Principles of Marketing

Nineteenth Edition, Global Edition

Chapter 2
Company and Marketing
Strategy: Partnering to Build
Customer Engagement, Value,
and Relationships

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Learning Objectives
2.1 Explain company-wide strategic planning and its four
steps.
2.2 Discuss how to design business portfolios and develop
growth strategies.
2.3 Explain marketing’s role in strategic planning and how
marketing works with its partners to create and deliver
customer value.
2.4 Describe the elements of a customer value-driven
marketing strategy and mix and the forces that influence
them.
2.5 Explore the marketing management functions, including
the elements of a marketing plan, and discuss the
importance of measuring and managing marketing
return on investment.
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STARBUCKS: Delivering the
“Starbucks Experience”
More than just coffee, Starbucks sells the “Starbucks Experience,”
one that “enriches people’s lives one moment, one human being,
one extraordinary cup of coffee at a time.”

Andrew Aitchison/Alamy Stock Photo

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Learning Objective 1
Explain company-wide strategic planning and its four steps.

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Company-Wide Strategic Planning:
Defining Marketing’s Role (1 of 5)
Strategic planning is the process of developing and
maintaining a strategic fit between the organization’s goals
and capabilities, and its changing marketing opportunities.

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Company-Wide Strategic Planning:
Defining Marketing’s Role (2 of 5)
Figure 2.1 Steps in Strategic Planning

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Company-Wide Strategic Planning:
Defining Marketing’s Role (3 of 5)
The mission statement is the organization’s purpose; what
it wants to accomplish in the larger environment.
CVS Health’s overall mission
is to be a “health care
innovation company,” one that
is “helping people on their
way to better health.” Its
marketing strategies and
programs must support this rafapress/Shutterstock
mission.

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Company-Wide Strategic Planning:
Defining Marketing’s Role (4 of 5)
Product- versus Market-Oriented Business Definitions
Company Product-Oriented Definition Market-Oriented Definition
Starbucks We sell coffee and snacks. We sell “The Starbucks Experience,” one
that enriches people’s lives in one
moment, one human being, one
extraordinary cup of coffee at a time.
Panera We sell fast-casual food in our We give customers “Food as it should
restaurants. be”: food that tastes good; food that feels
good; food that does good things for them
and the world around them.

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Real Marketing 2.1 IKEA’s Mission:
Creating a Better Everyday Life for
the Many People
I KEA’s deeply held mission is
to “create a better everyday
life for the many people K
by offering a wide range of
well-designed, functional
home furnishing products at
prices so low that as many
people as possible will be
able to afford them.”
Used with the permission of Inter I KEA Systems B.V.

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Company-Wide Strategic Planning:
Defining Marketing’s Role (5 of 5)
Setting Company Objectives and Goals
• Business objectives
– Build profitable customer relationships
– Invest in research
– Improve profits
• Marketing objectives
– Increase market share
– Create local partnerships
– Increase promotion

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Learning Objective 2
Discuss how to design business portfolios and develop
growth strategies.

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Designing the Business Portfolio
(1 of 8)
The business portfolio is the collection of businesses and products that
make up the company.
Portfolio analysis is a major activity in strategic planning whereby
management evaluates the products and businesses that make up the
company.

Complex business portfolios: You

probably know Johnson & Johnson
for its many iconic consumer health
brands, maybe BAND-AID brand
adhesive bandages, Johnson’s baby
shampoo, or Tylenol pain reliever.
But did you know that the
substantial bulk of J&J’s revenue
comes from its pharmaceuticals and
Justin Sullivan/Getty Images
medical devices businesses?
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Designing the Business Portfolio
(2 of 8)
Strategic business units can be a
• Company division
• Product line within a division
• Single product or brand

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Designing the Business Portfolio
(3 of 8)
Analyzing the Current Business Portfolio
• Identify strategic business units (SB Us)
• Assess the attractiveness of its various SBUs
• Decide how much support each S BU deserves

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Designing the Business Portfolio
(4 of 8)
Figure 2.2 The BCG Growth-Share Matrix

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Designing the Business Portfolio
(5 of 8)
Problems with Matrix Approaches
• Difficulty in defining SBUs and measuring market share
and growth
• Time consuming
• Expensive
• May not apply well to markets facing structural changes or
disruptions
• Many companies dropped formal matrix-based methods in
favor of customized approaches that suit specific
situations.
• These approaches are more decentralized.

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Designing the Business Portfolio
(6 of 8)
Figure 2.3 The Product/Market Expansion Grid

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Designing the Business Portfolio
(7 of 8)
Developing Strategies for Growth and Downsizing
Strategies for growth: To maintain its incredible growth, Starbucks
has brewed up an ambitious, multipronged growth strategy. In
little more than three decades, the chain has grown from a small
Seattle coffee shop to an over $24 billion powerhouse.

ChameleonsEye/Shutterstock
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Designing the Business Portfolio
(8 of 8)

Developing Strategies for Growth and Downsizing

Downsizing is when a company must prune, harvest, or
divest businesses that are unprofitable or that no longer fit
the strategy.

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Learning Objective 3
Explain marketing’s role in strategic planning and how
marketing works with its partners to create and deliver
customer value.

