Prentice Hall, Copyright 2009 1 Company and Marketing Strategy: Partnering to Build Customer Relationships Chapter 2 Next Exit

Company and Company and Marketing Marketing Strategy: Strategy:

Partnering to Partnering to Build Build

Customer Customer RelationshipsRelationships

Chapter 2Next Exit

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Prentice Hall, Copyright 2009

Rest Stop:Rest Stop: Previewing the ConceptsPreviewing the Concepts

1. Explain companywide strategic planning and its four steps.

2. Discuss how to design business portfolios and growth strategies.

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

4. Describe the elements of a customer-driven marketing strategy and mix, and the forces that influence it.

5. List the marketing management functions, including the elements of a marketing plan and discuss the importance of measuring/managing marketing ROI.

2-3Prentice Hall, Copyright 2009

NASCAR TodayNASCAR TodayPopularity: Second highest

watched regular season sport on TV (18 million viewers). Seen in 150 countries. No. 1 live spectator sport.

The Fans: 75 million young, affluent, family oriented fans; 40% are female and fans are very passionate about NASCAR.

The Payoff: Fans spend nearly $700 a year on NASCAR-related items; Fans are three times more loyal to sponsors than are fans of other sports. NASCAR generates $2 billion in merchandise sales annually and $555 million for TV broadcasting rights.

NASCAR –NASCAR – Customer Driven StrategyCustomer Driven StrategyCase StudyCase Study

How Did They Succeed?How Did They Succeed?NASCAR’s Strategy: Customer

driven and single-minded in developing relationships via a blend of live racing, media coverage, and compelling Web sites. In-car TV coverage puts fans in the middle of the action. Web sites are both informational and entertaining. Content includes news, stats, standings, driver bios, online games, community discussions and more.

Value Creation at Race Events: Family-oriented atmosphere features RV parks next to the racing ovals, security guards to enhance safety and drivers who are friendly and excellent role models. Plus, fans are encouraged to bring their own food.


Strategic PlanningStrategic Planning

The process of developing and maintaining a strategic fit

between the organization’s goals and capabilities and its

changing marketing opportunities.

Prentice Hall, Copyright 2009 2-5

Figure 2.1Figure 2.1Steps in Strategic PlanningSteps in Strategic Planning


The Mission StatementThe Mission Statement Questions the mission statement

should answer include:– What is our business?– Who is our customer?– What do consumers value?– What should our business be?

Mission statements should be market oriented, not product oriented.


Should be realistic. Should be specific. Should fit the market

environment. Should be based on distinctive

competencies. Should be motivating.

The Mission StatementThe Mission Statement


eBay’s Mission Statement“To provide a global trading platform where practically anyone can trade practically anything —you can get it at eBay”. eBay’s mission statement guides the firm in its strategic planning, and is reflected in eBay’s ads.

Marketing in Action

Fuel for ThoughtFuel for Thought


Evaluate the following mission statement for a real estate agency against the criteria previously discussed:

“We sell houses and commercial properties.”

Rewrite the mission statement.


Setting Firm Objectives and Setting Firm Objectives and GoalsGoals

The mission should be translated into supporting objectives for each level of management.– Creates a hierarchy of objectives that

are consistent with one another. •Business objective: Increase profits.•Marketing objective: Increase market

share of domestic and international markets.


Business PortfolioBusiness Portfolio

The collection of businesses and products that make up

the company.

The businesses chosen for the portfolio should be those that fit the firm’s strengths and weaknesses.


The company must:– Analyze its current business portfolio

or strategic business units (SBUs);– Decide which SBUs should receive

more, less, or no investment; and– Develop strategies for growth and

downsizing.

Designing the Business PortfolioDesigning the Business Portfolio


Strategic Business Unit (SBU)Strategic Business Unit (SBU)

Can be a company division, a product line within a division, or sometimes a single product or brand.

A unit of the company that has a A unit of the company that has a separate mission and objectives separate mission and objectives

and that can be planned and that can be planned independently from other independently from other

company businesses.company businesses.


Portfolio AnalysisPortfolio Analysis Portfolio analysis:

– Process by which management evaluates the products and businesses making up the company.

– Resources are directed toward more profitable businesses while weaker ones are phased out or dropped.


Figure 2.2Figure 2.2The BCG Growth-Share MatrixThe BCG Growth-Share Matrix


Stars Strategy: Build into cash cow via investment.

Cash Cows Strategy Options: Maintain or harvest for cash to build STARS.

Question Marks Strategy Options: Build into STAR via investment if warranted, or reallocate financing and let slip into DOG status.

Dogs Strategy Options: Maintain or divest.

BCG Growth-Share MatrixBCG Growth-Share Matrix


Managing the Business PortfolioTheme parks are just one of several SBUs for Disney. Other SBUs under the Disney umbrella include media holdings (ABC, ESPN), movie studios (Disney and Touchstone films), and consumer product sales.

Marketing in Action


Problems with matrix approaches have led many firms to drop matrix planning in favor of more customized approaches that are better suited to their specific situation. – Centralized strategic planning groups.– Decentralized strategic planning at the

division or SBU level.– Niche marketing strategies.

Market Differentiation and Market Differentiation and PositioningPositioning


Pursuing the Niche MarketVPI—Veterinary Pet Insurance is a very successful niche marketer. Although pet insurance is currently a small portion of the insurance market, it is the fastest growing segment.

