MKT 202
SPRING 2015
Chapter 2
COMPANY & MARKETING
STRATEGY: Partnering to Build
Customer Relationships
LEARNING OBJECTIVE
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Explain Strategic Planning & its 4 Steps.
Explain Marketing’s role in Strategic
Planning.
Discuss the Design of Business Portfolio &
Way to Develop Growth Strategies.
Describe the Elements of Marketing Mix & the
Forces which Influence it.
List Marketing Management’s Function.
Identify the Elements of Marketing Plan.
Discuss the Importance of Measuring &
Managing Return on Marketing Investment.
MARKETING ROLE IN STRATEGIC
PLANNING
Strategic Planning
The process of developing and
maintaining a strategic fit between the organization’s goals and
capabilities and it’s changing marketing opportunities.
 There are 4 main steps in Strategic Planning process in an organization –
 Defining Market Oriented Mission
Mission Statement depicts the purpose of the organization.
It should be Market Oriented and must be defined in terms of
satisfying customer needs. e.g. eBay’s mission; ‘to provide a global
trading platform.’
Several firms have their own product-oriented & marketoriented view of defining themselves.
Such as: Google, Revlon, Wal-Mart etc.
MARKETING ROLE IN STRATEGIC
PLANNING (CON’T)

Setting Company Objectives
Company’s mission should be broken down into several,
small, individual Objectives for each department.
Respective departments have to be held accountable.
Each broad marketing strategy then must be defined in
greater details.
MARKETING ROLE IN STRATEGIC
PLANNING (CON’T)
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Designing Business Portfolio
Business Portfolio is the collection of businesses & products
that combine make up the company.
At first, company should analyze its current portfolio.
For that, management has to identify the Strategic Business
Units (SBUs).
Based on BCG Matrix, Strategic Business Units can be divided
into 4 major categories. (Figure 2.2, p.42)
Stars
Market Share
Growth Rate
Cash Cow
Market Share
Growth Rate
Question Mark
Market Share
Growth Rate
Dog
Market Share
Growth Rate
Problem is, the BCG Matrix approach is difficult and time
consuming to implement.
MARKETING ROLE IN STRATEGIC
PLANNING (CON’T)
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Company needs to identify opportunities to grow and downsize non-
profitable business units to be competitive.
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A useful device to identify this opportunity is Product/Market
Expansion Grid (Figure 2.3, p. 43)
Existing Product
Existing
Markets
New
Markets

New Product
Market
Penetration
Product
Development
Market
Development
Diversification
Downsizing is essential when the market environment changes or
when the firm lacks experience in operating in several areas.
MARKETING ROLE IN STRATEGIC
PLANNING (CON’T)

Planning Functional Strategies
Major functional departments – finance, accounting,
marketing, purchasing, operations, human resources,
information systems; should work together under
Strategic Planning.
Marketing plays a vital role to provide with
Marketing Concept Philosophy and inputs
regarding market opportunities.
DEVELOPING PLAN TO BUILD
CUSTOMER RELATIONSHIP

Company’s Strategic Plan establishes what kind of business the
company will operate & its objective.

Customer’s Value is the key ingredient for Success. To ensure
best value for customer’s, marketers partner with 2 parties –

Partnering with Other Departments
Each department of a company carries out Value Creating
activities, resulting a formation of Value Chain.
Marketing needs help from each department to successfully
create a value for target customers. Success depends on how
well each department can work to add value for customers &
how well the activities are co-ordinate.
e.g. Wal-Mart ability to offer right products depend on it’s
Purchasing department’s skills.
DEVELOPING PLAN TO BUILD
CUSTOMER RELATIONSHIP (CON’T.)

Partnering with Others in Marketing System
A firm needs to look beyond it’s own Value Chain and analyze
the value chains of Suppliers, distributers and Customers.
e.g. McDonald’s value delivery system is fine-tuned to ensure
QSCV.
Many well-known companies are now-a-days partnering with
the members of supply chain to improve the Value Delivery
Network for the customers.
e.g. Toyota is partnering with the supplier of parts to ensure
high quality services.
MANAGING MARKETING MIX
 Developing Marketing Strategy
It is a marketing logic by which a business unit hopes to create
customer value & achieve profitable customer relationship.
Sound marketing strategy needs to analyze the customer needs
carefully and to do that, the firm needs to do following things –
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Segmentation
dividing a market into distinct group of
buyers who have different needs and characteristics.
Targeting process of evaluating each market segment and
selecting one or more segments to enter.
An important aspect here is ‘Niche Marketing’
Positioning Arrange for a product to occupy a clear,
distinctive & desirable place in customer’s mind.
Effective positioning begins with Differentiation.
MANAGING MARKETING MIX (CON’T..)

