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Introduction to Marketing
#2 Company and Marketing Strategy:

Partnering to Build Customer Relationships
2014 Fall
Group Formation
5-6 students in each group (total 12 groups)
Group case study
Case will be distributed on October 6
The deadline is October 20
Objective Outline
Company-wide strategic planning: Defining marketings role
Designing the business portfolio (SBUs)
Planning marketing: Partnering to build customer relationships
Marketing strategy and the Marketing Mix (4Ps)
Managing marketing effort
Measuring and managing return on marketing investment
McDonalds: A Customer-Focused Plan to Win Strategy
In the mid-1990s
Customers were looking for fresher and better-tasting food
Customers wanted more contemporary atmospheres
FAILED
FAILED
FAILED
Social activists & nutritionists
blamed the fat- and sugar-laden
menu
Plan to Win
Refocused the company on its customers
Five basics: People, Products, Place, Price, and Promotion
Clean, simple, more-modern interiors and amenities
Stayed open longer to serve late-night dinners
More variety and healthier options
Strategic Planning
The process of developing and maintaining a strategic fit
between the organization's goals and capabilities and its
changing marketing opportunities.
Strategic Planning involves developing an overall company strategy
for long-run survival and growth.

This process involves:
1) Defining the Company Mission: Statement of an organizations
purpose; should be market oriented.
2) Setting Company Objectives: Supporting goals and objectives to
guide the entire company.
3) Designing the Business Portfolio: Collection of businesses and
products that make up the company.
4) Planning Marketing Strategies: Detailed planning for each
department designed to accomplish strategic objectives.
Strategic Planning Process
Define Business Goal
Defining the Company Mission
Setting Company Objectives
Designing the Business Portfolio
Planning Marketing Strategies
Defining a Mission
Characteristics
of a good
mission
statement
Market-
oriented
Realistic
Specific
Fit market
environment
Distinctive
competencies
Motivating
3 essential components

1. Key market (customers) who is your target client/customer?
(generalize if needed)
2. Contribution (products/services) what product or service do
you provide to that client?
3. Distinction (competences) what makes your product or
service unique, so that the client would choose you?

Mission Statements
Group project
Mission Statements
Market-oriented mission: Food with great integrity

Highlights its commitment to good food made from natural, local,
and sustainably raised ingredients.
fast food restaurants with Mexican food
Good or Bad Mission Statement?
Mission Statement

Our goal for Citigroup is to be the most respected global financial
services company. Like any other public company, we're obligated to
deliver profits and growth to our shareholders. Of equal importance
is to deliver those profits and generate growth responsibly.
1. Key market? Target customers?
2. Contribution? Main products/services?
3. Distinction? Unique selling points?
shareholders
financial services
doing business responsibly --> quite broad
Citigroup
Mission Statement

FedEx will produce superior financial returns for shareowners by
providing high value-added supply chain, transportation, business
and related information services through focused operating
companies. Customer requirements will be met in the highest quality
manner appropriate to each market segment servedSafety will be
the first consideration in all operations. Corporate activities will be
conducted to the highest ethical and professional standards.
shareowners
high-valued supply chain
safety
FedEx
Mission Statement

The mission of The Walt Disney Company is to be one of the world's
leading producers and providers of entertainment and information.
Using our portfolio of brands to differentiate our content, services
and consumer products, we seek to develop the most creative,
innovative and profitable entertainment experiences and related
products in the world.
Entertainment
creative,innovative entertainment experiences
Walt Disney Company
Mission Statement

To Bring Inspiration and innovation to every athlete in the world.
Companies often define themselves in terms of products:
They are in the auto business or the clothing business.
Market definitions of a business, however, describe the
business as a customer satisfying process. Viewing
businesses in terms of customer needs can suggest
additional growth opportunities.
Product Orientation vs. Market Orientation
Facebook

Product-oriented objective
We are an online social network.

Market-oriented objective
We connect people around the world and help them share
important moments in their lives.
address the benedicts instead of products and services itself
"We connect people around the world and help them share important
moments in their lives."
Xerox

We make copying equipment.

We improve office productivity.
"We improve office productivity"
NASA

We explore outer space.

