Company and Marketing Strategy: Partnering to Build Customer Relationships

Chapter 2

Objectives
Understand company-wide strategic planning and its four steps. Learn how to design business portfolios and develop strategies for growth and downsizing. Understand marketings role in strategic planning and how marketers partner with others.
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Objectives
Be able to describe the marketing process and the forces that influence it. Learn the marketing management functions, including the elements of the marketing plan.
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Case Study
McDonalds: A Customer-Focused Plan to Win Strategy
By the turn of the twenty-rst century, McDonalds onceshiny Golden Arches seemed to be losing some of their luster.
thanks to a new customerfocused strategic blueprint called the Plan to Win McDonalds launched an amazing turnaround that once again has both customers and the company humming the chains catchy jingle, im lovin it.

Discussion: How did McDonald Recover?

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Formal Planning

Many companies operate without formal plans, yet these plans can provide many benefits such as:
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.

Strategic Planning
Strategic planning is defined as:
The process of developing and maintaining a strategic fit between the organizations goals and capabilities and its changing marketing opportunities.
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Steps in Strategic Planning (Fig. 2.1)

Corporate Level Business unit, product, and market level

Defining the Company Mission

Setting Company Objectives and Goals

Designing the Business Portfolio

Planning, marketing, and other fuctional Strategies

Strategic Planning
Planning activities occur at the business unit, product, and market levels, and include:
Defining the purpose and mission Setting objectives and goals Designing the business portfolio Developing detailed marketing and departmental plans
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Defining the Companys Business and Mission

A Mission Statement is a Statement of the Organizations Purpose.
Market Oriented Realistic Specific

Characteristics of a Good Mission Statement:

Fit Market Environment

Distinctive Competencies Motivating
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Strategic Planning
Mission statements should . . .
serve as a guide for what the organization wants to accomplish. be market-oriented rather than product-oriented. be neither too narrow, nor too broad. fit with the market environment. be motivating.
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Strategic Planning

Mission statements guide the development of objectives and goals.

Objectives are developed at each level in the organization hierarchy. Strategies are developed to accomplish these objectives.
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Heinz ties this diverse product portfolio together under this mission: As the trusted leader in nutrition and wellness, Heinzthe original Pure Food Companyis dedicated to the sustainable health of people, the planet, and our company.

Setting Company Objectives and Goals

Mission Statement

Marketing Objective # 1

Marketing Objective # 2

Marketing Objective # 3

Marketing Strategy

Marketing Strategy

Marketing Strategy

Marketing Strategy

Marketing Strategy
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Strategic Planning
Business portfolio: the collection of businesses and products that make up the company. Designing the business portfolio is a key element of the strategic planning process.
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Designing the Business Portfolio

The company must:

analyze its current business portfolio or Strategic Business Units (SBUs) decide which SBUs should receive more, less, or no investment develop growth strategies for adding new products or businesses to the portfolio

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Strategic Planning
Portfolio Design
Step 1: Analyze the current business portfolio Step 2: Shape the future business portfolio
Identify strategic business units (SBUs)
Assess each SBU:
The BCG growthshare matrix classifies SBUs into one of four categories using the:
Market

growth rate SBUs relative market share within the market.

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Analyzing Current SBUs:

Boston Consulting Group Approach

BCG Growth-Share Matrix

Relative Market Share Market Growth Rate
High High Stars
High growth & share Profit potential May need heavy investment to grow

Low Question Marks

High growth, low share Build into Stars or phase out Require cash to hold market share

Cash Cows Low

Low growth, high share Established, successful SBUs Produce cash

Dogs
Low growth & share Low profit potential

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Strategic Planning
BCG Growth-Share Matrix
High Market Growth Low Market Growth

Stars
Cash Cows
High Relative Market Share

Question Marks
Dogs

Low Relative Market Share

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growth-share matrix defines four types of SBUs:

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Strategic Planning
Portfolio Design
Step 1:
Analyze the current business portfolio or SBUs

Determine the future role of each SBU and choose the appropriate resource allocation strategy:
Build Hold Harvest Divest

Step 2: Shape the future business portfolio

SBUs change positions over time

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Strategic Planning
Matrix approaches to formal planning share many problems:
Difficult, time-consuming, and costly to implement. Focus only on current businesses. Too strongly emphasize market share growth or growth via diversification.
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Strategic Planning
Designing the business portfolio also involves:
Developing strategies for growth by identifying, evaluating, and selecting promising new market opportunities.

Product/market expansion grid

Developing strategies for downsizing the business portfolio.

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Developing Growth Strategies in the Age of Connectedness

Strategic Planning

Product/Market Expansion Grid

Existing Products Existing Markets New Markets Market Penetration Market Development New Products Product Development Diversification

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Market Penetration: making more sales to current customers without changing its products.
How? Add new stores in current market areas, improve advertising, prices, service or store design.

Product/ Market Expansion Grid

Market Development: develop new

markets for its current products.

How?
markets.

Identify new demographic or geographic

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Product/ Market Expansion Grid

Product Development: offering modified or new products to current markets.

How? New styles, flavors, colors, or modified products.

Diversification: new products for new markets.

How? Start up or buy new businesses. 23

Discussion Connections

Beyond evaluating current business, designing the business portfolio involves finding future businesses and products the company should consider. Apply the product/ market expansion grid to assess how one of the following companies might grow:
Dell computer Kodak Levi-Strauss E*Trade online investment services

Assign each of the choices to a separate small group, have the group develop the answer, then discuss each approach in class.

Planning Marketing
Marketing plays a key role in the strategic planning process. Marketers must practice CRM and Partner Relationship Management.
Partnering with other departments in the company as well as other firms in the marketing system helps to build a superior value delivery-network.
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The Marketing Process

Key Elements
Analyzing marketing opportunities Selecting target markets Developing the marketing mix Managing the marketing effort
The strategic planning and business portfolio analysis processes help to identify and evaluate marketing opportunities. The purpose of the marketing process is to help the firm plan how to capitalize on these opportunities.
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The Marketing Process

Key Elements
Analyzing marketing opportunities Selecting target markets Developing the marketing mix Managing the marketing effort
The segmentation process divides the total market into market segments. Target marketing determines which segment(s) are pursued. The market positioning for the product is then determined.

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The Marketing Process

Key Elements
Analyzing marketing opportunities Selecting target markets Developing the marketing mix Managing the marketing effort
Competitor analysis guides competitive marketing strategy development.
Strategy leads to tactics by way of the marketing mix:
The Four Ps product, price, place, promotion (seller viewpoint) The Four Cs customer solution, cost, convenience, and communication (customer viewpoint)

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The Marketing Process

Key Elements
Analyzing marketing opportunities Selecting target markets Developing the marketing mix Managing the marketing effort
Marketing analysis
Provides information helpful in planning, implementation, and control

Marketing planning
Strategies and tactics

Marketing implementation
Turns plans into action

Marketing control
Operating control Strategic control

Marketing audit
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