CHAPTER 2 : COMPANY AND MARKETING STRATEGY

Objective 1: Explain company-wide strategic planning and its four steps.

Company-Wide Strategic Planning: Defining Marketing's Role

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

Purpose: It guides long-term survival and growth.

Four Steps:

1. Defining the company mission

2. Setting company objectives and goals

3. Designing the business portfolio

4. Planning marketing and other functional strategies

2. Mission statement:
- A statement of the organization's purpose —what it wants to accomplish in the
larger environment.

- Should be market-oriented, focusing on customer needs rather than product or

technology.
- EX: Google: Its mission isn’t to be the best search engine, but “to give people a
window into the world’s information, wherever it might be found.

3. Setting Company Objectives and Goals:

Purpose: To translate the mission into measurable, actionable goals across different
levels of management (business and marketing objectives).

- Goals can include improving quality, expanding product range, or increasing

customer satisfaction.
 - Ex: Heinz: Its mission focuses on nutrition and wellness. Objectives include
increasing ketchup sales, reducing costs, and expanding into new markets like
Brazil with its product Quero

Objective 2: Discuss how to design business portfolios and develop growth

strategies.

1. Designing the Business Portfolio

-Business portfolio is the collection of businesses and products that make up the
company.
-The best business portfolio is the one that achieves the best fit between
opportunities in the environment and the company’s strengths and weaknesses.

2. Analyzing the Current Business Portfolio

-Portfolio analysis is the process by which management evaluates and plans for the
future of the products and businesses that make up the company
-A key purpose of strategic planning is to determine how the company can best use
its strengths to take advantage of attractive opportunities in the environment => most
standard portfolio analysis methods evaluate SBUs on two important dimensions:
the attractiveness of the SBU’s market or industry and the strength of the SBU’s
position in that market or industry.
-Growth-share matrix is a portfolio-planning method that evaluates a company’s
strategic business units (SBUs) in terms of market growth rate and relative market
share
-The growth-share matrix places SBUs into four quadrants:
1. Star: High-growth, high-share businesses or products. They require large
investments to support rapid growth but can become Cash Cows as growth slows.
-> Example: Tesla's electric vehicles in the early 2020s.
2. Cash cows: Low-growth, high-share businesses or products. They generate
steady cash flows and require little investment. Profits are used to fund other units or
return to shareholders.
-> Example: Apple's iPhone – mature market, high share, steady profits.
3. Question marks: High-growth markets with low market share. They need
significant investment to grow, but not all are worth it. Management must decide
whether to invest or divest.
-> Example: A new AI-powered wearable device in a booming tech market.
4. Dogs: Low-growth, low-share products. Limited profitability and can drain
resources. Best to divest unless they serve a strategic purpose.
-> Example: A legacy printer brand in a declining market.
3. Developing Strategies for Growth and Downsizing
-Product/market expansion grid is a portfolio-planning tool for identifying
company growth opportunities through market penetration, market
development, product development, or diversification

-Market penetration: Increasing sales of current products to current market

segments without changing the product.
-Market development: Identifying and developing new market segments for
current company products.
-Product development: Offering modified or new products to current market
segments.
-Diversification: Company growth through starting up or acquiring businesses
outside the company’s current products and markets.

Objective 3 : Planning Marketing: Partnering to Build Customer Relationships

1. Marketing in the Internal Value Chain

Each department in a company (marketing, R&D, production, finance, etc.) plays a

role in creating customer value — this is referred to as the internal value chain.

● Marketing alone can’t create value. It must coordinate with other departments
to design, produce, deliver, and support products that customers value.
● The effectiveness of marketing depends on how well departments perform
individually and how well they coordinate.

➔ Example: Airbus
● Airbus, a top global aircraft manufacturer, collaborates across departments to
serve airline customers.
● Marketing works closely with engineering (to meet technical requirements),
production (to ensure delivery and safety), and finance (to manage cost and
funding).
● Goal: To deliver high-quality aircraft on time and support customers with
maintenance and service throughout the product lifecycle.
 2. Marketing in the External Value Delivery Network

● Companies are part of a larger external value delivery network, which includes
suppliers, distributors, retailers, and customers.
● Marketing must partner effectively with these outside entities to deliver
superior value to customers.

