Lecture 2 Companyh and Marketing Strategy

P ro f . B a i X u a n

Southwestern University of Finance and Economics

 Review of Last Week Lecture
Marketing is the process to
Create value for customers Build customer Capture value
relationships from customers

• Segmentation,
• Needs, wants & targeting, • Product • Customer
demands perceived value
• Production, • Price
• Market offerings product, selling, • Satisfaction
• Promotion
• Market myopia marketing,
societal • Place
marketing
concept

2
Learning Objectives
• Explain company-wide strategic planning and its four
steps.
• Discuss how to design business portfolios and develop
growth strategies.
• Explain marketing’s role in strategic planning and how
marketing works with its partners to create and deliver
customer value.
• Marketing Analysis and Planning
1. Company-Wide Strategic
Planning: Defining Marketing’s Role

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Types of Planning

Criteria

Strategic Operational
Breadth
Long term Short term
Time
Directional Specific
Specificity
Single use Standing
Frequency
Company-Wide Strategic Planning:
Defining Marketing’s Role
Strategic Planning
• is the process of developing and maintaining a strategic fit
between the organization’s goals and capabilities and its
changing marketing opportunities

Although these may not be a marketer’s job,

he/she needs to understand the company’s Fig. 2.1
director in order to develop the appropriate Steps in strategic planning
marketing strategies to fit the overall goal
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1.1. Defining the Company Mission
Mission
• is the organization’s purpose, what it wants to
accomplish in the larger environment.

Table 2.1 Characteristics of a good mission statement

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1.1. Defining the Company Mission

Key questions to ask in defining the corporate mission:

A. What is our business?

B. Who is the customer?

C. What is of value to the customer?

D. What will our business be?

E. What should our business be?

“企业的事业是什么？”“企业要成为什么？”
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Mission Statements

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1.1. Defining the Company Mission

Mission Statement Cases:

Country Garden 碧桂园：希望社会因我们的存在而变得更加美好。
Tiktok 抖音：记录美好生活。
 1.1. Defining the Company Mission
➢ Characteristics of Good Mission Statements
1. They focus on a limited number of goals.
• “We want to produce the highest-quality products, offer the most service, achieve the widest
distribution, and sell at the lowest prices”.

2. They stress the company's major policies and values.

• Employees act consistently on important issues.

3. They take a long-term view.

• Management should change the mission only when it ceases to be relevant.

4. They are as short, memorable, and meaningful as possible.

• “To organize the world's information and make it universally accessible and useful.”

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1.2. Setting Company Objectives and Goals
Setting Company Objectives and Goals
• The company’s mission needs to be turned into detailed
supporting objectives for each level of management.
• Marketing strategies and programs must be developed to
support these marketing objectives.

Company
Business Marketing
Mission
Objectives Objectives
“To be the
“To expand 10 “To increase 10%
biggest Travel
new shops in HK market share in a
Agency in Hong
in 5 years year”
Kong”
1.3. Designing the Business Portfolio
The Business Portfolio
• is the collection of businesses and products that make up the
company
• A strategic business unit (SBU) is a unit of the company that
has a separate mission and objectives and that can be
planned independently from other company businesses.

E.g. is made up of SBUs

1.3. Designing the Business Portfolio
The Business Portfolio
• Steps in business portfolio planning:
▫ Analyze the firm’s current business portfolio
▫ Develop strategies for growth and downsizing to shape the
future portfolio
• The purpose of portfolio analysis is to direct resources
toward more profitable businesses while phasing out or
dropping weaker ones.
Source: http://thewaltdisneycompany.com/disney-companies
 Case discussion
What food do you like best in McDonald's?
What do you think McDonald's least
profitable and the most profitable SBU?
1.3. Designing the Business Portfolio
Designing the Business Portfolio
• Portfolio analysis is the process to

