Market-Oriented Business Strategies

Principles of Marketing, Chapter 2

• Company and Marketing Strategy: The chapter focuses on partnering to build customer engagement, value, and relationships.
• Objectives Outline:
  • Explain company-wide strategic planning and its four steps.
  • Discuss designing business portfolios and developing growth strategies.
  • Explain marketing's strategic planning role, its collaboration with partners, and delivery of customer value.
  • Describe customer value-driven marketing strategy and mix and influencing forces.
  • List marketing management functions, including a marketing plan, and the importance of managing marketing investment.

Strategic Planning

• Long-Run Survival and Growth: Strategic planning is a game plan for long-term survival and growth.
• Strategic Fit: It maintains a strategic fit between business goals, capabilities, and changing market opportunities.

Steps in Strategic Planning

• Company-Wide Strategic Planning: Guides marketing strategy and planning.
• Corporate Level: Defining the company mission, setting objectives and goals, and designing the business portfolio.
• Business Unit, Product, and Market Level: Planning marketing and other functional strategies.

Step 1: Mission Statement

• Organization's Purpose: Statement of the organization's purpose.
• Company Strengths: Emphasizing the company's strengths.
• Market-Oriented Approach: Defined in terms of satisfying basic customer needs.
• Customer Focus: Focus on customers and their experience.

Product- versus Market-Oriented Definitions

• Product-Oriented: Focuses on the product itself.
• Market-Oriented: Focuses on the customer experience and value creation.

Step 2: Setting Company Objectives and Goals

• Detailed Objectives: Supporting objectives for all management levels.
• Hierarchy of Objectives: Setting a hierarchy of objectives- business and marketing objectives.

Step 3: Designing a Business Portfolio

• Business Portfolio Planning: Collection of businesses and products making up the company.
  • Analysis of current business portfolio.
  • Developing future portfolio strategies

Portfolio Analysis

• Strategic Business Units (SBUs): Management evaluation of products and businesses.
  • Identification of SBUs.
  • Assessing attractiveness and deciding on the level of support for each SBU.
  • Directing resources towards profitable SBUs and phasing out weaker ones.

The BCG Growth-Share Matrix

• Growth-Share Matrix: Evaluates company SBUs based on market growth rate and relative market share: Stars, Question Marks, Cash Cows, and Dogs.
• Investment Decisions: Helps determine how much investment to allocate to different SBUs.
• Alternative Actions: Guides the company on whether to build, hold, harvest, or divest an SBU.

Growth-Share Matrix Criticisms

• Challenges: Difficult, time-consuming, and costly to implement and evaluate.
• Measurement Difficulties: Challenges in reliably defining and measuring aspects required for the analysis.
• Limited Future Planning Advice: Provides limited guidance for future planning

The Product/Market Expansion Grid

• Product Development: Introducing new products into existing markets.
• Market Development: Expanding into new markets with existing products.
• Market Penetration: Increasing market share in existing markets with existing products.
• Diversification: Developing new products for new markets.

Developing Strategies for Growth

• Starbucks Growth: Significant growth from a small Seattle coffee shop to a large global company.
• Expansion Pace: Rapid expansion of Starbucks stores.

Downsizing

• Unprofitable Products or Units: Products/business units no longer fitting the company's overall strategy.
• Reasons for Abandonment: Rapid company growth, lack of market experience, market environment changes, and declining products.

Step 4: Planning Marketing to Build Customer Relationships

• Marketing Concept: Company strategy should create and build customer value and relationships.
• Strategic Planning Input: Identifying market opportunities and potential advantages.
• Objectives Alignment: Developing strategies to achieve company objectives.

Partnering with Other Company Departments

• Internal Value Chain: Departments as links in the company's internal value chain.
• Coordinating Activities: Firm success depends on well-coordinated activities between different departments.
• Customer Focus: Marketers ensure all departments are customer-focused and create a seamless value chain.

Partnering with Others in the Marketing System

• Value Chain Assessment: Companies assess value chains- internal and external: Suppliers, distributors, and customers.
• Value Delivery Network: Composed of the company, its suppliers, distributors, and customers.

