Principles of Marketing
Seventeenth Edition
Chapter 2
Partnering to Build Customer
Engagement, Value, and Relationships
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Learning Objectives
2-1 Explain company-wide strategic planning and its four steps.
2-2 Discuss how to design business portfolios and develop growth strategies.
2-3 Explain marketing’s role in strategic planning and how marketing works with
its partners to create and deliver customer value.
2-4 Describe the elements of a customer value-driven marketing strategy and
mix, and the forces that influence it.
2-5 List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing
marketing return on investment.
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Learning Objective 1
Explain company-wide strategic planning and its four steps.
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Company-Wide 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.
Companies usually prepare annual plans, long-range plans, and strategic
plans.
The annual and long-range plans deal with the company’s current
businesses and how to keep them going.
In contrast, the strategic plan involves adapting the firm to take advantage
of opportunities in its constantly changing environment.
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Company-Wide Strategic Planning
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Company-Wide Strategic Planning
The mission statement is the organization’s purpose; what
it wants to accomplish in the larger environment.
Some companies define their missions myopically in
product or technology terms (“We make and sell furniture”
or “We are a chemical-processing firm”).
But mission statements should be market oriented and
defined in terms of satisfying basic customer needs
Microsoft’s mission isn’t to create the world’s best software,
technologies, and devices. It’s to “empower every person
and every organization on the planet to achieve more.”
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Product- versus Market-Oriented
Business Definitions
Company Product-Oriented Definition Market-Oriented Definition
Facebook We are an online social network We connect people around the
world and help them share
important moments in their lives
Home Depot We sell tools and home repair We empower consumers to
and improvement items. achieve the homes of their
dream
Walmart We run discount stores. We deliver low prices every day
and give ordinary folks the
chance to buy the same things
as rich people. “Save Money.
Live Better.”
Learning Objective 2
Discuss how to design business portfolios and develop growth strategies.
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Designing The Business Portfolio
The business portfolio is the collection
of businesses and products that make
up the company.
Portfolio analysis is a major activity in strategic planning whereby
management evaluates the products and businesses that make up the
company.
growth-share matrix A portfolio-planning method that evaluates a
company’s SBUs in terms of market growth rate and relative
market share.
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Designing The Business Portfolio
Strategic business units can be a
• Company division
• Product line within a division
• Single product or brand
• The Boston Consulting Group Approach Using the now-
classic Boston Consulting Group (BCG) approach, a company
classifies all its SBUs according to the growth-share matrix, as
shown in Figure 2.2. On the vertical axis, market growth rate
provides a measure of market attractiveness
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Designing The Business Portfolio
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The growth-share matrix defines four types of SBUs
1. Stars. Stars are
- high-growth, high-share businesses or products.
- They need heavy investments. to finance their rapid growth
2. Cash cows. Cash cows are
- low-growth, high-share businesses or products. And established and successful SBUs
- need less investment to hold their market share.
3. Question marks. are
- low-share business units in high-growth markets.
- They require a lot of cash to hold their share, let alone increase it.
- Management has to think hard about which question marks it to try to build into stars
4. Dogs. Dogs are
- low-growth, low-share businesses and products.
- They may generate enough cash to maintain themselves but do not promise to be large
sources of cash
Designing The Business Portfolio
Problems with Matrix Approaches
•Difficulty in defining SBUs and measuring market
share
and growth
•Time consuming
•Expensive
•Focus on current businesses, not future planning
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Designing The Business Portfolio
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Designing The Business Portfolio
Developing Strategies for Growth and Downsizing
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Designing The Business Portfolio
Developing Strategies for Growth and Downsizing
Downsizing is when a company must prune, harvest, or divest businesses
that are unprofitable or that no longer fit the strategy.
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Learning Objective 3
Explain marketing’s role in strategic planning and how marketing works with its
partners to create and deliver customer value.
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Planning Marketing: Partnering to Build
Customer Relationships (1 of 3)
Partnering with Other Company Departments
Value chain is a series of departments that carry out value creating activities
to design, produce, market, deliver, and support a firm’s products.
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Planning Marketing: Partnering to Build
Customer Relationships (2 of 3)
Partnering with Other Company Departments
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Planning Marketing: Partnering to Build Customer
Relationships (3 of 3)
Partnering with Others in the Marketing System
Value delivery network is made up of the company, suppliers, distributors,
and ultimately customers who partner with each other to improve
performance of the entire system.
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Learning Objective 4
Describe the elements of a customer value-driven marketing strategy and mix,
and the forces that influence it.
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Marketing Strategy and the Marketing Mix
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Marketing Strategy and the Marketing Mix
Customer Value-Driven Marketing Strategy
Marketing strategy is the marketing logic by which the company hopes to
create customer value and achieve profitable customer relationships.
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Marketing Strategy and the Marketing Mix
Customer Value-Driven Marketing Strategy
Market segmentation is the division of a market into distinct groups of
buyers who have different needs, characteristics, or behaviors and who might
require separate products or marketing mixes.
Market segment is a group of consumers who respond in a similar way to a
given set of marketing efforts.
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Marketing Strategy and the Marketing Mix
Customer Value-Driven Marketing Strategy
Market targeting is the process of evaluating each market segment’s
attractiveness and selecting one or more segments to enter.
Market positioning is the arranging for a product to occupy a clear, distinctive,
and desirable place relative to competing products in the minds of target
consumers.
Differentiation Actually differentiating the market offering to create superior
customer value..
After a company has decided which market segments to enter, it must determine
how to differentiate its market offering for each targeted segment and what
positions it wants to occupy in those segments
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Marketing Strategy and the Marketing Mix
Developing an Integrated Marketing Mix
Marketing mix is the set of controllable, tactical marketing tools—product,
price, place, and promotion—that the firm blends to produce the response it
wants in the target market.
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Marketing Strategy and the Marketing Mix
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Learning Objective 5
List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing
marketing return on investment.
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Managing the Marketing Effort
Figure 2.6 Analysis, Planning, Implementation, and Control
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Managing the Marketing Effort
Figure 2.7 Marketing Analysis: SWOT Analysis
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Managing the Marketing Effort
Marketing Implementation
• Turning marketing strategies and plans into marketing actions to
accomplish strategic marketing objectives
• Addresses who, where, when, and how
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Measuring and Managing Return on Marketing Investment
Return on Marketing Investment (Marketing ROI)
• Net return from a marketing investment divided by the costs of the
marketing investment
• Measurement of the profits generated by investments in marketing
activities
• Marketing managers must ensure that their marketing dollars are being
well spent. In the past, many marketers spent freely on big, expensive
marketing programs and flashy advertising campaigns, often without
thinking carefully about the financial returns on their spending
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Measuring and Managing Return on Marketing Investment
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