Marketing Principles

Lesson 2
Company and Marketing
Strategy: Partnering to Build
Customer Relationships

Dr. Nicholas Hamelin

 Learning Objectives

After studying this chapter, you should be able to:

1. Explain companywide strategic planning in its four
steps
2. Discuss how to design business portfolios and
develop growth strategies
3. Explain marketing’s role in strategic planning and
how marketing works with its partners to create
and deliver customer value
4. Describe the elements of a customer-driven
marketing strategy and mix, and the forces that
influence it
5. List the marketing management functions,
including the elements of a marketing plan, and
discuss the importance of measuring return on 2-2
marketing investment
The Mkt planning process
 Chapter Outline

1. Companywide Strategic Planning: Defining Marketing’s

Role
2. Planning Marketing: Partnering to Build Customer
Relationships
3. Marketing Strategy and the Marketing Mix
4. Managing the Marketing Effort
5. Measuring and Managing Return on Marketing Investment

2-3
 Companywide Strategic Planning:
Defining Marketing’s Role

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

2-4
 Companywide Strategic Planning:
Defining Marketing’s Role

Strategic Planning

Company Company Company

Mission Objectives Portfolio

Planning
Mkt / BU

2-4
 Companywide Strategic Planning:
Defining Marketing’s Role

Defining a Market-Oriented Mission

Mission statement: The organization’s

purpose, what it wants to accomplish in the
larger environment
Market-oriented mission statement: Defines
the business in terms of satisfying basic
customer needs

2-5
 Mission statement

! Coke : ‘to benefit and refresh

everyone it touches.’

! Alcoa… : ‘At Alcoa, our vision is to be

the best company in the world.’
 Mission statement

! Yahoo! : To connect people to their

passions, communities, and the world’s
knowledge.

! Google : To organize the world’s information

and make it universally accessible and
useful.

! Kellogg Co.“We build Gr-r-reat brands and

make the world a little happier by bringing
our best to you.”
 NOKIA China Mission statement

! Nokia is devoted to the long term strategy of becoming one of China's best
cooperative partners. Through localized research, development, production,
and technological innovation, Nokia is strengthening its position as the
leading supplier of mobile communication platforms and network solutions.
At present Nokia (China) is the largest exporter within China's mobile
communications industry.

! As the world's leader in mobile communications, Nokia acts as a driving

force within its industry. Nokia provides user-friendly and innovative
products, including mobile phones that incorporate graphics, games, media,
and business applications to enrich people's communication experience. In
addition, the company also supplies equipment, solutions, and services to
network operators.

! As an excellent corporate citizen, Nokia actively engages in activities with a

broad influence on society. Over the past two decades, Nokia has
participated in and sponsored China's development in the areas of
education, sports, environmental protection, and charity.
 „elegance, creativity, innovation and fantasy“

Mission Statement

! represent most refined

qualities of Western
"Art de Vivre"
! to be synonymous with
both elegance and
creativity.
! products represent
tradition, innovation,
dream & fantasy.
 „elegance, creativity, innovation and fantasy“

Mission Statement
 Companywide Strategic Planning:
Defining Marketing’s Role

Setting Company Objectives and Goals

• Business objectives
• Marketing objectives
 Companywide Strategic Planning:
Defining Marketing’s Role

Designing the Business Portfolio

The business portfolio is the collection of

businesses and products that make up the
company

2-7
 Companywide Strategic Planning:
Defining Marketing’s Role

Analyzing the Current Business Portfolio

Analyzing the current business portfolio is

the process by which management
evaluates the products and businesses
making up the company

2-8
 Companywide Strategic Planning:
Defining Marketing’s Role

Steps in Analyzing the Current Business Portfolio

1. Identify key businesses making up the company

2. Assess the attractiveness of its various SBUs
3. Decide how much support each SBU deserves

2-9
 Companywide Strategic Planning:
Defining Marketing’s Role

Steps in Analyzing the Current Business Portfolio

Identify key businesses making up the company

• Strategic business unit (SBU) is a unit of the company that
has a separate mission and objectives that can be planned
separately from other company businesses
• Company division
• Product line within a division
• Single product or brand

2-10
 Nokia SBU

! The move follows the reorganization of the Espoo, Finland,

company's mobile phone division into nine units in the spring of
2002. The restructuring will be in effect as of January 1, 2004,
officials said.