Identify key businesses (strategic business

units, or SBUs) that make up the company

Assess the attractiveness of its various

SBUs

Decide how much support each SBU

deserves
1.3. Designing the Business Portfolio
The Boston Consulting Group (BCG) Growth-Share Matrix

Star: Question marks:

requiring heavy requiring a lot of
investment to finance cash to hold
rapid growth. Will their share.
eventually turn into
cash cows.
Dogs:
Cash cow: may generate
established and enough cash to
successful SBUs maintain themselves
requiring less but do not promise
investment to maintain to be large sources
market share of cash.
Assessing Growth Opportunities

◆ The Boston Consulting Group Approach（BCG）

➢ Once the company has classified its SBUs, the company must determine what role each
will play in the future.

• Expand the market share, and invest more in order to build its share.
1 Build • Usually for question marks.

• Invest just enough to hold the SBU’s share at the current level.
2 Hold • Usually for stars and cash cows.

• Milking its short-term cash flow regardless of the long-term effect.

3 Harvest • Usually for not-promising cash cows and profitable question marks and dogs.

• Selling the SBU out or phasing it out and using the resources elsewhere.
4 Divest • Usually for question marks and dogs.
Can be difficult, time-consuming,
& costly to implement

Difficult to define SBU’s &

measure market share/growth

Focus on current businesses, but

not future planning

Can lead to unwise expansion or

diversification
Group Assignment

• Evaluate the current business portfolios of Tencent/Kangshifu using the

Boston Consulting Group Approach.
• Identify representative businesses in each category of the growth-share
matrix.
• For each representative SBU, provide suggestions for its strategic plans.
 1.3. Designing the Business Portfolio
- Developing Growth Strategies
• The Strategic Planning Gap
• A. Intensive growth
• Opportunities for growth within current
businesses.

• B. Integrative growth
• Build or acquire businesses related to current
businesses.

• C. Diversification growth
• Add attractive unrelated businesses

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 A. Intensive Growth

• Detecting new intensive-growth opportunities

(1) Market-penetration
• Making more sales to current customers without changing Product-market expansion grid
products
• Acquire competitor’s customers
• Acquire new customers

(2) Market-development
• Developing new markets for current products
• Identify new market segmentation
• Expand the market scope

(3) Product-development
• Offer modified or new products to current market
• Identify new product categories

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 A. Intensive Growth --- Case of Starbucks

Market-
penetration

Affordable instant coffee

Market-
development

Starbucks
Product- enters the ice-
development cream market.

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39 © Pearson Education South Asia Pte Ltd 2013. All rights reserved
 B. Integrative Growth

• A business can increase sales and profits through backward, forward, or horizontal
integration within its industry.

• Backward integration
• Acquire one or more suppliers to gain more control or generate more profit

• Forward integration
• Acquire some wholesalers or retailers

• Horizontal integration
• Acquire one or more competitors

41 © Pearson Education South Asia Pte Ltd 2013. All rights reserved
 C. Diversification Growth

• Diversification growth makes sense when good opportunities exist outside the
present businesses

• What are the conditions indicating diversification opportunity?

• the industry is highly attractive
• the company has the right mix of business strengths to succeed.

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 C. Diversification Growth

• Several types of diversification are possible: Animated film producer

• New products that have technological or marketing synergies with existing
product lines. household electrical appliances
• New products unrelated to the current industry but appeal to current customers.
• New businesses unrelated.

Broadcast industry with Disney Channel Toy manufacture

Vacation and resort properties

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 Diversification Growth Strategy—
Case of Starbucks

Starbucks diversification strategy

• Starbucks brand ice cream
• Starbucks has also venture into the beer business.
• To target at the health-conscious market, Starbucks offer Refreshers beverages made with
real fruit juice and fruit pieces.

