Company and Marketing Strategy

The company without a strategy is willing to try anything. Michael Porter

If you know the enemy and know yourself you need not fear the results of a hundred battles. Sun Tzu

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Company and Marketing StrategyCompanywide Strategic Planning: Defining Marketings RoleDesigning the Business PortfolioPlanning Marketing: Partnering to Build Customer RelationshipsMarketing Strategy and the Marketing MixManaging the Marketing EffortMeasuring and Managing Return on Marketing Investment

Topic Outline

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Originally known for films, animation, theme parks. Satisfying the customer is everyones job.Mission: make people happy & make a dream come true!Disney has grown via diversification.

Case: Disney What are its challenges?

Discussion

Has Disney grown too large? Will consumers accept new Disney businesses?

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Strategic (Marketing) PlanningCompanies should look ahead and develop long-term strategies to meet changing conditions in their industries and ensure long-term survival

The task of selecting an overall company strategy for long-run survival and growth strategic planningMarketings key role in strategic planning

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Formal PlanningBenefits of formal plans:Encouraging management to think ahead systematically.Forcing managers to clarify objectives and policies.Better coordination of company efforts.Clearer performance standards for control.Helping the company to anticipate and respond quickly to environmental changes and sudden developments.

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What is Strategic Planning?Strategic Planning defined:The process of developing and maintaining a strategic fit between the organizations resources, goals and capabilities and its changing market opportunities.

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Strategic PlanningIt sets the the stage for the rest of the planning in the firmThe aim to shape and reshape companys businesses and products in order to reach to targeted profits and growth.Top-management job!Part of a broader process: strategic management

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Strategic Planning, Implementation, and Control ProcessPlanning

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This type of business plan involves adapting the firm to take advantage of opportunities in its constantly changing environment.Annual planMarketing planStrategic planOperational plan

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Strategic PlanningOrganizational levels subject to strategic planning:Corporate levelDivision levelBusiness unit levelProduct level

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Steps in Strategic PlanningDefining theCompanyMissionSetting CompanyObjectivesand GoalsDesigningthe BusinessPortfolioPlanning marketingand other functionalstrategiesCorporate LevelBusiness unit, product,and marketlevel

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Strategic PlanningThe mission statement is the organizations purpose, what it wants to accomplish in the larger environment

Market-oriented mission statement defines the business in terms of satisfying basic customer needs

Defining a Market-Oriented Mission

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Strategic PlanningThe mission statement is clear at the beginning

Fundamental questions:What is our business?Who is the customer?What do consumers value?What should our business be?

Defining a Market-Oriented Mission

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The organization should base its mission statement on its ________.profitable goalscustomers welfareproducts valuedistinctive competencies

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Strategic PlanningEach companys mission is shaped by: HistoryCurrent preferences of the owners and the managementThe market environmentResourcesDistinctive competencies

Defining a Market-Oriented Mission

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Strategic PlanningMarket-oriented definition of a business better than product or technological definition A market-oriented mission statement defines the business in terms of satisfying basic customer needs

Defining a Market-Oriented Mission

Mission statement must avoid being too narrow or too broad

Mission statement to be guided by a vision - an almost impossible dream that provides a direction for the company for the next 10 to 20 years

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Characteristics of a Good Mission Statement:

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Strategic Planning

CompanyProduct-Oriented DefinitionMarket-Oriented DefinitionAmazon.comWe sell books, videos, CDs, toys, consumer electronics and other products onlineWe make the Internet buying experience fast, easy, and enjoyable were the place where you can find and discover anything you want to buy onlineDisneyWe run theme parksWe create fantasiesa place where dreams come true and America still works the way its supposed toNikeWe sell athletic shoes and apparelWe bring inspiration and innovation to every athlete* in the world (* if you have a body, you are an athlete)

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Strategic PlanningExamples of Market-Oriented Missions

MissionAs a higher education and research institution dedicated to the advancement of basic and applied sciences, our mission is to educate the technological leaders and entrepreneurs of the future in a rich intellectual environment sensitive to both local and global issues.VisionITUs vision is to become a national and international focal point of pioneering studies in the fields of science, technology, social sciences, and the arts.

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Strategic PlanningSetting Company Objectives and GoalsCompanys mission needs to be turned into detailed, supporting objectives for each level of management Mission hierarchy of objectives

As specific as possibleMarketing strategies must be developed to support these marketing objectives

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Strategic PlanningSetting Company Objectives and Goals

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Hierarchy of Objectives

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Strategic PlanningThe business portfolio collection of businesses and products that make up the companyDesigning the business portfolio nvolves 2 main steps:

Analyzing the current business portfolio and decide which business should receive more, less or no investmentShaping the future portfolio by developing growth strategies to add new products/businesses to the current portfolioDesigning the Business Portfolio

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Strategic PlanningPortfolio Analysis to identify and evaluate the various businesses that make up the companyIdentifying key businesses Strategic Business Units - SBU SBU: unit of the company that has a separate mission and objectives that can be planned independently from other company businessesCompany divisionProduct line within a divisionSingle product or brand

Analyzing the Current Business Portfolio

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Strategic PlanningAnalyzing the Current Business Portfolio

