Company and Company and Marketing StrategyMarketing Strategy

Chapter 2Chapter 2

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Known for films, Known for films, animation, theme parks animation, theme parks and customer orientationand customer orientationParks offer a variety of Parks offer a variety of attractions as well as attractions as well as cleanliness, order, and cleanliness, order, and warmthwarmth

Satisfying the Satisfying the customer is customer is everyone’s jobeveryone’s job

Disney has grown Disney has grown via diversificationvia diversification

Sales and net Sales and net income have fallenincome have fallen

cWalt DisneyWalt Disney

Discussion:Discussion: How Can Disney Recover?How Can Disney Recover?

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Objectives

Understand companywide Understand companywide strategic strategic planningplanning and its four steps. and its four steps.

Learn how to design business Learn how to design business portfolios and develop portfolios and develop strategies strategies for growth and downsizing.for growth and downsizing.

..

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Objectives

Be able to describe the Be able to describe the marketing marketing processprocess and the forces that and the forces that influence it.influence it.

Understand the marketing Understand the marketing management functions, including management functions, including the the elements of the marketing planelements of the marketing plan..

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Strategic Planning*

Strategic planning is defined as:Strategic planning is defined as: ““The process of developing and The process of developing and

maintaining a strategic maintaining a strategic fit fit between between the organization’s the organization’s goals and goals and capabilitiescapabilities and its and its changing changing marketing opportunitiesmarketing opportunities.”.”

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Figure 2-1:

Steps in the Strategic Planning Process

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Market OrientedMarket Oriented

RealisticRealistic

Fit Market EnvironmentFit Market Environment

Distinctive CompetenciesDistinctive Competencies

MotivatingMotivating

Specific

Characteristics of a Good Mission

Statement:

A Mission Statement is a Statement of the Organization’s Purpose.

Defining the Company’s Business and Mission

Mission Statement:What the organization wants to accomplish inthe larger environment.

3m does more than just make adhesives, scientific equipment, health care, and communications products. It solves people’s problems by putting innovation to work for them. (Text page 49.)

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Strategic Planning

Mission statements guide the Mission statements guide the development of objectives and development of objectives and goals.goals. Objectives are developed at each level Objectives are developed at each level

in the organization hierarchy.in the organization hierarchy. Strategies are developed to Strategies are developed to

accomplish these objectives.accomplish these objectives.

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Example: Monsanto CompanyMission: Helping to Mission: Helping to feed the world populationfeed the world population and and sustain the environmentsustain the environment..

Overall objective: To create Overall objective: To create environmentally environmentally better productsbetter products and get them to market and get them to market fasterfaster at at lower costlower cost..

Objective of agricultural division: To increase Objective of agricultural division: To increase agricultural agricultural productivityproductivity and reduce chemical and reduce chemical pollutionpollution. .

General ElectricGeneral Electric

• Boundaryless…Speed…Stretch

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Strategic Planning

Business portfolio:Business portfolio: “the collection of businesses “the collection of businesses and products that make and products that make up the company.”up the company.” Designing the businessDesigning the business

portfolio is a key step in portfolio is a key step in the strategic planning the strategic planning process.process.

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Strategic Planning

Step 1: Step 1: Analyze the Analyze the current business current business portfolioportfolio

Step 2: Step 2: Shape the future Shape the future business portfoliobusiness portfolio

Identify strategic business Identify strategic business units (SBUs)units (SBUs)Assess each SBU:Assess each SBU: The BCG growth-share The BCG growth-share

matrix classifies SBUs matrix classifies SBUs into one of four into one of four categories using:categories using:Market growth rate Market growth rate The SBU’s relative market The SBU’s relative market

share within the market.share within the market.

Portfolio DesignPortfolio Design

Portfolio Analysis:On Your Firm’s

StrengthWhat share of the market ?What share of the market ?

what does market share mean?what does market share mean?

Portfolio Analysis:On Market Attractiveness

Is the market growing?Is the market growing?

