Priciples of Marketing by Philip Kotler and Gary

Priciples of Marketing by Philip Kotler and Gary Armstrong Chapter 2 Company and Marketing Strategy Partnering to Build Customer Relationships PEARSON

Objective Outline 1 Companywide Strategic Planning: Defining Marketing’s Role Explain company-wide strategic planning and its four steps. Designing the Business Portfolio 2 Discuss how to design business portfolios and develop growth strategies.

Objective Outline 3 Planning Marketing: Partnering to Build Customer Relationships Explain Marketing’s 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 5 List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing return on marketing investment.

Companywide Strategic Planning: Defining Marketing’s Role l Strategic planning is the process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities. l Companies usually prepare annual plans, long-range plans, and strategic plans. l The annual and long-range plans deal with the company’s current businesses and how to keep them going. l In contrast, the strategic plan involves adapting the firm to take advantage of opportunities in its constantly changing environment.

Companywide Strategic Planning: Defining Marketing’s Role • Like the marketing strategy, the broader company strategy must be customer focused. • Company-wide strategic planning guides marketing strategy and planning.

Defining a Market-Oriented Mission l The mission statement is the organization’s purpose, what it wants to accomplish in the larger environment. l Market-oriented mission statement defines the business in terms of satisfying basic customer needs.

Defining a Market-Oriented Mission

Setting Company Objectives and Goals Business objectives Marketing objectives • Build profitable customer relationships • Invest in research • Improve profits • Increase market share • Create local partnerships • Increase promotion

Designing the Business Portfolio l The business portfolio is the collection of businesses and products that make up the company. l Business portfolio planning involves two steps: the company must analyze its current business portfolio and determine the investment shape the future portfolio by developing strategies for growth and downsizing

Analyzing the Current Business Portfolio l Portfolio analysis is a major activity in strategic planning whereby management evaluates the products and businesses that make up the company Companythe key l Management’s first step is to identify division businesses that make up the company, called strategic business units (SBUs). SBU Product line within a division Single product or brand

Analyzing the Current Business Portfolio The company next assesses the attractiveness of its various SBUs and decides how much support each deserves. Tthe attractiveness of the SBU’s market or industry and the strength of the SBU’s position in that market or industry. The best-known portfolio-planning method was developed by the Boston Consulting Group, a leading management consulting firm.

Stars are high-growth, high-share businesses or products. They often need heavy investments to finance their rapidall company classifies growth. They require. Approach a lot of The Boston Consulting Group cash to hold their share, let alone it. SBUsincrease according l. A its to the growth-share matrix. The growth-share matrix defines four types of SBU’s: These established and successful SBUs need less investment to hold their market share. They may generate enough cash to maintain themselves but do not promise to be large sources of cash.

The Boston Consulting Group Approach l It can pursue one of four strategies for each SBU. Build： Hold: It can invest more in the business unit. It can just enough to share at the current level. Harvest： It can harvest the SBU, milking its short-term cash. Divest： It can divest the SBU by selling it or phasing it out and using the resources elsewhere.

Problems with Matrix Approaches l It have some limitations: • Difficulty in defining SBUs and measuring market share and growth • Time consuming • Expensive • Focus on current businesses, not future planning l Methods to improve: • Dropped formal matrix methods in favor of more customized approaches that better suit their specific situations • Today’s strategic planning has been decentralized

Developing Strategies for Growth and • Market development ─ Companies can grow by developing new markets Downsizing for existing products. For example, Starbucks is expanding rapidly in China, which by 2015 will be its second-largest market, behind only the States. l. United Product/market expansion grid is a portfolio- planning tool for identifying company growth • Diversification ─ Through diversification, companies can grow by starting through market penetration, market oropportunities buying businesses outside their current product/markets. For example, Starbucks is entering the “health and wellness” market development, product development, or with stores called Evolution By Starbucks. diversification.

Developing Strategies for Growth and Downsizing Market penetration • Company growth by increasing sales of current products to current market segments without changing the product Market development • The company growth by identifying and developing new market segments for current company products. Product development • Company growth by offering modified or new products to current market segments. Diversification • Company growth through starting up or acquiring businesses outside the company’s current products and markets.

Planning Marketing: Partnering to Build Customer Relationships l Marketing plays a key role in the company’s strategic planning in several ways: First, marketing provides a guiding philosophy—the marketing concept—that suggests the company strategy should revolve around building profitable relationships with important consumer groups. Second, marketing provides inputs to strategic planners by helping to identify attractive market opportunities and assessing the firm’s potential to take advantage of them. Finally, within individual business units, marketing designs strategies for reaching the unit’s objectives. Once the unit’s objectives are set, marketing’s task is to help carry them out profitably.