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Boston Consulting Groups Growth-Share Matrix

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Question Marks

High growth, low share Build into Stars or phase out Require cash to hold market share

Stars

High growth & share Profit potential May need heavy investment to grow

Cash Cows

Low growth, high share Established, successful SBUsProduce cash

Dogs

Low growth & share Low profit potential

Market Growth Rate Low High

Boston Consulting Groups Growth-Share Matrix? Relative Market ShareHigh Low

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BuildIncrease market shareWorks well for question marksHoldPreserve market shareGood for cash cow

HarvestIncreases short-term cash flowGood for weak cash cows, question marks and dogsDivestSell or liquidateGood for dogs and question marks

After the classification of its SBUs to determine what role each will play in the future

Analyzing the Current Business Portfolio

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Can be difficult, time-consuming, & costly to implement

Difficulty in defining SBUs & measuring market share and growth

Focus on current businesses; provide little advice for future planning

Can Lead to Unwise Expansion or Diversification

Problems with Matrix Approaches

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Strategic PlanningProduct/market expansion grid is a tool for identifying company growth opportunities through market penetration, market development, product development, or diversification

Developing Strategies for Growth and Downsizing

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Growth Strategies - Product / Market Expansion Grid (Ansoff)4. Diversification

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Growth StrategiesMarket penetrationExisting productsProduct developmentMarket developmentDiversifica-tionMaking more sales to current customers without changing its products. Add new stores in current market areas, improve advertising, prices, service or store design.

Existing marketsNew marketsNew products

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Growth StrategiesMarket penetrationExisting productsProduct developmentMarket developmentDiversifica-tionDevelop new markets for current productsIdentify new demographic or geographic marketsDomestic or international

Existing marketsNew marketsNew products

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Growth StrategiesMarket penetrationExisting productsProduct developmentMarket developmentDiversifica-tionOffering modified or new products to current markets. New styles, flavors, colors, or modified products

Existing marketsNew marketsNew products

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Growth StrategiesMarket penetrationExisting productsProduct developmentMarket developmentDiversifica-tionNew products for new markets. Start up or buy new businesses

Existing marketsNew marketsNew products

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The Business Portfolio

Which strategy is this?

Market penetration Market development Product development Diversification

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Strategic PlanningDownsizing is the reduction of the business portfolio by eliminating products or business units that are not profitable or that no longer fit the companys overall strategy

Some reasons that a company might want to abandon products or markets:The market environment might change (making some of the companys product or markets less profitable e.g. economic recession)The company may have grown too fast or entered areas where it lacks experienceSome of the companys products or business units age and die.

Developing Strategies for Growth and Downsizing

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Functional PlanningThe companys overall strategic plan establishes what kind of businesses the company will be in future & its objectives for each business.More detailed planning must take place within each business unit

The major functional departments in each unit must work together to accomplish strategic objectivesMarketing plays a key role

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Marketings Key Role in Strategic Planning Provide a guiding philosophy Identify attractive opportunities Design effective strategies Build strong value chains Form superior value delivery networks

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Marketings Key Role: Partner Relationship Management

Partner relationship management working closely with partners in other departments (to form an effective value chain that serves the customer), and

partnering effectively with other companies in the marketing system for a superior value delivery network to jointly bring greater value to customers

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Marketings Key Role: Partner Relationship ManagementValue chain is a series of departments that carry out value-creating activities to design, produce, market, deliver, and support a firms productsThe companys overall success depends also on how well the activities of various dept. are coordinatedDepartmental relations are full of conflicts!

Marketers must find ways to get all dept. to think consumer and to develop a smoothly functioning value chain

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Marketings Key Role: Partner Relationship ManagementThe company needs to look beyond its own value chain in order to create customer value:Value-delivery network network made up of the company, suppliers, distributors, and customers who partner with each other to improve the performance of the entire sytem

Competition today takes place between the entire value delivery networks!

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Business Unit Strategic Planning

Sheet1

External Analysis

(Opport.&Threat)

MissionSWOTSettingSelectingDevelopingImplemen-Feedback &

StatementANALYSISObjectivesStrategyProgram.tationControl

Internal Analysis

(Streng.&Weakness)

Sheet2

Sheet3

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Business Unit Strategic PlanningBusiness Mission each SBU needs to define its specific mission within the broader company missionExternal Environment Analysis to build a MIS to monitor:Key external macroenvironment forcesSignificant microenvironment actors Trends and important developments to identify the associated opportunities and threats

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Business Unit Strategic PlanningInternal Environment Analysis Each business needs to evaluate its internal strengths and weaknesses periodicallyChecklist for Performing Strengths/Weaknesses AnalysisManagement or an outside consultant reviews the businesss marketing, financial, manufacturing and organizational competencies and rates each factor as strength or weaknessSWOT ANALYSIS

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Business Unit Strategic PlanningGoal Formulation (Goals objectives that are specific with respect to magnitude and time)Turning objectives into measurable goals facilitates management planning, implementation and controlMost businesses pursue a mix of objectives Objectives must be arranged hieararchically; from the most to the least importantshould be stated quantitatively whenever possible (e.g .increase the ROI to 15% within two years)should be realisticshould be consistent

