Chapter 2

Company and Marketing Strategy:

Partnering to Build Customer
Engagement, Value, and Relationships

Principles of Marketing
Philip Kotler, Gary Armstrong
 Company and Marketing Strategy
Topic Outline
Companywide Strategic Planning: Defining Marketing’s Role
Designing the Business Portfolio
Planning Marketing: Partnering to Build Customer Relationships
Marketing Strategy and the Marketing Mix
Managing the Marketing Effort
Measuring and Managing Return on Marketing Investment
What Is Marketing?
The Marketing Process
 Strategic Planning

Companywide
Strategy is theory about how to gain
Strategic competitive advantage
Planning
Strategic Planning is the process of
developing and maintaining a strategic fit
between the organization’s goals,
capabilities and its changing marketing
opportunities
Companywide Strategic Planning
Steps in Strategic Planning
 Companywide Strategic Planning
Defining a Market-Oriented Mission

• The mission statement

is the organization’s
purpose, what it wants Grameenphone is here to inspire.
to accomplish in the We provide the power of digital
larger environment communication, enabling
everyone to improve their lives,
• Market-oriented
build societies and secure a
mission statement better future for all.
defines the business in We exist to help our customers
terms of satisfying get the full benefit of being
basic customer needs connected. Our success is
measured by how passionately
they promote
 Companywide Strategic Planning
Product Orientation vs. Market Orientation

Company Product Market Orientation

Orientation

Xerox We make copying We improve office

equipment productivity

Amazon We are the biggest e- To be Earth's most

commerce website customer-centric company

Meta We are an online social Giving people the power

network to build community and
bring the world closer
together
 Setting Company Objectives and Goals
• Turn broad missions into detailed
supporting objectives. Objectives
must meet SMART criteria:
– S  Specific
Companywide – M  Measurable
Strategic – A  Attainable
Planning – R  Realistic
– T  Time-bound
“To achieve a market share of 25%
in 5 years”
 Designing the Business Portfolio
• The business portfolio is the
collection of businesses and
Companywide products that make up the
Strategic company
• Portfolio analysis is a major
Planning activity in strategic planning
whereby management
evaluates the products and
businesses that make up the
company
 Analyzing the Current Business
Portfolio
• Strategic business units can be
• Company division (Unilever – Food &
Drink, Home care, Personal Care, Water
Companywide purifier)
Strategic • Product line within a division (e.g.
Planning Personal care)
• Single product or brand (e.g. Clear
shampoo)
Companywide Strategic Planning
Analyzing the Current Business Portfolio
 Companywide Strategic Planning
Analyzing the Current Business Portfolio
BCG Portfolio Planning Approach
High
Low

High Low
 Companywide Strategic Planning
Analyzing the Current Business Portfolio
BCG Portfolio Planning Approach
To understand the Boston Matrix you need to understand how market share &
market growth interrelated.
Relative Market Share
On the Vertical axis, relative market share serves as a measure of
company strength in the future. Market share is the percentage of
the total market that is being serviced by your company measured
either in the revenue terms or unit volume terms.
Business Unit Sales this year
RMS :-
Leading rival sales this year
The higher your market share, the higher proportion of the market
you control.
 Companywide Strategic Planning
Analyzing the Current Business Portfolio
BCG Portfolio Planning Approach

Market Growth Rate is used as a measure of a market’s attractiveness.

Individual Sales this year – Individual sales last year

MGR =
Individual Sales last year
Markets experiencing high growth are ones where the total market
share available is expanding & there is plenty of opportunity for
everyone to make money.
 Companywide Strategic Planning
Analyzing the Current Business Portfolio
BCG Portfolio Planning Approach
Stars
(high growth, high market share)

• Stars are leader in business

• They also require heavy investment to maintain it’s large market share and
their rapid growth

• It leads to large amount of cash consumption & cash generation.

• Attempts should be made to hold the market share otherwise the star will
become a cash cow.
 Companywide Strategic Planning
Analyzing the Current Business Portfolio
BCG Portfolio Planning Approach
Cash cows
( low growth, high market share)

• Cash cow represent the division within a company that has a large market
share within a mature industry.

