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Chapter Two

Chapter Two. Company and Marketing Strategy. companywide Strategic Planning: Defining Marketing Role. Strategic Planning The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities.

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Chapter Two

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  1. Chapter Two Company and Marketing Strategy

  2. companywide Strategic Planning: Defining Marketing Role Strategic Planning The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities. Companies usually prepare annual plans, long-term plans, and strategic plans.

  3. companywide Strategic Planning: Defining Marketing Role The annual and long-term plans deal with the company current business and how to keep them going. While, strategic plan involves adapting the firm to take advantage of opportunities in its constantly changing environment.

  4. Steps in the Strategic Planning Process

  5. Steps in the Strategic Planning Process Defining the company Mission A statement of the organization’s purpose- what it wants to accomplish in the larger environment is called mission. A simple mission statement begins with the following questions: what is our business? Who is our customer? What should our business be?

  6. Steps in the Strategic Planning Process Mission statements should be market oriented rather than product oriented and defined in terms of satisfying basic customer needs. Products and technology eventually become outdated, but basic market needs may last forever. Nokia’s mission isn’t simply to sell mobile phone. Its mission is to “connect people”.

  7. Steps in the Strategic Planning Process Setting the Company Objective and Goals The company needs to turn its mission into detailed supporting objectives for each level of management. Each manager should have objectives and be responsible for reaching them.

  8. Steps in the Strategic Planning Process Designing the Business Portfolio Business portfolio The collection of businesses and products that make up a company. The best business portfolio is the one that best fits the company’s strengths and weaknesses to opportunities in the environment. Business portfolio planning involves two steps. First, the company must analyze its

  9. Steps in the Strategic Planning Process Current business portfolio and decide which businesses should receive more, less, or no investment. Second, it must shape the future portfolio by developing strategies for growth and downsizing. (1) Analyzing the Current Business Portfolio Business portfolio analysis The process by which management evaluates the products and businesses that make up the company.

  10. Steps in the Strategic Planning Process Management first step is to identify the key businesses that make up the company, called strategic business unit (SBUs). An SBU can be a company division, a product line within a division, or sometimes a single product or brand. The Boston Consulting Group Approach: Using Boston Consulting Group (BCG)

  11. Steps in the Strategic Planning Process Approach, a company classifies all its SBUs according to the growth-share matrix.

  12. Steps in the Strategic Planning Process On the vertical axis, market growth rate provides a measure of market attractiveness. On the horizontal axis, relative market share serves as a measure of company strength in the market. The growth-share matrix defines four types of SBUs: Stars: stars are high-growth, high-share businesses or products. They often need heavy investments to finance their rapid growth. Eventually their growth will slow down, and they will turn into cash cows.

  13. Steps in the Strategic Planning Process Cash Cows: cash cows are low-growth, high share businesses or products. These established and successful SBUs need less investment to hold their market share. Thus, they produce a lot of cash that the company uses to pay its bills and support other SBUs that need investment. Question marks: question marks are low-share business units in high-growth markets. They require a lot of cash to hold their share.

  14. Steps in the Strategic Planning Process Management has to think hard about which question marks it should try to build into stars and which should be phased out. Dogs: dogs are low-growth, low-share business and products. They may generate enough cash to maintain themselves but do not promise to be large sources of cash.

  15. Steps in the Strategic Planning Process (2) Analyze Future Business Portfolio: Developing Strategies for Growth and Downsizing: Designing business portfolio also involves finding businesses and products the company should consider in the future. One useful device for identifying growth opportunities is the product/market expansion grid.

  16. Steps in the Strategic Planning Process

  17. Steps in the Strategic Planning Process Market Penetration: A strategy for a company growth by increasing sales of current products to current market segments without changing the product or market. Market Development: A strategy for a company growth by identifying and developing new market segments for current company product.

  18. Steps in the Strategic Planning Process Product Development: A strategy for a company growth by offering modified or new products to current market segments. Diversification: A strategy for a company growth by offering new products to the new market segments.

  19. Steps in the Strategic Planning Process Downsizing: A strategy for a company to reduce the business portfolio by eliminating products of business units that are not profitable or that no longer fit the company’s overall strategy.

  20. Steps in the Strategic Planning Process Planning Marketing: partnering to build Customer Relationships Partnering with other Company Departments Each company department can be thought of as a link in the company’s value chain. That is, each department carries out value-creating activities to design, produce, market, deliver, and support the firm’s product.

  21. Steps in the Strategic Planning Process Partnering with Others in the Marketing System In its quest to create customer value, the firm needs to look beyond its own value chain and into the value chains of its suppliers, distributers, and, ultimately, its customer. This is also called value delivery network.

  22. Marketing Strategy and the Marketing Mix

  23. Marketing Strategy and the Marketing Mix Customer-Driven Marketing Strategy Marketing Strategy: The marketing logic by which the business unit hopes to create customer value and achieve profitable customer relationships. Market Segmentation  Dividing a broad target market into subsets of consumers who have common needs and priorities and then designing and implementing strategies to target them.

  24. Marketing Strategy and the Marketing Mix Market Targeting The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter. Market Positioning Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.

  25. Marketing Strategy and the Marketing Mix Differentiation is the process of distinguishing a product or service from others, to make it more attractive to a particular target market. This involves differentiating it from competitors' products as well as a firm's own products.

  26. Marketing Strategy and the Marketing Mix Developing an Integrated Marketing Mix Marketing Mix A set of marketing tools- products, price, place, and promotion. Products means the combination good and services the company offer to the target market. Price is the amount of money customers must pay to obtain the product.

  27. Marketing Strategy and the Marketing Mix Place includes company activities that make the product available to target consumers. Promotion means activities that communicate the merits of the product and persuade target customers to buy it.

  28. Marketing Strategy and the Marketing Mix

  29. Managing the Marketing Effort Managing the marketing process requires the four marketing management function.

  30. Managing the Marketing Effort Marketing Analysis Managing the marketing function begins with the complete analysis of the company situation. The marketer should conduct a SWOT analysis, by which it evaluates the company’s overall strength (S), weaknesses (W), opportunities (O), and threats (T).

  31. Managing the Marketing Effort

  32. Managing the Marketing Effort Marketing Planning Marketing planning involves deciding on marketing strategies that will help the company attain its overall strategic objectives. A detailed marketing plan is needed for each business, product, or brand. Marketing Implementation The process that turns marketing strategies and plan into actions in order to achieve desired marketing objective.

  33. Managing the Marketing Effort Marketing Control The process of measuring and evaluating the results of marketing strategies and plans and taking corrective action to ensure that objectives are achieved.

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