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Business Unit Strategic PlanningStrategy FormulationStrategy A game plan for how to reach goals (while goals indicating what a business unit wants to achieve)3 general type of strategy:Cost Leadership to achieve the lowest production and distribution costs / to price lower than its competitors and win a large market shareDifferentiation to concentrate on achieving performance in an important customer benefit area valued by a large part of the marketFocus on one or more narrow market segments rather than going after a large market

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The Marketing ProcessPlanning at the corporate, division and business levels integral part of the marketing process

Marketing Process (definition)

consists of analyzing mktg opportunities, selecting target markets, developing the mktg mix, and managing the mktg effort

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CompetitorsMarketingIntermediariesPublicsSuppliersDemographic-EconomicEnvironmentTechnological-NaturalEnvironmentPolitical-LegalEnvironmentSocial-CulturalEnvironment

The Marketing Process

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The Marketing Process (cont.)

Analyzing marketing opportunitiesResearching and selecting target marketsDesigning marketing strategiesPlanning marketing programsOrganizing, implementing, controlling the marketing effort

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The Marketing Process (cont.)Analyzing marketing opportunitiesA reliable marketing and information system To evaluate consumer wants and behaviorTo assess market sizeTo gather information about the marketing environmentTo understand consumer markets, business markets and their behaviorsTo monitor competitors

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The Marketing Process (cont.)Researching and selecting target markets

To divide the market into specific segments To evaluate each segment and choose market segments to be served bestTo develop a clear position relative to competitors in the minds of consumers

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Customers grouped by:GeographicDemographicPsychographicBehavioral

Market segment is a groups of consumers who respond in similar ways to marketing efforts.

Market SegmentationTarget marketingMarket Positioning

Strategy

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Evaluation of each segments attractivenessSelection of segments with greatest long-term profitabilityA company can choose one or several segments to target

StrategyMarket SegmentationTarget marketingMarket Positioning

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The place the product occupies in the consumers mindProducts are positioned relative to competing productsMarketers look for clear, distinctive and desirable place in positioning

StrategyMarket SegmentationTarget marketingMarket Positioning

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The Marketing Process (cont.)Designing marketing strategies for competitive advantage

Market leader strategiesMarket challenger strategiesMarket follower strategiesMarket nicher strategies

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The Marketing Process (cont.)Planning marketing programsDecisions on:Marketing expendituresMarketing mix 4PsMarketing budget allocation

The marketing mix is the set of controllable tactical marketing toolsproduct, price, place, and promotionthat the firm blends to produce the response it wants in the target market

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The Marketing Mix

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The Marketing Process (cont.)

Managing the marketing effort

Marketing AnalysisMarketing PlanningMarketing ImplementationMarketing Control

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Managing the Marketing EffortThe Marketing Process (cont.)

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Finding opportunities : the company must analyzeits market & mktg environmentcompany strengths & weaknessescurrent and possible mktg actions

Avoiding threatsUnderstanding strengthsAnalyzing weaknesses

AnalysisPlanningImplementationControl

Managing the Marketing EffortMarketing Functions

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Marketing Analysis SWOT Analysis

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Marketing planning involves deciding on marketing strategies that will help the company reach its strategic objectivesMarketing plan 2 levels:Strategic mktg plan develops the broad mktg objectives and strategy based on an analysis of the current market situation and opportunitiesTactical mktg plan outlines specific mktg tactics, including advertising, merchandising, pricing, channels, service, etc.

Managing the Marketing EffortMarketing FunctionsAnalysisPlanningImplementationControl

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Managing the Marketing EffortMarket PlanningParts of a Marketing Plan

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The process that turns mktg plans into mktg actions to accomplish strategic mktg objectivesSuccessful implementation depends on how well the company blends its people, organizational structure, decision and reward system, and company culture into a cohesive action plan that supports its strategies

Managing the Marketing EffortMarketing FunctionsAnalysisPlanningImplementationControl

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Managing the Marketing EffortMarketing Department Organization

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Measurement and evaluation of the results of marketing strategiesChecking for differences between goals and performanceTaking of corrective action as needed

Managing the Marketing EffortMarketing FunctionsAnalysisPlanningImplementationControl

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Managing the Marketing EffortReturn on Marketing Investment (Marketing ROI)Return on marketing investment (Marketing ROI) is the net return from a marketing investment divided by the costs of the marketing investment. Marketing ROI provides a measurement of the profits generated by investments in marketing activities.

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The series of departments that add value-creating activities to the design, product/service, and market and support a companys product(s) is called ________.1. marketing mix2. positioning3. value chain4. SWOT

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The network comprised of the company, venders, distributors, and customers who partner with each other to improve the performance of the entire system is called _________.value-delivery networkpositioningmarket conceptmarket penetration

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The set of controllable, tactical marketing tools that the firm blends together to produce its response to the wants of its target market are called its ________.marketing arsenalmarketing mixmarketing positionindependent marketing options

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The following four stepsdefining the companys mission, setting objectives, designing a portfolio, and developing plansis called ________.strategic planningpositioningmarket penetrationdifferentiation

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