• They are often foundation of the company & often the stars of yesterday.

• They generate cash and those cash are used by companies to pay the bill
and support other SBUs that need investment.

• They are located in an industry that not growing or declining

 Companywide Strategic Planning
Analyzing the Current Business Portfolio
BCG Portfolio Planning Approach
Question marks
(high growth, low market share)

• Most business start of as question marks

• They will absorb great amount of cash to hold their share, let alone
increase it

• Question marks have potential to become star & evenly cash cow but can
also become dog. Thus, management needs to think hard that which one it
should focus on to build into stars or which one to phase out

• Question marks must be analyzed carefully in order to determine whether

they worth the investment required to grow market share
 Companywide Strategic Planning
Analyzing the Current Business Portfolio
BCG Portfolio Planning Approach
Dogs
(low growth, low market share)

• Dogs have little market share and low growth market and thus neither
generate nor consume a large amount of cash

• Dogs are the cash traps because they tie up the money in a business
that has little potential

• Business is situated at a declining stage

• Dogs should be disposed of unless they somehow contribute to the

sales of other brands/products within the portfolio
 • It can pursue one of the 4 strategies:
• Build – invest more in the business
Companywide unit’s share
Strategic • Hold – invest just enough in the
Planning business unit’s share
Role of each • Harvest – milking its short-term cash
flow regardless of the long-term
SBU in future in effect
matrix approach • Divest – selling or phasing SBU and
using resources elsewhere
 • iPhone
• iPod
• Macbook
Portfolio
• AirPods
of Apple
 Benefits of Matrix Approaches
• Simple & easy to understand
• Helps to quickly & simply screen the
opportunity open & helps to think
Companywide about how to make the most of them.
Strategic • Helpful for managers to evaluate
balance in the companies' current
Planning portfolio of Stars, Cash Cows,
Question Marks and Dogs.
• Identify how corporate cash resources
can best be used to maximize
company’s future growth &
profitability.
 Problems with Matrix Approaches

• Difficulty in defining SBUs and

measuring market share and growth
Companywide • Time consuming
Strategic • Expensive
Planning • Focus on current businesses, not
future planning
 Companywide Strategic Planning
Developing Strategies for Growth and Downsizing

• Product/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
Product/Market Expansion Grid Strategies

Companywide
Strategic
Planning
 Companywide Strategic Planning
Developing Strategies for Growth and Downsizing

Market penetration is a growth strategy

increasing sales to current market segments
without changing the product
Market development is a growth strategy that
identifies and develops new market segments
for current products
 Companywide Strategic Planning
Developing Strategies for Growth and Downsizing

Product development is a growth strategy that

offers new or modified products to existing
market segments
Diversification is a growth strategy through
starting up or acquiring businesses outside the
company’s current products and markets
 Companywide Strategic Planning
Developing Strategies for Growth and
Downsizing

• Downsizing is the reduction of the business

portfolio by eliminating products or business
units that are not profitable or that no longer
fit the company’s overall strategy
 Internal

Value chain is a series of departments that carry out

value-creating activities to design, produce, market,
deliver, and support a firm’s products

Planning Marketing
Partnering to Build Customer
Relationships
Planning Marketing
Partnering to Build Customer Relationships

• 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
Marketing
Strategy
and the
Marketing
Mix
Managing
the
Marketing
Effort
Managing the Marketing Effort
Marketing Analysis – SWOT Analysis
Managing the Marketing Effort
Market Planning – Parts of a Market Plan
Managing the Marketing Effort
Market Implementation

• Implementation is the process that turns

marketing plans into marketing actions to
accomplish strategic marketing objectives.
• Faster or better execution can help a company
win the marketplace compared to other players
in the market.
Managing the Marketing Effort
Marketing Control

• Controlling is the measurement and evaluation

of results and the taking of corrective action as
needed to ensure the objectives are achieved.
• Operating control
• Strategic control
Measuring and Managing Return on
Marketing Investment

• 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.