A Global
Perspective
Philip Kotler
Gary Armstrong
Swee Hoon Ang
2 Siew Meng Leong
Company and Chin Tiong Tan
Oliver Yau Hon-
Marketing Strategy: Ming
Partnering to Build
Customer
Relationships
2-1
Learning Objectives
After studying this chapter, you should be able to:
1. Explain companywide strategic planning in its four
steps
2. Discuss how to design business portfolios and develop
growth strategies
3. Explain marketing’s role in strategic planning and how
marketing works with its partners to create and deliver
customer value
4. Describe the elements of a customer-driven marketing
strategy and mix, and the forces that influence it
5. List the marketing management functions, including the
elements of a marketing plan, and discuss the
importance of measuring return on marketing
investment
2-2
Chapter Outline
1. Companywide Strategic Planning: Defining
Marketing’s Role
2. Planning Marketing: Partnering to Build
Customer Relationships
3. Marketing Strategy and the Marketing Mix
4. Managing the Marketing Effort
5. Measuring and Managing Return on
Marketing Investment
2-3
Companywide Strategic Planning:
Defining Marketing’s Role
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.
2-4
Steps in Strategic Planning
2-5
Companywide Strategic Planning:
Defining Marketing’s Role
Defining a Market-Oriented Mission
Mission statement: The organization’s purpose, what
it wants to accomplish in the larger environment
Market-oriented mission statement: Defines the
business in terms of satisfying basic customer
needs
2-6
Companywide Strategic Planning:
Defining Marketing’s Role
Setting Company Objectives and Goals
• Business objectives
• Marketing objectives
2-7
Companywide Strategic Planning:
Defining Marketing’s Role
Designing the Business Portfolio
The business portfolio is the collection of businesses
and products that make up the company.
2-8
Companywide Strategic Planning:
Defining Marketing’s Role
Analyzing the Current Business Portfolio
Analyzing the current business portfolio is the process
by which management evaluates the products and
businesses making up the company.
2-9
Companywide Strategic Planning:
Defining Marketing’s Role
Steps in Analyzing the Current Business Portfolio
• Identify key businesses making up the company
• Assess the attractiveness of its various SBUs
• Decide how much support each SBU deserves
2-10
Companywide Strategic Planning:
Defining Marketing’s Role
Steps in Analyzing the Current Business Portfolio
Identify key businesses making up the company:
• A strategic business unit (SBU) is a unit of the company that
has a separate mission and objectives that can be planned
separately from other company businesses.
• Company division
• Product line within a division
• Single product or brand
2-11
Companywide Strategic Planning:
Defining Marketing’s Role
Steps in Analyzing the Current
Business Portfolio
Assess the attractiveness of various SBUs
and decide how much support each
deserves.
2-12
Companywide Strategic Planning:
Defining Marketing’s Role
Analyzing the Current Business Portfolio
The Boston Group Approach
• Growth share matrix is a portfolio planning method that
evaluates a company’s strategic business units in terms of
their market growth rate and relative share.
• Strategic business units are classified as:
• Stars
• Cash Cows
• Question marks
• Dogs
2-13
The BCG Growth-Share Matrix
2-14
Companywide Strategic Planning:
Defining Marketing’s Role
Analyzing the Current Business Portfolio
The Boston Group Approach
Stars are high-growth, high-share businesses or products
requiring heavy investment to finance rapid growth. They
will eventually turn into cash cows.
Cash cows are low-growth, high-share businesses or products
that are established and successful SBUs requiring less
investment to maintain market share.
2-15
Companywide Strategic Planning:
Defining Marketing’s Role
Analyzing the Current Business Portfolio
The Boston Group Approach
Question marks are low-share business units in high-
growth markets requiring a lot of cash to hold their
share.
Dogs are low-growth, low-share businesses and products
that may generate enough cash to maintain
themselves but do not promise to be large sources of
cash.
2-16
Companywide Strategic Planning:
Defining Marketing’s Role
Analyzing the Current 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
2-17
Companywide Strategic Planning:
Defining Marketing’s Role
Developing Strategies for Growth and Downsizing
The product/market expansion grid is a tool for
identifying company growth opportunities through
market penetration, market development, product
development, or diversification.
2-18
Companywide Strategic Planning:
Defining Marketing’s Role
Developing Strategies for Growth and Downsizing
• Product/market expansion grid strategies
• Market penetration
• Market development
• Product development
• Diversification
2-19
The Product/Market Expansion Grid
2-20
Companywide Strategic Planning:
Defining Marketing’s Role
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.
2-21
Companywide Strategic Planning:
Defining Marketing’s Role
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.
2-22
Companywide Strategic Planning:
Defining Marketing’s Role
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.
2-23
Planning Marketing: Partnering to Build
Customer Relationships
Partner Relationship Management
Partner relationship management is the process of working
closely with partners in other company departments to
form an effective value chain that serves the customer, as
well as partnering effectively with other companies in the
marketing system to form a competitively superior value-
delivery network.
2-24
Planning Marketing: Partnering to Build
Customer Relationships
Partnering with Other Company Departments
A value chain is a series of departments that carry out value-
creating activities to design, produce, market, deliver, and
support a firm’s products.
2-25
Planning Marketing: Partnering to Build
Customer Relationships
Partnering with Others in the Marketing System
A 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.