40 © Pearson Education South Asia Pte Ltd 2013. All rights reserved
Downsizing
• Reduces the business portfolio by eliminating products or
business units that are not profitable or that no longer fit the
company’s overall strategy
• Reasons for downsizing:
▫ Rapid growth of the company
▫ Lack of experience in a market
▫ Change in market environment
▫ Decline of a particular product
2. Marketing Analysis & Planning

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2.1. Managing the Marketing Effort
The Marketing Plan
• 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.
Market Segmentation and
Market Targeting
Market segmentation

• Dividing a market into distinct groups of buyers who have

different needs, characteristics, or behaviors, and who
might require separate products or marketing programs

Market segment

• Group of consumers who respond in a similar way to a

given set of marketing efforts

Market targeting

• Evaluating each market segment’s attractiveness and

selecting one or more segments to enter
Positioning
• Arranging for a product to occupy a clear, distinctive, and
desirable place relative to competing products in the minds
of target consumers
• Begins with differentiation
▫ Differentiation: Differentiating the market offering to create
superior customer value

Nutrition Silky Hair Scurf-free

2.2. Marketing Analysis & Planning
SWOT Analysis
• A summary of the ideas developed in the situation analysis, which
allows managers to focus clearly on the meaningful
strengths (S) and weaknesses (W) in the firm’s internal environment
and
opportunities (O) and threats (T) coming from outside the firm (the
external environment).
Some examples of strengths: Some examples of weaknesses:
- patents - no innovations / poor technology
- product innovations - unknown / weak brand name
- strong brand names - poor product / services
- High customer satisfaction - high cost structure
- cost advantages - lack of resources
- exclusive access to resources - lack of access to key distribution channels
- strong distribution networks
SWOT
Analysis

Some examples of opportunities: Some examples of threats:

- an unfulfilled customer need - consumers shift away from firm's products
- arrival of new technologies (e.g. internet) - change in consumers buying power
- removal of international trade barriers - new trade regulations
- a new international market (e.g. China) - a new competitor
- a market with weak competitor - a new, innovative product or service from
competitor
- competitors have better access to
resources or distribution channels
2.2. Marketing Analysis & Planning
Objectives
• are statements that describe results to be
achieved. They should be “SMART”.
Are these objectives “smart” enough?
Specific Measurable Achievable Realistic Timed

1. I want to be a successful person.

2. To be a market leader

3. Before I graduate from SWUFE, I

want to get a boyfriend who is taller
than me.

4. To achieve 10% market share in

China market by 2018

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2.3. Marketing Strategy and the
Marketing Mix
for achieving marketing objectives

Positioning
Targeting

Segmentation

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The Major Activities in a customer-driven
Marketing Strategy and the Marketing Mix
Ch.18 Competitor

Ch.2 Company &

Marketing Strategy

Ch.8-17 4Ps

Ch.5 Consumer
Ch.7 STP

Ch.3 The Marketing

Environment
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Contents of a Marketing Plan
Section Purpose
Executive summary Brief summary of the main goals and
recommendations
Current marketing Gives the market description and the
situation product, competition, and
distribution review
Threats and Helps management to anticipate
opportunities important positive or negative
analysis developments
Objectives and issues States and discusses marketing
objectives and key issues
Contents of a Marketing Plan
Section Purpose
Marketing Outlines the broad marketing logic and the specifics of
strategy target markets, positioning, marketing expenditure levels,
and strategies for each marketing mix element

Action Spells out how marketing strategies will be turned into

programs specific action programs
Budgets Details a supporting marketing budget that is a projected
profit-and-loss statement
Controls Outlines the controls that will be used to monitor progress,
allow management to review implementation
results, and spot products that are not meeting their goals
 Case Study

◼ Combining personal shopping experiences and case studies, what are

the differences in STP strategies between the three companies,
Pinduoduo, JD.com, and Taobao?

◼ What is social e-commerce? Why does Pinduoduo use this model?

What fundamental benefits does this bring to Pinduoduo?
◼ What are the key factors for Pinduoduo's success?
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Thank you very much !