Chapter 2 Company & Marketing Strategy Partnering to Build Customer Relationships

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Chapter 2Company Marketing Strategy
Partnering to Build Customer Relationships

• Professor Marshall
• Queens College

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Strategic Planning

• The process of developing and maintaining a
  strategic fit between the organizations goals
  and capabilities and its changing marketing
  opportunities.

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Steps in Strategic Planning

• Defining the company mission
• Setting company objectives and goals
• Designing the business portfolio
• Planning marketing and other functional
  strategies

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Mission Statement

• A statement representing the organizations
  purpose what it wants to accomplish.

Note you can usually find a companys mission
statement on their website under Investor
Relations or Corporate information.
ebays Mission http//pages.ebay.com/aboutebay/th
ecompany/companyoverview.html
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Mission Statement Guidelines

• Should be market oriented and defined in terms of
  customer needs. Example Charles Schwab
  guardian of its customers financial dreams
• Should be realistic
• Should be specific (not too narrow or broad)
• Should fit the market environment. Example Girl
  Scouts old to prepare young girls for
  motherhood and wifely duties new where girls
  grow strong.
• Should be motivating. Example Walt Disney aims
  to make people happy.

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Designing the Business Portfolio

• The business portfolio is the collection of
  businesses and products that make up the company.
• The company must
• analyze its current business portfolio or
  Strategic Business Units (SBUs),
• decide which SBUs should receive more, less, or
  no investment,
• develop growth strategies for growth or
  downsizing.

An SBU can be a company division, a product line,
or a single product or brand.It has a separate
mission can be planned independently from other
company businesses.
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The BCG Growth-Share Matrix
Star Often need heavy investment to finance rapid
growth. These turn into Cash Cows.
Question Mark Require a lot of cash to hold
market share. Some are built into stars and some
are phased out.
High
Market Growth Rate
Cash Cow Established. Need less investment to
hold market share. These support other SBUs.
Dog May generate enough cash to sustain
themselves but do not support other SBUs.
Low
High
Low
Relative Market Share
The size of the circles is proportional to the
SBUs dollar sales. Each SBU has a life cycle and
over time, SBUs change positions in the matrix.
The company needs to keep adding new products so
that some will become stars cash cows.
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The BCG Growth-Share MatrixExample Macintosh
Star iPod
Question Mark
High
Market Growth Rate
Cash Cow Mac Computers
Dog MacOS
Low
High
Low
Relative Market Share
Relative Market Share the ratio of sales of a
particular brand to total sales of that product
type in a defined region (country).
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Ways to Research Market Share

• 10K Reports
• SIC Codes (Standard Industry Classification)
• NAICS Codes (North American Industry
  Classification)
• Use Library Databases Journals to look up
  articles related to the company/industry

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Problems with Matrix Approaches

• Difficult to quantify market share and market
  growth.
• Focus on current business not future planning.
• Companies have shifted toward customized,
  decentralized approaches to strategic planning.

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Product/Market Expansion Grid
Strategies for company growth
Existing Products
New Products
Market Penetration Increasing sales of current
products to current market segments without
changing the product.
Product Development Offering modified or new
products to current market segments.
Existing Markets
Market Development Identifying and developing new
market segments for current products.
Diversification Starting up or acquiring
businesses outside the companys current products
and markets.
New Markets
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Product/Market Expansion Grid
Examples of Starbucks growth
Existing Products
New Products
Market Penetration Starbucks is adding 23 stores
per week.
Product Development Starbucks recently added hot
breakfast sandwiches to its menu.
Existing Markets
Market Development Starbucks might consider new
demographic markets (for example senior citizens
or different ethnic groups).
Diversification Starbucks tested new restaurant
concepts in San Francisco to enter a new related
market.
New Markets
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Marketings Role in Strategic Planning
The major functional departments in each unit of
the company marketing, finance, accounting,
purchasing, operations, information systems,
human resources, and others - must work together
to accomplish the strategic objectives.

