Chapter 2: Company & Marketing Strategy PDF

CHAPTER 2: COMPANY & MARKETING STRATEGY  1. Companywide Strategic Planning: Defining Marketing’s Role 2. Planning Marketing: Partnering to Build Customer Relationships LEARNING 3. Marketing Strategy and the Marketing Mix OBJECTIVES...

CHAPTER 2: COMPANY & MARKETING STRATEGY  1. Companywide Strategic Planning: Defining Marketing’s Role 2. Planning Marketing: Partnering to Build Customer Relationships LEARNING 3. Marketing Strategy and the Marketing Mix OBJECTIVES 4. Managing the Marketing Effort 5. Measuring and Managing Return on Marketing Investment 1. Companywide 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 1. Companywide Strategic Planning Figure 2.1 Steps in Strategic Planning 1. Companywide Strategic Planning 1.1 Defining the company mission The mission statement is the organization’s purpose, what it wants to accomplish in the larger environment CVS Health’s overall mission is to be a “pharmacy innovation company,” one that is “helping people on their way to better health.” Its marketing strategies and programs must support this mission. 1. Companywide Strategic Planning 1.1 Defining the company mission A mission statement should: Not be myopic in product terms Meaningful and specific Motivating Emphasize the company’s strengths Contain specific workable guidelines Not be stated as making sales or profits 1. Companywide Strategic Planning 1.1 Defining the company mission Product- versus Market-Oriented Business Definitions 1. Companywide Strategic Planning 1.2 Setting Company Objectives and Goals Business Objectives Marketing Objectives Build profitable customer relationships Increase market share Invest in research Create local partnerships Improve profits Increase promotion 1. Companywide Strategic Planning 1.1 Defining the company mission I K E A’s deeply held mission is to “create a better everyday life for the many people by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.” 1. Companywide Strategic Planning 1.3 Designing the Business Portfolio The business portfolio is the collection of businesses and products that make up the company. Best fits the company’s strengths and weaknesses to opportunities in the environment. Portfolio analysis is a major activity in strategic planning whereby management evaluates the products and businesses that make up the company. Company must analyze its current business portfolio and determine which businesses should receive more, less, or no investment. Then, shape the future portfolio developing strategies for growth and downsizing 1. Companywide Strategic Planning 1.4 Analyzing the Current Business Portfolio Strategic business units can be: Product line within a Company division Single product or brand division  1. Companywide Strategic Planning 1.4 Analyzing the Current Business Portfolio 1 2 3 Identify key businesses Assess the attractiveness Decide how much support (strategic business units, of its various SBUs each SBU deserves or SBUs) that make up the company 1. Companywide Strategic Planning 1.4 Analyzing the Current Business Portfolio Boston Consulting Group (BCG) 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. Cont 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. 1. Companywide Strategic Planning Problems with Matrix Approaches Difficulty in defining SBUs and measuring market share and growth Time consuming Expensive Focus on current businesses, not future planning Increasingly, companies are placing responsibility for strategic planning in the hands of cross- functional teams of divisional managers who are close to their markets. 1. Companywide Strategic Planning 1.5 Developing Strategies for Growth and Downsizing Product/Market Expansion Grid is a tool for identifying company growth opportunities 1. Companywide Strategic Planning 1.5 Developing Strategies for Growth and Downsizing Market penetration growth by increasing sales to current market segments without changing the product : Add new stores in current market areas to make it easier for customers to visit. Market development growth by identifying and developing new market segments for current products :new geographic markets, new demographic markets 1. Companywide Strategic Planning 1.5 Developing Strategies for Growth and Downsizing Product development is a growth strategy that offers new or modified products to existing market segments: moving into new product categories Diversification is a growth strategy through starting up or acquiring businesses outside the company’s current products and markets : acquire a company that operates in different market segments with a different product mix. 1. Companywide Strategic Planning 1.5 Developing Strategies for Growth and Downsizing Downsizing prune, harvest or divest businesses that are unprofitable or that no longer fit the strategy: The firm may have grown too fast or entered areas where it lacks experience. The market environment might change, making some products or markets less profitable. Some products or business units simply age and die. 1. Companywide Strategic Planning 1.5 Developing Strategies for Growth and Downsizing Strategies for growth: To maintain its incredible growth, Starbucks has brewed up an ambitious, multipronged growth strategy. In little more than three decades, the chain has grown from a small Seattle coffee shop to an over $24 billion powerhouse. Downsizing is when a company must prune, harvest, or divest businesses that are unprofitable or that no longer fit the strategy. 2. 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 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 3. Marketing Strategy & the Marketing Mix 3. Marketing Strategy & the Marketing Mix Marketing strategy is the marketing logic by which the company hopes to create customer value and achieve profitable customer relationships. 3. Marketing Strategy & the Marketing Mix Developing an Integrated Marketing Mix Market segmentation is the division of a market into distinct groups of buyers who have different needs, characteristics, or behavior and who might require separate products or marketing mixes Market segment is a group of consumers who respond in a similar way to a given set of marketing efforts 3. Marketing Strategy and the Marketing Mix Developing an Integrated Marketing Mix Market targeting is the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter. Market positioning is the arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. Differentiation begins the positioning process. 3. Marketing Strategy and the 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 4. Managing the Marketing Effort 4. Managing the Marketing Effort 1. Marketing analysis –SWOT analysis 4. Managing the Marketing Effort 2. Market Planning Parts of a Marketing Plan Executive summary Current marketing situation Threats and Opportunities analysis Objective and issues Marketing strategy Actions program Budgets Controls 4. Managing the Marketing Effort 3. Marketing Implementation Turns marketing plans into marketing actions to accomplish strategic marketing objectives Addresses who, where, when, how 4. Managing the Marketing Effort 4. Marketing Control Evaluating of results Taking of corrective action to achieve objectives Operating control :involves checking ongoing performance against the annual plan and taking corrective action when necessary. Its purpose is to ensure that the company achieves the sales, profits, and other goals set out in its annual plan. It also involves determining the profitability of different products, territories, markets, and channels. Strategic control: involves looking at whether the company’s basic strategies are well matched to its opportunities 5. Measuring and Managing Return on Marketing Investment Return on Marketing Investment (Marketing ROI) THE END