Chapter 2

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Chapter 2
2-1. Explain company-wide strategic planning and its four steps
First Stop: Rolex
Building Brand Equity through a Customer-drive Marketing Mix
Rolex endorses sports that reinforce the values of the brand—achievement and
exclusivity.
Strategic Planning
•
Game plan for long-run survival and growth
•
Helps to maintain a strategic fit between its goals and capabilities and changing
marketing opportunities.
Mission Statement
•
Statement of the organization’s purpose
•
Market oriented - defined in terms of satisfying basic customer needs
•
Emphasize the company’s strengths
•
Focus on customers and the customer experience
Setting Company Objectives and Goals
•
Detailed supporting objectives for each level of management
•
Setting a hierarchy of objectives
•
Business objectives
•
Marketing objectives
2-1 Summary
•
•
Strategic planning
•
Defining the company’s mission
•
Setting objectives and goals
•
Designing a business portfolio
•
Developing functional plans
Company mission statement
•
Market oriented, realistic, specific
•
Motivating, consistent with market environment
2-2. Discuss how to design business portfolios and develop growth strategies
Business Portfolio
•
Collection of businesses and products that make up the company
•
Steps in business portfolio planning:
•
•
Analyze the firm’s current business portfolio
•
Develop strategies to shape the future portfolio
Example: Disney has become a sprawling collection of media and
entertainment businesses.
Portfolio Analysis
•
Management’s evaluation of the products and businesses that make up the
company
•
Identify the strategic business units (SBUs)
•
Assess SBUs’ attractiveness and decide on the level of support SBU
deserves
•
Direct resources toward more profitable businesses and phase down or drop
its weaker ones
The BCG Growth-Share Matrix
•
Evaluates a company’s SBUs in terms of market growth rate and relative
market share
•
Problems with Growth-Share Matrix
•
Difficult, time consuming, and costly
•
Difficult to define and measure
•
Provides little advice for future planning
The Product/Market Expansion Grid
Developing Strategies for Growth
Under Armour has grown at a blistering rate under its multipronged growth strategy.
Downsizing
•
Products or business units that are unprofitable or no longer fit the company’s
overall strategy
•
Reasons to abandon products or markets
•
Rapid growth of the company
•
Lack of experience in a market
•
Change in market environment
•
Decline of a particular product
2-2 Summary
•
Portfolio analysis
•
BCG Growth-Share Matrix
•
Product market expansion grid
•
Strategies for growth and downsizing
2-3. Explain marketing’s role in strategic planning and how marketing works with its
partners to create and deliver customer value
Planning Marketing: Partnering to Build Customer Relationships
•
Provides a guiding philosophy
•
Marketing concept—company strategy should create customer value
and build profitable relationships
•
Provides inputs to strategic planners
•
•
Identify market opportunities and potential to take advantage of them
Designs strategies for reaching the business unit’s objectives
Partnering with Other Company Departments
•
Company departments are links in the company’s internal value chain.
•
Firm’s success depends on how well the various departments coordinate their
activities.
•
Marketers should ensure all the departments are customer-focused and
develop a smooth functioning value chain.
Partnering with Others in the Marketing System
•
Companies should assess value chains
•
Internal departments
•
External: suppliers, distributors and customers
•
Value delivery network is composed of the company, its suppliers, its
distributors, and its customers
2-3 summary
•
Planning Marketing
•
Partnering to build customer relationships
•
Partnering with other company departments
•
Partnering with suppliers, distributors and customers
•
Value delivery network
2-4. Describe the elements of a customer value-driven marketing strategy and mix and
the forces that influence it
Managing Marketing Strategy and the Marketing Mix
Customer Value-Driven Marketing Strategy
•
Marketing logic by which the company creates customer value and achieves
profitable customer relationships
•
Integrated marketing mix: product, price, place, and promotion
•
Activities for best marketing strategy and mix
•
Marketing analysis
•
Planning, implementation, and control
Market Segmentation and Market Targeting
•
Market segmentation
•
Dividing a market into distinct groups of buyers who have different needs,
characteristics, or behaviors, and who might require separate products or
marketing programs
•
Market segment
•
Group of consumers who respond in a similar way to a given set of marketing
efforts
•
Market targeting
•
Evaluating each market segment’s attractiveness and selecting one or more
segments to enter
Positioning
•
Positioning the product to occupy a clear, distinctive, and desirable place
relative to competing products
•
Differentiating the market offering to create superior customer value
•
The entire marketing program should support the chosen positioning strategy.
•
Example: Southwest’s positioning as “The LUV Airline” is reinforced by the
colorful heart in its new logo and plane graphics design.
The Four Ps of the Marketing Mix
Criticisms of the Four Ps
•
Omits or underemphasizes service products
•
Needs to include packaging as a product decision
•
Buyer’s perspective would emphasize the four A s:
•
Acceptability
•
Affordability
•
Accessibility
•
Awareness
Managing Marketing: Analysis, Planning, Implementation, and Control
SWOT Analysis: Strengths (S), Weaknesses (W), Opportunities (O), and Threats (T)
2-4 summary
•
Customer value-driven marketing strategy
•
Market segmentation and market segment
•
Market targeting
•
Positioning and differentiating
•
Four Ps of the marketing mix
•
Analysis, planning implementation and control
•
SWOT analysis
2-5. List the marketing management functions, including the elements of a marketing
plan, and discuss the importance of measuring and managing marketing return on
investment
Contents of a Marketing Plan
Market Implementation
•
Turning
marketing
strategies
and
plans
into
marketing
actions
accomplish strategic marketing objectives
•
Addresses the who, where, when, and how of the marketing activities
Marketing Department Organization
Marketing Control
•
Measuring and evaluating the results of marketing strategies and plans
to
•
Operating control ensures that the company achieves its sales, profits, and
other goals.
•
Strategic control involves looking at whether the company’s basic strategies
are well matched to its opportunities.
Marketing Return on Investment (ROI)
•
Net return from a marketing investment divided by the costs of the marketing
investment
•
Assessment measures
•
Standard marketing performance measures
•
Customer-centered measures
Marketing Return on Investment
2-5 summary
•
Contents of a marketing plan
•
Analysis, planning and implementation
•
Operating and strategic marketing control
•
Marketing department organization
•
Marketing return on investment
Chapter 1
What is marketing?