We reach for new heights and reveal the unknown so that
what we do and learn will benefit all humankind.
"We reach for new heights and reveal the unknown so that what we
do and learn will benefit all mankind."
Columbia Pictures

We make movies.

We entertain people.
"We entertain people."
Ritz-Carlton Hotels & Resorts

We rent rooms.

We create the Ritz-Carlton experience a memorable stay that
far exceeds guests already high expectations.
"We create the Ritz-Carlton experience - a memorable stay that far exceeds
guest's already high expectations."
4Ps
The best portfolio is the one that best fits the companys strengths
and weaknesses to the opportunities in the environment.

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 adding new products or businesses
to the portfolio
* strategic business unit (SBU) is a profit center which focuses on product
offering and market segment. Large companies normally manage quite
different businesses, each requiring its own strategy. At one time, General
Electric classified its businesses into 49 strategic business units (SBUs).
Wiki definition --> a division
An SBU must

1. have its own mission, distinct from the missions of other SBU
2. have definable groups of competitors
3. prepare its own integrative plans, fairly distinct from those of
other SBU
4. manage its resources in key areas
5. have a proper size neither too large nor too small
Strategic Business Units (SBU)
Strategic Business Units (SBU)
An SBU can be

1. A company division
2. A product line within a division
3. A single product or brand
Examples of Strategic Business Units (SBU)
Kate Spade is a SBU under the Liz Claiborne corporate umbrella.
Examples of Strategic Business Units (SBU)
Procter & Gamble products (P&G)

Three categories:
1. Beauty
2. Household Care
3. Health & Well-Being

More than 250 brands, including 23 brands
which have more than a billion dollars in
net annual sales
Without showing P&G (not being shown in package)
Analyzing Current SBUs:
Boston Consulting Group Approach
Growth-share matrix
A portfolio-planning method that evaluates a companys SBUs in
terms of market growth rate and relative market share.
high Low
high
Low
Stars. High-growth, high-share
business or products. Need heavy
investments to finance their rapid
growth
Cash Cow. Low-growth, high-share
business and products. Successful
SBUs and need less investment to
hold their market share.
Question Marks. High-growth, low-share business or products.
Need a lot of cash to hold their share.
Dogs. Low-growth, low-share business and products. May generate
enough cash to maintain but not so promising.
extract money to other branches
Under the classic BCG portfolio
planning approach, the company
invests funds from mature,
successful products and business
(cash cows) to support promising
products and businesses in faster-
growing markets (stars and question
markets), hoping to turn them into
future cash cows.
cash cows
stars and questions
cash cows
Product/ Market Expansion Grid
Product/Market Expansion Grid
A portfolio-planning tool for identifying company growth
opportunities.
Growth-share matrix Evaluating the current businesses.
Product/Market Expansion Grid Finding future business opportunities
**Popular question: define and give an example
Market Penetration: increase sales to present customers with
current products. How? Cut prices, increase advertising, get
products into more stores.

Market Development: develop new markets with current
products. How? Identify new demographic or geographic
markets.

Product Development: offering modified or new products to
current customers. How? New styles, flavors, colors, or modified
products.