! Currently Nokia's business units comprise the mobile phone

business and the networking business. The new business units
are as follows:

! Mobile Phones
! Networks
! Multimedia.
! Enterprise
! sales and marketing as well as manufacturing and logistics,
 Companywide Strategic Planning:
Defining Marketing’s Role

Steps in Analyzing the Current Business

Portfolio

Assess the attractiveness of various SBUs and

decide how much support each deserves
• Mkt share,
• Growth…

2-11
 Companywide Strategic Planning:
Defining Marketing’s Role

Analyzing the Current Business Portfolio

The Boston Group Approach

Growth share matrix is a portfolio planning method that

evaluates a company’s strategic business units in terms of
their market growth rate and relative share
Strategic business units are classified as:
• Stars
• Cash Cows
• Question marks
• Dogs

2-12
Business portfolio analysis
 Companywide Strategic Planning:
Defining Marketing’s Role

Analyzing the Current Business Portfolio

The Boston Group 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

2-13
 Companywide Strategic Planning:
Defining Marketing’s Role

Analyzing the Current Business Portfolio

The Boston Group Approach

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

2-14
 Snack Foods Beverages Foods

Frito-Lay North America

Frito-Lay International Quaker North America

Pepsi-Cola North America

Gatorade/Tropicana North America
PepsiCo Beverages International
 Snack Foods

Frito-Lay North America

Lay’s Funyuns
Ruffles Sunchips
Doritos Cracker Jack
Santitas Chester’s popcorn
Fritos Grandma’s cookies
Cheetos Munchos
Rold Gold Smartfood
Baken-ets fried pork skins
Oberto meat snacks
 Snack Foods

Frito-Lay International

Bocabits wheat snacks Walkers potato crisps

Crujitos corn snacks Walkers Square potato snacks
Fandangos corn snacks Walkers Monster Munch Corn snacks
Hamkas snacks Miss Vickie’s potato chips
Niknaks cheese sticks Gamesa cookies
Quavers potato snacks Dippas
Sabritas potato chips Sonric’s sweet snacks
Twisties cheese snacks
 Beverages

Pepsi-Cola North America

Pepsi-Cola Lipton
Mountain Dew Dole
Slice Aquafina
Mug Frappuccino
Sierra Mist SoBe
FruitWorks AMP
 Beverages

Gatorade/Tropicana North America

Gatorade
Propel
Tropicana
Dole juices
Beverages

PepsiCo Beverages International

Loóza juices and nectars

Copella juices
Frui’Vita juices
Tropicana 100 juices
 Foods

Quaker North America

Quaker Oats Quaker rice cakes and granola bars

Cap’n Crunch cereal Rice-A-Roni side dishes
Life cereal Near East couscous/pilafs
Quisp cereal Aunt Jemima mixes & syrups
King Vitaman cereal Quaker grits
Mother’s cereal
 Analyzing the Current
Business Portfolio
" Build " Harvest
" Increase market " Increases short-
share term cash flow
" Works well for " Good for weak
cash cows,
question marks question marks
" Hold and dogs
" Preserve market " Divest
share " Sell or liquidate
" Good for cash cow " Good for dogs and
question marks
 Companywide Strategic Planning:
Defining Marketing’s Role

Analyzing the Current Business Portfolio

Problems with Matrix Approaches

• Difficulty in defining SBUs and measuring

market share and growth
• Time consuming
• Expensive
• Focus on current businesses, not future
planning
2-15
 Companywide Strategic Planning:
Defining Marketing’s Role

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

2-16
Companywide Strategic Planning:
Defining Marketing’s Role

Developing Strategies for Growth and Downsizing

• Product/market expansion grid

strategies
• Market penetration
• Market development
• Product development
• Diversification

2-17
Product/market expansion grid
strategies
 Companywide Strategic Planning:
Defining Marketing’s Role