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Planning Marketing: Partnering to
Build Customer Relationships (1 of 3)
Partnering with Other Company Departments
Value chain is a series of departments that carry out value
creating activities to design, produce, market, deliver, and
support a firm’s products.

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Planning Marketing: Partnering to
Build Customer Relationships (2 of 3)
Partnering with Other Company Departments
The value chain: To obtain sales
and maintain a profitable
customer relationship, Airbus
marketers work closely with
finance, design, production,
service, and other Airbus
departments to engage in a
highly coordinated customer vaalaa/Shutterstock
value creation and delivery
process over time. Working
together, the total company team
can help Airbus’s airline
customers “own the sky.”
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Planning Marketing: Partnering to
Build Customer Relationships (3 of 3)
Partnering with Others in the Marketing System
Value delivery network is made up of the company,
suppliers, distributors, and ultimately customers who partner
with each other to improve performance of the entire system.

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Learning Objective 4
Describe the elements of a customer value-driven marketing
strategy and mix and the forces that influence them.

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Marketing Strategy and the Marketing
Mix (1 of 7)
Figure 2.4 Managing Marketing Strategies and the
Marketing Mix

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Marketing Strategy and the Marketing
Mix (2 of 7)
Customer Value-Driven Marketing Strategy
Marketing strategy is the marketing logic by which the
company hopes to create customer value and achieve
profitable customer relationships.

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Marketing Strategy and the Marketing
Mix (3 of 7)
Customer Value-Driven Marketing Strategy
Market segmentation is the division of a market into distinct
groups of buyers who have different needs, characteristics,
or behaviors and who might require separate products or
marketing mixes.
Market segment is a group of consumers who respond in a
similar way to a given set of marketing efforts.

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Discussion Question (1 of 2)
Discuss the importance of market segmentation

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Marketing Strategy and the Marketing
Mix (4 of 7)
Customer Value-Driven Marketing Strategy
Market targeting is the process of evaluating each market
segment’s attractiveness and selecting one or more
segments to enter.
Market positioning is the arranging for a product to occupy
a clear, distinctive, and desirable place relative to competing
products in the minds of target consumers.
Differentiation begins the positioning process.

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Marketing Strategy and the Marketing
Mix (5 of 7)
Customer Value-Driven Marketing Strategy
Positioning is arranging for a product to occupy a clear, distinctive, and
desirable place relative to competing products from competing brands
and give them the greatest advantage in their target markets.

The non-dairy segment started off

as an offshoot of the milk industry
but has now become a huge
industry containing various
segments within itself.

imageBROKER/Alamy Stock Photo

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Positioning

Positioning: Global Village

Dubai’s positioning as a
funfair ground sets it apart
from the plethora of theme
parks in the region.

Aleksandar Tomic/Alamy Stock Photo

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Marketing Strategy and the Marketing
Mix (6 of 7)
Developing an Integrated Marketing Mix
Marketing mix is the set of controllable, tactical marketing
tools—product, price, place, and promotion—that the firm
blends to produce the response it wants in the target market.

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Marketing Strategy and the Marketing
Mix (7 of 7)
Figure 2.5 The Four P s of the Marketing Mix

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Discussion Question (2 of 2)
Marketers should think through the Four A s and then build
the four Ps. Do you agree? Explain your answer.

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Learning Objective 5
Explore the marketing management functions, including the
elements of a marketing plan, and discuss the importance of
measuring and managing marketing return on investment.

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Managing the Marketing Effort and
Marketing Return on Investment
(1 of 4)

Figure 2.6 Managing Marketing: Analysis, Planning,

Implementation, and Control

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Managing the Marketing Effort and
Marketing Return on Investment
(2 of 4)
Figure 2.7 SWO T Analysis: Strengths (S), Weaknesses (W),
Opportunities (O), and Threats (T)

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Managing the Marketing Effort and
Marketing Return on Investment
(3 of 4)
Market Planning—Parts of a Marketing Plan
• Executive summary
• Current Marketing situation
• Threats and opportunities analysis (SWO T)
• Objectives and issues
• Marketing strategy
• Executive plans
• Budgets
• Controls

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Managing the Marketing Effort and
Marketing Return on Investment
(4 of 4)
Marketing Implementation
• Turning marketing strategies and plans into marketing
actions to accomplish strategic marketing objectives
• Addresses who, where, when, and how
Marketers must continually
plan their analysis,
implementation, and control
activities.

ammentorp/123 RF
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Marketing Department Organization
• To head up large marketing organizations, many
companies have created a chief marketing officer (or
CMO) position.
• Modern marketing departments can be arranged in
several ways.
– Functional organization
– Geographic organization
– Product management organization
– Market or customer organization

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Marketing Control
• Marketing control involves four steps.
– Management
▪ sets specific marketing goals.
▪ measures its performance in the marketplace
▪ evaluates the causes of any differences between
expected and actual performance
▪ takes corrective action to close the gaps between
goals and performance.
• Operating control
• Strategic control

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Measuring and Managing Return on
Marketing Investment (1 of 2)
Return on Marketing Investment (Marketing RO I)
• Net return from a marketing investment divided by the
costs of the marketing investment
• Measurement of the profits generated by investments in
marketing activities

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Measuring and Managing Return on
Marketing Investment (2 of 2)
Figure 2.8 Marketing Return on Investment

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