Company and Marketing

Strategy
The company without a strategy is willing to try anything.
Michael Porter
If you know the enemy and know yourself you need not
fear the results of a hundred battles.
Sun Tzu

Company and Marketing Strategy

Topic Outline

Companywide Strategic Planning: Defining Marketings

Role
Designing the Business Portfolio
Planning Marketing: Partnering to Build Customer
Relationships
Marketing Strategy and the Marketing Mix
Managing the Marketing Effort
Measuring and Managing Return on Marketing
Investment

Case: Disney
What are its challenges?

Originally known for

films, animation, theme
parks.
Satisfying the customer
is everyones job.

Mission: make people

happy & make a dream
come true!

Disney has grown via

diversification.

Discussion

1.

Has Disney grown

too large?
Will consumers
accept new Disney
businesses?

2.

Strategic (Marketing) Planning

Companies should look ahead and develop

long-term strategies to meet changing
conditions in their industries and ensure longterm survival

The task of selecting an overall company

strategy for long-run survival and growth
strategic planning
Marketings key role in strategic planning

Formal Planning

Benefits of formal plans:

Encouraging

management to think ahead

systematically.
Forcing managers to clarify objectives and policies.
Better coordination of company efforts.
Clearer performance standards for control.
Helping the company to anticipate and respond
quickly to environmental changes and sudden
developments.

What is Strategic Planning?

Strategic Planning defined:

The process of developing and
maintaining a strategic fit between the
organizations resources, goals and
capabilities and its changing market
opportunities.

Strategic Planning

It sets the the stage for the rest of the planning

in the firm
The aim to shape and reshape companys
businesses and products in order to reach to
targeted profits and growth.
Top-management job!

Part of a broader process: strategic management

Strategic Planning, Implementation,

and Control Process
Planning
Corporate
planning

Implementation
Organizing

Division
planning
Business
planning
Product
planning

Control
Measuring
results
Diagnosing
results

Implementing
Taking
corrective
action

This type of business plan involves adapting

the firm to take advantage of opportunities
in its constantly changing environment.
1.
2.
3.
4.

Annual plan
Marketing plan
Strategic plan
Operational plan

Strategic Planning

Organizational levels subject to strategic

planning:
Corporate level
Division level
Business unit level
Product level

Steps in Strategic Planning

Corporate Level

Defining
Definingthe
the
Company
Company
Mission
Mission

Setting
Setting
Company
Company
Objectives
Objectives
and
andGoals
Goals

Designing
Designing
the
theBusiness
Business
Portfolio
Portfolio

Business unit,
product,
and market
level
Planning
Planning
marketing
marketing
and
andother
other
functional
functional
strategies
strategies

Strategic Planning
Defining a Market-Oriented Mission

The mission statement is

the organizations
purpose, what it wants to
accomplish in the larger
environment

Market-oriented mission
statement defines the
business in terms of
satisfying basic customer
needs

Strategic Planning
Defining a Market-Oriented Mission

The mission statement is clear at the

beginning

Fundamental questions:
What

is our business?
Who is the customer?
What do consumers value?
What should our business be?

The organization should base its mission

statement on its ________.
1.
2.
3.
4.

profitable goals
customers welfare
products value
distinctive competencies

Strategic Planning
Defining a Market-Oriented Mission

Each companys
mission is shaped by:
History
Current

preferences of
the owners and the
management
The market environment
Resources
Distinctive competencies

Limited
number of
goals
Stress major
policies & values
Define competitive
scopes

Strategic Planning
Defining a Market-Oriented Mission

Market-oriented
definition of a
business better than
product or
technological definition
A market-oriented

mission statement
defines the business in
terms of satisfying
basic customer needs

Mission statement
must avoid being too
narrow or too broad

Mission statement to
be guided by a vision an almost impossible
dream that provides a
direction for the
company for the next 10
to 20 years

Market
MarketOriented
Oriented

Characteristics
Characteristicsof
ofaa
Good
Good Mission
Mission
Statement:
Statement:

Realistic
Realistic
Specific
Fit
FitMarket
MarketEnvironment
Environment

Distinctive
DistinctiveCompetencies
Competencies
Motivating
Motivating

Strategic Planning
Company

Product-Oriented
Definition

Market-Oriented Definition

Amazon.com

We sell books, videos,

CDs, toys, consumer
electronics and other
products online

We make the Internet buying

experience fast, easy, and
enjoyable were the place where
you can find and discover
anything you want to buy online

Disney

We run theme parks

We create fantasiesa place

where dreams come true and
America still works the way its
supposed to

Nike

We sell athletic shoes and

apparel

We bring inspiration and

innovation to every athlete* in the
world (* if you have a body, you
are an athlete)

Strategic Planning
Examples of Market-Oriented Missions
Mission
As a higher education and
research institution dedicated to the
advancement of basic and applied
sciences, our mission is to educate
the technological leaders and
entrepreneurs of the future in a rich
intellectual environment sensitive to
both local and global issues.
Vision
ITUs vision is to become a national and
international focal point of pioneering studies
in the fields of science, technology, social
sciences, and the arts.

