Chapter 2: Company and Marketing Strategy: Partnering to Build Customer Engagement, Value, and Relationships Flashcards
Strategic planning
The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities
The annual and long-range plans
deal with the company’s current businesses and how to keep them going
the strategic plan
involves adapting the firm to take advantage of opportunities in its constantly changing environment.
At the corporate level, the company starts the strategic planning process by
defining its overall purpose and mission
marketing planning occurs at
the business-unit, product, and market levels
MIssion statement
a statement of the organization’s purpose—what it wants to accomplish in the larger environment.
Can act as an “invisible hand”
Purpose statement questions
What is our business?
Who is the customer?
What do consumers value?
What should our business be?
Business portfoliio
Collection of businesses and products that make up the company
THe best one’s are the ones that fit the company’s strengths and weaknesses to opportunities in the environment
Business portfolio planning involves two steps
First, the company must analyze its current business portfolio and determine which businesses should receive more, less, or no investment.
Second, it must shape the future portfolio by developing strategies for growth and downsizing.
Portfolio analysis
Management evaluates the products and businesses that make up the company.
The company will want to put strong resources into its more profitable businesses and phase down or drop its weaker ones.
Portfolio analysis Step 1
identify the key businesses that make up the company, called strategic business units (SBUs)
strategic business units (SBUs)
can be a company division, a product line within a division, or sometimes a single product or brand
most standard portfolio analysis methods evaluate SBUs on two important dimensions:
1) the attractiveness of the SBU’s market or industry
2) the strength of the SBU’s position in that market or industry
The Boston Consulting Group Approach (BCG)
a company classifies all its SBUs according to the growth-share matrix
Growth-share matrix
A portfolio-planning method that evaluates a company’s SBUs in terms of market growth rate and relative market share
The growth-share matrix defines four types of SBUs:
1) Stars
2) Cash cows
3) Question Marks
4) Dogs
1) Stars
Stars are high-growth, high-share businesses or products. They often need heavy investments to finance their rapid growth. Eventually their growth will slow down, and they will turn into cash cows.
2) Cash cows
Cash cows are low-growth, high-share businesses or products. These established and successful SBUs need less investment to hold their market share. Thus, they produce a lot of the cash that the company uses to pay its bills and support other SBUs that need investment.
3) Question Marks
Question marks are low-share business units in high-growth markets. They require a lot of cash to hold their share, let alone increase it. Management has to think hard about which question marks it should try to build into stars and which should be phased out.
4) Dogs
Dogs are low-growth, low-share businesses and products. They may generate enough cash to maintain themselves but do not promise to be large sources of cash.
Once it has classified its SBUs, the company must determine what role each will play in the future. It can pursue one of four strategies for each SBU.
1) It can invest more in the business unit to build its share.
2) Or it can invest just enough to hold the SBU’s share at the current level.
3) It can harvest the SBU, milking its short-term cash flow regardless of the long-term effect.
4) Finally, it can divest the SBU by selling it or phasing it out and using the resources elsewhere.
Problems with Matrix Approaches
Limitations:
They can be difficult, time consuming, and costly to implement.
Management may find it difficult to define SBUs and measure market share and growth
these approaches focus on classifying current businesses but provide little advice for future planning.
Product /Market expansion grid
Portfolio-planning tool for identifying company growth opportunities through market penetration, market development, product development, or diversification
Market penetration
making more sales to current customers without changing its original products
Market development
Company growth by identifying and developing new markets for its current products
For instance, managers could review new demographic markets.
Product development
Company growth by offering modified or new products to current markets
Diversification
starting up or buying businesses beyond its current products and markets
Why a firm would downsize?
A firm may have grown too fast or entered areas where it lacks experience.
The market environment might change, making some products or markets less profitable.
Finally, some products or business units simply age and die.
The company’s strategic plan establishes
what kinds of businesses the company will operate and its objectives for each.
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 creating customer value and 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.
