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									Company and Marketing
    Preview Case:
    Disney – What are its challenges?

   Originally known for
    films, animation,                Discussion
    theme parks.                      Questions
   Satisfying the
    customer is
    everyone’s job.              1.   Has Disney grown
        Mission: “make people        too large?
         happy” & “make a
         dream come true!”       2.   Will consumers
   Disney has grown via              accept new Disney
    diversification.                  businesses?
     Strategic Marketing Planning
   Companies should look ahead and develop
    long-term strategies  to meet changing
    conditions in their industries and ensure long-
    term survival

   The task of selecting an overall company
    strategy for long-run survival and growth 
    “strategic planning”
   Marketing’s key role in strategic planning
                Formal Planning

   Benefits of formal plans:
     Encouraging   management to think ahead
     Forcing managers to clarify objectives and policies.
     Better coordination of company efforts.
     Clearer performance standards for control.
     Helping the company to anticipate and respond
      quickly to environmental changes and sudden
      What is Strategic Planning?

   Strategic Planning defined:
     The  process of developing and maintaining a
      strategic fit between the organization’s
      resources, goals and capabilities and its
      changing market opportunities.
              Strategic Planning

   It sets the the stage for the rest of the planning
    in the firm
   The aim  to shape and reshape company’s
    businesses and products in order to reach to
    targeted profits and growth.
   Top-management job!
   Part of a broader process: strategic management
              Strategic Planning

   Organizational levels subject to strategic
        Corporate level
        Division level

        Business unit level

        Product level
Strategic Planning, Implementation,
        and Control Process
Planning    Implementation    Control
Corporate                    Measuring
planning      Organizing      results
planning                     Diagnosing
Business     Implementing
Product                      corrective
planning                       action
          Steps in Strategic Planning
                                           Business unit,
               Corporate Level               product,
                                            and market
Defining the    Setting       Designing      marketing
 Company       Company      the Business     and other
  Mission      Objectives      Portfolio     functional
               and Goals                     strategies
             Market-Oriented Mission

   Fundamental             A clear mission
    questions:               statement:
     What is our            A   statement of the
      business?                organization’s purpose
     Who is the               --- what it wants to
      customer?                accomplish in the larger
     What do
      consumers value?        Acts as “invisible hand”
     What should our
                               that guides employees to
      business be?             work toward realizing the
                               organization’s goals.
                Company Mission

   Each company’s mission is shaped by five
     History
     Current  preferences of the owners and
     The market environment
     Resources
     Distinctive competences
              Company Mission (cont.)

   “Market-oriented definitions” of a business 
    better than product or technological definitions
    (see page 38)
    A   market-oriented mission statement  defines the
       business in terms of satisfying basic customer needs

   Mission statement  must avoid being too narrow or
    too broad
   Mission statement  to be guided by a “vision” - an
    almost “impossible dream” that provides a direction
    for the company for the next 10 to 20 years
              Company Mission                 (cont.)

Market Oriented

                                          Characteristics of a
                                            Good Mission

             Fit Market Environment

                         Distinctive Competencies

      Company Goals and Objectives

   Company’s mission  needs to be turned into
    detailed, supporting objectives for each level
    of management
   Mission  hierarchy of objectives

   As specific as possible
   Marketing strategies  must be developed to
    support these marketing objectives
               Hierarchy of Objectives


             Marketing         Marketing       Marketing
            Objective # 1     Objective # 2   Objective # 3

Marketing               Marketing
 Strategy                Strategy
             The Business Portfolio

   Business portfolio  collection of businesses
    and products that make up the company
   Business portfolio planning involves 2 main
    1.   Analyzing the current business portfolio and
         decide which business should receive more, less or
         no investment
    2.   Shaping the future portfolio by developing growth
         strategies to add new products/businesses to the
         current portfolio
Analyzing the Current Business Portfolio