Strategic Planning
Setting Company Objectives and Goals

Companys mission needs to be turned

into detailed, supporting objectives for
each level of management
Mission hierarchy of objectives
As specific as possible
Marketing strategies must be developed to
support these marketing objectives

Strategic Planning
Setting Company Objectives and Goals

Hierarchy of Objectives
Mission
Statement

Marketing
Objective # 1

Marketing
Strategy

Marketing
Objective # 2

Marketing
Strategy

Marketing
Objective # 3

Strategic Planning
Designing the Business Portfolio

The business portfolio collection of

businesses and products that make up the
company
Designing the business portfolio nvolves 2
main steps:
1.

2.

Analyzing the current business portfolio and

decide which business should receive more, less or
no investment
Shaping the future portfolio by developing
growth strategies to add new
products/businesses to the current portfolio

Strategic Planning
Analyzing the Current Business Portfolio

Portfolio Analysis to identify and evaluate

the various businesses that make up the
company
Identifying

key businesses Strategic Business

Units - SBU
SBU: unit of the company that has a separate
mission and objectives that can be planned
independently from other company businesses
Company division
Product line within a division
Single product or brand

Strategic Planning
Analyzing the Current Business Portfolio

20%18%16%14%12%10%8%6%4%2%0
10x

Stars

Question marks

?2

Market Growth Rate

Boston Consulting Groups

Growth-Share Matrix

Dogs

Cash cow

8
6

7
4x

2x 1.5x

1x

.5x .4x .3x .2x .1x

Relative Market Share

Low

High

Market Growth Rate

Boston Consulting Groups

Growth-Share Matrix
Question
QuestionMarks
Marks

Stars
High growth & share
Profit potential
May need heavy
investment to grow
Cash
CashCows
Cows

?
High growth, low share
High growth, low share

Build
Buildinto
intoStars
Starsor
orphase
phaseout
out
Require
Requirecash
cashto
tohold
hold
market
marketshare
share

Dogs
Dogs

Low
Lowgrowth,
growth,high
highshare
share
Established,
Established,successful
successful
SBUs
SBUs
Produce
Producecash
cash

Low
Lowgrowth
growth&&share
share
Low
Lowprofit
profitpotential
potential

Relative Market Share

High

Low

Analyzing the Current Business Portfolio

After the classification of its SBUs to determine

what role each will play in the future

Build
Increase market
share
Works well for
question marks

Hold
Preserve market
share
Good for cash
cow

Harvest
Increases shortterm cash flow
Good for weak
cash cows,
question marks
and dogs

Divest
Sell or liquidate
Good for dogs
and question

Problems with Matrix Approaches

Can
Can be
be difficult,
difficult, time-consuming,
time-consuming, &
& costly
costly to
to implement
implement

Difficulty
Difficulty in
in defining
defining SBUs
SBUs &
& measuring
measuring market
market share
share and
and growth
growth

ocus on
Focus
on current
current businesses;
businesses; provide
provide little
little advice
advice for
for future
future planning
planning

Can
Can Lead
Lead to
to Unwise
Unwise Expansion
Expansion or
or Diversification
Diversification

Strategic Planning
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

Growth Strategies Product / Market Expansion Grid (Ansoff)

Existing
products
Existing
markets

1. Market
penetration

New
markets

2. Market
development

New
products

3. Product
development

4. Diversification

Growth Strategies

Existing
products

New
products

Making more sales

to current customers
without changing its
products.

Existing
markets

Market
Product
Market
Product
penetration
penetration development
development

New
markets

Market
Market
development
development

DiversificaDiversification
tion

Add new stores in

current market areas,
improve advertising,
prices, service or
store design.

Growth Strategies

Existing
products

New
products

Existing
markets

Market
Product
Market
Product
penetration
penetration development
development

New
markets

Market
Market
development
development

DiversificaDiversification
tion

Develop new
markets for current
products

Identify new
demographic or
geographic markets

Domestic or
international

Growth Strategies

Existing
products

New
products

Existing
markets

Market
Product
Market
Product
penetration
penetration development
development

New
markets

Market
Market
development
development

DiversificaDiversification
tion

Offering modified
or new products to
current markets.