Value chain
Series of internal departments that carry out value-creating activities to design, produce, market, deliver, and support a firms products
Value delivery network
Network composed of the company suppliers, distributors, and, ultimately, customers who partner with each other to improve the performance of the entire system in delivering customer value
Managing Marketing Strategies and the Marketing Mix
Customers in the middle (center)
Marketing strategy
the marketing logic by which the company hopes to create this customer value and achieve these profitable relationships.
The company decides which customers it will serve (segmentation and targeting) and how (differentiation and positioning). It identifies the total market and then divides it into smaller segments, selects the most promising segments, and focuses on serving and satisfying the customers in these segments.
Market Segmentation
Consumers can be grouped and served in various ways based on geographic, demographic, psychographic, and behavioural factors
Market Segmentation definition
The process of dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviours and who might require separate marketing strategies or mixes
Market segment
consists of consumers who respond in a similar way to a given set of marketing efforts
Marketing targeting (AKA targeting)
Evaluating each market segment’s attractiveness and selecting one or more segments to enter
A company should target segments in which it can profitably generate the greatest customer value and sustain it over time.
Positioning
arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.
Differentiation
actually differentiating the company’s market offering to create superior customer value
Marketing mix
the set of tactical marketing tools that the firm blends to produce the response it wants in the target market
The marketing mix consists of everything the firm can do to engage consumers and deliver customer value. The many possibilities can be collected into four groups of variables—the four Ps
Product
the goods-and-services combination the company offers to the target market. Thus, a Ford Escape consists of nuts and bolts, spark plugs, pistons, headlights, and thousands of other parts.
Price
the amount of money customers must pay to obtain the product. For example, Ford calculates suggested retail prices that its dealers might charge for each Escape
Place
includes company activities that make the product available to target consumers. Ford partners with a large body of independently owned dealerships that sell the company’s many different models.
Promotion
refers to activities that communicate the merits of the product and persuade target customers to buy it.
Four A’s
Acceptability
Affordability
Accessibility
Awareness
Managing the marketing process requires the five marketing management functions
analysis, planning, implementation, organization, and control
SWOT analysis
the company’s overall strengths (S), weaknesses (W), opportunities (O), threats (T)
Strengths include
internal capabilities, resources, and positive situational factors that may help the company serve its customers and achieve its objectives.
Weaknesses include
internal limitations and negative situational factors that may interfere with the company’s performance
Opportunities include
are favourable factors or trends in the external environment that the company may be able to exploit to its advantage.
Threats
unfavourable external factors or trends that may present challenges to performance.
Marketing Planning
involves choosing marketing strategies that will help the company attain its overall strategic objectives
A marketing strategy consists
of specific strategies for target markets, positioning, the marketing mix, and marketing expenditure levels
Market implementation
the process that turns marketing plans into marketing actions to accomplish strategic marketing objectives
Whereas marketing planning addresses
the what and why of marketing activities, implementation addresses the who, where, when, and how.
chief marketing officer (or CMO)
This person heads up the company’s entire marketing operation and represents marketing on the company’s top management team
Modern marketing departments can be arranged in several ways. The most common form of marketing organization is the
functional organization
Marketing control
evaluating results and taking corrective action to ensure that the objectives are attained.
Marketing control involves four steps
Management first sets specific marketing goals. It then measures its performance in the marketplace and evaluates the causes of any differences between expected and actual performance. Finally, management takes corrective action to close the gaps 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
marketing return on investment (or marketing ROI)
the net return from a marketing investment divided by the costs of the marketing investment. It measures the profits generated by investments in marketing activities.
The main components of a marketing plan
are the executive summary, the current marketing situation, threats and opportunities, objectives and issues, marketing strategies, action programs, budgets, and controls.
A company’s value chain is only as strong as its weakest link. What should a company do to properly gauge the strength of its links and continually improve?
Examine how well each group performs its work of adding customer value.
One useful device for identifying growth opportunities is the product/market expansion grid, which includes which of the following strategies?
Market penetration, market development, product development, and diversification
