Chapter Two

1. Chapter Two Company and Marketing Strategy: Partnering to Build Customer Relationships Idrees Alhassan MBA

2. Companywide Strategic Planning:Defining Marketing’s Role • Strategic planning • The process of developing and maintaining a strategic fit betweenthe organization’s goals and capabilities and its changing marketing opportunities. • In other words; • Each company must find the “game plan” for long-run survival and growth that makes the most sense given its specific situation, opportunities, objectives and resources.

3. Companywide Strategic Planning:Defining Marketing’s Role • Strategic planning • It sets the stagefor the rest of the planning. • The process begins with defining the overall purpose and mission.

4. Companywide Strategic Planning:Defining Marketing’s Role • Defining Mission • What is our business? • Who is the customer? • What do consumers value? • What shouldour business be? • Simple but hard to answer questions. Thus; • Avoid “Marketing Myopia” in defining mission. • Technologies and products go obsolete but “needs” stay the same i.e. “class and form difference”.

5. Companywide Strategic Planning:Defining Marketing’s Role • Mission must be; • Realistic i.e. a pencil maker claims to be in communication equipment business is NOT realistic. • Specific (workable) i.e. quality, satisfaction, employees are an asset are too vague. Lack inspiration. • Fitting market environment i.e. the very core of the need. • Based on distinctivecompetencies. • Motivating i.e. making more sales or profits is NOT. But “Changing Lives” is. “Your Potential, Our Passion” by Microsoft is.

6. Companywide Strategic Planning:Defining Marketing’s Role • Company’s objectives and goals • The mission should be turned into detailed supporting objectives for each level of management. • Mission leads to a HIERARCHY OF OBJECTIVES (Domino Effect). • For example, (agricultural firm); • Improving the future of farming & food abundantly and safely (mission). • Build profitable customer relationships by developing better agricultural products & delivering faster and cheaper(overall obj). • This is possible by R&D that safely produces results without harmful sprays (obj). • R&D needs money. So, improving profits becomes another objective by either REDUCING COSTS or IMPROVING SALES. • Sales can be improved either locally or internationally(obj).

7. Companywide Strategic Planning:Defining Marketing’s Role • Designing Business Portfolio • the collection of businesses and products that make up the company. • The best portfolio would be the one that best fits the company’s strengths and weaknesses to opportunities in the environment. • Business Portfolio Planning involves TWO steps: • It must analyze its current businesses/products. • It must shape the future portfolio by developing strategies for growth and downsizing. • Portfolio Analysis • The process by which management evaluates the products and businesses making up the company. • It’s a process of pruning and fortifying.

8. Companywide Strategic Planning:Defining Marketing’s Role • Portfolio planning tools • BCG Matrix (for current businesses or products) • Product/Market Expansion Grid (for potential businesses or products) Existing Market New Market New Product Existing Product

9. Companywide Strategic Planning:Defining Marketing’s Role Assignment Real Marketing The Walt Disney Company: The Strategic Planning for a Happy-Ever-After Ending (Principles of Marketing, 12th Edition, page 39-40)

10. Planning Marketing:Partnering to Build Customer Relationships • The strategic plan establishes • What kinds of businesses to operate • What are their objectives • Then, each unit/department has its own objectives. • Marketing, HR, Finance, Accounting, Procurement, Operations, Information Systems etc. all work together to accomplish the strategic mission/plan.

11. Planning Marketing:Partnering to Build Customer Relationships • Marketing provides the philosophy i.e. the marketing concept. • Although marketing plays the key role, it cannot accomplish the overall objective alone. • Two Concepts help marketing philosophy to attain survival and thrival. • Value Chain • Value-Delivery Network

12. Planning Marketing:Partnering to Build Customer Relationships • Value Chain

13. Planning Marketing:Partnering to Build Customer Relationships Value Chain (details)

14. Planning Marketing:Partnering to Build Customer Relationships Value Chain – A Valuable Tip A company’s Value Chain is as strong as its weakest link. (specialization and coordination are equally important)

15. Planning Marketing:Partnering to Build Customer Relationships • Value Chain • Ideally, all functions work in harmony. • In practice, departmental relations are full of conflict and misunderstandings. • Marketing considers Customers’ View above all. • Thus, marketing actions can cause other departments to do their jobs poorly in their terms. • Marketing department actions can; • Increase purchasing costs • Disrupt production schedules • Increase inventories • Create budget headaches

16. Planning Marketing:Partnering to Build Customer Relationships • Value Chain • Marketers must get other departments to “think consumer”. • They need to work closely with other department managers. • The idea is to “maximize the customer experience across the organization and its various customer touch points”. • As Jack Welch says; • Companies can’t give job security. Customers can !

17. Planning Marketing:Partnering to Build Customer Relationships • Value-Delivery Network • The network made up of; • The company • Suppliers • Distributors • Customers • who partner together with each other to improve the performance of the entire system.