Diversification: new products for new markets. How? Start up or
buy new businesses.
Product/ Market Expansion Grid Examples
Going for the China market with sesame-chocolate cubes is
Diversification
Diversification
Keeping launching new collections to its customers is
Product development
Development
Product
Original usage of baking soda is for baking. It causes
expansion of the batter and forms the characteristic
texture and grain in pancakes, cakes, and quick breads.
Appealing to different usages is
Market development
Market Development
Appealing to existing customers is
Market penetration
If you love your children,
Three times a day.
Market Penetration
Korea, 2001
Milk consumption reduced by 3.7 % but
production increased by 8.4%.
Seoul Milk needed to do something about it.
Market penetration was no longer enough
Korea, 2002
Seoul Milk sold 10,000,000 packs (200ml) a day
What happened?
Korea, 2002
Seoul Milk sold 10,000,000 packs (200ml) a day
http://www.youtube.com/watch?v=VGABv2RsmCQ
Milk Mania series
Market development
Market Development
from children to adult
Diversification
Nothing is going right for me since I met you!!
Go away!!
I met her in my twenties.
You go away. Please go away
Fill me up..
Love is always thirsty. When 2% is lacking.
http://www.youtube.com/watch?v=YxxOpRbpwL8
Product development
Marketings Role in Strategic Planning
Process of Selecting Target Consumers (STP)
Market Segmentation: determining distinct groups of buyers
(segments) with different needs.
Market Targeting: evaluating and selecting which target
segments to enter.
Market Positioning: developing products distinctive and
desirable place in the minds of target segments compared to
competing products.
Marketings Role in Strategic Planning Segmentation
http://www.bayesia.com/en/applications/marketing.php
Marketings Role in Strategic Planning Segmentation
Marketings Role in Strategic Planning Targeting
CVS Caremark's target market is women since they make up 80
percent of the pharmacy chains customers.
The Oreo cookie is a popular cookie in the U.S., known for its two
discs of chocolate with a white cream filling. However, Kraft has
formulated a different version of the Oreo to target consumers in
China. The Chinese version consists of four layers of long, thin
biscuits coated in chocolate.
Pepsi-Cola Company used target market analysis to broaden
the audience for Mountain Dew. Experts in target marketing
developed an ad campaign targeting urban youth that featured
hip-hop music artist Busta Rhymes in a variety of extreme-
sports antics and role-playing characterizations. The campaign
was a hit, and sales increased in inner-city markets.
Marketings Role in Strategic Planning Positioning
Because youre worth it
http://www.youtube.com/watch?v=
KiuAPc88pY4
http://www.youtube.com/watch?v
=BbBqBoS9Wpc
How is your brand perceived?
MDS (Multidimensional Scaling )

What are images of actors?
What are their relative positions in peoples mind?
MDS (Multidimensional Scaling)
Allows researcher to determine perceived relative image of a
set of objects (brands, products, endorsers etc.)
Multidimensional Scaling
How similar are?

vs.
vs.
vs.
___
___
___
Perceptual Map
MDS: SPSS Outputs
Example) MDS for car perceptions
BMW 328i
Ford Explorer Infinity J30 Grand Cherokee
Lexus ES300
Mercedes C280
Saab 9000
Chrysler
Town & Country
Porsche Boxster
Volvo V90
Each respondent ranked the list of 45 possible pairs
-2 -1 0 1
Dimension 1
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
D
i
m
e
n
s
i
o
n

2
bmw
ford
infinty
jeep
lexus
chrysler
mercedes
saab
porsche
volvo
Euclidean distance model
MDS: SPSS Outputs
Example) MDS for car perceptions
closer the icon is, more direct competitor
Marketing Mix- The Four Ps
4 Ps
Goods-and-service
combination that a
company offers to a
target market
Amount of money
that consumers
have to pay to obtain
the product
Activities that
persuade target
customers to buy
the product
Company activities
that make the
product available
Product Pricing
Promotion
Place
size,color
4 Ps and 4Cs
There is another concern that 4Ps take the sellers view of the
market, not the buyers view. From the buyers viewpoint, in this
age of customer value and relationships, the four Ps might be
better described as the four Cs.
4Ps
Product
Price
Place
Promotion
4Cs
Customer solution
Customer cost
Convenience
Communication

juz focus on products / services nt customers
Managing the Marketing Effort
SWOT analysis. An overall evaluation of the companys strengths, weaknesses,
opportunities, and threats
Internal
External
Positive Negative
threats
Marketing Implementation
The process that turns marketing strategies and plans into
marketing actions in order to accomplish strategic marketing
objectives
Marketing Control
The process of measuring and evaluating the results of
marketing strategies and plans, and taking corrective action to
ensure that objectives are achieved.
Marketing Control
Set Marketing Goals
Measure
Performance
Evaluate
Performance
Take Corrective
Action
Marketing Audit
A comprehensive, systematic, independent, and periodic
examination of a company's environment, objectives, strategies,
and activities to determine problem areas and to recommend a
plan of action to improve the company's marketing performance.
Return on marketing (or marketing ROI)
The net return from a marketing investment divided by the costs
of the marketing investment.

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Introduction to Marketing

#2 Company and Marketing Strategy:

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