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Question Marks

• High growth, low share • Build into Stars or phase out • Require cash to hold market share

Question Marks

• High growth, low share • Build into Stars or phase out • Require cash to hold market share

Stars

• High growth & share• Profit potential • May need heavy investment to grow

Cash Cows

• Low growth, high share• Established, successful SBU’s•Produce cash

Cash Cows

• Low growth, high share• Established, successful SBU’s•Produce cash

Dogs

• Low growth & share • Low profit potential

Dogs

• Low growth & share • Low profit potential

Relative Market ShareHigh Low

Mark

et

Gro

wth

Rate

Low

H

igh

Analyzing Current SBU’s:Boston Consulting Group

Approach

?

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Business Strength

High

Medium

Low

Strong Average Weak

A

B

C

D

Ind

ustr

y

Att

racti

ven

ess

Analyzing Current SBU’s:

GE’s Strategic Business-Planning Grid

General Electric Approach

how attractive is the industry?how attractive is the industry?Market sizeMarket size Industry profit marginIndustry profit marginCompetitive intensityCompetitive intensity Industry cost structureIndustry cost structure

what is the business strength?what is the business strength?Quality and price competitivenessQuality and price competitivenessCustomer knowledgeCustomer knowledgeGeographic advantageGeographic advantage

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Strategic Planning

Step 1: Step 1: Analyze the Analyze the current business current business portfolioportfolio

Step 2:Step 2: Shape the future Shape the future business portfoliobusiness portfolio

Determine the future role of Determine the future role of each SBU and choose the each SBU and choose the appropriate resource appropriate resource allocation strategy:allocation strategy: BuildBuild HoldHold HarvestHarvest DivestDivest

SBUs change positions SBUs change positions over timeover time

Portfolio DesignPortfolio Design

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Can be Difficult, Time-Consuming, & Costly to ImplementCan be Difficult, Time-Consuming, & Costly to Implement

Difficult to Define SBU’s & Measure Market Share/ GrowthDifficult to Define SBU’s & Measure Market Share/ Growth

Focus on Current Businesses, But Not future PlanningFocus on Current Businesses, But Not future Planning

Can Lead to Unwise Expansion or DiversificationCan Lead to Unwise Expansion or Diversification

Problems With Matrix Approaches

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Strategic Planning

Designing the business portfolio Designing the business portfolio also involves:also involves: Developing Developing strategies for growthstrategies for growth by by

identifying, evaluating, and selecting identifying, evaluating, and selecting promising new market opportunities.promising new market opportunities.

Developing strategies for Developing strategies for downsizingdownsizing the business portfolio.the business portfolio.

Strategies for Growth

ProductsProducts

MarketsMarkets

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Figure 2-3:

Product / Market Expansion Grid*

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Product/ Market Expansion Grid

Market PenetrationMarket Penetration: making more sales to : making more sales to current customers without changing its current customers without changing its products. products. How? Add new stores in current market How? Add new stores in current market

areas, improve advertising, prices, service areas, improve advertising, prices, service or store design.or store design.

Market Development: develop new markets for its current products.

How? Identify new demographic or geographic markets.

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Product/ Market Expansion Grid

Product DevelopmentProduct Development: offering modified or : offering modified or new products to current markets. new products to current markets. How? New styles, flavors, colors, or How? New styles, flavors, colors, or

modified products.modified products.

DiversificationDiversification: new products for new : new products for new markets. markets. How? Start up or buy new businesses. How? Start up or buy new businesses.

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The Marketing Process*

The strategic planning The strategic planning and business portfolio and business portfolio analysis processes analysis processes help to identify and help to identify and evaluate marketing evaluate marketing opportunities.opportunities.

The purpose of the The purpose of the marketing process is marketing process is to help the firm plan to help the firm plan how to capitalize on how to capitalize on these opportunities.these opportunities.