   Portfolio Analysis  to identify and evaluate
    the various businesses that make up the
     To identify key businesses  Strategic Business
      Units - SBU
          SBU: unit of the company (separate mission and
           objectives / can be planned independently from other
           company businesses)
     To assess the attractiveness of its various SBUs
      and decide how much support each deserves
                                  Boston Consulting Group’s
                                    Growth-Share Matrix
Market Growth Rate

                     20%-              Stars                  Question marks

                     18%-                         4
                                                              3          ?     1
                     12%-                  5
                      8%-          Cash cow                           Dogs
                      6%-                                                      8
                      2%-         6                               7
                            10x       4x       2x 1.5x   1x       .5x .4x .3x .2x .1x
                                       Relative Market Share
                                      Boston Consulting Group’s
                                        Growth-Share Matrix

                                  Stars                 Question Marks
Market Growth Rate

                            • High growth & share     • High growth, low share
                            • Profit potential        • Build into Stars or phase out
                            • May need heavy          • Require cash to hold
                               investment to grow        market share
                             Cash Cows                       Dogs

                            • Low growth, high share • Low growth & share

                            • Established, successful • Low profit potential
                            •Produce cash

                                           Relative Market Share
                                          High                   Low
    Analyzing the Current Business Portfolio
   After the classification of its SBUs  to determine
    what role each will play in the future
 Build                          Harvest
      Increase market              Increases short-
       share                         term cash flow
      Works well for               Good for weak
                                     cash cows,
       question marks                question marks
 Hold                               and dogs
      Preserve market           Divest
       share                        Sell or liquidate
      Good for cash cow            Good for dogs and
                                     question marks
         Problems With Matrix Approaches

    Can be Difficult, Time-Consuming, & Costly to Implement

    Difficult to Define SBU’s & Measure Market Share/ Growth

Focus on Current Businesses; provide little advice for future planning

         Can Lead to Unwise Expansion or Diversification
                   Growth Strategies -
           Ansoff’s Product / Market Expansion Grid
               Existing              New
               products            products

Existing        1. Market        3. Product
markets         penetration      development

 New            2. Market
markets         development   4. Diversification
           Growth Strategies

                                            Making more sales
            Existing      New                to current customers
            products      products           without changing its
Existing     Market        Product           products.
markets    penetration   development            Add new stores in
             Market       Diversifica-           current market areas,
markets    development       tion               improve advertising,
                                                 prices, service or
                                                 store design.
           Growth Strategies

                                            Develop new
            Existing      New                markets for current
            products      products           products
Existing     Market        Product              Identify new
markets    penetration   development             demographic or
             Market       Diversifica-           geographic markets
markets    development       tion                   Domestic or
           Growth Strategies

                                            Offering modified
            Existing      New                or new products to
            products      products
                                             current markets.
Existing     Market        Product              New styles, flavors,
markets    penetration   development             colors, or modified
             Market       Diversifica-           products
markets    development       tion
           Growth Strategies

            Existing      New              New products for
            products      products
                                            new markets.
Existing     Market        Product
                                               Start up or buy
markets    penetration   development
                                                new businesses
             Market      Diversifica-
markets    development      tion

   Some reasons that a company might want to
    abandon products or markets:
       The market environment might change (making some
        of the company’s product or markets less profitable – e.g.
        economic recession)

       The company may have grown too fast or entered
        areas where it lacks experience

       Some of the company’s products or business units
        age and die.
             Functional Planning

   The company’s overall strategic plan  establishes
    what kind of businesses the company will be in future
    & its objectives for each business.
   More detailed planning must take place within each
    business unit

   The major functional departments in each unit  must
    work together to accomplish strategic objectives
   Marketing plays a key role
      Marketing’s Key Role in
        Strategic Planning

   Provide a guiding philosophy
   Identify attractive opportunities
   Design effective strategies
   Build strong value chains
   Form superior value delivery networks
                Marketing’s Key Role:
        Partner Relationship Management

   Partner relationship management
     working  closely with partners in other departments (to
      form an effective “value chain” that serves the
      customer), and
     partnering effectively with other companies in the
      marketing system for a superior “value delivery
      network” to jointly bring greater value to customers
               Marketing’s Key Role:
         Partner Relationship Management

