portfolios and develop growth strategies 3. Explain marketing’s role in strategic planning and how marketing works with its partners to create and deliver customer value 4. Describe the elements of a customer-driven marketing strategy and mix, and the forces that influence it 5. List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring return on marketing investment 2-2
  • 3. Chapter Outline 1. Companywide Strategic Planning: Defining Marketing’s Role 2. Planning Marketing: Partnering to Build Customer Relationships 3. Marketing Strategy and the Marketing Mix 4. Managing the Marketing Effort 5. Measuring and Managing Return on Marketing Investment 2-3
  • 4. Companywide Strategic Planning: Defining Marketing’s Role 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 2-4
  • 5. Companywide Strategic Planning: Defining Marketing’s Role Defining a Market-Oriented Mission Mission statement: The organization’s purpose, what it wants to accomplish in the larger environment Market-oriented mission statement: Defines the business in terms of satisfying basic customer needs 2-5
  • 6. Companywide Strategic Planning: Defining Marketing’s Role Setting Company Objectives and Goals • Business objectives • Marketing objectives 2-6
  • 7. Companywide Strategic Planning: Defining Marketing’s Role Designing the Business Portfolio The business portfolio is the collection of businesses and products that make up the company 2-7
  • 8. Companywide Strategic Planning: Defining Marketing’s Role Analyzing the Current Business Portfolio Analyzing the current business portfolio is the process by which management evaluates the products and businesses making up the company 2-8
  • 9. Companywide Strategic Planning: Defining Marketing’s Role Steps in Analyzing the Current Business Portfolio 1. Identify key businesses making up the company 2. Assess the attractiveness of its various SBUs 3. Decide how much support each SBU deserves 2-9
  • 10. Companywide Strategic Planning: Defining Marketing’s Role Steps in Analyzing the Current Business Portfolio Identify key businesses making up the company • Strategic business unit (SBU) is a unit of the company that has a separate mission and objectives that can be planned separately from other company businesses • Company division • Product line within a division • Single product or brand 2-10
  • 11. Companywide Strategic Planning: Defining Marketing’s Role Steps in Analyzing the Current Business Portfolio Assess the attractiveness of various SBUs and decide how much support each deserves 2-11
  • 12. Companywide Strategic Planning: Defining Marketing’s Role Analyzing the Current Business Portfolio The Boston Group Approach Growth share matrix is a portfolio planning method that evaluates a company’s strategic business units in terms of their market growth rate and relative share Strategic business units are classified as: • Stars • Cash Cows • Question marks • Dogs 2-12
  • 13. Companywide Strategic Planning: Defining Marketing’s Role Analyzing the Current Business Portfolio The Boston Group Approach Stars are high-growth, high-share businesses or products requiring heavy investment to finance rapid growth. They will eventually turn into cash cows. Cash cows are low-growth, high-share businesses or products that are established and successful SBUs requiring less investment to maintain market share 2-13
  • 14. Companywide Strategic Planning: Defining Marketing’s Role Analyzing the Current Business Portfolio The Boston Group Approach Question marks are low-share business units in high-growth markets requiring a lot of cash to hold their share Dogs are low-growth, low-share businesses and products that may generate enough cash to maintain themselves but do not promise to be large sources of cash 2-14
  • 15. Companywide Strategic Planning: Defining Marketing’s Role Analyzing the Current Business Portfolio Problems with Matrix Approaches • Difficulty in defining SBUs and measuring market share and growth • Time consuming • Expensive • Focus on current businesses, not future planning 2-15
  • 16. Companywide Strategic Planning: Defining Marketing’s Role Developing Strategies for Growth and Downsizing Product/market expansion grid is a tool for identifying company growth opportunities through market penetration, market development, product development, or diversification 2-16
  • 17. Companywide Strategic Planning: Defining Marketing’s Role • Product/market expansion grid strategies • Market penetration • Market development • Product development • Diversification 2-17 Developing Strategies for Growth and Downsizing
  • 18. Companywide Strategic Planning: Defining Marketing’s Role Developing Strategies for Growth and Downsizing Market penetration is a growth strategy increasing sales to current market segments without changing the product Market development is a growth strategy that identifies and develops new market segments for current products 2-18
  • 19. Companywide Strategic Planning Defining Marketing’s Role Developing Strategies for Growth and Downsizing Product development is a growth strategy that offers new or modified products to existing market segments Diversification is a growth strategy through starting up or acquiring businesses outside the company’s current products and markets 2-19
  • 20. Companywide Strategic Planning Defining Marketing’s Role Developing Strategies for Growth and Downsizing Downsizing is the reduction of the business portfolio by eliminating products or business units that are not profitable or that no longer fit the company’s overall strategy 2-20
  • 21. Planning Marketing: Partnering to Build Customer Relationships Partner Relationship Management Partner relationship management is the process of working closely with partners in other company departments to form an effective value chain that serves the customer, as well as partnering effectively with other companies in the marketing system to form a competitively superior value-delivery network 2-21
  • 22. Planning Marketing: Partnering to Build Customer Relationships Value chain is a series of departments that carry out value-creating activities to design, produce, market, deliver, and support a firm’s products 2-22 Partnering with Other Company Departments
  • 23. Planning Marketing: Partnering to Build Customer Relationships Value delivery network is made up of the company, suppliers, distributors, and ultimately customers who partner with each other to improve performance of the entire system 2-23 Partnering with Others in the Marketing System