➔ Example – Subway: Subway relies on its external value network (ingredient

suppliers, logistics, franchisees) to deliver fresh, healthy, and affordable
sandwiches. Marketing supports this by understanding customer needs and
coordinating with suppliers and partners to meet those expectations consistently.

3. Real-World Application: Conflict & Coordination

● Conflicts may arise between departments (e.g., marketing wants perfection,

production wants efficiency).
● Strategic leadership is essential to align goals across departments — ensuring
the customer’s experience remains at the center.

➔Example – Product Launch: Marketing might want to launch a product in December

to maximize holiday sales, but production may face capacity limits. To balance,
leadership could prioritize certain features or adjust timelines, ensuring the product
meets customer needs while maintaining efficiency.

Objective 4: Describe the elements of a customer-driven marketing strategy and

mix and the forces that influence it.

Marketing Strategy and the Marketing Mix

Marketing strategy:

-The marketing logic by which the company hopes to create customer value and
achieve profitable customer relationships.

Customer-Driven Marketing Strategy

1. Market segmentation:

Dividing a market into distinct groups of buyers who have different needs,
characteristics, or behaviors, and who might require separate products or
marketing programs.

EX: Starbucks divides its market by demographics (age, income), psychographics

(lifestyle), and behavior (frequency of coffee consumption).

2. Market segment:
A group of consumers who respond in a similar way to a given set of marketing
efforts.

EX: One segment is young professionals (ages 25–35) who enjoy premium coffee and
value a comfortable workspace.

3. Market targeting:

The process of evaluating each market segment's attractiveness and selecting one
or more segments to enter.

EX: Starbucks targets this segment by offering high-quality coffee, free Wi-Fi, and
cozy store environments that suit both work and relaxation.

4. Positioning

Arranging for a product to occupy a clear, distinctive, and desirable place relative
to competing products in the minds of target consumers.

EX: Starbucks positions itself as a premium coffee brand that provides more than just
coffee – a “third place” between home and work.

5. Differentiation

Actually differentiating the market offering to create superior customer value.

EX: Starbucks differentiates itself through consistent product quality, customer

experience, personalized drinks, and strong brand identity.

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.

1. Product means the goods-and-services combination the company offers to the

target market.
- EX: Starbucks - A wide variety of beverages (e.g., Pumpkin Spice Latte), food
items, and coffee beans, along with branded merchandise.

2. Price is the amount of money customers must pay to obtain the product.

EX: Starbucks - Premium pricing strategy – higher than average prices to reflect
quality and experience.
3. Place includes company activities that make the product available to target consum-
ers.
EX: Starbucks - Thousands of stores located in high-traffic areas such as city centers,
shopping malls, and airports, plus mobile app and delivery.

4. Promotion refers to activities that communicate the merits of the product and
persuade target customers to buy it.

EX: Starbucks - Social media campaigns, loyalty programs (Starbucks Rewards), and
seasonal promotions like “Buy 1 Get 1” during festive seasons.

Objective 5 : Managing the Marketing Effort and Marketing Return on

Investment

Managing the marketing process requires the five marketing management functions

a. Marketing analysis

This is the first step, involving a full evaluation of the company’s current situation
using a SWOT Analysis:

● Strengths – internal capabilities that help achieve objectives.

 ● Weaknesses – internal limitations that hinder progress.

● Opportunities – favorable external trends or chances to grow.

● Threats – external factors that could pose risks or challenges.

➔ Example:
A food company may identify its strength as sourcing fresh ingredients, a
weakness in slow delivery, an opportunity to partner with a delivery service,
and a threat from competitors offering quicker service.

b. Marketing Planning

Once analysis is complete, companies develop strategic plans to meet their goals. This
includes marketing plans for specific products, brands, or regions.

➔ Example:
Coca-Cola creates a new product line for health-conscious consumers and
builds a marketing plan with targeted ads and influencer partnerships.

c. Marketing implementation

This step involves carrying out the marketing plans. Teams take action, launch
campaigns, coordinate promotions, and initiate product rollouts.