2-26
Marketing Strategy and
the Marketing Mix
Marketing Strategy
A marketing strategy is the marketing logic by which
the business unit hopes to achieve its marketing
objectives.
2-27
Marketing Strategy and
the Marketing Mix
Customer-Driven Marketing Strategy
Market segmentation is the division of a market into
distinct groups of buyers who have distinct needs,
characteristics, or behavior and who might require
separate products or marketing mixes.
2-28
Marketing Strategy and
the Marketing Mix
Customer-Driven Marketing Strategy
A market segment is a group of consumers who
respond in a similar way to a given set of marketing
efforts.
Target marketing is the process of evaluating each
market segment’s attractiveness and selecting one
or more segments to enter.
2-29
Marketing Strategy and
the Marketing Mix
Customer-Driven Marketing Strategy
Market positioning is the arranging for a product to occupy
a clear, distinctive, and desirable place relative to
competing products in the minds of the target
consumer.
2-30
Marketing Strategy and
the Marketing Mix
Developing an Integrated Marketing Mix
The 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.
2-31
Managing Marketing Strategy and Marketing
Mix
2-32
Marketing Strategy and
the Marketing Mix
Developing an Integrated Marketing Mix
The four Ps
• Product
• Price
• Place
• Promotion
2-33
Marketing Strategy and
the Marketing Mix
Developing an Integrated Marketing Mix
The four Ps
Product is the goods and services in combination that the
company offers to the target market.
Price is the amount of money customers have to pay to obtain
the product.
2-34
Marketing Strategy and
the Marketing Mix
Developing an Integrated Marketing Mix
The four Ps
Place is the company activities that make the product available
to target customers.
Promotion is the activities that communicate the merits of the
product and persuade target customers to buy it.
2-35
Marketing Strategy and
the Marketing Mix
The 4 Ps versus The 4 Cs
Product Customer solution
Price Customer cost
Place Convenience
Promotion Communication
2-36
Managing the Marketing Effort
Managing the marketing effort requires:
• Analysis, Planning, Implementing and Controlling
2-37
Managing the Marketing Effort
Marketing Analysis
Marketing analysis is the complete analysis of the company’s
situation in a SWOT analysis that evaluates the company’s:
• Strengths
• Weaknesses
• Opportunities
• Threats
2-38
Managing the Marketing Effort
Marketing Analysis
• Strengths include internal capabilities, resources, and
positive situational factors that may help to serve company
customers and achieve company objectives.
• Weaknesses include internal limitations and negative
situational factors that may interfere with company
performance.
• Opportunities are favorable factors or trends in the
external environment that the company may be able to
exploit to its advantage.
• Threats are unfavorable factors or trends that
may present challenges to performance.
2-39
Managing the Marketing Effort
Market Planning
Planning is the development of strategic and marketing plans to
achieve company objectives.
Marketing strategy consists of the specific strategies for target
markets, positioning, the marketing mix, and marketing
expenditure levels.
2-40
Managing the Marketing Effort
Market Planning
Sections of a marketing plan include:
• Executive summary
• Current marketing situation
• Threats and opportunities
• Objective and issues
• Action programs
• Budgets
• Controls
2-41
Managing the Marketing Effort
Marketing Implementation
• Implementing is the process that turns marketing plans into
marketing actions to accomplish strategic marketing
objectives.
• Successful implementation depends on how well the
company blends its people, organizational structure,
decision and reward system, and company culture into a
cohesive action plan that supports its strategies.
2-42
Managing the Marketing Effort
Marketing Department Organization
• Functional
• Geographic
• Product
• Market or customer management
2-43
Managing the Marketing Effort
Marketing Department Organization
• Functional organization: This is the most common form of
marketing organization with different marketing functions
headed by a functional specialist.
• Sales manager
• Market research manager
• Customer service manager
• New product manager
2-44
Managing the Marketing Effort
Marketing Department Organization
Geographic organization:
• Useful for companies that sell across the country or
internationally.
• Managers are responsible for developing strategies and
plans for a specific region.
Product management:
• Useful for companies with different products or brands.
• Managers are responsible for developing strategies and
plans for a specific product or band.
2-45
Managing the Marketing Effort
Marketing Department Organization
Market or customer management organization:
• Useful for companies with one product line sold to many
different markets and customers.
• Managers are responsible for developing strategies and
plans for their specific markets or customers.
Customer management involves a customer focus and not a
product focus for managing customer profitability and
customer equity.
2-46
Managing the Marketing Effort
Marketing Control
• Controlling is measuring and evaluating results and taking corrective action as
needed.
• Operating control
• Strategic control
• Operating control involves checking ongoing performance against annual plan and
taking corrective action as needed.
• Strategic control involves looking at whether the company’s basic strategies are
well matched to its opportunities.
2-47
Managing the Marketing Effort
Marketing Control
A marketing audit is a comprehensive, systematic, independent,
and periodic examination of a company’s environment,
objectives, strategies, and activities to determine problem
areas and opportunities.
2-48
Measuring and Managing Return on
Marketing Investment
Return on Marketing Investment (ROI)
Return on marketing investment (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.
2-49
Measuring and Managing Return on
Marketing Investment
Customer-Centered Measures
• Customer acquisition
• Customer retention
• Customer lifetime value
2-50
Return on Marketing
2-51