  • 24. Marketing Strategy and the Marketing Mix Marketing Strategy Marketing strategy is the marketing logic by which the business unit hopes to achieve its marketing objectives 2-24
  • 25. Marketing Strategy and the Marketing Mix Customer-Driven Marketing Strategy Market segmentation is the division of a market into distinct groups of buyers who have distinct needs, characteristics, or behavior and who might require separate products or marketing mixes 2-25
  • 26. Marketing Strategy and the Marketing Mix Customer-Driven Marketing Strategy Market segment is a group of consumers who respond in a similar way to a given set of marketing efforts Target marketing is the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter 2-26
  • 27. Marketing Strategy and the Marketing Mix Customer-Driven Marketing Strategy Market positioning is the arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of the target consumer 2-27
  • 28. Marketing Strategy and the Marketing Mix Developing an Integrated Marketing Mix Marketing mix is the set of controllable tactical marketing tools—product, price, place, and promotion—that the firm blends to produce the response it wants in the target market 2-28
  • 29. Marketing Strategy and the Marketing Mix The four Ps • Product • Price • Place • Promotion 2-29 Developing an Integrated Marketing Mix
  • 30. Marketing Strategy and the Marketing Mix Developing an Integrated Marketing Mix The four Ps Product is the goods and services in combination that the company offers to the target market Price is the amount of money customers have to pay to obtain the product 2-30
  • 31. Marketing Strategy and the Marketing Mix Developing an Integrated Marketing Mix The four Ps Place is the company activities that make the product available to target customers Promotion is the activities that communicate the merits of the product and persuade target customers to buy it 2-31
  • 32. Marketing Strategy and the Marketing Mix Developing an Integrated Marketing Mix The 4 Ps versus The 4 Cs Product Customer solution Price Customer cost Place Convenience Promotion Communication 2-32
  • 33. Managing the Marketing Effort Managing the marketing effort requires: • Analysis • Planning • Implementing • Controlling 2-33
  • 34. Managing the Marketing Effort Marketing Analysis Analysis is the complete analysis of the company’s situation in a SWOT analysis that evaluates the company’s: • Strengths • Weaknesses • Opportunities • Threats 2-34
  • 35. Managing the Marketing Effort Marketing Analysis Strengths include internal capabilities, resources, and positive situational factors that may help to serve company customers and achieve company objectives Weaknesses include internal limitations and negative situational factors that may interfere with company performance 2-35
  • 36. Managing the Marketing Effort Marketing Analysis Opportunities are favorable factors or trends in the external environment that the company may be able to exploit to its advantage Threats are unfavorable factors or trends that may present challenges to performance 2-36
  • 37. Managing the Marketing Effort Market Planning Planning is the development of strategic and marketing plans to achieve company objectives Marketing strategy consists of the specific strategies for target markets, positioning, the marketing mix, and marketing expenditure levels 2-37
  • 38. Managing the Marketing Effort Sections of a marketing plan include: • Executive summary • Current marketing situation • Threats and opportunities • Objective and issues • Action programs • Budgets • Controls 2-38 Market Planning
  • 39. Managing the Marketing Effort Marketing Implementation Implementing is the process that turns marketing plans into marketing actions to accomplish strategic marketing objectives Successful implementation depends on how well the company blends its people, organizational structure, decision and reward system, and company culture into a cohesive action plan that supports its strategies 2-39
  • 40. Managing the Marketing Effort Marketing Department Organization • Functional • Geographic • Product • Market or customer management 2-40
  • 41. Managing the Marketing Effort Marketing Department Organization Functional organization: This is the most common form of marketing organization with different marketing functions headed by a functional specialist • Sales manager • Market research manager • Customer service manager • New product manager 2-41
  • 42. Managing the Marketing Effort Marketing Department Organization Geographic organizations: Useful for companies that sell across the country or internationally. Managers are responsible for developing strategies and plans for a specific region. Product Management: Useful for companies with different products or brands. Managers are responsible for developing strategies and plans for a specific product or band. 2-42
  • 43. Managing the Marketing Effort Marketing Department Organization Market or customer management organization: Useful for companies with one product line sold to many different markets and customers. Managers are responsible for developing strategies and plans for their specific markets or customers. 2-43
  • 44. Managing the Marketing Effort Marketing Department Organization Customer management involves a customer focus and not a product focus for managing customer profitability and customer equity 2-44
  • 45. Managing the Marketing Effort Marketing Control Controlling is measuring and evaluating results and taking corrective action as needed • Operating control • Strategic control 2-45
  • 46. Managing the Marketing Effort Marketing Control Operating control involves checking ongoing performance against annual plan and taking corrective action as needed Strategic control involves looking at whether the company’s basic strategies are well matched to its opportunities 2-46
  • 47. Managing the Marketing Effort Marketing Control Marketing audit is a comprehensive, systematic, independent, and periodic examination of a company’s environment, objectives, strategies, and activities to determine problem areas and opportunities 2-47
  • 48. Measuring and Managing Return on Marketing Investment Return on Marketing Investment (ROI) Return on marketing investment (ROI) is the net return from a marketing investment divided by the costs of the marketing investment. Marketing ROI provides a measurement of the profits generated by investments in marketing activities. 2-48
  • 49. Measuring and Managing Return on Marketing Investment Customer-Centered Measures • Customer acquisition • Customer retention • Customer lifetime value 2-49