Chapter 2Chapter 2Company & Marketing Strategy Company & Marketing Strategy

Partnering to Build Partnering to Build Customer RelationshipsCustomer Relationships

Professor MarshallProfessor Marshall

Queens CollegeQueens College

Strategic PlanningStrategic Planning

The process of developing and The process of developing and maintaining a strategic fit between the maintaining a strategic fit between the organization’s goals and capabilities and organization’s goals and capabilities and its changing marketing opportunities.its changing marketing opportunities.

Steps in Strategic PlanningSteps in Strategic Planning

1.1. Defining the company missionDefining the company mission

2.2. Setting company objectives and goalsSetting company objectives and goals

3.3. Designing the business portfolioDesigning the business portfolio

4.4. Planning marketing and other functional Planning marketing and other functional strategiesstrategies

Mission StatementMission Statement

A statement representing the organization’s A statement representing the organization’s purpose – what it wants to accomplish.purpose – what it wants to accomplish.

Note: you can usually find a company’s mission statement on their website under ‘Investor Relations’ or ‘Corporate information’.

ebay’s Mission: http://pages.ebay.com/aboutebay/thecompany/companyoverview.html

Mission Statement GuidelinesMission Statement Guidelines

Should be market oriented and defined in Should be market oriented and defined in terms of customer needs. terms of customer needs. Example: Charles Schwab – Example: Charles Schwab – ‘guardian of its customers’ financial dreams’‘guardian of its customers’ financial dreams’

Should be realisticShould be realisticShould be specific (not too narrow or Should be specific (not too narrow or broad)broad)Should fit the market environment. Should fit the market environment. Example: Example: Girl Scouts old: ‘to prepare young girls for motherhood and wifely duties’ – Girl Scouts old: ‘to prepare young girls for motherhood and wifely duties’ – new: ‘where girls grow strong’.new: ‘where girls grow strong’.

Should be motivating. Should be motivating. Example: Walt Disney aims to Example: Walt Disney aims to ‘make people happy’.‘make people happy’.

Designing the Business PortfolioDesigning the Business Portfolio

The business portfolio is the collection of The business portfolio is the collection of businesses and products that make up the businesses and products that make up the company.company.The company must:The company must:– analyze its analyze its currentcurrent business portfolio or business portfolio or

Strategic Business Units (SBUs),Strategic Business Units (SBUs),– decide which SBUs should receive more, less, decide which SBUs should receive more, less,

or no investment,or no investment,– develop growth strategies for growth or develop growth strategies for growth or

downsizing.downsizing.An SBU can be a company division, a product line, or a single product or brand.It has a separate mission & can be planned independently from other company businesses.

The BCG Growth-Share MatrixThe BCG Growth-Share Matrix

Star

Often need heavy investment to finance rapid growth. These turn into Cash Cows.

Question Mark

Require a lot of cash to hold market share. Some are built into stars and some are phased out.

Cash Cow

Established. Need less investment to hold market share. These support other SBUs.

Dog

May generate enough cash to sustain themselves but do not support other SBUs.

High

Low

High Low

Relative Market Share

Market G

rowth R

ate

The size of the circles is proportional to the SBU’s dollar sales.

Each SBU has a life cycle and over time, SBUs change positions in the matrix. The company needs to keep adding new products so that some will become stars & cash cows.

The BCG Growth-Share MatrixThe BCG Growth-Share MatrixExample: MacintoshExample: Macintosh

Star

iPod

Question Mark

Cash Cow

Mac Computers

Dog

MacOS

High

Low

High Low

Relative Market Share

Market G

rowth R

ate

Relative Market Share: the ratio of sales of a particular brand to total sales of that product type in a defined region (country).

Ways to Research Market ShareWays to Research Market Share

10K Reports10K Reports

SIC Codes (Standard Industry SIC Codes (Standard Industry Classification)Classification)

NAICS Codes (North American Industry NAICS Codes (North American Industry Classification) Classification)

Use Library Databases & Journals to look Use Library Databases & Journals to look up articles related to the company/industryup articles related to the company/industry

Problems with Matrix ApproachesProblems with Matrix Approaches

Difficult to quantify market share and Difficult to quantify market share and market growth.market growth.

Focus on current business not future Focus on current business not future planning.planning.

