Chapter 2. – Lecture 2.
31/08/22
Company and marketing strategy p. 44 – 77
Summary p. 74 – 76
Company-wide strategic planning: defining marketing’s role
Defining market-oriented mission
Strategic planning sets the stage for the rest of the company’s planning. Marketing contributes to strategic
planning, and the overall plan defines marketing’s role in the company.
Strategic planning involves developing company’s game plan for long-term survival and growth, and consists
of following four points:
1 2 3 4
The company's mission should be market oriented, realistic, specific, Mission statement is a
motivating, and consistent with the market environment. Companies should statement of the
define themselves in terms of how they create value for the customers, rather organizations purpose;
than defining themselves by what they do or make what it wants to
i.e. [Link] accomplish in the larger
“We sell books, white à “We make the internet buying experience fast, easy environment. Rather than
goods, consumer and enjoyable – we’re the place where you can find having a mission
electronics, household and discover anything you want to buy online.” statement defining what
the organization does or
goods and products
online”. makes (product-oriented
decision), it should define
how the organization
The mission is then transformed into detailed supporting goals and objectives, creates value for its
which in turn guide decisions about the business portfolio. Then each business customers (market-
and product unit must develop detailed marketing plans in line with the oriented decision).
company-wide plan.
Setting company objectives and goals
Guided by the company's mission statement and objectives, management plans its business portfolio; the
collection of businesses and products that make up the company.
The firm should design a business portfolio that best fits its strengths and weaknesses to opportunities in
the environment. To do that, the planning involves two steps:
Step 1. Analyzing the current business portfolio and deciding which Portfolio analysis is the process
businesses should receive more, less or no investment which by management evaluates
Management’s first step is to identify the key businesses - strategic the products and businesses that
business units or SBUs – Which can be; company divisions, product line makes up the company.
within a division or single product/brand.
The first step in the analysis is
- The company is likely to put strong resources into profitable identifying the key businesses
businesses and phase down/drop weaker ones, unless future known as strategic business units
forecast suggests otherwise. (SBUs) and then deciding how
- Most standard analyzes then look into: The attractiveness and much support each of them
strength of position of each SBU. deserve.
The purpose of the analysis is to
find the best ways to use
company’s strengths to take
attractive opportunities in the
environment.
Growth-share matrix is a portfolio
planning method that evaluates a
company’s SBUs in terms of its
market growth rate and relative
market share.
The matrix is used to measure the
company’s competitiveness and
each SBU needs to be either
decided to be built, held, harvested
or divested.
The company might use a formal portfolio-planning method, but many companies are now designing
more-customized portfolio-planning approaches that are better suited to their unique situations, since
The matrix approaches have limitations:
- Difficult, time-consuming and cost to implement
- Management may find defining SBUs, market share and growth difficult
Shaping the future portfolio by developing strategies for growth and downsizing
Step 2.
Beyond evaluating current businesses, many companies need growth to in order to compete effectively,
keep their stakeholders happy and to attract the best talent.
à This can be done using following strategies:
Market penetration: a growth strategy focused on increasing sales of current products to current market
segments with existing products.
i.e. McDonalds: No major changes in products but through marketing mix improvements: adjustments to product
design, advertising, pricing and marketing channels.
Market development: a growth strategy focused on identifying and developing new market segments for
current products.
i.e. New demographic markets: senior consumers could be encouraged to try new food, styles, travel destinations or
products.
Product development: a growth strategy focused on
different modified or new products in current markets.
i.e. Charter tour operators: new products in terms of
travel concepts for couples, families, seniors, SPA
weekends.
Diversification: a growth strategy focused on starting
up or buying businesses outside of current products
and markets.
i.e. Fiat and BMW clothing, ICA bank and Harley-Davidson
perfume
Downsizing: reducing the business portfolio by eliminating businesses or products that are not profitable or
that no longer fit the company’s overall strategy. Some products and business units simply age and die.
i.e. CRT television sets and Polaroid photographs with instant processing.
Marketing strategy and the marketing mix
After setting the company-wide strategy, it’s time for customer-driven strategy and programmes.
Customer value and relationships are at the center of marketing strategy Marketing strategy is the
and programs. Through market segmentation, targeting, differentiation, and logic which by the
positioning, the company divides the total market into smaller segments company hopes to create
who have different needs, characteristics or behaviors and selects segments customer value and
that it can best serve. achieve profitable
relationships.
After a company has decided which segments to enter, it must decide how it
will differentiate its market offerings for each targeted segment and what it Market segmentation
positions it wants to occupy in those segments. means dividing the market
à Done by designing an integrated marketing mix, which consists of into distinct groups of
controllable marketing tools: product, price, place, and promotion (the four consumers who have
Ps concept) blended to produce the wanted response in the target market different needs,
and to achieve the company’s marketing objective by delivering customer characteristics or
value. behaviors, and who might
require separate products
or marketing programmes.
Market segment is a group
of consumers who respond
in a similar way to a given
set of marketing efforts.
Market targeting is the
process of evaluating each
market segment’s
attractiveness and
Products means Price is the Place/Marketing Promotion/Marketing selecting one or more
the goods-and- suggested retail channels includes means activities that segments to enter.
services price + factory company activities communicate the merits
combination options that make the of the product and
product available to persuade target Positioning is arranging for
Volvo XC40 e.g. sunroof, target consumers in customers to buy it. a product to occupy a
consists of bigger wheels various markets. clear, distinctive and
thousands of and a premium i.e. Volvo cars spend
desirable place relative to
parts and comes sound system = i.e. Volvo partners billions of Kr/year on
fully serviced with discounts that include a large body marketing and competing products in the
some support are negotiated of independently advertising. minds of target consumers.
functions and e.g. since the original owned dealerships
up to 11-year price tag are around the world = Differentiation means
road assistance. rarely changed. Availability and
function of the
actually differentiating the
dealer network market offering to create
density and location. superior customer value.