Marketing in Action


Problems with Matrix ApproachesProblems with Matrix Approaches

Positioning:– Arranging for a product to occupy a

clear, distinctive, and desirable place relative to competing products in the minds of the consumers.•Wireless provider Helio

proclaims, “Don’t call us a phone company. Don’t call us a phone.”


Figure 2.3Figure 2.3The Product/Market Expansion GridThe Product/Market Expansion Grid


Product DevelopmentThe key to growth in many consumer goods companies is new product development. New products provide customers with value when they satisfy needs better than existing offerings.

Marketing in Action

Visit www.pg.com to see more examples

http://www.pg.com/


Planning MarketingPlanning Marketing

Marketing plays a key role in strategic planning:– Provides a guiding philosophy.

•The Marketing Concept – Provides inputs to strategic planners.– Designs strategies to reach objectives.


Creating Customer ValueCreating Customer Value

Marketers must practice partner relationship management.– Working with partners internally within

the company can create an effective value chain.

– Working with external partners in the marketing system helps to form a superior value delivery network.


Value Delivery NetworkValue Delivery Network Components include:

– Company’s value chain•Each department is a link.

– Distributors– Suppliers– Customers

Improved performance in delivery value to customers is the goal.


Value ChainValue Chain Each company department

engages in some type of value-creating activity.– Purchasing– Marketing– Operations, etc.

Coordination between departments is key to providing superior value.


Customer-Driven Marketing StrategyCustomer-Driven Marketing Strategy

Succeeding in today’s competitive marketplace requires that firms be customer centered.– Firms often must win customers away

from the competition by delivering greater value.

– Understanding customer needs and wants is key to being able to provide value.


Quick FlickQuick FlickThe Mayo Clinic is very customer centered.

Click to play Click to play videovideo


Figure 2.4Figure 2.4Managing Marketing Strategy Managing Marketing Strategy

and the Marketing Mixand the Marketing Mix


Segmentation

The process of dividing a market into distinct groups of buyers with different needs,

characteristics, or behavior who might require separate products

of marketing programs.


Segmentation and TargetingSegmentation and Targeting Targeting:

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


Differentiation and PositioningDifferentiation and Positioning Positioning:

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


Differentiation and PositioningDifferentiation and Positioning Differentiation:

– Creating superior customer value by actually differentiating the market offering.


The Marketing Mix

The set of controllable, tactical marketing tools that the firm blends to

produce the response it wants in the target market.


Figure 2.5Figure 2.5The Four Ps of the Marketing MixThe Four Ps of the Marketing Mix


4 Ps – Seller’s View– Product– Price– Place– Promotion

4 Cs – Buyer’s View– Customer Solution– Customer Cost– Convenience– Communication

The 4 Ps and the 4 Cs The 4 Ps and the 4 Cs of the Marketing Mixof the Marketing Mix


Figure 2.6Figure 2.6Marketing Analysis, Planning, Marketing Analysis, Planning, Implementation, and ControlImplementation, and Control


Figure 2.7Figure 2.7SWOT AnalysisSWOT Analysis


1. Executive summary2. Current marketing situation3. Analysis of threats and opportunities4. Objectives for the brand5. Marketing strategy6. Action programs7. Marketing budget8. Controls

Brand/Product Marketing PlanBrand/Product Marketing Plan


Turns marketing plans into day-to-day marketing actions by addressing:– Who– Where– When– How

Good implementation is a challenge. Marketing departments must be

properly organized to ensure timely implementation.

Marketing ImplementationMarketing Implementation


Functional Organization: – Each marketing activity is headed by a

functional specialist.• E.g., sales manager, advertising manager,

marketing research manager, etc. Geographic Organization:

– Sales and marketing people are assigned to specific countries, regions, and districts.

Marketing Department Marketing Department OrganizationOrganization


Product Management Organization:– One person given responsibility for complete

strategy and marketing program for a single product.

Market or Customer Organization:– Manager responsible for particular market or

customer. Combination Organization:

– Uses some combination of the previous four approaches.

Marketing Department Marketing Department OrganizationOrganization


Marketing Control ProcessMarketing Control Process Set goals Measure

performance Evaluate

performance Take

corrective action


Marketing Control ProcessMarketing Control Process Operating Control

– Evaluates performance against the plan and takes corrective action.

Strategic control– Evaluates whether strategies match

opportunities.•The marketing audit is major tool.


Return on Marketing Return on Marketing Return on marketing investments

is assessed using one or more methods:– Standard marketing performance

measures•Brand awareness, sales, market share

– Customer-centered measures•Customer acquisition, customer

retention, customer lifetime value

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Rest Stop:Rest Stop: Reviewing the ConceptsReviewing the Concepts

1. Explain companywide strategic planning and its four steps.

2. Discuss how to design business portfolios and growth strategies.

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

4. Describe the elements of a customer-driven marketing strategy and mix, and the forces that influence it.

5. List the marketing management functions, including the elements of a marketing plan and discuss the importance of measuring/managing marketing ROI.

2-47

47


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Copyright © 2009 Pearson Education, Inc. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice HallPublishing as Prentice Hall

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Prentice Hall, Copyright 2009 1 Company and Marketing Strategy: Partnering to Build Customer Relationships Chapter 2 Next Exit