Chapter 2 - Partnering to Build Customer Relationships

Copyright © 2012 Pearson Canada Inc.2 - 1

Company and Marketing Strategy

Partnering to Build Customer Relationships

Chapter 2


Previewing the Concepts

1. Explain the four steps of company-wide strategic planning

2. Discuss how to design business portfolios and growth strategies

3. Explain marketing’s role in strategic planning and how marketing creates and delivers 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 and discuss the importance of measuring and managing return on marketing investment


Strategic Planning Defined

• Strategic Planning:– The process of developing and maintaining a

strategic fit between the organization’s goals and capabilities and its changing marketing opportunities


Steps in Strategic Planning

• Corporate level:– Defining the company mission– Setting objectives and goals– Designing the business portfolio

• Business unit, product, and market level:– Planning marketing strategy as well as other

functional strategies


Mission Statement Defined

• A mission statement is a statement of the organization’s purpose – what it wants to accomplish in the larger environment– Example: Nike’s mission is “to bring

inspiration and innovation to every athlete* in the world. (*If you have a body, you are an athlete.)”


The Mission Statement

• Questions the mission statement should answer include:– What is our business?– Who is the customer?– What do consumers value?– What should our business be?

• Mission statements should be market oriented, not product oriented


Setting Objectives and Goals

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

consistent with one another– Example:

• Business objective: Increase profits• Marketing objective: Increase market share of

domestic and international markets


Designing the Business Portfolio

• Business Portfolio:– The collection of businesses and products

that make up the company

• The company must:– Analyze its current portfolio and decide which

should receive more, less, or no investment– Shape the future portfolio by developing

strategies for growth and downsizing


Portfolio 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


Portfolio Analysis

• Evaluate the company’s key businesses, called strategic business units (SBUs):– Attractiveness of SBU’s market or industry– Strength of SBU’s position in that market or

industry

• BCG Growth Share Matrix uses market growth rate and relative market share to classify SBUs into four groups


BCG Growth-Share Matrix


Problems with Matrix Approaches

• Several problems exist:– Can be difficult, time consuming, and costly to

implement– Difficult to define SBUs and measure market

share and growth rate– Focus is on current businesses; gives little

help with future planning

• As a result, many companies favour more customized strategic planning approaches


Product/Market Expansion Grid

• The product/market expansion grid can identify growth opportunities:


Downsizing

• Companies must develop strategies for growing and downsizing portfolios

• Downsizing eliminates products or business units that are not profitable or no longer fit the company’s overall strategy– Many reasons exist for downsizing


Planning Marketing

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

• The marketing concept

– Provides input to strategic planners• Identifies opportunities

– Designs strategies to reach objectives


Creating Customer Value

• Marketers must practice partner relationship management– Working with internal partners can create an

effective value chain– Working with external partners helps to form a

superior value delivery network


Value Delivery Network

• Components include: – Company’s value chain– Suppliers– Distributors– Customers

• Improved performance in delivery value to customers is the goal


Marketing Strategy and the Marketing Mix

• The goal is to create value for customers and build profitable customer relationships

• Marketing strategy decisions include:– Market segmentation and targeting– Differentiation and positioning

• Marketing strategy must guide marketing mix decisions


Market Segmentation and Targeting

• Segmentation:– Dividing a market into distinct groups of

buyers who have different needs, behaviours, characteristics, and who might require separate products or marketing programs

• Targeting:– Evaluating the attractiveness of each market

segment and selecting one or more segments to enter


Differentiation 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:– 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

• These tools are often called the 4 P’s:– Product– Price– Place (Distribution)– Promotion


The Marketing Mix

• The 4 Ps of the marketing mix:


The 4 Ps and the 4 Cs

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

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


Managing the Marketing Effort

• Four marketing management functions:– Analysis; SWOT analysis is key– Planning; ensure marketing plan is consistent

with strategic plan– Implementation; carry out the plans

successfully– Control; measure and evaluate results and

take corrective action as needed


SWOT Analysis

• SWOT analysis:


Contents of a Marketing Plan

• Executive summary• Current marketing situation• Analysis of threats and opportunities• Objectives and issues• Marketing strategy• Action programs• Budgets• Controls


Marketing Implementation

• Turns marketing plans into marketing actions by addressing:– Who– Where– When– How

• Implementation can be difficult but is critical to success


Organizing Marketing Departments

• Many companies have a Chief Marketing Officer (CMO)

• Functional organization:– Different marketing activities are headed by a

specialist (i.e. sales manager)

• Geographic organization: – Sales and marketing people are assigned to

specific countries, regions, and/or districts


Marketing Department Organization

• Product management organization:– One person is responsible for the strategy

and marketing program for a single product

• Market or customer organization:– Manager responsible for specific market or

type of customer (i.e. government buyers)

• Combination organization: – Uses some combination of the previous four

approaches


Marketing Control Process

• Marketing control involves four steps:– Set specific marketing goals– Measure performance in the marketplace– Evaluate performance– Take corrective action to close the gaps

between goals and performance


Marketing Control Process

• Operating control:– Evaluates performance against the annual

plan and takes corrective action

• Strategic control:– Evaluates whether strategies match

opportunities


Return on Marketing Investment

• Return on marketing investment is assessed using one or more methods:– Standard marketing performance measures

(marketing dashboards):• Brand awareness, sales, market share

– Customer-centered measures:• Customer acquisition, customer retention,

customer lifetime value, customer equity


Reviewing the Concepts

1. Explain the four steps of company-wide strategic planning

2. Discuss how to design business portfolios and growth strategies

3. Explain marketing’s role in strategic planning and how marketing creates and delivers 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 and discuss the importance of measuring and managing return on marketing investment

Chapter 2 - Partnering to Build Customer Relationships

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