Companies have shifted toward Companies have shifted toward customized, decentralized approaches to customized, decentralized approaches to strategic planning.strategic planning.

Product/Market Expansion GridProduct/Market Expansion Grid

Market PenetrationMarket PenetrationIncreasing sales of current Increasing sales of current products to current market products to current market segments without changing the segments without changing the product.product.

Product DevelopmentProduct DevelopmentOffering modified or new Offering modified or new products to current market products to current market segments.segments.

Market DevelopmentMarket DevelopmentIdentifying and developing new Identifying and developing new market segments for current market segments for current products.products.

DiversificationDiversificationStarting up or acquiring Starting up or acquiring businesses outside the businesses outside the company’s current products and company’s current products and markets.markets.

Existing Products New Products

New Markets

Existing Markets

Strategies for company growth

Product/Market Expansion GridProduct/Market Expansion Grid

Market PenetrationMarket PenetrationStarbucks is adding 23 stores Starbucks is adding 23 stores per week.per week.

Product DevelopmentProduct DevelopmentStarbucks recently added hot Starbucks recently added hot breakfast sandwiches to its breakfast sandwiches to its menu.menu.

Market DevelopmentMarket DevelopmentStarbucks might consider new Starbucks might consider new demographic markets (for demographic markets (for example: senior citizens or example: senior citizens or different ethnic groups).different ethnic groups).

DiversificationDiversificationStarbucks tested new Starbucks tested new restaurant concepts in San restaurant concepts in San Francisco to enter a new Francisco to enter a new related market. related market.

Existing Products New Products

New Markets

Existing Markets

Examples of Starbucks’ growth

Marketing’s Role in Marketing’s Role in Strategic PlanningStrategic Planning

Provide a guiding philosophy (the Provide a guiding philosophy (the marketing concept)marketing concept)

Provide inputs to strategic plannersProvide inputs to strategic planners

Design strategies to reach objectivesDesign strategies to reach objectives

The major functional departments in each unit of the company – marketing, finance, accounting, purchasing, operations, information systems, human resources, and others - must work together to accomplish the strategic objectives.

Value Delivery NetworkValue Delivery Network

Company’s value chain – internal Company’s value chain – internal departments that must perform and departments that must perform and coordinate activitiescoordinate activities

Distributors (for example Pepsi has Distributors (for example Pepsi has partnered with the college dining halls)partnered with the college dining halls)

Suppliers (for example Dell has partnered Suppliers (for example Dell has partnered with Microsoft and Intel) with Microsoft and Intel)

Marketing StrategyMarketing Strategy

The following steps help the company The following steps help the company choose which customers to serve and choose which customers to serve and how:how:

Market SegmentationMarket Segmentation

Target MarketingTarget Marketing

Market PositioningMarket Positioning

Market SegmentationMarket Segmentation

The process of dividing a market into The process of dividing a market into distinct groups of buyers with different distinct groups of buyers with different needs, characteristics, or behavior who needs, characteristics, or behavior who might require separate products of might require separate products of marketing programs.marketing programs.

A market segment consists of consumers A market segment consists of consumers who respond in a similar way to a given who respond in a similar way to a given set of marketing efforts.set of marketing efforts.

Target MarketingTarget Marketing

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

Target segments that can sustain Target segments that can sustain profitability.profitability.

Market PositioningMarket Positioning

Arranging for a product to occupy a clear, Arranging for a product to occupy a clear, distinctive, and desirable place relative to distinctive, and desirable place relative to competing products in the minds of target competing products in the minds of target consumers. consumers.

Begins with differentiating the company’s Begins with differentiating the company’s marketing offer so it gives consumers marketing offer so it gives consumers more value.more value.

Marketing MixMarketing Mix

The set of The set of controllable, tactical controllable, tactical marketing tools that marketing tools that the firm blends to the firm blends to produce the response produce the response it wants in the target it wants in the target market.market.

