2016.06.01 - Lecture 2 - Summer School Principles of Marketing - Chapter 2

(B) COMPANY & MARKETING STRATEGY
Lecture #2
Lecturer: Donna-Kay Smith
Date: June 1, 2016
 Flashback – The Marketing Process
 Company-wide Strategic Planning
 Partnering to engage customers and create value
 Marketing Strategy & Planning
 Choosing target markets
 Positioning market offerings
 Developing a marketing mix
 Managing marketing programs
 Measuring and managing marketing Return On

Investment (marketing ROI)
1 2 3 4 5
Understand Construct an Build Capture value

Design a
the integrated profitable from
customer
marketplace marketing relationships customers to
value-driven
and customer program that and create create profits
marketing
needs and delivers customer and customer
strategy
wants superior value delight equity
Create value for customers and Capture value

build customer relationships from customers
 The company’s overarching strategy guides marketing
strategy & planning and must be customer focused.
 Strategic Planning – The process of developing and

maintaining a strategic fit between (i) the organization's goals
and capabilities and (ii) changing marketing opportunities.
 Four (4) steps are involved in strategic planning:
Defining a market oriented Setting company Designing the business Planning marketing &
mission objectives and goals portfolio other functional strategies
 The company’s mission should be market oriented, realistic,
specific, motivating and consistent with the marketing
environment.
 The company’s purpose should be clearly stated in the form of a
mission statement.
 Mission statements should be market-oriented – i.e. define the
business in terms of satisfying basic customer needs.
 In doing so, it will answer the questions:
 What is our business?
 Who is the customer?
 What do customers value?
 What should our business be?
 Example: Walmart’s market-oriented mission
statement:
We deliver low prices every day and give ordinary folks
the chance to buy the same things as rich people.
“Save Money. Live Better.”
 It answers the questions:
 What is our business? – Retailing
 Who is the customer? – Ordinary folks (low to mid-income)
 What do customers value? – Low cost quality products
 What should our business be? – Helping people save money
 The mission statement must be translated into a set of objectives
and goals to guide decisions about the business portfolio.
 Setting goals involves two (2) decisions:
1. Identifying the focus of the company’s actions – Create value for
shareholders in the form of net income, profit margins and sales
revenues.
2. Defining the specific performance benchmarks (quantitative and

temporal) to be achieved.
 Objectives may be:

 Customer specific – E.g. Increasing market share
 Collaborator-related – E.g. Acquiring particular distribution outlets
 Internal – E.g. Lowering production costs
 Competitive – E.g. Create barriers to entry or competitors
 The business portfolio – The collection of businesses
and products that make up the company.
 The best portfolio leverages the company’s strengths

and weaknesses to increase opportunities and
mitigate against threats in the marketing
environment.
 Business portfolio planning involves two (2) steps:

1. Analyzing current business portfolio
2. Developing strategies for growth and downsizing for
future business portfolio
Analyzing current business portfolio
 Portfolio analysis is a major activity in strategic
planning. It involves evaluating the products and
businesses that makes up the company.
 There are (3) steps in analyzing the current business
portfolio:
1. Identify key businesses making up the company
2. Assess the attractiveness of the various Strategic
Business Units (SBUs)
3. Decide how much support each SBU deserves
1) Identify key businesses making up the company
 Strategic business unit (SBU) – A unit of the company
that has a separate mission and objectives that can be
planned separately from other company businesses:
 Company division
 Product line within a division
 Single product or brand
2) Assess the attractiveness of various SBUs – The
aim is to decide how much support each SBU
deserves.
 The BCG Matrix is the best known portfolio-planning
method, however it does have a few limitations.
 Problems with Matrix approaches:
 Difficulty defining SBUs and measuring market
share and growth
 Time consuming
 Expensive to implement
 Emphasis is placed on current businesses, not
future planning
3) Develop growth and downsizing strategies for
adjusting the future portfolio.
 The Product/Market Expansion Grid is a useful tool for
identifying market opportunities:
 Downsizing is the reduction of the business portfolio by
eliminating products or business units that are not
profitable or that no longer fit the company’s overall
strategy.
 Possible reasons for downsizing include:
 Entering markets where the company lacks experience
 Changes in the market resulting in products/markets being not
as profitable as expected
 Business units or products sometimes have operated beyond
their useful life.
 Brands or businesses that become unprofitable or no

longer fit the company’s strategy must be selectively
pruned, harvested or divested.
 Role of marketing in strategic planning:
 Provides a marketing concept philosophy to direct efforts towards
creating customer value and building profitable relationships with the
most advantageous customer segments.
 Provides inputs regarding attractive market opportunities and
assessing the company’s potential to take advantage of them.
 Designs strategies for achieving objectives.
 Helps to carry out the strategies profitably.
 Major functional units (e.g. marketing, finance, accounting,

purchasing, operations, information systems, human resources,
etc.) must work together to accomplish strategic objectives.
 Marketing alone cannot produce superior value to engage
customers.
 Marketers must practice:
1) Partnering with other company departments
 Partner relationship management is the process of working closely with partners in other
company departments to form an effective value chain that serves the customer
 The Value chain is the series of departments that carry out value-creating activities to design,
produce, market, deliver, and support a firm’s products.
2) Partnering with others in the marketing system
 To create value, the company must look beyond its own internal value chain and into the
value chains of its suppliers, distributors and ultimately its customers to form a competitively
superior value delivery network.
 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.
 Marketing Strategy – The marketing logic by which the company hopes
to create customer value and achieve profitable customer relationships.
 Managing marketing strategies and the marketing mix:

 Market segmentation – Dividing a marketing into distinct groups of
buyers who have different needs, characteristics or behaviours and who
might require separate products or marketing programs.
 Examples: Distinct groups may be based on demographic needs, geographic
needs, psychographic and behavioural needs.
 Market segment – A group of consumers who respond in a similar way to

a given set of marketing efforts.
 Market targeting – The process of evaluating each market segment’s
attractiveness and selecting one or more segments to enter.
 Market positioning – Arranging for a product to occupy a clear,
distinctive and desirable place relative to competing products in the
minds of target consumers.
 Differentiation – The process of distinguishing the market offering from
that of competitors to create superior customer value.
Developing an Integrated Marketing Mix
 Marketing Mix – The set of tactical marketing tools (4 Ps) that the
company combines to produce a desired response in the target market.
 The marketing mix may be extended to offer greater specificity to
services by including People, Processes and Physical evidence. (Hooley,
Piercy & Nicoulaud, 2012)
 The Four Ps vs. Four Cs

 Four Ps – represent the seller’s view of the market
 Four Cs – Represent the buyer’s (customer) view of the market.
Four Ps Four Cs
Product Customer solution
Price Customer cost
Place Convenience
Promotion Communication
 To find and implement the best strategy and mix, the company engages
in market analysis, planning, implementation and control.
1) Marketing Analysis
 SWOT Analysis
1) Marketing Analysis (Cont’d)
 PESTEL Analysis
2) Marketing Planning
 Involves choosing marketing strategies that will help the company
attain its strategic objectives.
 A Marketing Plan is intended to effectively communicate the
company’s goal and the desired course of action to relevant
stakeholders. (Chernev, 2011)
 Main components of the marketing plan are:
 Executive Summary
 Current marketing situation
 Threats and opportunities analysis
 Objectives and issues
 Marketing strategies
 Action programs
 Budgets
 Controls
3) Marketing Implementation and organization
 Marketing Implementation - The process that turns
marketing plans into marketing actions to accomplish
strategic marketing objectives.
 Successful implementation depends on how well the
company blends its people, organizational structure,
decision and reward system, and company culture
into a cohesive action plan that supports its strategies
 A marketing department organization is responsible
for executing marketing strategies and plans.
 Marketing departments can be organized in one way or a combination of ways:
a. Functional organization – The most common form of marketing organization
with different marketing functions headed by a functional specialist. E.g. Sales
Manager/ Market Research Manager/ Customer Service Manager/ New Product
Manager
b. Geographic organizations – Useful for companies that sell across the country
or internationally. Managers are responsible for developing strategies and
plans for a specific region.
c. Product Management organization – Useful for companies with different
products or brands. Managers are responsible for developing strategies and
plans for a specific product or band.
d. Market 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.
e. Customer management organization – Involves a customer focus, and not a
product focus, for managing customer profitability and customer equity.
4) Marketing Control
 This involves evaluating the results of marketing
strategies and plans and taking corrective action to
ensure that the objectives are attained.
 Marketing control involves four (4) steps:
 Setting specific marketing goals
 Measuring performance in the marketplace
 Evaluating the causes of any differences between
expected and actual performance.
 Checking ongoing performance against the annual plan
and taking action where necessary. (Operational Control).
 Accountability is a top marketing concern.
 To ensure marketing funds are being spent in the interest of
shareholders, Marketers determine the Marketing Return on
Investment (marketing ROI) – The net return from a marketing
investment divided by the costs of the marketing investment.
 The challenge with measuring marketing ROI is that returns such as
engagement, advertising and brand-building impacts are not easily put
into dollar value returns.
 Notwithstanding, marketing ROI can be assessed in the form of:
 Standard marketing performance measures – E.g. brand awareness, sales and
market share.
 Customer-centred performance measures – E.g. customer acquisition, customer
retention, customer lifetime value and customer equity
 Marketing investments result in improved customer value, engagement

and satisfaction which in turn increases customer attraction and
retention.
The End
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(B) COMPANY & MARKETING STRATEGY

 Measuring and managing marketing Return On

Understand Construct an Build Capture value

Create value for customers and Capture value

 Strategic Planning – The process of developing and

 Four (4) steps are involved in strategic planning:

2. Defining the specific performance benchmarks (quantitative and

 Objectives may be:

 The best portfolio leverages the company’s strengths

 Business portfolio planning involves two (2) steps:

 Brands or businesses that become unprofitable or no

 Major functional units (e.g. marketing, finance, accounting,

2) Partnering with others in the marketing system

 Managing marketing strategies and the marketing mix:

 Market segment – A group of consumers who respond in a similar way to

 The Four Ps vs. Four Cs

 Marketing investments result in improved customer value, engagement

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