18. Planning Marketing:Partnering to Build Customer Relationships • Value-Delivery Network

19. Marketing Strategy and Marketing Mix • The strategic plan defines the company’s overall mission and objectives. • Marketing follows (i.e. Customer value & relationship) • Next is Marketing Strategy • the marketing logic by which the company hopes to achieve its marketing objectives. • In other words; • Deciding which customers to serve (segmentation & targeting). • Deciding how to serve them (differentiation and positioning).

20. Marketing Strategy and Marketing Mix • Guided by Marketing Strategy, the company designs • Integrated Marketing Program (4 Ps or Marketing Mix) • To find the best Marketing Strategy and Marketing Mix, the company engages in; • Marketing Analysis • Planning • Implementation • Control • Through these activities, the company watches and adapts to the forces in the marketing environment.

21. Marketing Strategy and Marketing Mix Competitors Intermediaries Planning Implementation Control Suppliers Publics

22. Marketing Strategy and Marketing Mix • Customer-Driven Marketing Strategy • Market Segmentation • The process of dividing a market into distinct groups of buyers who have different needs, characteristics or behaviors who might require separate products or marketing mixes is called segmentation. • Market Segment • A group of consumers who respond in a similar way to a given set of marketing efforts. • E.g. Tylenol (pain killer) for high-income and low-income segments. • Or biggest, most comfortable cars make one market segment and economy class cars make another market segment. • A company is wise to focus its efforts on meeting the distinct needs of individual market segments rather than the whole segment altogether.

23. Marketing Strategy and Marketing Mix • Customer-Driven Marketing Strategy • Market Targeting • After segmentation is Targeting. • Which segment to enter? • Two ways; • Enter One Market Segments (Ferrari Sports Cars) • Enter Multiple but Related Market Segments (Shirts for Kids, Teens, Women, Adults)

24. Marketing Strategy and Marketing Mix Assignment Real Marketing Jones Soda: Staying True to Your Niche (Principles of Marketing, 12th Edition, page 47)

25. Marketing Strategy and Marketing Mix • Customer-Driven Marketing Strategy • Market Differentiation & Positioning • After Targeting a market segment, a company decides on how to differentiate and position its product. • Effective positioning begins with differentiation • Positioning - Arranging for a product to occupy a clear, distinctive and desirable placerelative to competing productsin the minds of target consumers. • Differentiation – to actually differentiate the market offering to create superior customer value. • All the marketing program should support the Chosen Positioning Strategy.

26. Marketing Strategy and Marketing Mix • Integrated Marketing Mix • After deciding on the overall marketing strategy, begins the process of Marketing Mix.

27. Managing the Marketing Effort • Marketing Analysis • SWOT • Industry • PEST Analyses • Marketing Planning (assignment, Table 2.2, page 52) • What and why? • Doing the right thing. • Develop strategic plans (already discussed) • Then, develop marketing plans • Marketing implementation • Who, where, when & how? • Doing things right. • Successful implementation depends on • Company’s people • Organizational structure • Decision and reward systems • Company’s culture

28. Managing the Marketing Effort • Marketing Implementation (continued) • The company must be staffed by people with • Needed skills • Motivation • Personal characteristics • Reward system • If short-term accomplishments are rewarded more often, it will become the culture and long-term goals might be endangered. • Organizational Culture • The company’s marketing strategies must fit the values and belief systems. • Marketing should be accepted as a value of their own

29. Managing the Marketing Effort • Marketing Department • In small businesses, one person can be enough to run the whole marketing department. • But, in larger organizations; • Functional Organization • Sales manager, advertising manager, marketing research manager, customer service manager or new product manger • Geographic organization • The sales and marketing people are assigned to a specific location. • Product management organization • For each product, a separate department with manager and all functions. • Market/customer management organization • Its like product management organization, the difference is that it revolves around market needs rather than products.

30. Managing the Marketing Effort • Marketing Control • The process of measuring and evaluating the results of marketing strategies and plans and taking corrective actions to ensure that objectives are achieved. • Corrective actions – changing the course of action or even changing the goals. • Marketing Control at Two Levels • Operational level • Strategic level

31. Managing the Marketing Effort • Marketing Control (continued) • Operational level control • Checking on-going performance against the annual plan and correcting it. It includes checking sales figures, profits, costs etc. • Strategic level control • Checking whether company’s basic strategies are well-matched to its opportunities. • Due to constant change in the environment, strategies and program may go out-dated. • A good tool is marketing audit.

32. Managing the Marketing Effort • Marketing Control (continued) • Marketing Audit is • a Comprehensive • Systematic • Independent and; • Periodic examination of a company’s • Marketing Environment • Marketing Objectives • Marketing Strategies and • Marketing Organization • Marketing Mixes • Marketing productivity and profitability

33. Measuring Return on Marketing Investment (or Marketing ROI) • Marketing ROI • The net return from a marketing investment divided by the costs of the marketing investment. • The new mantra, as opposed to the blind marketing budgets, is; • Measurement and Accountability • Its hard and tough to measure.

34. Measuring Return on Marketing Investment (or Marketing ROI) • However, beyond standard performance measures; • Customer-centered measures of marketing impact • Customer acquisition, Customer retention & Customer life-time value