New styles, flavors,

colors, or modified
products

Growth Strategies

Existing
products
Existing
markets
New
markets

New
products

Market
Product
Market
Product
penetration
penetration development
development
Market
DiversificaMarket
Diversificadevelopment
tion
development
tion

New products for

new markets.

Start up or buy
new businesses

The Business Portfolio

Which strategy
is this?

Market penetration
Market development
Product development
Diversification

2 - 36

Strategic Planning
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 companys overall
strategy
Some reasons that a company might want to abandon
products or markets:

The market environment might change (making some of the

companys product or markets less profitable e.g. economic
recession)
The company may have grown too fast or entered areas where
it lacks experience
Some of the companys products or business units age and die.

Functional Planning

The companys overall strategic plan establishes

what kind of businesses the company will be in future
& its objectives for each business.
More detailed planning must take place within each
business unit
The major functional departments in each unit must
work together to accomplish strategic objectives
Marketing plays a key role

Marketings Key Role in

Strategic Planning

Provide a guiding philosophy

Identify attractive opportunities
Design effective strategies
Build strong value chains
Form superior value delivery networks

Marketings Key Role:

Partner Relationship Management

Partner relationship management

working

closely with partners in other departments

(to form an effective value chain that serves the
customer), and

partnering

effectively with other companies in the

marketing system for a superior value delivery
network to jointly bring greater value to customers

Marketings Key Role:

Partner Relationship Management

Value chain is a series of departments that carry out

value-creating activities to design, produce, market,
deliver, and support a firms products
The companys overall success depends also on how
well the activities of various dept. are coordinated

Departmental relations are full of conflicts!

Marketers must find ways to get all dept. to think

consumer and to develop a smoothly functioning
value chain

Marketings Key Role:

Partner Relationship Management

The company needs to look

beyond its own value chain in
order to create customer value:
Value-delivery network
network made up of the
company, suppliers,
distributors, and customers
who partner with each other
to improve the performance
of the entire sytem

Competition today takes place between

the entire value delivery networks!

Business Unit Strategic Planning

External Analysis
(Opport.&Threat)

Mission

SWOT

Setting

Selecting

Developing

Implemen-

Feedback &

Statement

ANALYSIS

Objectives

Strategy

Program.

tation

Control

Internal Analysis
(Streng.&Weakness)

Business Unit Strategic Planning

Business

Mission each SBU needs to define

its specific mission within the broader company
mission
External Environment Analysis to build a
MIS to monitor:
Key external macroenvironment forces
Significant microenvironment actors
Trends and important developments to identify
the associated opportunities and threats

Business Unit Strategic Planning

Internal

Environment Analysis Each business

needs to evaluate its internal strengths and
weaknesses periodically

Checklist

for Performing Strengths/Weaknesses

Analysis
Management or an outside consultant reviews the
businesss marketing, financial, manufacturing and
organizational competencies and rates each factor
as strength or weakness
SWOT

ANALYSIS

Business Unit Strategic Planning

Goal Formulation (Goals objectives that are

specific with respect to magnitude and time)
Turning objectives into measurable goals facilitates
management planning, implementation and control
Most businesses pursue a mix of objectives

Objectives must be arranged hieararchically; from the most to

the least important
should be stated quantitatively whenever possible
(e.g .increase the ROI to 15% within two years)
should be realistic
should be consistent

Business Unit Strategic Planning

Strategy Formulation
Strategy

A game plan for how to reach goals (while

goals indicating what a business unit wants to achieve)
3 general type of strategy:
Cost

Leadership to achieve the lowest production

and distribution costs / to price lower than its
competitors and win a large market share
Differentiation to concentrate on achieving
performance in an important customer benefit area
valued by a large part of the market
Focus on one or more narrow market segments
rather than going after a large market

The Marketing Process

Planning at the corporate, division and business

levels integral part of the marketing process

Marketing Process (definition)

consists of analyzing mktg opportunities,
selecting target markets, developing the mktg
mix, and managing the mktg effort

The Marketing Process

ng
ti l
ke ro
ar nt
M Co

PoliticalLegal
Environment

Profitable
Customer
Relshps.
Promotion

Competitors

Price

Publics

M
Im a r
pl ke
em tin
en g
ta
t

M
A ark
n e
al t
ys in
is g

Place

Product

ng
ti g
ke in
ar nn
M la
P

Suppliers

TechnologicalNatural
Environment

Marketing
Intermediaries

io
n

DemographicEconomic
Environment

SocialCultural
Environment

The Marketing Process (cont.)