   Each department in the company  as a link in the
    company’s value chain;
     Each dept.carries out value-creating activities
     The company’s overall success  depends also on how well
      the activities of various dept. are coordinated
         Departmental relations are full of conflicts

     Marketers   must find ways to get all dept. to “think
        consumer” and to develop a smoothly functioning
        value chain
                Marketing’s Key Role:
        Partner Relationship Management

   The company needs to look beyond its own value
    chain in order to create customer value:
     Value-delivery  network  network made up of the
      company, suppliers, distributors, and customers who
      partner with each other to improve the performance of
      the entire sytem
          Competition today takes place between the entire value
           delivery networks!
            Business Unit Strategic Planning

            External Analysis

Mission          SWOT             Setting     Selecting   Developing   Implemen-   Feedback &
Statement      ANALYSIS          Objectives   Strategy    Program.       tation      Control

            Internal Analysis
      Business Unit Strategic Planning

 Business    Mission  each SBU needs to define
  its specific mission within the broader company
 External Environment Analysis  to build a MIS
  to monitor:
   Key external macroenvironment forces
   Significant microenvironment actors

   Trends and important developments  to identify
    the associated opportunities and threats
       Business Unit Strategic Planning

         Environment Analysis  Each business
 Internal
 needs to evaluate its internal strengths and
 weaknesses periodically
      “Checklist   for Performing Strengths/Weaknesses
    Management or an outside consultant  reviews the
     business’s marketing, financial, manufacturing and
     organizational competencies and rates each factor
     as strength or weakness
                        SWOT    ANALYSIS
                    Business Unit Strategic Planning /
                                   Example of a Checklist
ı                                                          PERFORMANCE                       IMPORTANCE
                                  Main        2nd      Moderate     2nd      Main     High   Medium   Low
                                 Strength   Strength              Weakness Weakness
  Firm's reputation
  Market share
  Product/service quality
  Sales force
  R&D / Innovation
  Geographical location
  High profitability
  Low cost of capital
  Cash flow
  Financial stability
  Scale economies
  Capacity of meeting demand
  Talented productive power
  Timely production
  Technical competence
  Skillful managers
  Loyal employees
  Entrepreneurship orientation
  Flexibility degree
  Rapid adaptation
            Business Unit Strategic Planning

   Goal Formulation (Goals  objectives that are
    specific with respect to magnitude and time)
     Turning objectives  into measurable goals  facilitates
      management planning, implementation and control
     Most businesses pursue a mix of objectives
           Objectives must be arranged hieararchically; from the most to
            the least important
           should be stated quantitatively whenever possible (e.g
            .“increase the ROI to 15% within two years”)
           should be realistic
           should be consistent
         Business Unit Strategic Planning

   Strategy Formulation
     Strategy   A game plan for how to reach goals (while
      goals indicating what a business unit wants to achieve)
     3 general type of strategy:
           Cost  Leadership  to achieve the lowest production
            and distribution costs / to price lower than its
            competitors and win a large market share
           Differentiation  to concentrate on achieving
            performance in an important customer benefit area
            valued by a large part of the market
           Focus  on one or more narrow market segments
            rather than going after a large market
          The Marketing Process

   Planning at the corporate, division and business
    levels  integral part of the marketing process

   Marketing Process (definition) 
    consists of analyzing mktg opportunities,
    selecting target markets, developing the mktg
    mix, and managing the mktg effort
               The Marketing Process

Demographic-                Marketing              Technological-
  Economic                Intermediaries              Natural
Environment                                         Environment

Suppliers         Place     Customer       Price          Publics

  Political-                                         Social-
   Legal                   Competitors               Cultural
Environment                                        Environment
     The Marketing Process (cont.)

1.   Analyzing marketing opportunities
2.   Researching and selecting target markets
3.   Designing marketing strategies
4.   Planning marketing programs
5.   Organizing, implementing, controlling the
     marketing effort
         The Marketing Process (cont.)

