Course Name: Marketing Management

Effective date: 1 February 2022

Week 2
COMPANY AND MARKETING STRATEGY:
PARTNERING TO BUILD CUSTOMER
ENGAGEMENT, VALUE, AND
RELATIONSHIPS
Reference: Kotler and Armstrong (2021)
 LEARNING OUTCOMES
• Student will be able to describe the concept of marketing and consumer-
business buyer behaviour.
• Student will be able to apply the marketing strategy.
 OUTLINE
Company-Wide 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 and Marketing Return on

Investment
2.1. COMPANY-WIDE STRATEGIC PLANNING:
DEFINING MARKETING’S ROLE
 Strategic Planning

Strategic planning
The process of developing and maintaining a strategic fit between the
organization’s goals and capabilities and its changing marketing
opportunities.
 Defining a Market-Oriented Mission

An organization exists to accomplish something, and this purpose

should be clearly stated. Forging a sound mission begins with the
following questions: What is our business? Who is the customer? What
do consumers value? What should our business be? These simple-
sounding questions are among the most difficult the company will ever
have to answer. Successful companies continuously raise these
questions and answer them carefully and completely.
A mission statement is a statement of the organization’s purpose—
what it wants to accomplish in the larger environment. A clear mission
statement acts as an “invisible hand” that guides people in the
organization.
Steps in Strategic Planning

Figure 2.1. Steps in Strategic Planning

Source: Kotler and Armstrong (2021)
 Setting Company Objectives
and Goals

• The company needs to turn its broad mission into detailed supporting
objectives for each level of management. Each manager should have
objectives and be responsible for reaching them.
 Product- versus Market-Oriented
Business Definitions
Table 2.1. Product- versus Market-Oriented Business Definitions

Source: Kotler
and Armstrong
(2021)
2.2. DESIGNING THE BUSINESS PORTFOLIO
 Business portfolio

Business portfolio: The collection of businesses and products that make

up the company. The best business portfolio is the one that best fits the
company’s strengths and weaknesses to opportunities in the
environment.
 Analyzing The Current Business
Portfolio

• Portfolio analysis: The process by which management evaluates the

products and businesses that make up the company.
 Analyzing The Current Business Portfolio
(continued)

• Management’s first step is to identify the key businesses that make up

the company, called strategic business units (SBUs). An SBU can be a
company division, a product line within a division, or sometimes a
single product or brand. The company next assesses the
attractiveness of its various SBUs and decides how much support each
deserves. When designing a business portfolio, it’s a good idea to add
and support products and businesses that fit closely with the firm’s
core philosophy and competencies.
 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. On the horizontal axis, relative market share
serves as a measure of company strength in the market. The growth-
share matrix defines four types of SBUs:
 Growth-Share Matrix
1. Stars. Stars are high-growth, high-share businesses or products.
They often need heavy investments to finance their rapid growth.
Eventually their growth will slow down, and they will turn into cash
cows.
2. Cash cows. Cash cows are low-growth, high-share businesses or
products. These established and successful SBUs need less
investment to hold their market share. Thus, they produce a lot of
the cash that the company uses to pay its bills and support other
SBUs that need investment.
 Growth-Share Matrix

3. Question marks. 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 should try to build into stars and which should
be phased out.
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.
The BCG Growth-Share Matrix

Figure 2.2. The BCG Growth-Share Matrix

Source: Kotler and Armstrong (2021)
 Problems with BCG Matrix
Approaches
• The BCG and other formal methods revolutionized strategic planning.
However, such centralized approaches have limitations: They can be
difficult, time-consuming, and costly to implement. Management
may find it difficult to define SBUs and measure market share and
growth. In addition, these approaches focus on classifying current
businesses but provide little advice for future planning.
 Developing Strategies for Growth
and Downsizing
• Product/market expansion grid: A portfolio-planning tool for identifying company
growth opportunities through market penetration, market development, product
development, or diversification.
• Market penetration: Company growth by increasing sales of current products to
current market segments without changing the product.
• Market development: Company growth by identifying and developing new
market segments for current company products.
• Product development: Company growth by offering modified or new products to
current market segments.
The Product/Market Expansion Grid

Figure 2.3. The Product/Market Expansion Grid

Source: Kotler and Armstrong (2021)
 Diversification
Diversification: Company growth through starting up or acquiring
businesses outside the company’s current products and markets.
2.3. PLANNING MARKETING: PARTNERING TO BUILD
CUSTOMER RELATIONSHIPS
 Partnering with Other Company
Department

• Value chain: The series of internal departments that carry out value-
creating activities to design, produce, market, deliver, and support a
firm’s products.
 Partnering with Others in Marketing
System

• Value delivery network: A network composed of the company,

suppliers, distributors, and, ultimately, customers who partner with
each other to improve the performance of the entire system in
delivering customer value
2.4. MARKETING STRATEGY AND THE MARKETING MIX
 Managing Marketing Strategies and
the Marketing Mix

• Marketing Strategy: The marketing logic by which the company hopes

to create customer value and achieve profitable customer
relationships.
Managing Marketing Strategies and
the Marketing Mix

Figure 2.4. Managing Marketing Strategies and the Marketing Mix

Source: Kotler and Armstrong (2021)
 Customer Value-Driven Marketing
Strategy
• Market segmentation: Dividing a market into distinct groups of buyers
who have different needs, characteristics, or behaviors and who might
require separate marketing strategies or mixes.
• Market segment: A 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 serve.
• Positioning: Arranging for a product to occupy a clear, distinctive, and
desirable place relative to competing products in the minds of target
consumers.
 Developing an Integrated Marketing
Mix