Marketing Mix is the set of controllable, tactical tools which
the firm blends to produce the response from target market.
 Basically the 4P’s, invented by McCarthy.
The 4P’s have corresponding C’s, which explains from the view
point of Customers.
4P’s
4C’s
Product
Customer Solution
Price
Customer Cost
Place
Convenience
Promotion
Communication
MANAGING MARKETING MIX (CON’T..)

The 4 P’s have several factor’s attached to them which
constitutes tactical tool kit for establishing strong positioning.
Product
Variety
Quality
Design
Packaging
Services
Promotion
Advertising
Sales Promo.
Pub. Relation
Pers. Selling
Target
Customer
Intended
Positioning
Price
List Price
Discounts
Allowances
Credit Terms
Payment Per.
Place
Channels
Coverage
Assortment
Location
Inventory
MANAGING MARKETING EFFORT

Managing the overall marketing function require four major
steps/activities.
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Marketing Analysis
A firm should analyze its market
and marketing environment to find attractive opportunities.
An effective tool for analysis is SWOT. (Figure 2.7, p.54)
Internal
Strength
Internal Capabilities
that help a firm
External
Opportunities
External factors that a
firm can exploit
Weakness
Internal limitations
that may interfere
Threats
Current & emerging
external factors that
may challenge
MANAGING MARKETING EFFORT
(CON’T..)
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Marketing Planning
Detail marketing plan is needed
for each business, product or brand.
The plan states the major objectives for the brands and
outlines the specifics of a marketing strategy. Outlines how
the firm will approach the strategy to maximize customer
value.

The plan also outlines the Budget needed to accomplish the
tasks.
MANAGING MARKETING EFFORT
(CON’T..)

Marketing Implementation
Process that turns
marketing strategies into actions.
Addresses the who, when, how, where of marketing activities.
Effective Implementation helps to gain Competitive Advantage.

Marketing Department Organization
Company must
design a marketing organization which can accomplish tasks
for marketing strategy.
Modern marketing department can be divided in several ways.

Functional Organization - different marketing activities
are headed by a functional specialists.
MANAGING MARKETING EFFORT
(CON’T..)

Geographic Organization – Sales and marketing people are
assigned to specific countries, regions and states.

Product Management Organization - A product manager
develops and implements a complete strategy and marketing
program for a specific product or brand.

Customer Management Organization - Market managers
are responsible for developing plans for specific market and
customers.

Many firms are shifting their focus from Brand Management
to Customer Management.
MANAGING MARKETING EFFORT
(CON’T..)

Marketing Control
A process of measuring &
evaluating the results of marketing strategies & plans &
taking corrective action to ensure objectives are achieved.

Operating Control – checking ongoing performance against the
annual plan and taking corrective action when necessary.

Strategic Control – looking at whether the company’s basic
strategies are well matched with it’s opportunities.

Marketing Audit assess the marketing environment,
marketing strategy, marketing organization, marketing mix,
marketing systems, productivity and profitability.
MEASURING & MANAGING
MARKETING ROI
•
Marketing ROI
The net return from a marketing
investment, divided by the costs of that investment.
It measures the profit generated by the activities from the
marketing investment.
 Terms of Standard Marketing Performance are – Brand
awareness, Sales, Market Share etc.
 Marketers are also using customer centered measures of
marketing impact, such as – customer acquisition, customer
retention, customer life-time value, customer equity etc.
MEASURING & MANAGING
MARKETING ROI (CON’T..)
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Marketing managers should ensure that their dollars are
well spent.
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Marketers face growing pressure to show that they are
adding value to the line with the cost.
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Therefore, marketing ROI is the heart of any business.
MEASURING & MANAGING
MARKETING ROI (CON’T..)

Return on Marketing Investment (Figure 2.8)
Marketing Investments
Marketing Returns
Improved Value & Satisfaction
Increased Customer
Attraction
Increased Customer
Retention
Increased customer lifetime
value & customer equity
Return on Marketing Investment
Cost of
Marketing
Investment
END OF CHAPTER 2