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.