CHAPTER 2
Linking
Marketing
and Corporate
Strategies
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2-1
After reading this chapter you
should be able to:
• Describe the three organisational levels of strategy
and how they relate to each other and the marketing
function.
• Describe why business, mission, culture, and goals
are important in organisations.
• Understand how organisations set strategic directions
by assessing where they are now and seek to be in
the future.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2-2
After reading this chapter you should
be able to:
• Describe the strategic marketing process and its
three key phases: planning, implementation, and
control.
• Explain how the marketing mix elements are
blended into a marketing program.
• Describe how marketing control compares actual
result with planned objectives and acts on
deviations from the plan.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2-3
Organisations and their Levels of
Strategy
• Understanding organisations and how they operate is
critical to understanding marketing.
• It is useful therefore to understand the two basic kinds
of organisations and the levels that exist in them and
their link to marketing.
• Organisations can be divided into two types: business
and non-profit.
• Profit is defined as the reward to a business firm for the
risk it undertakes in offering a product for sale.
• A business firm is a privately owned organisation that
serves its customers in order to earn a profit.
• A non-profit firm is an organisation that serves its
customers but does not have profit as its ultimate goal.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2-4
The Salvation Army is a good example
of a non-profit firm.
Source: http://www.salvationarmy.org.au/SALV/national/, viewed
January 28 2008.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2-5
Levels in Organisations and How
Marketing Links to Them
• All organisations seek to meet their objectives, and
marketing helps them do this.
• The three levels in an organisation are corporate,
business, and functional.
• The corporate level is where the overall strategic
direction for the entire direction is set.
• The business level is where business unit managers
set the direction for individual products and markets.
Strategic directions are more specific at this level.
• The functional level is where groups of specialists
actually create value for the organisation.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2-6
The three levels in an organisation
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2-7
Strategy Issues in Organisations
• Organisations spend much time every year on what
strategic direction they should take.
• So how do you know what direction an organisation
is taking?
• One way is to critically analyse the corporate,
business and functional levels of the company.
• A critical analysis of an organisation’s mission
statement can also assist.
• Firstly the business analysis.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2-8
Strategy Issues in Organisations - The
Business
• Every business is in business to sell products to their
customers.
• What products though? And how many?
• Smarter businesses all realise that they no longer
can specialise in a narrow product line and that their
competitors are not just the other companies in their
industry.
• Competitors can be in other industries and their
products may appeal to customers in other markets
so the modern company must be flexible.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2-9
Business Strategy
• The Lord of the Rings trilogy
wasn’t just competing
against other movies for your
money.
• It’s competitors were all the
other entertainment
providers that existed.
• Insert LOTR image from
the text.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2 - 10
Strategy Issues in Organisations Mission
• An excellent way of understanding a business is by
examining its mission statement or purpose.
• This sets out the scope of the organisation, often
identifying its customers, markets, products,
technology and values.
• Sometimes the mission is also called the vision
statement.
• Cochlear’s mission statement on p.26 is an example
of a good mission statement.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2 - 11
Strategy Issues in Organisations Goals
• Goals or objectives convert the mission into targeted
levels of performance to be achieved, often by a
specified time.
• These objectives allow the organisation to measure
how well it is meeting its mission.
• Objectives are set at all levels of the organisation to
ensure that the overall mission of the company is
met.
• Business firms can pursue several different types of
goals such as:
- Profit
- Sales
- Market share - Quality - Customer satisfaction
- Employee welfare - Social responsibility
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2 - 12
Concept Check
1. What are the three levels in today’s large organisations?
2. What is the meaning of an organisation’s mission?
3. How do an organisation’s goals relate to its mission?
1. Corporate, business and functional.
2. A mission is a statement of the organisation’s scope, often
identifying its customers, markets, products, technology,
and values. It often has an inspirational theme.
3. Goals or objectives measure how well the organisation’s
mission is being accomplished.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2 -13
A Look Around: Where are We now?
• Companies are constantly looking around to see
where they are now in the context of their corporate
objectives.
• A more detailed way of doing this is through a SWOT,
but initially a company examines the three C’s:
competencies, competitors and customers.
• Competencies are what the organisation does best
and what gives it a competitive advantage
• Competitors include direct and in-direct competitors.
• Customers include current and future customers.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2 - 14
Setting Strategic Directions
• Deciding what strategic direction a company wants to
take is only done after a careful analysis of the entire
corporation.
• There are many different ways of doing this, but we
will be only looking at two.
• Business Portfolio Analysis uses quantified
performance measures and growth targets to analyse
a firm’s strategic business units as though they were
separate investments. The BCG matrix is used with
this approach.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2 - 15
BCG Growth-Share Matrix
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2 - 16
How would you classify these two
products using the BCG?
