Chapter Two Marketing Strategy: Where Marketing Really Begins With Duane Weaver 2-1 © 2010 Pearson Education Canada OUTLINE • Strategic Planning Defined and the Process • SBU’s • Marketing Positioning – Tools: - The BCG Matrix and - The Product-Market Expansion Grid • • • • • • Partnering Strategy a& Marketing Mix Segmentation Differentiation & Positioning Managing Effort, SWOTs, & ROI A Marketing Plan 2-2 © 2010 Pearson Education Canada What Is Strategic Planning? Strategic Planning is the process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities. © 2010 Pearson Education Canada Strategic Planning and the Marketing Process Company Wide Strategic Planning Company Mission and Company Objectives Design Business Portfolio Strategies for Growth BCG Matrix Product Market Expansion Developing Customer Driven Marketing Strategy Segmentation, Targeting and Positioning Developing the Integrated Marketing Mix Product, Price, Place, Promotion 2-4 © 2010 Pearson Education Canada Company Wide Strategic Planning • Defining a Clear Company Mission – States the organization’s purpose. – Market and customer-oriented. – Provides direction to internal stakeholders. • Setting Company Objectives and Goals – The mission of the organization is translated to detailed, quantifiable objectives – The rest of the planning process is supported by these objectives 2-5 © 2010 Pearson Education Canada Mission Statements • Mission statement A statement of the organization’s purpose what it wants to accomplish in the larger environment. • It answers basic questions – – – – 2-6 What is our business? Who is the customer? What does the customer value? What should our business be? © 2010 Pearson Education Canada Defining a Market Oriented Mission A market oriented mission statement – Defines the business in terms of satisfying customer needs – Will not be too narrow or too broad – Will be in tune with the current market environment 2-7 © 2010 Pearson Education Canada Company Objectives and Goals • Goals must be sustainable and lead to growth • Corporate objectives include marketing objectives (specific, measurable, obtainable): – Invest in research and development – Improve or develop new products – Develop customer relationships 2-8 © 2010 Pearson Education Canada Strategic Business Units (SBU) • A unit of the company that has a separate mission and objectives and that can be planned independently from other company businesses. • Can be a company division, a product line within a division or sometimes a single product or brand 2-9 © 2010 Pearson Education Canada Business Portfolio • The business portfolio is the collection of businesses and products that make up the company. • The company must: – Analyze its current business portfolio or Strategic Business Units (SBUs). – Decide which SBUs should receive more, less or no investment. – Develop growth strategies for growth or downsizing and portfolio planning using tools such as the BCG matrix. © 2010 Pearson Education Canada The BCG Growth Share Matrix Rising Stars Question Marks Business strength, growth rate, cash use Defend position Cash Cows Nurture to generate cash Use cash to make into a star Dogs Fix or abandon Industry attractiveness, market share, cash generation 2-11 © 2010 Pearson Education Canada Analyze Opportunities • Product-Market Expansion Grid identifies four potential growth areas. Existing Products New Products Existing Markets Market Penetration Product Development New Markets Market Development Diversification © 2010 Pearson Education Canada in-class notes Product/Market Expansion Grid • Strategies for growth – Market penetration strategy – Market development strategy – Product development strategy – Diversification strategy • Strategies for international growth – Company must decide whether to go international, then which markets, how many, and which types to enter 2-13 © 2010 Pearson Education Canada Partners Create and Deliver Customer Value • Partnering to build customer relationships – In building profitable customer relationships companies partner with the value chain to deliver value to its customers – The value chain is the collective system of internal company departments and external business partners that together provide customer value by producing, delivering, marketing, and supporting the company’s products 2-14 © 2010 Pearson Education Canada Marketing Strategy and the Marketing Mix Mission Statement Corporate Objectives Business Objectives Marketing Objectives Marketing Strategies - The marketing logic by which the company creates customer value and achieves profitable customer relationships. Marketing Mix Strategies – guided by marketing strategies made up of factors under its control - product, price, place, and promotion. 2-15 © 2010 Pearson Education Canada Customer Driven Marketing Strategy • Market Segmentation – sub dividing the target market • Market Targeting – evaluating each segment and selecting one or more segments • Market Differentiation and Positioning – occupy a clear distinctive place in consumer’s mind 2-16 © 2010 Pearson Education Canada Market Segmentation • The process of dividing a market into distinct groups of buyers with different needs, characteristics or behaviours who might require separate products or marketing programs. • Consumers are grouped into market segments based on: • Geographic • Demographic • Psychographic • Behavioral factors (e.g.: bought here before-loyalty) 2-17 © 2010 Pearson Education Canada Market Segmentation - exercise PLEASE TAKE 5 MINUTES TO: 1. Get into your case team groups. 2. Choose a company you are familiar with as a team. 3. Identify one of the typical customers they sell to. A. Determine what form of market segmentation would work for them best to reach this type of customer (as a group/segment)? B. Be prepared to explain to the class why you think this type of segmentation is the best approach. 2-18 © 2010 Pearson Education Canada Market Differentiation and Positioning • Arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of target consumers. • Process begins with differentiating the company’s marketing offer so it gives consumers more value. 2-19 © 2010 Pearson Education Canada The Marketing Mix The set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market. 2-20 © 2010 Pearson Education Canada Creating the Integrated Marketing Mix • Product – offers the right product, service or experience. • Price – controls perceived value and satisfaction. • Place – allows customers’ easy access to product and support. • Promotion – communicates the offer and the value proposition. 2-21 © 2010 Pearson Education Canada The Four Ps and the Four Cs • PRODUCT provides CUSTOMER SOLUTION • PRICE represents CUSTOMER COST • PLACE provides CONVENIENCE • PROMOTION is two-way COMMUNICATION 2-22 © 2010 Pearson Education Canada Managing the Marketing Effort • Marketing Analysis – A detailed description and analysis of the current situation facing the company (e.g.: SWOT) • Marketing Planning – a detailed plan for each business unit • Marketing Implementation – turning plans into action • Marketing Department Organization – • • • • • Functional organizations Product organizations Market based organizations Geographic organizations Combinational organizations • Marketing Control – evaluating the results 2-23 © 2010 Pearson Education Canada Measuring and Managing Return on Marketing Investment Can you PROVE it will or it did work? • Return on Marketing Investment – The return on investment that can be calculated and attributed directly to the efforts of marketing – Calculated by dividing net return from marketing by the cost of marketing investment – Measures the profits generated by investments in marketing activities 2-24 © 2010 Pearson Education Canada A Marketing Plan Outline • Executive summary. • Current marketing situation. – – – – • • • • • • Market description. Product review. Competitive review. Review of distribution. Threat and opportunity analysis (SWOT). Objectives and issues. Marketing strategy. Action program. Budgets. Controls. © 2010 Pearson Education Canada Thanks! © 2010 Pearson Education Canada