• Provide a guiding philosophy (the marketing
  concept)
• Provide inputs to strategic planners
• Design strategies to reach objectives

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Value Delivery Network

• Companys value chain internal departments that
  must perform and coordinate activities
• Distributors (for example Pepsi has partnered
  with the college dining halls)
• Suppliers (for example Dell has partnered with
  Microsoft and Intel)

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Marketing Strategy

• The following steps help the company choose which
  customers to serve and how
• Market Segmentation
• Target Marketing
• Market Positioning

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Market Segmentation

• The process of dividing a market into distinct
  groups of buyers with different needs,
  characteristics, or behavior who might require
  separate products of marketing programs.
• A market segment consists of consumers who
  respond in a similar way to a given set of
  marketing efforts.

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Target Marketing

• Involves evaluating each market segments
  attractiveness and selecting one or more segments
  to enter.
• Target segments that can sustain profitability.

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Market Positioning

• Arranging for a product to occupy a clear,
  distinctive, and desirable place relative to
  competing products in the minds of target
  consumers.
• Begins with differentiating the companys
  marketing offer so it gives consumers more value.

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Marketing Mix

• The set of controllable, tactical marketing tools
  that the firm blends to produce the response it
  wants in the target market.

• Consists of the 4 Ps
• Product
• Price
• Place
• Promotion

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Product VarietyQualityDesignFeaturesBrand
NamePackagingServices
Price List PriceDiscountsAllowancesPayment
PeriodCredit Terms
Target Customers Intended Positioning
Place ChannelsCoverageAssortmentsLocationsInve
ntoryTransportationLogistics
Promotion AdvertisingPersonal SellingSales
PromotionPublic Relations
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The 4 Ps the 4 Cs of theMarketing Mix

• 4 Ps - Sellers View
• Product
• Price
• Place
• Promotion

• 4 Cs - Buyers View
• Customer Solution
• Customer Cost
• Convenience
• Communication

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SWOT AnalysisAn analysis of your company verses
competition
Strengths Competitive Advantages
Weaknesses Limitations the firm has in its
marketing strategy
Threats Barriers that may prevent the firm from
reaching its goals
Opportunities Favorable conditions that could
yield rewards
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SWOT AnalysisAn analysis of your company verses
competition
Strengths your specialist marketing expertise a
new, innovative product or service location of
your business quality processes and procedures
any other aspect of your business that adds
value to your product or service
Weaknesses lack of marketing expertise
undifferentiated products or services (i.e. in
relation to your competitors) location of your
business poor quality goods or services damaged
reputation
Threats a new competitor in your home market
price wars with competitors a competitor has a
new, innovative product or service competitors
have superior access to channels of distribution
taxation is introduced on your product or
service
Opportunities a developing market such as the
Internet mergers, joint ventures or strategic
alliances moving into new market segments that
offer improved profits a new international
market a market vacated by an ineffective
competitor
http//www.marketingteacher.com/SWOT/walmart_swot.
htm
http//www.marketingteacher.com/SWOT/starbucks_swo
t.htm
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Sections of Marketing Plan

1. Executive summary summarizes main goals
2. Current marketing situation
3. Analysis of threats and opportunities that the
   product might face
4. Objectives for the brand
5. Marketing strategy
6. Action programs what/when/who
7. Marketing budget expected costs revenues
8. Controls how progress is monitored

http//college.hmco.com/business/pride/foundations
/1e/students/sample/sample.pdf
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Marketing Control Process

• Set Goals
• Measure Performance
• Evaluate Performance
• Take Corrective Action

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Marketing Department Organization

• Functional Organization by marketing activity
  (sales, advertising, etc.)
• Geographic Organization by location
• Product Management Organization by product or
  brand
• Market or Customer Organization by market/type
  of customer
• Combination

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Video Case

• Dunkin Donuts
• (10 minutes)

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Thoughts

• Is Dunkin Donuts more product-oriented or
  customer-oriented?
• How would you prepare against the invasion of
  Starbucks and Krispy Kreme?

https//www.dunkindonuts.com
http//www.starbucks.com
http//www.krispykreme.com