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2 - 17
Growth Strategies: Where do We Want
to Go?
•
•
•
Market Product Analysis involves analysing what
products and markets best fit the company’s current
resources.
The company then decides which of the four marketproduct strategies it wishes to pursue.
These four strategies are:
1. Market penetration
2. Product development
3. Market development
4. Diversification
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2 - 18
Market-Product Strategies
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2 - 19
Concept Check
1. What are competencies and why are they important?
2. What is business portfolio analysis?
3. What are the four market-product strategies?
1. Competencies are an organisation’s special capabilities,
including skills, technologies, and resources that distinguish it
from other organisations. They are important because
exploiting them can lead to success.
2. Business portfolio analysis uses quantified performance
measures and growth targets to analyze a firm’s strategic
business units as though they were a collection of separate
investments.
3. Market penetration, market development, product development,
and diversification.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2 - 20
The Strategic Marketing Process
• After the organisation assesses where it’s at, other questions
emerge.
• These are questions like:
– How do we allocate our resources to get where we want to
go?
– How do we convert our plans to actions?
– How do our results compare with our plans, and do
deviations require new plans and actions?
• This is part of the strategic marketing process, which also
includes a marketing plan.
• Marketing plan is a road map for the marketing activities of an
organisation for a specified future period of time.
• For more detailed information on the marketing plan please read
appendix A.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2 - 21
The Strategic Marketing Process
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2 - 22
The Strategic Marketing Process
• As you have just seen the strategic marketing
process has 3 steps to it.
• Step 1: SWOT Analysis
• Step 2: Market-product focus and goal setting
• Step 3: Marketing program
• We will now look at these in some more detail.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2 - 23
SWOT Analysis
• The essence of a SWOT is taking stock of where the
firm or product is currently.
• It is marketing’s equivalent of a balance sheet.
• It considers mainly external factors, but also some
internal factors such as the mission of the
organisation.
• SWOT’s can be done at any level of the organisation.
• SWOT’s act as the basis for any decision about
strategic direction and change.
• Figure 2.5 in the text gives an example of how you
might write up some of the factors in a SWOT.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2 - 24
Market-Product Focus and Goal
Setting
• Deciding what markets to target and what products to
focus on is essential for an effective marketing
program.
• This can only be done though after the organisation
has segmented its markets.
• Market segmentation is one of the most important
areas of the marketing process to get right.
• If you target too broadly then you can waste precious
resources and only skim critical markets.
• If you target too narrowly then you may miss some
crucial markets and customer segments.
• It is only after you have completed your segmentation
analysis do you decide on your marketing mix.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2 - 25
Marketing Program
• The marketing program is
only finalised after
completing steps 1 & 2.
• The marketing program must
be designed around a
budget and involve all
elements of the marketing
mix.
• As you can see opposite
from Fig 2.6 the success of
any marketing program
depends upon a cohesive
marketing program.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2 - 26
Concept Check
1. What is the difference between a strength and an
opportunity in a SWOT analysis?
2. What is market segmentation?
3. What are points of difference and why are they important?
1. Both are positive factors for an organisation, but a strength is an
internal factor where as an opportunity is an external one.
2. Market segmentation involves considering prospective buyers in
terms of groups or segments that
(1) have common needs and
(2) will respond similarly to a marketing action.
3. Points of difference are those characteristics of a product that
make it superior to competitive substitutes. They are the single
most important factor in the success or failure of a new product.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2 - 27
Strategic Marketing Process: The
Implementation Phase
•
•
No matter how good your marketing program is if it
is not implemented correctly then you will not meet
any of your objectives.
There are four components of the implementation
phase:
•
•
•
1.
Obtaining Resources
Designing the Marketing Organisation
Developing Schedules
Executing the marketing program
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2 - 28
Strategic Marketing Process: The
Control Phase
•
•
•
The control phase of the strategic marketing process
seeks to keep the marketing program moving in the
direction set for it.
This part of the process is always ongoing.
It requires the marketing manager to:
1. Compare the results of the marketing program with the
goals in the written plans to identify any deviations, positive
or negative.
2. To act on those deviations, positive or negative. This means
correcting the negative deviations by altering the program
where necessary but also capitalising on the positive
deviations to maximise marketing outcomes.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2 - 29
Concept Check
1. What is the control phase of the strategic
marketing process?
2. How do the objectives set for a marketing
program in the planning phase relate to the
control phase of the strategic marketing
process?
1. This is the phase that seeks to keep the
marketing program moving in the direction set
for it.
2. The planning phase objectives are used as
benchmarks with which the actual performance
results are compared in the control phase.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2 - 30
Finish
• Questions?
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
2 - 31