1. Company and Marketing Strategy
Partnering to Build Customer
Relationships
Chapter 2
Priciples of Marketing
by Philip Kotler and Gary Armstrong
PEARSON

2. 1
Companywide Strategic Planning: Defining
Marketing’s Role
Explain company-wide strategic planning and its four
steps.
2
Designing the Business Portfolio
Discuss how to design business portfolios and
develop growth strategies.
Objective Outline

3. 3
Planning Marketing: Partnering to Build
Customer Relationships
Explain Marketing’s role in strategic planning and
how marketing works with its partners to create and
deliver customer value.
4
Marketing Strategy and the Marketing Mix
Describe the elements of a customer-driven marketing
strategy and mix and the forces that influence it.
Objective Outline

4. 5
Managing the Marketing Effort
Measuring and Managing Return on
Marketing Investment
List the marketing management functions, including
the elements of a marketing plan, and discuss the
importance of measuring and managing return on
marketing investment.
Objective Outline

5. Companywide Strategic Planning:
Defining Marketing’s Role
 Strategic planning is the process of developing and
maintaining a strategic fit between the organization’s goals and
capabilities and its changing marketing opportunities.
 Companies usually prepare annual plans, long-range plans, and
strategic plans.
 The annual and long-range plans deal with the company’s
current businesses and how to keep them going.
 In contrast, the strategic plan involves adapting the firm to take
advantage of opportunities in its constantly changing
environment.

6. Companywide Strategic Planning:
Defining Marketing’s Role
• Like the marketing strategy, the broader company
strategy must be customer focused.
• Company-wide strategic planning guides marketing
strategy and planning.

7. Defining a Market-Oriented Mission
 The mission statement is the organization’s
purpose, what it wants to accomplish in the larger
environment.
 Market-oriented mission statement defines the
business in terms of satisfying basic customer
needs.

8. Defining a Market-Oriented Mission

9. 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

10. Designing the Business Portfolio
 The business portfolio is the collection of
businesses and products that make up the
company.
 Business portfolio planning involves two steps:
the company must
analyze its current
business portfolio and
determine the
investment
shape the future
portfolio by
developing strategies
for growth and
downsizing

11. Analyzing the Current Business Portfolio
 Portfolio analysis is a major activity in strategic
planning whereby management evaluates the
products and businesses that make up the
company
 Management’s first step is to identify the key
businesses that make up the company, called
strategic business units (SBUs).
SBU
Company
division
Product line
within a
division
Single product
or brand

12. Analyzing the Current Business Portfolio
The company next assesses the
attractiveness of its various SBUs and
decides how much support each deserves.
Tthe attractiveness of the SBU’s market
or industry and the strength of the SBU’s
position in that market or industry.
The best-known portfolio-planning
method was developed by the Boston
Consulting Group, a leading
management consulting firm.

13. The Boston Consulting Group Approach
 A company classifies all its SBUs according to
the growth-share matrix. The growth-share
matrix defines four types of SBU’s:
Stars are high-growth,
high-share businesses
or products. They often
need heavy investments
to finance their rapid
growth.
These established
and successful SBUs
need less investment
to hold their market
share.
They may generate
enough cash to
maintain themselves
but do not promise to
be large sources of
cash.
They require a lot of
cash to hold their
share, let alone
increase it.

14. The Boston Consulting Group Approach
 It can pursue one of four strategies for each SBU.
Build：
It can invest more in the
business unit.
Hold:
It can just enough to
share at the current level.
Harvest：
It can harvest the SBU,
milking its short-term
cash.
Divest：
It can divest the SBU by
selling it or phasing it
out and using the
resources elsewhere.

15. Problems with Matrix Approaches
 It have some limitations:
• Difficulty in defining SBUs and measuring market share and
growth
• Time consuming
• Expensive
• Focus on current businesses, not future planning
 Methods to improve:
• Dropped formal matrix methods in favor of more customized
approaches that better suit their specific situations
• Today’s strategic planning has been decentralized

16. Developing Strategies for Growth and
Downsizing
 Product/market expansion grid is a portfolio-
planning tool for identifying company growth
opportunities through market penetration, market
development, product development, or
diversification.
• Market development ─ Companies can grow by developing new markets
for existing products. For example, Starbucks is expanding rapidly in
China, which by 2015 will be its second-largest market, behind only the
United States.
• Diversification ─ Through diversification, companies can grow by starting
or buying businesses outside their current product/markets. For example,
Starbucks is entering the “health and wellness” market with stores called
Evolution By Starbucks.

17. Developing Strategies for Growth
and Downsizing
• Company growth by increasing sales of
current products to current market
segments without changing the product
Market
penetration
• The company growth by identifying and
developing new market segments for
current company products.
Market
development
• Company growth by offering modified
or new products to current market
segments.
Product
development
• Company growth through starting up or
acquiring businesses outside the
company’s current products and markets.
Diversification

18. Planning Marketing: Partnering to Build
Customer Relationships
 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
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.