Consists of the 4 PsConsists of the 4 Ps

1.1.ProductProduct

2.2.PricePrice

3.3.PlacePlace

4.4.PromotionPromotion

Target Customers

Intended Positioning

Product

VarietyQualityDesignFeaturesBrand NamePackagingServices

Promotion

AdvertisingPersonal SellingSales PromotionPublic Relations

Price

List PriceDiscountsAllowancesPayment PeriodCredit Terms

Place

ChannelsCoverageAssortmentsLocationsInventoryTransportationLogistics

The 4 P’s & the 4 C’s of theThe 4 P’s & the 4 C’s of theMarketing MixMarketing Mix

4 P’s - Seller’s View4 P’s - Seller’s View

– ProductProduct

– PricePrice

– PlacePlace

– PromotionPromotion

4 C’s - Buyer’s View4 C’s - Buyer’s View

– Customer SolutionCustomer Solution

– Customer CostCustomer Cost

– ConvenienceConvenience

– CommunicationCommunication

SWOT AnalysisSWOT AnalysisAn analysis of your company verses competitionAn analysis of your company verses competition

StrengthsStrengthsCompetitive AdvantagesCompetitive Advantages

WeaknessesWeaknessesLimitations the firm has in its Limitations the firm has in its marketing strategymarketing strategy

OpportunitiesOpportunitiesFavorable conditions that could yield rewards

ThreatsThreatsBarriers that may prevent the firm from reaching its goals

SWOT AnalysisSWOT AnalysisAn analysis of your company verses competitionAn analysis of your company verses competition

StrengthsStrengthsyour specialist marketing expertise your specialist marketing expertise a new, innovative product or service a new, innovative product or service location of your business location of your business quality processes and procedures quality processes and procedures any other aspect of your business that adds any other aspect of your business that adds value to your product or servicevalue to your product or service

WeaknessesWeaknesseslack of marketing expertise lack of marketing expertise undifferentiated products or services (i.e. in undifferentiated products or services (i.e. in relation to your competitors) relation to your competitors) location of your business location of your business poor quality goods or services poor quality goods or services damaged reputationdamaged reputation

OpportunitiesOpportunitiesa developing market such as the Internet mergers, joint ventures or strategic alliances moving into new market segments that offer improved profits a new international market a market vacated by an ineffective competitor

ThreatsThreatsa new competitor in your home market a new competitor in your home market price wars with competitors price wars with competitors a competitor has a new, innovative product or a competitor has a new, innovative product or service service competitors have superior access to channels competitors have superior access to channels of distribution of distribution taxation is introduced on your product or taxation is introduced on your product or serviceservice

http://www.marketingteacher.com/SWOT/walmart_swot.htm

http://www.marketingteacher.com/SWOT/starbucks_swot.htm

Sections of Marketing PlanSections of Marketing Plan

1.1. Executive summary – summarizes main goalsExecutive summary – summarizes main goals2.2. Current marketing situationCurrent marketing situation3.3. Analysis of threats and opportunities that the Analysis of threats and opportunities that the

product might faceproduct might face4.4. Objectives for the brandObjectives for the brand5.5. Marketing strategyMarketing strategy6.6. Action programs – what/when/whoAction programs – what/when/who7.7. Marketing budget – expected costs & revenuesMarketing budget – expected costs & revenues8.8. Controls – how progress is monitoredControls – how progress is monitored

http://college.hmco.com/business/pride/foundations/1e/students/sample/sample.pdf

Marketing Control ProcessMarketing Control Process

Set GoalsSet Goals

Measure PerformanceMeasure Performance

Evaluate PerformanceEvaluate Performance

Take Corrective ActionTake Corrective Action

Marketing Department OrganizationMarketing Department Organization

Functional Organization – by marketing Functional Organization – by marketing activity (sales, advertising, etc.)activity (sales, advertising, etc.)

Geographic Organization – by locationGeographic Organization – by location

Product Management Organization – by Product Management Organization – by product or brandproduct or brand

Market or Customer Organization – by Market or Customer Organization – by market/type of customermarket/type of customer

CombinationCombination

Video CaseVideo Case

Dunkin’ DonutsDunkin’ Donuts(10 minutes)(10 minutes)

ThoughtsThoughts

Is Dunkin’ Donuts more product-oriented Is Dunkin’ Donuts more product-oriented or customer-oriented?or customer-oriented?

How would you prepare against the How would you prepare against the invasion of Starbucks and Krispy Kreme?invasion of Starbucks and Krispy Kreme?

http://www.starbucks.com

https://www.dunkindonuts.com

http://www.krispykreme.com