Key ElementsKey Elements

Analyzing marketing Analyzing marketing opportunitiesopportunities

Selecting target Selecting target marketsmarkets

Developing the Developing the marketing mixmarketing mix

Managing the Managing the marketing effortmarketing effort

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The Marketing Process

Analyzing marketing Analyzing marketing opportunitiesopportunities

Selecting target Selecting target marketsmarkets

Developing the Developing the marketing mixmarketing mix

Managing the Managing the marketing effortmarketing effort

Key ElementsKey Elements The segmentationThe segmentation process divides the process divides the total market into total market into market segments.market segments.

Target marketingTarget marketing chooses which chooses which segment(s) are segment(s) are pursued.pursued.

Market positioningMarket positioning for the product is for the product is then determined.then determined.

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Connecting With Customers

Market Positioning: arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. i.e. Chevy Blazer is “like a rock.”

POSITIONING:Bentley: “You don’t park it. You position it.”

For what target market is Bentley positioned?

Text page 65

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The Marketing ProcessCompetitor analysis Competitor analysis guides competitive guides competitive marketing strategy marketing strategy development.development.Strategy leads to tactics Strategy leads to tactics via the marketing mix: via the marketing mix: The “Four Ps” – product, The “Four Ps” – product,

price, place, promotion price, place, promotion (seller viewpoint)(seller viewpoint)

The “Four Cs” – The “Four Cs” – customer solution, cost, customer solution, cost, convenience, and convenience, and communication communication (customer viewpoint)(customer viewpoint)

Analyzing marketing Analyzing marketing opportunitiesopportunities

Selecting target Selecting target marketsmarkets

Developing the Developing the marketing mixmarketing mix

Managing the Managing the marketing effortmarketing effort

Key ElementsKey Elements

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Figure 2-5:

The Marketing Mix

Developing the Marketing Mix

PricePrice

PlacePlace

PromotionPromotion

ProductProduct

QualityQuality

DesignDesign

FeaturesFeatures

PackagingPackaging

Sizes Sizes

ServicesServices

Goods and services offered to consumer

Developing the Marketing Mix

PricePrice

PlacePlace

PromotionPromotion

ProductProduct

AdvertisingAdvertising

Personal sellingPersonal selling

Sales PromotionSales Promotion

PublicityPublicity

Activities that communicate merits of product

Developing the Marketing Mix

PricePrice

PlacePlace

PromotionPromotion

ProductProduct

ChannelsChannels

LocationsLocations

AssortmentsAssortments

InventoryInventory

TransportationTransportation

Activities that make products available

Developing the Marketing MixPricePrice

PlacePlace

PromotionPromotion

ProductProduct

list pricelist price

discountsdiscounts

credit termscredit terms

payment payment periodperiod

allowancesallowancesMoney paid to obtain product

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The Marketing Process

Marketing analysisMarketing analysis Provides information Provides information

helpful in planning, helpful in planning, implementation, and implementation, and controlcontrol

Marketing planningMarketing planning Strategies and tacticsStrategies and tactics

Marketing Marketing implementationimplementation Turns plans into actionTurns plans into action

Marketing controlMarketing control Operating controlOperating control Strategic controlStrategic control

Analyzing marketing Analyzing marketing opportunitiesopportunities

Selecting target Selecting target marketsmarkets

Developing the Developing the marketing mixmarketing mix

Managing the Managing the marketing effortmarketing effort

Key ElementsKey Elements

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Figure 2-6:

Managing the Marketing Effort

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Marketing Control Process (Fig. 2.8)

Set Goals

Measure Performance

Evaluate Performanc

e

Take Corrective

Action

Marketing Plan

Where you want to goWhere you want to go

BA 499 BA 499 write a marketing planwrite a marketing plan

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Executive Summary

Current Marketing Situation

Threats and Opportunity Analysis

Objectives and Issues

Marketing Strategy

Action Programs

Budgets

Controls

Contents of a Marketing Plan