Partnering with Other Company Departments l Value chain is a series of departments that carry out value-creating activities to design, produce, market, deliver, and support a firm’s products. l That is, each department carries out value-creating activities to design, produce, market, deliver, and support the firm’s products.

Partnering with Others in the Marketing System l Value delivery network is the network made up of the company, its suppliers, its distributors, and, ultimately, its customers who partner with each other to improve the performance of the entire system. l Toyota’s performance against Ford depends on the quality of Toyota’s overall value delivery network versus Ford’s.

Marketing Strategy and the Marketing Mix l Next comes marketing strategy—the marketing logic by which the company hopes to create this customer value and achieve these profitable relationships.

Customer-Driven Marketing Strategy l Most companies are in a position to serve some segments better than others. l Thus, each company must divide up the total market, choose the best segments, and design strategies for profitably serving chosen segments. l This process involves: Marketing segmentation Positioning Market targeting

Market Segmentation l The process of dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs, is called market segmentation. l Market segment is a group of consumers who respond in a similar way to a given set of marketing efforts.

Marketing Targeting l Market targeting is the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter. l A company with limited resources might decide to serve only one or a few special segments or market niches. l Most companies enter a new market by serving a single segment; if this proves successful, they add more segments.

Marketing Differentiation and Positioning l Positioning is arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of the target consumer. l Thus, effective positioning begins with differentiation— actually differentiating the company’s market offering so that it gives consumers more value.

Product means the goods-and-services combination the company offers to the target market. l Marketing mix is the set Price is the amount The of money customers marketing must pay to obtain the product. mix ─ or Developing an Integrated Marketing Mix of controllable tactical the four Ps marketing tools—product, price, place, and ─ consists of tactical promotion—that the firm blends to produce themarketing Promotion An refers to effective marketing program blends tools the response it wants in the target market. Place includes activities that marketing mix elements into an integrated blended company activities communicate the merits of marketing program designed to achieve the into an that make thecompany’s product andmarketing persuade objectives by delivering integrated available to target customers to buy it. value to consumers. The marketingproduct mix constitutes marketing target consumers. program the company’s tactical tool kit for establishing that strong positioning in target incentives. actually delivers the intended value to target customers.

Developing an Integrated Marketing Mix l It holds that the four Ps concept takes the seller’s view of the market, not the buyer’s view. From the buyer’s viewpoint, in this age of customer value and relationships, the four Ps might be better described as the four Cs: 4 Ps 4 Cs Product Customer solution Price Customer cost Place Convenience Promotion Communication

Managing the Marketing Effort l Managing the marketing process requires the four marketing management functions:

Marketing Analysis l The marketer should conduct a SWOT analysis , by which it evaluates the company’s overall strengths (S), weaknesses (W), opportunities (O), and threats (T).

Marketing Planning l Through strategic planning, the company decides what it wants to do with each business unit. Marketing planning involves choosing marketing strategies that will help the company attain its overall strategic objectives. Positioning Marketing Strategy: It outlines how the company intends to create value for target customers in order to capture value in return. Target markets Marketi ng strategy Marketing expenditure level Market mix

Marketing Implementation l Marketing implementation is the process that turns marketing plans into marketing actions to accomplish strategic marketing objectives. l Whereas marketing planning addresses: what l Many managers think that “doing things right” (implementation) why is as important as, or even more important than, “dong the right who things”(strategy). where when how

Marketing Department Organization Functional organization • This is the most common form of marketing organization with different marketing functions headed by a functional specialist. Geographic organization • 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 brand. 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.

Marketing Control l Marketing control is the measuring and evaluating the results of marketing strategies and plans and taking corrective action to ensure that the objectives are achieved. Management first sets Measures its specific marketing goals. performance in the market place Four steps of marketing control: Management takes corrective action to close the gaps between goals and performance Evaluates the causes of any differences between expected and actual performance

Measuring and Managing Return on Marketing Investment l Return on marketing investment (or marketing ROI) is the net return from a marketing investment divided by the costs of the marketing investment. l It measures the profits generated by investments in marketing activities. l Many companies are assembling such measures into marketing dashboards ─ meaningful sets of marketing performance measures in a single display used to monitor strategic marketing performance.

Measuring and Managing Return on Marketing Investment

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