Priciples of Marketing

By: Philip Kotler and Gary Armstrong

Chapter 2
Company and Marketing
Strategy
Partnering to Build Customer
Relationships
JULIANE ANGELA P. HISONA
KYRIE ALTHEA D. FABULAR
PRINCESS CLARICE DEL PUERTO
PEARSON
Just Do It
Objective Outline
Companywide Strategic Planning: Defining
Marketings Role
1 Explain company-wide strategic planning and its four
steps.

Designing the Business Portfolio

Discuss how to design business portfolios and
2
develop growth strategies.
Objective Outline
Planning Marketing: Partnering to Build
Customer Relationships
3 Explain Marketings role in strategic planning and
how marketing works with its partners to create and
deliver customer value.

Marketing Strategy and the Marketing Mix

4 Describe the elements of a customer-driven marketing
strategy and mix and the forces that influence it.
Objective Outline

Managing the Marketing Effort

Measuring and Managing Return on
Marketing Investment
List the marketing management functions, including
5 the elements of a marketing plan, and discuss the
importance of measuring and managing return on
marketing investment.
Companywide Strategic Planning: Definin
g Marketings Role

Strategic planning is the process of developi

ng and maintaining a strategic fit between the org
anizations goals and capabilities and its changin
g marketing opportunities.
Companywide Strategic Planning:
Defining Marketings Role
Steps in Strategic Planning

Like the marketing

Company-wide strategic
strategy, the broad
planning guides marketing
company strategy must be
strategy and planning.
customer focused.
Defining a Market-Oriented Mission

Mission statement: The organizations pur

pose, what it wants to accomplish in the lar
ger environment.
Market-oriented mission statement: Defi
nes the business in terms of satisfying basi
c customer needs.
 Nike
We bring inspiration and innovati
on to every athlete in the world.
Defining a Market-Oriented Mission
ToTo be customers
be our the worldsfavorite
best and
place
most profitable
and way toquick-service
eat.
restaurant.
Setting Company Objectives and Goals
Designing the Business Portfolio
Business portfolio: The collection of busi
nesses and products that make up the comp
any.
Business portfolio planning involves two st
eps:

The company must analyze

Shape the future
its current business
portfolio by developing
portfolio and determine
strategies for growth
which businesses receive
and downsizing
more, less, or no investment
Analyzing the Current Business Portfolio

Portfolio analysis:
Process by which management evaluates t
he products and businesses that make up the
company
Steps in Analyzing the Current Business Po
rtfolio
1. Identify the key businesses that make up the c
ompany, called strategic business units (SBU
s).
2. Assess the attractiveness of its various SBUs
3. Decide how much support each SBU deserves
 Stars are high-growth,
The Boston Consulting They
GrouprequireApproach
high-share businesses a lot of
or products. They often cash to hold their
need heavy investments share, let alone
A company classifies
to finance itsall
their rapid SBUsincrease
according
to th it.
growth.
e growth-share matrix. The growth-share matrix
defines four types of SBUs:

These established They may generate

enough cash to
and successful SBUs
maintain themselves
need less investment but do not promise to
to hold their market be large sources of
share. cash.
The Boston Consulting Group Approach
It can pursue one of four strategies for each SBU.
Problems with Matrix Approaches
It have some limitations:
Difficulty in defining SBUs and measuring market share and
growth
Time consuming
Expensive
Focus on current businesses, not future planning
Methods to improve:
Dropped formal matrix methods in favor of more customized
approaches that better suit their specific situations
Todays strategic planning has been decentralized
 Developing Strategies for Growth and Dow
nsizing
Market development Companies can grow by developing new markets
for existing products. For example, Starbucks is expanding rapidly in
China, which by 2015 will be its second-largest market, behind only the
United
Product/market
States. expansion grid is a portfolio-pl
anning tool for identifying company growth oppo
Diversification Through diversification, companies can grow by
rtunities
starting through
or buying market
businesses penetration,
outside their currentmarket deve For
product/markets.
lopment,
example, product
Starbucks development,
is entering the health or
anddiversification.
wellness market with
stores called Evolution By Starbucks.
Developing Strategies for Growth a
nd Downsizing
Market Company growth by increasing sales of
current products to current market
penetration segments without changing the product

Market The company growth by identifying and

developing new market segments for
development current company products.

Product Company growth by offering modified

or new products to current market
development segments.

Company growth through starting up or

Diversification acquiring businesses outside the
companys current products and
markets.
Planning Marketing:
Partnering to Build
Customer
The Role of Marketing in Strategic Planning

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

Roles of
Marketing
1. Provides a guiding philosophy the m
arketing concept.
2. Helps identify attractive marketing op
portunities and assessing the firms
potential.
3. Design strategies for reaching the uni
Partner Relationship Management
Working closely with partners in:
Other company departments
Outside the company
Partnering with Other Company De
partments
Value Chain

The series of internal

departments that carry ou
t value-creating activiti
es to design, produce, ma
rket, deliver, and suppor
t a firms products.
Partnering with Others in the Ma
rketing System
Value Delivery
Network
The network made up of the company, it
s suppliers, its distributors, and, ultim
ately, its customers who partner with eac
h other to improve the performance of the
entire system.
Marketing Strategy
and Marketing Mix
Managing Marketing Strategies an
d the Marketing Mix
Customer-Driven Marketing Strate
gy
Marketing
Strategy
The marketing logic b
y which the company hop
es to create customer v
alue and achieve profit
able customer relation
ships.
 What
customers
will we
Segmenta serve?
tion

Positionin Targeting
g

Differenti
How can we ation
serve these
customers
best?