Developing Strategies for Growth and

Downsizing

Market penetration is a growth strategy

increasing sales to current market segments
without changing the product

Market development is a growth strategy that

identifies and develops new market
segments for current products
2-18
 Companywide Strategic Planning
Defining Marketing’s Role

Developing Strategies for Growth and

Downsizing

Product development is a growth strategy

that offers new or modified products to
existing market segments

Diversification is a growth strategy through

starting up or acquiring businesses outside
the company’s current products and
markets 2-19
 Companywide Strategic Planning
Defining Marketing’s Role

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 company’s overall
strategy

2-20
 GM massive downsizing

! GM's big shakeup Automaker ups job cuts to 30,000

jobs as it shuts plants, facilities in plan to save $7B a
year. November 21, 2005: 3:29 PM EST By Chris
Isidore, CNN/Money senior writer

! GM CEO Rick Wagoner detailed the company's job-

cut plans but declined to say when the troubled
automaker might return to profitability

! NEW YORK ([Link]) - General Motors

Corp. said Monday it would cut 30,000 hourly jobs and
close or scale back operations at about a dozen U.S.
and Canadian locations in a bid to save $7 billion a
year and halt huge losses in its core North American
auto operations.
 Planning Marketing: Partnering to
Build Customer Relationships

Partner Relationship Management

Partner relationship management is the

process of working closely with partners in
other company departments to form an
effective value chain that serves the
customer, as well as partnering effectively
with other companies in the marketing
system to form a competitively superior
value-delivery network
2-21
Partner relation management:
Intel & Apple
Planning Marketing: Partnering to
Build Customer Relationships
Partnering with Other Company Departments

Value chain is a series of departments that

carry out value-creating activities to
design, produce, market, deliver, and
support a firm’s products

2-22
 Planning Marketing: Partnering
to Build Customer Relationships

Partnering with Others in the Marketing System

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

2-23
 Marketing Strategy and the
Marketing Mix

Marketing Strategy

Marketing strategy is the marketing logic by

which the business unit hopes to achieve its
marketing objectives

2-24
 BMW Marketing strategy
! Hahnemann believed products should be born of marketing
ideas
! Every thing BMW would do must be rooted in a marketing
strategy.
! Constant upgrade throughout a series run. When BMW
launches a new model, a four-door, for example, it brings out
the two-door the next year, the convertible the year after, more
powerful engines the following year, performance upgrades the
year after that. That's done to keep the line fresh over the
course of a seven-year run and to keep people interested.
! Basing its brand strategy in sporty driving and performance-
ensures that annual improvements and upgrades are very much
noticed and appreciated by BMW's core customers.
 Marketing Strategy and the
Marketing Mix

Customer-Driven Marketing Strategy

Market segmentation is the division of a

market into distinct groups of buyers who
have distinct needs, characteristics, or
behavior and who might require separate
products or marketing mixes

2-25
 Marketing Strategy and the
Marketing Mix

Customer-Driven Marketing Strategy

Market segment is a group of consumers who

respond in a similar way to a given set of
marketing efforts

Target marketing is the process of evaluating

each market segment’s attractiveness and
selecting one or more segments to enter

2-26
 To segment a market, first of all identify all the possible
customers. Decide how homogeneous they are (broad or
narrow segmentation strategy)
Next, group them according to the homogeneity of their
needs (clustering)
Next, start analysing and measuring the segments (find
the gold)
$ # # # $
 Marketing Strategy

Strategy ! Customers grouped by:

! Geographic
1. Market ! Demographic

Segmentation ! Psychographic
! Behavioral
2. Target marketing ! Market segment is a
groups of consumers who
3. Market respond in similar ways to
Positioning marketing efforts.
 Marketing Strategy

Strategy ! Evaluation of each

segment’s
1. Market attractiveness
Segmentation ! Selection of segments
with greatest long-
2. Target marketing term profitability
3. Market ! A company can
Positioning choose one or several
segments to target
 Marketing Strategy

Strategy ! The place the product

occupies in the
1. Market consumer’s mind
! Products are positioned
Segmentation relative to competing
2. Target marketing products
! Marketers look for clear,
3. Market distinctive and desirable
Positioning place in positioning
 Marketing Strategy

Segmentation, targeting
and positioning begin
with the customer.