(In online sales,
Marketing mix is the set of
availability is
measured in terms controllable tactical
of delivery) marketing tools: product,
price, place/marketing
In addition, since critics argue that channels and
the 4Ps concept takes the seller’s promotion/marketing
view, the four Cs (or As) concept communications that the
has been developed to represent firm blends to produce the
the buyer’s view à hoped response in the
target market.
Critics argue that the four
Ps concepts takes the
sellers view and in
response the fours As
response was developed to
present the buyers view.
The value chain: partnering to create great offers and build relationships
Value chain is the series of departments that carry out value-creating activities to design, produce, market,
deliver and support a firm’s products.
The firms success depends on how well the various departments work co-ordinates their activities.
à The major functional departments in each business unit – marketing, HR, finance, controlling, accounting,
purchasing, operations, informational systems and others – must work together to accomplish strategic
objectives and make sure the company reaches its overall goals in terms of growth, profitability and
sustainability.
Managing the marketing effort and marketing return on investment
Managing the marketing requires
the following for marketing
management functions: analysis,
planning, implementation, and
control.
Managing the marketing function begins with a complete analysis of the company’s situation:
The company then develops company-wide strategic plans and then SWOT analysis is an overall
turns them into marketing and other plans for each division, product evaluation of the company’s overall
and brand: what and why. strengths, weaknesses,
opportunities and threats.
Through implementation the company then turns marketing
Marketing implementation is the
strategies into marketing actions: who where, when and how. process that turns marketing plan
into marketing actions in order to
Control then consists of evaluating the results of marketing activities accomplish strategic marketing
and taking corrective actions when needed, including the measures of objectives.
return on the marketing investment.
Marketing control is evaluating
Finally, marketing analysis provides information and evaluations results and taking corrective action
needed for all the other marketing activities. to ensure that objectives are
attained.
Marketing managers must ensure that their marketing dollars are
being well spent. In a tighter economy, today's marketers face
growing pressures to show that they are adding value in line with
their costs. In response, marketers are developing better measures of
return on marketing investment. Increasingly, they are using
customer-centered measures of marketing impact as a key input into
their strategic decision making.
International marketing strategy
Marketing strategy may be local, domestic or international undertaking depending on the size, scope and
ambition of the company. A global firm is one that, by operating in more than one country gains marketing,
production, R & D, and financial advantages that are not available to purely domestic competitors.
Most companies have ambition to grow, however following should be Standardized Global
considered when entering international markets: Marketing is an
- Should the company apply national or a truly global attitude? international marketing
- is it exploring local marketing opportunities across countries or is it striving strategy for using basically
for standardized approach to draw benefits from global efficiencies? the same marketing
In addition, companies that go global may face highly unstable governments and strategy and mix in all the
currencies, restrictive government policies and regulations, corruption and high trade company’s international
barriers. markets.
The rapidly changing global environment poses both opportunities and threats, and Adapted global marketing
it’s difficult to find a marketer today that isn’t affected in some way by global is an international
developments. The world is shrinking with digitalization and the advent of cheaper marketing strategy for
and faster transportation and financial flows. adjusting the marketing
strategy and mix elements
to each international target
Many large companies, regardless of their ‘home country’ nowadays think of market, bearing more costs
themselves as truly global. They view the entire world as single, borderless but hoping for larger market
market. share and return.
Many of them suffer from being characterized by the attitudes of their home country.
The major global marketing decision usually boils down to whether how much if, at
all, should a company adapt its marketing strategy and programmes to the local
markets.
Companies can choose to stick with standardized global marketing: using
basically the same marketing strategy and mix in all the company’s
international markets or use adapted global marketing: adjusting the
marketing strategy and mix elements to each international target market,
bearing more costs but hoping for a larger market share and return.
Choosing between these two has been widely debated, since some global marketers
believe that digitalization and technology are making world a smaller place and
driving the standardization between peoples’ needs all around the world. In the other
hand the marketing concept holds that adapted marketing programmes will be more
effective if tailored to the needs of each targeted customer group.
Despite digitalization, technology and standardization, consumers from
different countries still have widely different cultural backgrounds, wants and
needs, spending power, product preferences and shopping patterns and
therefore, most international marketers suggests that companies should seek
balance between both standardization and adaption.
Measuring and managing return on marketing investment
Before, spending much on marketing wasn’t as widely questioned, but because of more pressure from
owners, tougher competition in markets and the fact that marketing spending has been questioned in many
companies, measuring return on marketing investment (Marketing ROI) emerged.
ROI is the net return from a marketing investment divided by the costs of the marketing investment.
However, there is some key things to be considered:
Can be difficult measure:
- There is no consistent definition of ROI
- Effects of marketing are difficult to assess because of the almost indefinite array of factors.
- Competitors moves
- Changing cost structures
i.e. A $1000 000 television campaign reached 2000 000 viewers. How will the return be measured in terms of sales,
profits, and building customer engagement and relationships?
Some instances are very easy to measure:
- Increased sales
i.e. Findus selling 750% more fish sticks during ICA campaign
Dynamic nature of marketing makes emphasis on one goal difficult – Instead, multitude of goals:
i.e. Increased sales, improved image, higher price premium and/or better product mix
In addition:
- ROI measures have inherent limitations
A company can assess marketing ROI n terms of standard marketing performance measures into marketing
dashboards – meaningful sets of marketing performances in a single display used to monitor strategic
marketing performance.