➔ Example:
Coca-Cola launches a new flavor by coordinating advertisements, influencer
outreach, and in-store promotions simultaneously.

d. Marketing organization

Refers to how the company structures its teams and resources to support marketing
activities. This includes assigning roles, defining responsibilities, and aligning
departments.

➔ Example:
Nike assigns cross-functional teams—design, supply chain, and marketing—to
a new sneaker release, ensuring everyone works in sync.

e. Marketing Control

This stage involves measuring and evaluating results. If a strategy underperforms,

corrective actions are taken.
 ➔ Example:
A marketing team reviews ad performance data. If Instagram engagement is
low, they may shift budget to TikTok, where results are better.

CHAPTER 7: CUSTOMER VALUE-DRIVEN MARKETING

STRATEGY
Objective 1: Define the major steps in designing a customer value-driven
marketing strategy:

1. Market segmentation

2. Market targeting (or targeting)

3. Differentiation

4. Positioning

Marketing Strategy

1. The First two steps: Shows the four major steps in designing a customer value-
driven marketing strategy. The company selects the customers that it will serve.

 Market segmentation involves dividing a market into distinct groups of

buyers who have different needs, characteristics, or behavior and who might
require separate marketing strategy or mixes.

 Market targeting (or targeting) consists of evaluating each market

segments’s attractiveness and selecting one or two more segments to serve.

2. The Final two steps: The company decides on a value proposition–how it will
create value for target customers.

 Differentiation involves actually differentiating the firm’s market offering to

create superior customer value

 Positioning is the quest for a market offering to occupy a clear, distinctive, and
desirable place in the mind of target consumers–one that is not occupied by a
competing product.
Objective 2: Discuss the major bases for segmenting consumer and businesses
markets.

Market Segmentation
A marketer has to evaluate different segmentation bases, alone and in combination,
to find the best way to view market structure.

Major bases:

1. Geographic Segmentation: Dividing the market based on nations, regions,

states, counties, cities, or even neighborhoods.
2. Demographic Segmentation: Dividing the market based on variables such as
age, life-cycle stage, gender, income, occupation, education, religion, ethnicity,
and generation.
3. Psychographic Segmentation: Dividing buyers into different groups based on
lifestyle, social class, or personality characteristics.
4. Behavioral Segmentation: Divides buyers into segments based on their
knowledge, attitudes, uses, or responses to a product. Many marketers believe
that behavior variables are the best starting point for building market
segments.
Dividing buyers into groups based on their knowledge, attitudes, uses, or responses to
a product. This includes occasions, benefits sought, user status, usage rate, loyalty
status, readiness stage, and attitude toward the product.

Objective 3: Explain how companies identify attractive market segments and

choose a market-targeting strategy.

Market Targeting

Evaluating Market Segments:

 Market segmentation reveals the firm’s market segment opportunities. The firm
then has to evaluate the various segments and decide how many and which
segments it can serve best. We now look at how companies evaluate and select
target segments.

To identify attractive market segments, a company evaluates three key factors:

1. Segment Size and Growth: The company assesses how large and fast-growing
a segment is. However, the "right" size and growth depend on the company's
resources and capabilities. Smaller companies may target smaller or less
competitive segments that are more profitable for them.

Example: Tech Industry

 Large & fast-growing segment: Cloud computing for large enterprises.

 Smaller firm choice: A small tech startup may choose to serve a niche like
cloud storage for small creative agencies—less competition and more
specific needs.

2. Segment Structural Attractiveness: The firm examines long-term profitability

by analyzing factors such as the number and strength of competitors, how easy
 it is for new firms to enter, the presence of substitute products, and the
bargaining power of buyers and suppliers. Segments with intense competition or
strong buyer/supplier power may be less attractive.

Example: Smartphone Market

 High competition: Samsung, Apple, Xiaomi dominate the space—tough for

new brands.

 Substitutes: Tablets, smartwatches, and laptops reduce dependence on phones.

 Buyer power: Consumers compare many options, expect low prices and high
features.