1.
2.
3.
4.
5.

Analyzing marketing opportunities

Researching and selecting target markets
Designing marketing strategies
Planning marketing programs
Organizing, implementing, controlling the
marketing effort

The Marketing Process (cont.)

1.

Analyzing marketing opportunities

A reliable marketing and information system

To evaluate consumer wants and behavior

To assess market size
To gather information about the marketing
environment
To understand consumer markets, business
markets and their behaviors
To monitor competitors

The Marketing Process (cont.)

2.

Researching and selecting target markets

To divide the market into specific segments

To evaluate each segment and choose market
segments to be served best
To develop a clear position relative to competitors
in the minds of consumers

Strategy

Customers

1. Market

Segmentation
2. Target
marketing
3. Market
Positioning

grouped by:

Geographic
Demographic
Psychographic
Behavioral

Market

segment is a
groups of consumers
who respond in similar
ways to marketing
efforts.

Strategy
1. Market

Segmentation
2. Target
marketing
3. Market
Positioning

Evaluation

of each

segments
attractiveness
Selection of segments
with greatest long-term
profitability
A company can choose
one or several
segments to target

Strategy
1. Market

Segmentation
2. Target
marketing
3. Market
Positioning

The

place the product

occupies in the
consumers mind
Products are positioned
relative to competing
products
Marketers look for
clear, distinctive and
desirable place in
positioning

The Marketing Process (cont.)

3.

Designing marketing strategies for

competitive advantage

Market leader strategies

Market challenger strategies
Market follower strategies
Market nicher strategies

The Marketing Process (cont.)

4.

Planning marketing programs

Decisions on:

Marketing expenditures

Marketing mix 4Ps

Marketing budget allocation

The marketing mix is the set of controllable tactical

marketing toolsproduct, price, place, and
promotionthat the firm blends to produce the
response it wants in the target market

The Marketing Mix

2 - 58

The Marketing Process (cont.)

5.

Managing the marketing effort

Marketing Analysis
Marketing Planning
Marketing Implementation
Marketing Control

The Marketing Process (cont.)

Managing the Marketing Effort

Managing the Marketing Effort

Marketing Functions

Analysis
Planning
Implementation
Control

Finding opportunities : the

company must analyze

its market & mktg

environment
company strengths &
weaknesses
current and possible mktg
actions

Avoiding threats
Understanding strengths
Analyzing weaknesses

Marketing Analysis SWOT Analysis

Managing the Marketing Effort

Marketing Functions Marketing planning

Analysis
Planning
Implementation
Control

involves deciding on
marketing strategies that
will help the company
reach its strategic
objectives
Marketing plan 2 levels:
Strategic mktg plan develops
the broad mktg objectives and
strategy based on an analysis of
the current market situation and
opportunities
Tactical mktg plan outlines
specific mktg tactics, including
advertising, merchandising,
pricing, channels, service, etc.

Managing the Marketing Effort

Market PlanningParts of a Marketing Plan

Managing the Marketing Effort

Marketing Functions The process that turns

Analysis
Planning
Implementation
Control

mktg plans into mktg

actions to accomplish
strategic mktg 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

Managing the Marketing Effort

Marketing Department Organization

Managing the Marketing Effort

Marketing Functions

Analysis
Planning
Implementation
Control

Measurement and
evaluation of the
results of marketing
strategies
Checking for
differences between
goals and
performance
Taking of corrective
action as needed

Managing the Marketing Effort

Return on Marketing Investment (Marketing ROI)

Return on marketing
investment (Marketing 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.

The series of departments that add valuecreating activities to the design,

product/service, and market and support a
companys product(s) is called ________.
1. marketing mix
2. positioning
3. value chain
4. SWOT

The network comprised of the company,

venders, distributors, and customers who
partner with each other to improve the
performance of the entire system is called
_________.
1.
2.
3.
4.

value-delivery network
positioning
market concept
market penetration

The set of controllable, tactical marketing

tools that the firm blends together to
produce its response to the wants of its
target market are called its ________.
1.
2.
3.
4.

marketing arsenal
marketing mix
marketing position
independent marketing options

The following four stepsdefining the

companys mission, setting objectives,
designing a portfolio, and developing plans
is called ________.
1.
2.
3.
4.

strategic planning
positioning
market penetration
differentiation