Marketing Strategy Process

 Market
Segmentation
Dividing a market into
distinct groups of buyers
who have different needs,
characteristics, or behav
iors and who might requir
e separate products or ma
rketing programs.

Market
Segments
A group of
consumers who
responds in a similar
way to a given set of
 Market
Segmentation

Consumers can be groupe

d based on:
Geographic
Demographic
Psychographic
Behavioral
Segmenta
Targeting
tion

-Psychographic
Segmentation
-Demographic
Differenti
Segmentation Positionin
ation g
 Market
Targeting
The process of evalua
ting each market segmen
ts attractiveness and
selecting one or more s
egments to enter.
Segmenta
Targeting
tion

-Psychographic - Coffee drinkers

Segmentation - 25-40 yrs old office
-Demographic workers
Differenti
Segmentation Positionin
ation g
 Market
Differentiation

Actually differentiat
ing the companys mark
et offering so that it
gives consumers more va
lue.
Segmenta
Targeting
tion

-Psychographic - Coffee drinkers

Segmentation - 25-40 yrs old office
-Demographic workers
Differenti
Segmentation Positionin
ation g
- Over 80,000 drink
combination
- rHBG-free milk
 Market
Positioning

Arranging for a produc

t to occupy a clear dist
inctive, and desirable p
lace relative to competi
ng products in the minds
of target consumers.
Segmenta
Targeting
tion

-Psychographic - Coffee drinkers

Segmentation - 25-40 yrs old office
-Demographic workers
Differenti
Segmentation Positionin
ation g
- Over 80,000 drink
combination - Premium brand
- rHBG-free milk
Developing an Integrated Marketi
ng Mix

Marketing
Mix
The set of tactical
marketing tools pro
duct price, place, an
d promotion that th
e firm blends to prod
uce the response it w
ants in the target ma
rket.
Product
The goods and serv
ices combination the
company offers to th
e target market.

Price
The amount of
money customers
must pay to obtain
the product.
 Place
The activities tha
t makes the product a
vailable to target co
nsumers.

Promotio
The n activities that
communicate the merits
of the product and
persuade target
customers to buy it.
The 4 Ps of the Marketing Mi
x
 Companys Customers
Perspective Perspective

4Ps 4Cs
Customer
Product
Solution
Price Customer Cost

Place Convenience
Communicatio
Promotion
n
The 4 Ps and the 4 Cs of the Mar
keting Mix
MANAGING THE MARK
ETING EFFORT
Objective V
4 Marketing Management Functions
Analysis

Planning

Implementation

Control
Marketing Analysis
The marketer should construct a SWOT analysis, by which
it evaluates the companys overall
Strengths (S)
Weaknesses (W)
Opportunities (O)
Threats (T)
Strengths
Strengths include internal capabilities, resources, and posi
tive situational factors

Weaknesses
include internal limitations and negative situational factors
that may interfere with the companys performance
Opportunities
are favorable factors or trends in the external environment
that the company may be able to exploit to its advantage

Threats
are unfavorable external factors or trends that may
present challenges to performance.
Marketing Planning
involves choosing marketing strategies that will help the c
ompany attain its overall strategic objectives. A detailed m
arketing plan is needed for each business, product, or bra
nd
Marketing Implementation
is the process that turns marketing plans into marketing a
ctions to accomplish strategic marketing objectives
Marketing Department Organization
Functional organization- Under this organization, differe
nt marketing activities are headed by a functional specialis
ta sales manager, an advertising manager, etc.

Geographic organization- a company that sells across t

he country or internationally often uses this approach.

Product Management Organization- companies with ma

ny very different products or brands often create this type
of organization.
Marketing Department Organization
Market or Customer management organization- for co
mpanies that sell one product line to many different types
of markets and customers who have different needs and p
references.
Marketing Control
Measuring and evaluating the results of marketing strategi
es and plans and taking corrective action to ensure that th
e objectives are achieved.
4 Steps in Marketing Control
Management first sets specific marketing goals

It then measures its performance in the marketplace

Evaluates the causes of any differences between expecte

d and actual performance

Finally, management takes corrective action to close the g

aps between goals and performance
 Operating control involves checking ongoing performance
against the annual plan and taking corrective action when
necessary
 Strategic control involves looking at whether the company
s basic strategies are well matched to its opportunities.
Measuring and Managing Return on Marketing Inve
stment
Return on marketing investment
(or marketing ROI)

The net return from a marketing investment divided by the

costs of the marketing investment.