• Marketing mix: The set of tactical marketing tools— product, price,

place, and promotion— that the firm blends to produce the response
it wants in the target market.
 Marketing Mix
• Product means the goods-and-services combination the company offers to the
target market. Thus, a Ford Escape consists of nuts and bolts, spark plugs, pistons,
headlights, and thousands of other parts. Ford offers several Escape models and
dozens of optional features. The car comes fully serviced and with a comprehensive
warranty that is as much a part of the product as the tailpipe.
• Price is the amount of money customers must pay to obtain the product. For
example, Ford calculates suggested retail prices that its dealers might charge for
each Escape. But Ford dealers rarely charge the full sticker price. Instead, they
negotiate the price with each customer, offering discounts, trade-in allowances,
and credit terms. These actions adjust prices for the current competitive and
economic situations and bring them into line with the buyer’s perception of the
car’s value.
 Marketing Mix (continued)
• Place includes company activities that make the product available to target consumers. Ford
partners with a large body of independently owned dealerships that sell the company’s many
different models. Ford selects its dealers carefully and strongly supports them. The dealers keep
an inventory of Ford automobiles, demonstrate them to potential buyers, negotiate prices, close
sales, and service the cars after the sale.
• Promotion refers to activities that communicate the merits of the product and
persuade target customers to buy it. Ford spent nearly $2.5 billion last year on U.S.
advertising to tell consumers about the company and its many products.15 Dealership
salespeople assist potential buyers and persuade them that Ford is the best car for them.
Ford and its dealers offer special promotions—sales, cash rebates, and low financing
rates—as added purchase incentives. And Ford’s websites and Facebook, Twitter, YouTube,
Instagram, and other social media platforms engage consumers with the brand and each
other.
The Four Ps of the Marketing Mix

Figure 2.5. The Four Ps of the Marketing Mix

Source: Kotler and Armstrong (2021)
2.5. MANAGING THE MARKETING EFFORT AND
MARKETING RETURN ON INVESTMENT
 Managing the Marketing Effort
Managing the marketing process:
• Develops company-wide strategic plans and then translates them into
marketing and other plans for each division, product, and brand.
• Through implementation and organization, the company turns the
plans into actions.
• Control consists of measuring and evaluating the results of marketing
activities and taking corrective action where needed.
• Finally, marketing analysis provides the information and evaluations
needed for all the other marketing activities.
 Managing Marketing

Figure 2.6 Managing Marketing: Analysis, Planning, Implementation, and Control

Source: Kotler and Armstrong (2021)
 Marketing Analysis
• Managing the marketing function begins with a complete analysis of the
company’s situation. The marketer should conduct a SWOT analysis (pronounced
“swat analysis”), by which it evaluates the company’s overall strengths (S),
weaknesses (W), opportunities (O), and threats (T) (see Figure 2.7). Strengths
include internal capabilities, resources, and positive situational factors that may
help the company serve its customers and achieve its objectives. Weaknesses
include internal limitations and negative situational factors that may interfere
with the company’s performance. Opportunities are favorable factors or trends in
the external environment that the company may be able to exploit to its
advantage. And threats are unfavorable external factors or trends that may
present challenges to performance.
 SWOT Analysis

Figure 2.7 SWOT Analysis: Strengths (S), Weaknesses (W), Opportunities (O), and Threats (T)
Source: Kotler and Armstrong (2021)
 Marketing Strategy
A marketing strategy consists of specific strategies for target markets,
positioning, the marketing mix, and marketing expenditure levels. It
outlines how the company intends to engage target customers and
create value in order to capture value in return. In this section, the
planner explains how each strategy responds to the threats,
opportunities, and critical issues spelled out earlier in the plan.
Additional sections of the marketing plan lay out an action program for
implementing the marketing strategy along with the details of a
supporting marketing budget. The last section outlines the controls that
will be used to monitor progress, measure return on marketing
investment, and take corrective action.
 Marketing Implementation
Marketing implementation is the process that turns marketing plans
into marketing actions to accomplish strategic marketing objectives.
Whereas marketing planning addresses the what and why of marketing
activities, implementation addresses the who, where, when, and how.
Many managers think that “doing things right” (implementation) is as
important as, or even more important than, “doing the right things”
(strategy). The fact is that both are critical to success, and companies
can gain competitive advantages through effective implementation.
One firm can have essentially the same strategy as another yet win in
the marketplace through faster or better execution. Still,
implementation is difficult—it is often easier to think up good
marketing strategies than it is to carry them out.
 Marketing Department Organization
• The company must design a marketing organization that can carry out
marketing strategies and plans. If the company is very small, one
person might do all the research, selling, advertising, customer
service, and other marketing work. As the company expands,
however, a marketing department emerges to plan and carry out
marketing activities. In large companies, this department contains
many s pecialists— product and market managers, sales managers
and salespeople, market researchers, and advertising and digital
media experts, among others.
 Marketing control

• Marketing control
Measuring and evaluating the results of marketing strategies and plans
and taking corrective action to ensure that the objectives are achieved.
 Measuring and Managing Marketing
Return on Investment
• One important marketing performance measure is marketing return
on investment (or marketing ROI). Marketing ROI is the net return
from a marketing investment divided by the costs of the marketing
investment. It measures the profits generated by investments in
marketing activities.
Marketing Return on Investment

Figure2.8 Marketing Return on Investment

Reference

Philip Kotler, Gary Armstrong, and Marc Oliver Opresnik. (2021). Principles of Marketing. 18e Global Edition.
Pearson. ISBN 10: 1-292-34113-0 ISBN 13: 978-1-292-34113-2 eBook ISBN 13: 978-1-292-34120-0