19. 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.
 That is, each department carries out value-creating
activities to design, produce, market, deliver, and support
the firm’s products.

20. Partnering with Others in the Marketing
System
 Value delivery network is the network made up of the
company, its suppliers, its distributors, and, ultimately, its
customers who partner with each other to improve the
performance of the entire system.
 Toyota’s performance against Ford depends on the quality
of Toyota’s overall value delivery network versus Ford’s.

21. Marketing Strategy and the Marketing
Mix
 Next comes marketing strategy—the marketing
logic by which the company hopes to create this
customer value and achieve these profitable
relationships.

22. Customer-Driven Marketing Strategy
 Most companies are in a position to serve some segments
better than others.
 Thus, each company must divide up the total market, choose
the best segments, and design strategies for profitably serving
chosen segments.
 This process involves:
Marketing
segmentation
Market
targeting
Positioning

23. Market Segmentation
 The process of dividing a market into distinct groups of
buyers who have different needs, characteristics, or
behaviors, and who might require separate products or
marketing programs, is called market segmentation.
 Market segment is a group of consumers who respond in
a similar way to a given set of marketing efforts.

24. Marketing Targeting
 Market targeting is the process of evaluating each
market segment’s attractiveness and selecting one or more
segments to enter.
 A company with limited resources might decide to serve
only one or a few special segments or market niches.
 Most companies enter a new market by serving a single
segment; if this proves successful, they add more
segments.

25. Marketing Differentiation and Positioning
 Positioning is arranging for a product to occupy a clear,
distinctive, and desirable place relative to competing
products in the minds of the target consumer.
 Thus, effective positioning begins with differentiation—
actually differentiating the company’s market offering so
that it gives consumers more value.

26. 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.
Product means the
goods-and-services
combination the
company offers to the
target market.
Price is the amount
of money customers
must pay to obtain
the product.
Promotion refers to
activities that
communicate the merits
of the product and
persuade target customers
to buy it.
Place includes
company activities
that make the
product available to
target consumers.
The
marketing
mix ─ or
the four Ps
─ consists
of tactical
marketing
tools
blended
into an
integrated
marketing
program
that
actually
delivers the
intended
value to
target
customers.
An effective marketing program blends the
marketing mix elements into an integrated
marketing program designed to achieve the
company’s marketing objectives by delivering
value to consumers. The marketing mix constitutes
the company’s tactical tool kit for establishing
strong positioning in target incentives.

27. Developing an Integrated Marketing Mix
 It holds that the four Ps concept takes the seller’s view of
the market, not the buyer’s view. From the buyer’s
viewpoint, in this age of customer value and relationships,
the four Ps might be better described as the four Cs:
4Ps
Product
Price
Place
Promotion
4Cs
Customer solution
Customer cost
Convenience
Communication

28. Managing the Marketing Effort
 Managing the marketing process requires the four marketing
management functions:

29. Marketing Analysis
 The marketer should conduct a SWOT analysis ,by which it
evaluates the company’s overall strengths (S), weaknesses (W),
opportunities (O), and threats (T).

30. Marketing Planning
 Through strategic planning, the company decides what it wants
to do with each business unit. Marketing planning involves
choosing marketing strategies that will help the company attain
its overall strategic objectives.
Positioning
Market mix
Marketing
expenditure
level
Target
markets
Marketi
ng
strategy
Marketing Strategy:
It outlines how the
company intends to
create value for target
customers in order to
capture value in return.

31. Marketing Implementation
 Marketing implementation is the process that turns
marketing plans into marketing actions to accomplish
strategic marketing objectives.
 Whereas marketing planning addresses:
what
why
who
where
when
how
 Many managers think that “doing things right” (implementation)
is as important as, or even more important than, “dong the right
things”(strategy).

32. Marketing Department Organization
• This is the most common form of marketing
organization with different marketing functions
headed by a functional specialist.Functional organization
• Useful for companies that sell across the country or
internationally. Managers are responsible for
developing strategies and plans for a specific
region.
Geographic
organization
• Useful for companies with different products or
brands. Managers are responsible for developing
strategies and plans for a specific product or brand.Product management
• 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.
Market or customer
management
organization

33. Marketing Control
 Marketing control is the measuring and evaluating the
results of marketing strategies and plans and taking
corrective action to ensure that the objectives are
achieved.Management first sets
specific marketing
goals.
Measures its
performance in the
market place
Evaluates the causes of
any differences
between expected and
actual performance
Management takes
corrective action to
close the gaps between
goals and performance
Four steps of
marketing
control:

34. Measuring and Managing Return on
Marketing Investment
 Return on marketing investment (or marketing ROI)
is 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.
 Many companies are assembling such measures into
marketing dashboards ─ meaningful sets of marketing
performance measures in a single display used to monitor
strategic marketing performance.

35. Measuring and Managing Return on
Marketing Investment

36. The End