Managing Marketing Strategy and the Marketing Mix

• Customer Value and Relationships: Marketing is about creating customer value and profitable relationships.
• Marketing Strategy Questions: Identifying target customers and creating value for them.
• Marketing Program (4Ps): Designed to deliver intended value to targeted consumers.

Customer Value-Driven Marketing Strategy

• Marketing Logic: Creates customer value and achieves profitable relationships.
• Marketing Mix: Product, price, place, and promotion.
• Marketing Analysis, Planning, and Control: Integral to effective application of marketing strategy and mix.

Market Segmentation and Market Targeting

• Market Segmentation: Dividing the market into distinct groups with different needs and characteristics requiring tailored products or marketing programs.
• Market Targeting: Evaluating segment attractiveness and selecting segments to enter.

Market Differentiation and Positioning

• Product Positioning: Product occupies a clear, distinctive, and desirable place relative to competitors.
• Differentiation: Creating superior customer value.
• Marketing Program Support: Entire marketing program should support the chosen positioning strategy.

The Four Ps of the Marketing Mix

• Product: Variety, quality, design, features, brand name, packaging, and services.
• Price: List price, discounts, allowances, payment period, and credit terms.
• Place: Supply chains, channel coverage, channel management, logistics, and transportation.
• Promotion: Advertising, personal selling, sales promotion, public relations, and direct marketing.

Criticisms of the Four Ps

• Service Product Focus Deficiency: Omits or underemphasizes service products.
• Packaging as a Product Decision: Needs to include packaging as a product decision.
• Buyer Perspective: Buyer's perspective on the Four Ps should emphasize acceptability, affordability, accessibility, and awareness.

Managing Marketing: Analysis, Planning, Implementation, and Control

• Analysis: Initial step to develop the company-wide and marketing strategies and plans.
• Planning: Develop strategic and marketing plans.
• Implementation and Organization: Putting the plans into action.
• Control: Evaluate results and take corrective action.

SWOT Analysis

• SWOT: Analyzing strengths, weaknesses, opportunities, and threats.
• Matching Strengths to Opportunities: The goal is to match internal strengths with attractive opportunities.
• Addressing Weaknesses and Threats: To mitigate weaknesses and minimize threats.

Contents of a Marketing Plan

• Executive Summary: Brief summary of goals and recommendations given the market description.
• Current Marketing Situation: Product, competition, and distribution review. Helps to anticipate positive or negative developments.
• Threats and Opportunities Analysis: Anticipating positive or negative developments.
• Objectives and Issues: States and discusses marketing objectives and key issues, including an analysis of threats and opportunities.
• Marketing Strategy: Outlines broad marketing logic, specifics of target markets, positioning, marketing expenditure, and strategies.
• Action Programs and Budgets: Spells out how marketing strategies are turned into action programs with detailed budget breakdown.
• Controls: Outlines monitoring progress, reviewing results, and identifying products not meeting goals.

Market Implementation

• Turning Strategies into Actions: Aligns marketing strategies and plans to accomplish strategic marketing objectives.

Marketing Department Organization

• Functional Organization: Department organized by functional area.
• Geographical Organization: Department organized by region.
• Product Management Organization: Department organized by product.
• Market or Customer Management Organization: Department organized by customer segment.
• Combination Organization: Combines different organizational structures mentioned.

Marketing Control

• Measure and Evaluate Results: Measuring and evaluating marketing strategies and plans.
• Operating Control: Ensuring that sales, profits, and other goals are met.
• Strategic Control: Ensuring that basic strategies match opportunities.

Measuring and Managing Marketing Return on Investment (ROI)

• Net Return on Investment: Net return from a marketing investment divided by the cost of the investment.
• Assessment Measures: Includes standard marketing performance measures and customer-centered measures.

Marketing Return on Investment

• Customer Value and Engagement: Improved customer value and engagement are key elements of marketing ROI.
• Attraction and Retention: Increased measures of customer attraction and retention indicate effective marketing.
• Lifetime Values and Equity: Enhanced customer lifetime values and equity demonstrates the financial impact of the marketing efforts.

This quiz explores key concepts of market-oriented business strategies, including the focus of mission statements, customer experience, and the definition of customer value-driven marketing. Additionally, it discusses examples from companies like NPR, Sephora, and Walmart, highlighting their unique approaches to strategic planning in marketing.