Segmentation

Check

Targeting STP

Positioning
 Marketing Strategy.
[Link]

! For the following CHEVROLET_TRUCK_AD.flv

ads define the Chevy_truck_commercial.flv

segment targeted Chevrolet_Aveo_Transformer_Commercial.flv

and the positioning Mercedes-Benz_E-Class_commercial

[Link]
of the company.
Mercedes_Ad.flv

Segmentation

Targeting

Positioning
 Marketing Strategy and the
Marketing Mix

Customer-Driven Marketing Strategy

Market positioning is the arranging for a

product to occupy a clear, distinctive, and
desirable place relative to competing
products in the minds of the target
consumer

2-27
 Marketing Strategy and the
Marketing Mix

Developing an Integrated 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

2-28
 Marketing Strategy and the
Marketing Mix

Developing an Integrated Marketing Mix

The four Ps

• Product
• Price
• Place
• Promotion

2-29
 Marketing Strategy and the
Marketing Mix

Developing an Integrated Marketing Mix

The four Ps
! the right product

! sold at the right price

! in the right place

! using the most suitable promotion.

2-29
 Marketing Strategy and the
Marketing Mix

Developing an Integrated Marketing Mix

The four Ps

Product is the goods and services in

combination that the company offers to the
target market

Price is the amount of money customers have

to pay to obtain the product

2-30
 Marketing Strategy and the
Marketing Mix

Developing an Integrated Marketing Mix

The four Ps

Place is the company activities that make the

product available to target customers

Promotion is the activities that communicate

the merits of the product and persuade
target customers to buy it

2-31
 Marketing Strategy and the
Marketing Mix

Developing an Integrated Marketing Mix

The 4 Ps versus The 4 Cs

Product Customer solution

Price Customer cost
Place Convenience
Promotion Communication

2-32
 Managing the Marketing Effort

Managing the marketing effort requires:

• Analysis
• Planning
• Implementing
• Controlling
 Managing the Marketing Effort

Marketing Analysis

Analysis is the complete analysis of the

company’s or projects situation in a SWOT
analysis that evaluates the:
• Strengths
• Weaknesses
• Opportunities
• Threats
Warning: Swot is not abstract it is project based!
2-34
Swot Analysis
Swot analysis
 Managing the Marketing Effort

Marketing Analysis

Strengths include internal capabilities,

resources, and positive situational factors
that may help to serve company customers
and achieve company objectives

Weaknesses include internal limitations and

negative situational factors that may
interfere with company performance

2-35
 Managing the Marketing Effort

Marketing Analysis

Opportunities are favorable factors or trends in the

external environment that the company may be
able to exploit to its advantage

Threats are unfavorable factors or trends that may

present challenges to performance

2-36
 G.M. CASE
MISSION STATEMENT

G.M. is a multinational corporation engaged

in socially responsible operations, worldwide.
It is dedicated to provide products and
services of such quality that our customers will
receive superior value while our employees
and business partners will share in our success
and our stock-holders will receive a sustained
superior return on their investment.
 G.M. OBJECTIVES

! BECOME PROFITABLE

! SATISFY CUSTOMERS
WITH BETTER
PRODUCTS
! GROW THE BUSINESS IN
FUTURE YEARS
 G. M. SWOT ANALYSIS

! STRENGTHS

! SIZE AND MARKET SHARE

! TECHNOLOGY POTENTIAL
! NEW LEADERSHIP
! QUALITY IMPROVEMENT AND PERCEPTION
THEREOF
! MODEL ACCEPTANCE HAS IMPROVED
! BENEFITS DERIVED FROM A NEW STRATEGY -
STRUCTURE APPORACH AND RELATIONSHIP.
 G. M. SWOT ANALYSIS

! WEAKNESSES

! Failure To Make Technology Work

! Too Much Vertical Integration

! Bureaucratic Culture
 G. M. SWOT ANALYSIS

! WEAKNESSES cont.