1.   Analyzing marketing opportunities
         A reliable marketing and information system
             To evaluate consumer wants and behavior
             To assess market size
             To gather information about the marketing
             To understand consumer markets, business
              markets and their behaviors
             To monitor competitors
         The Marketing Process (cont.)

2.   Researching and selecting target markets

        To divide the market into specific segments
        To evaluate each segment and choose market
         segments to be served best
        To develop a clear position relative to competitors
         in the minds of consumers
 Strategy              Customers grouped   by:
                          Geographic

1. Market                 Demographic

   Segmentation           Psychographic

                          Behavioral

2. Target marketing    Market  segment is a
3. Market              groups of consumers
                       who respond in similar
   Positioning         ways to marketing
 Strategy              Evaluation   of each
1. Market               attractiveness
   Segmentation        Selection of segments
                        with greatest long-term
2. Target marketing     profitability
3. Market              A company can choose
   Positioning          one or several
                        segments to target
 Strategy              The  place the product
                        occupies in the
                        consumer’s mind
1. Market
   Segmentation        Products are positioned
                        relative to competing
2. Target marketing     products
3. Market              Marketers look for
   Positioning          clear, distinctive and
                        desirable place in
         The Marketing Process (cont.)

3.   Designing marketing strategies for
     competitive advantage

        Market leader strategies
        Market challenger strategies
        Market follower strategies
        Market nicher strategies
         The Marketing Process (cont.)
4.   Planning marketing programs
          Decisions on:
             Marketing expenditures
             Marketing mix – 4Ps
             Marketing budget allocation

     The marketing mix includes controllable and
     tactical marketing tools known as the 4P’s
        The 4P’s include:
                Product
                Place
                Promotion
                Price
         The Marketing Process (cont.)

5.   Managing the marketing effort

         Marketing Analysis
         Marketing Planning
         Marketing Implementation
         Marketing Control
      Managing the Marketing Effort

Marketing Functions
                         Finding opportunities : the
•   Analysis              company must analyze
                             its market & mktg
•   Planning              
                              company strengths &
•   Implementation            weaknesses
                             current and possible mktg
•   Control                   actions
                         Avoiding threats
                         Understanding strengths
                         Analyzing weaknesses
     Managing the Marketing Effort

Marketing Functions
                       Marketing plans include:
•   Analysis              Executive summary

•   Planning              Analysis of current situation

                          Objectives
•   Implementation        Targets and positioning

•   Control               Marketing mix

                          Budget

                          Controls
                 Marketing Planning

   Through strategic planning  the company
    decides what it wants to do with each business
   Marketing planning  involves deciding on
    marketing strategies that will help the company
    reach its strategic objectives
   Marketing plan  2 levels:
       Strategic mktg plan  develops the broad mktg objectives and
        strategy based on an analysis of the current market situation and
       Tactical mktg plan  outlines specific mktg tactics, including
        advertising, merchandising, pricing, channels, service, etc.
     Contents of a Marketing Plan
Executive Summary & Table of Contents
  Current Marketing Situation
    Threats and Opportunity Analysis
      Objectives and Issues
         Marketing Strategy
             Action Programs
     Managing the Marketing Effort

Marketing Functions      The process that turns
                          mktg plans into mktg
•   Analysis              actions in order to achieve
                          strategic mktg objectives
•   Planning
•   Implementation       Deals with “who”, “where”,
                          “when”, “how” (while mktg
•   Control               planning dealing with “what”
                          and “why”)
                         Companies can gain
                          competitive advantages
                          through effective
Managing the Marketing Effort

Marketing Functions
                         Evaluation of the
•   Analysis              results of marketing
•   Planning              strategies
•   Implementation
                         Checks for
•   Control               differences between
                          goals and
Measuring Effectiveness
   Return on marketing (marketing ROI)
     The  net return from a marketing investment
      divided by the costs of the investments
          Marketing Implementation

     Marketing Analysis of Company’s Situation

  Marketing           Marketing          Control
   Planning         Implementation     Measure
Develop Strategic      Carry Out
     Plans                The          Evaluate
                         Plans          Results
   Marketing                              Take
     Plans                             Corrective

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