3. Company Objectives and Resources: Even if a segment looks attractive, the

company must consider whether it aligns with its goals and whether it has the
necessary strengths to succeed. Companies should only target segments where
they can create superior customer value and gain a competitive advantage.

Example 1: Mercedes-Benz

 Opportunity: Economy cars are a large and growing market.

 But: Mercedes focuses on luxury and performance—it doesn’t align with their
brand or customer expectations.

 Decision: Mercedes sticks to premium segments where it has an advantage.

Selecting Target Market Segments

o Undifferentiated (mass) marketing: A market-coverage strategy in

which a firm focuses on what is common in the needs of consumers
rather than on what is different . The company designs a product and a
marketing program that will appeal to the largest number of buyers.
o Differentiated Marketing (segmented marketing): A firm targets
several market segments and designs separate offers for each.By doing
this,companies hope for higher sales and a stronger position within each
market segment. Developing a stronger position within several segments
creates more total sales than undifferentiated marketing across all
segments

-> For example: P&G markets six different laundry detergent brands in the
United States (Bold, Cheer, Dash, Dreft, Gain, and Tide), which compete with
each other on supermarket shelves.
 Benefits of Differentiated Marketing:
1. Better Market Coverage:

o By targeting several segments, companies reach a wider audience.

o Example: IHG Hotels operates 16 different hotel brands across four

segments: luxury, premium, essentials, and suites—serving both
business travelers and budget-conscious tourists.

2. Stronger Position in Each Segment:

o Tailored products and marketing build deeper relationships and loyalty

within each segment.

o Example: IHG’s InterContinental brand targets luxury travelers, while

Holiday Inn Express focuses on essential, budget-friendly travel.

3. Increased Total Sales:

o Customizing offerings leads to higher sales in each segment compared

to using one broad, undifferentiated approach.

Drawbacks
1. Higher Costs:

o Developing multiple products, marketing plans, and campaigns

increases costs for:

 Production

 Research & development

 Marketing and advertising

  Channel management

2. Brand Overlap & Confusion:

o Too many similar brands may:

 Confuse customers.

 Lead to cannibalization, where one brand takes sales from

another within the same company.

o Example: Some critics question whether IHG needs 16 brands, some of

which may compete for the same type of traveler.

3. Concentrated (niche) marketing:A market-coverage strategy in which a firm

goes after a large share of one or a few segments or niches

Example: Rolex – Luxury Watches for a Niche Market

Rolex focuses exclusively on the high-end luxury watch market, targeting a

narrow segment of affluent consumers who value prestige, craftsmanship, and
timeless design.

Micromarketing:Tailoring products and marketing programs to the needs and

wants of specific individuals and local customer segments; it includes local marketing
and individual marketing.

Example:Nike

Nike uses micromarketing through its “Nike By You” (formerly known as

NikeID) platform, which allows individual customers to design and
personalize their own sneakers—choosing colors, materials, and even adding
custom text.

Local marketing:Tailoring brands and marketing to the needs and wants of

local customer segments—cities, neighborhoods, and even specific stores.

Example:Starbucks “Local Favorites” Menus

Starbucks practices local marketing by tailoring its store offerings to fit the
tastes and preferences of local communities.

Individual marketing:Tailoring products and marketing programs to the needs

and preferences of individual customers.

Example:Amazon's Personalized Recommendations

 Amazon uses data from each user’s browsing, purchase history, and search
behavior to create personalized shopping experiences.

Choosing a Targeting Strategy

Company Resources

 Limited resources → Use concentrated marketing (focus on a specific

niche).

 More resources → Can support differentiated marketing (multiple

segments) or undifferentiated marketing (mass market).

Product Variability

 Standardized products (e.g., steel, grapefruit) → Best for undifferentiated

marketing.
 Customizable or diverse products (e.g., cars, fashion) → Better suited to
differentiated or concentrated marketing.

Product Life Cycle Stage

 Introduction stage → Use undifferentiated or concentrated marketing to

simplify the launch.

 Mature stage → Use differentiated marketing to reach a broader, more

segmented market.

Market Variability

 If consumers have similar needs and responses, use undifferentiated

marketing.
 If preferences vary greatly, use differentiated or concentrated strategies.