! Product Design Problems - Public Acceptance And Reduction Of

Cycle Time

! Market Share And Profitability

! Negative Effects Of Downsizing

! Still Much To Learn About Lean Production - High Cost Producer

! Hughes Aircraft Situation

 G. M. SWOT ANALYSIS

! OPPORTUNITIES

! USE OF KNOWLEDGE GAINED FROM SATURN EXPERINCE AND

TOYOTA (NUMMI) JOINT VENTURE.
! EXPANSION OF THEIR GLOBAL PRESENCE - THEIR OWN
EUROPEAN MODEL OPERATON AS AN EXAMPLE.
! CONTINUE TO BUILD ON THE NEWFOUND CUSTOMER
CONFIDENCE.
! CHANGING CONSUMER DEMAND FOR NEW MODEL TYPES AND
STYLES - EXPANSION AND LEADERSHIP.
 G. M. SWOT ANALYSIS

! THREATS
! DOMESTIC AND FOREIGN COMPETITION
! U.S. FEDERAL LEGISLATION AND REGULATION

! CONSUMER LAWSUITS

! FOREIGN LEGISLATION AND REGULATION

! DECLINING QUALITY OF THE INFASTRUCTURE IN THIS
COUNTRY

! DECLINING VALUE OF JAPANESE YEN

 Quantitative Assessment of
Elements Within the SWOT Matrix
 Managing the Marketing Effort

Market Planning

Planning is the development of strategic and

marketing plans to achieve company
objectives

Marketing strategy consists of the specific

strategies for target markets, positioning,
the marketing mix, and marketing
expenditure levels

2-37
Managing the Marketing Effort

Market Planning
Sections of a marketing plan include:
• Executive summary
• Current marketing situation
• Threats and opportunities
• Objective and issues
• Action programs
• Budgets
• Controls

2-38
 Managing the Marketing Effort

Marketing Implementation

Implementing is the process that turns marketing plans into

marketing actions to accomplish strategic marketing
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

2-39
 Managing the Marketing Effort

Marketing Department Organization

• Functional
• Geographic
• Product
• Market or customer management

2-40
 Managing the Marketing Effort

Marketing Department Organization

Functional organization: This is the most

common form of marketing organization
with different marketing functions headed
by a functional specialist
• Sales manager
• Market research manager
• Customer service manager
• New product manager

2-41
 NAND Flash & Storage Media Division
Business Development Unit

NAND FLASH & STORAGE MEDIA

Business Development Unit

Assistant

NOKIA WIRELESS MULTIMEDIA STORAGE GEOGRAPHICAL

Business Business Business Business Business
Development Development Development Development Development

NAND & MCP

Product
Marketing

FLASH CARDS
Product
Marketing

APPLICATION LAB
System Support
& Software Tools
 Managing the Marketing Effort

Marketing Department Organization

Geographic organizations: Useful for companies that

sell across the country or internationally. Managers
are responsible for developing strategies and plans
for a specific region.

Product Management: Useful for companies with

different products or brands. Managers are
responsible for developing strategies and plans for
a specific product or band.

2-42
 Managing the Marketing Effort

Marketing Department Organization

Market or customer management organization:

Useful for companies with one product line sold to
many different markets and customers. Managers
are responsible for developing strategies and plans
for their specific markets or customers.

2-43
 Managing the Marketing Effort

Marketing Department Organization

Customer management involves a customer

focus and not a product focus for managing
customer profitability and customer equity

2-44
 Managing the Marketing Effort

Marketing Control

Controlling is measuring and evaluating results

and taking corrective action as needed
• Operating control
• Strategic control

2-45
 Managing the Marketing Effort

Marketing Control

Operating control involves checking ongoing

performance against annual plan and taking
corrective action as needed

Strategic control involves looking at whether

the company’s basic strategies are well
matched to its opportunities

2-46
 Managing the Marketing Effort

Marketing Control

Marketing audit is a comprehensive,

systematic, independent, and periodic
examination of a company’s environment,
objectives, strategies, and activities to
determine problem areas and opportunities

2-47
 Measuring and Managing Return
on Marketing Investment

Return on Marketing Investment

(ROI)

Return on marketing investment (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.

2-48
Measuring and Managing Return on
Marketing Investment

Customer-Centered Measures

• Customer acquisition
• Customer retention
• Customer lifetime value

2-49