Marketing is managing profitable customer relationships.

Simplest definition: Attract new customers by promising superior value

Keep and grow current customers by delivering satisfaction.
Marketing defined

Broadly defined, marketing is a social and managerial process by which
individuals and organizations obtain what they need and want through creating
and exchanging value with others.

We define marketing as a process by which companies create value for
customers and build strong customer relationships to capture value from
customers in return.
Marketing process

This important figure shows marketing in a nutshell. By creating value for
customers, marketers capture value from customers in return. This five-step
process forms the marketing frame work for the rest of the chapter and the
remainder of the text.

Create value for customers and build customer relationships

Capture value from customers in return
Understanding the Marketplace and Customer Needs Customer
Need

States of deprivation
Physical—food, clothing, warmth, safety
Social—belonging and affection
Individual—knowledge and self-expression
Demands

Human wants backed by buying power
Market Offerings-Products, Wants, and Demands

Market offerings are some combination of products, services, information, or
experiences offered to a market to satisfy a need or a want.

Marketing myopia is focusing only on existing wants and losing sight of
underlying consumer needs.
Customer Value and Satisfaction Expectations

Customers
•
From expectations about the value and satisfaction that various market
offerings will deliver and buy accordingly
Exchanges and Relationships
Exchange
the act of obtaining a desired object from someone by offering something in return
Relationship
Marketing actions try to create, maintain, grow exchange relationships.
Markets
•
Each party in the system adds value. Walmart cannot fulfill its promise of low
prices unless its suppliers provide low costs. Ford cannot deliver a high-quality
car-ownership experience unless its dealers provide outstanding service.
•
Arrows represent relationships that must be developed and managed to create
customers value and profitable customer relationships.
Designing a Customer-Driven Marketing Strategy
•
We define marketing management is the art and science of choosing target
markets and building profitable relationships with them.
Selecting Customers to Serve
 Market segmentation refers to dividing the markets into segments of customers.
 Target marketing refers to which segments to go after.
Choosing a Value Proposition
 A brand’s value proposition is the set of benefits or values it promises to deliver
to consumers to satisfy their needs.
Marketing Management Orientations
The societal marketing concept holds that marketing strategy should deliver value to
customers in a way that maintains or improves both the consumer’s and society’s wellbeing.
•
The selling concept takes an inside-out view that focuses on existing products
and heavy selling. The aim is to sell what the company makes rather than
making what the customer wants.
•
The marketing concept takes an outside-in view that focuses on satisfying
customer needs as a path to profits. As South-west Airlines’ colorful founder
puts it, “We don’t have a marketing department, we have a customer
department.”
Preparing an Integrated Marketing Plan and Program
 The marketing mix is the set of tools (four Ps) the firm uses to implement its
marketing strategy. It includes product, price, promotion, and place.
 The firm must blend each marketing mix tool into a comprehensive integrated
marketing program that communicates and delivers the intended value to
chosen customers.
Building Customer Relationships Customer Relationship Management (CRM)
 In this broader sense, customer relationship management is the overall
process of building and maintaining profitable customer relationships by
delivering superior customer value and satisfaction.
Relationship Building Blocks:
Customer Value and Satisfaction
 A customer buys from the firm that offers the highest customer-perceived
value—the customer’s evaluation of the difference between all the benefits and
all the costs of a market offering relative to those of competing offers.
 Customer satisfaction depends on the product’s perceived performance
relative to a buyer’s expectations. If the product’s performance falls short of
expectations, the customer is dissatisfied.
Customer Relationship Levels and Tools
 Companies can build customer relationships at many levels, depending on the
nature of the target market.

Many companies offer frequency marketing programs that reward customers
who buy frequently or in large amounts.
 Other companies sponsor club marketing programs that offer members special
benefits and create member communities.
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