Competitor Strategies

 If competitors use differentiated or concentrated marketing, using

undifferentiated marketing may be risky.
  If competitors use undifferentiated marketing, you can stand out by focusing
on specific segments.

Socially Responsible Target Marketing: focusing on the segments that they

can satisfy best and most profitably. Targeting also benefits consumers—
companies serve specific groups of consumers with offers carefully tailored to
their needs.

Example: Dove’s "Real Beauty" Campaign (Unilever)

Dove, a brand under Unilever, launched its "Real Beauty" campaign to target
women of all shapes, sizes, ages, and ethnicities—challenging narrow beauty
standards often promoted in media and advertising.

Objective 4: Discuss how companies differentiate and position their products for
maximum competitive advantage

Differentiation And Positioning

A product position:
 is the way a product is defined by consumers on important attributes - the place
the product occupies in consumers’ minds relative to competing products.
 is the complex set of perceptions, impressions, and feelings that consumers
have for the product compared with competing products.

Positioning Map:
 In planning their differentiation and positioning strategies, marketers often
prepare perceptual positioning maps that show consumer perceptions of their
brands versus competing products on important buying dimensions

EX: a positioning map for the U.S. large luxury sport utility vehicle (SUV) mar
ket
Choosing a Differentiation and Positioning Strategy:

 A brand’s positioning must serve the needs and the preferences of well defined
target market
 The differentiation and positioning consists of three steps:
+ Identifying a set of differentiating competitive advantages on which to build
a position
+ Choosing the right competitive advantages
+ Selecting an overall positioning strategy

EX: Although both Dunkin’ Donuts and Starbucks are coffee shops, they offer very
different product assortments and store atmospheres. Yet each succeeds because it
creates just the right value proposition for its unique mix of customers
 Competitive advantage: An advantage over competitors gained by offering
greater customer value, either by having lower price or providing more benefits
that justify higher price

Choosing the Right Competitive Advantages: Suppose a company is fortunate

enough to discover several potential differentiations that provide competitive
advantages
 How Many Differences to Promote
EX: Apple Inc. and the iPhone

When Apple promotes the iPhone, it could choose to highlight many different points
of difference:

 High-end design and build quality

 Seamless integration with the Apple ecosystem
 iOS user experience
 Camera quality
 Privacy and security
 Customer service
 Brand prestige
 Which Differences to Promote
EX: When carmaker Nissan introduced its novel little Cube, it didn’t position the car
only on attributes shared with competing models, such as affordability and
customization. It positioned it as a “mobile device” that fits today’s digital lifestyles.

Selecting An Overall Positioning Strategy

 Value Proposition: the full positioning of a brand - the full mix of benefits on
which it is positioned

→ In the following sections, we discuss the five winning value propositions: more for
more, more for the same, the same for less, less for much less, and more for less:

 More For More: involves providing the most upscale product or service and
charging a higher price to cover the higher costs
EX: When Apple launched the iPhone, for instance, it entered the market with
advanced features and a high price point to match.

 More For the Same: companies can attack a competitor’s more-for-more

positioning by introducing a brand offering comparable quality at a lower price
EX:Toyota used this tactic when it introduced its Lexus brand. Lexus was marketed as
delivering the same high-end features and reliability as Mercedes or BMW, but at a
much more accessible price.

 The Same for Less: Instead of offering different or better items, they sell
many of the same brands as department and specialty stores, but at discounted
prices due to stronger purchasing power and efficient operations.
EX: Amazon’s Kindle Fire costs less than 40% of an iPad or Samsung Galaxy.
  Less for Much Less: There’s always a market for those who are willing to
accept fewer features in return for a lower cost. Many consumers don't need or
can’t afford the very best, and they’re happy to compromise for savings.
EX: Brands like Ramada Limited, Holiday Inn Express, and Motel 6 trim unnecessary
amenities to offer more affordable rates.

 More for Less: The ideal proposition is offering more value at a lower price.
While many companies aim for this, few can pull it off consistently
EX: Home Depot launched with better product variety, top-notch service, and the
lowest prices in town—outshining traditional hardware stores.