Principles of Marketing
Seventeenth Edition
Chapter 2
Company and Marketing Strategy
Partnering to Build Customer
Engagement, Value, and Relationships
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Learning Objectives
2-1 Explain company-wide strategic planning and its four steps.
2-2 Discuss how to design business portfolios and develop growth
strategies.
2-3 Explain marketing’s role in strategic planning and how marketing works
with its partners to create and deliver customer value.
2-4 Describe the elements of a customer value-driven marketing strategy
and mix, and the forces that influence it.
2-5 List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing
marketing return on investment.
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Learning Objective 1
Explain company-wide strategic planning and its four steps.
1. Strategic planning
2. Mission statement
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Questions:
[Link] was Starbucks like before the crisis in 2007?
2. What was Starbucks’ strategy after Howard Schultz
became CEO in 1992?
3. During the crisis in 2007, how did Schultz manage to
transform the coffee industry to save Starbucks from
crisis?
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Company-Wide Strategic Planning
[Link]
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Company-Wide 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.
=> Strategic planning sets the stage for the rest of planning in the firm.
Companies usually prepare annual plans, long-range plans, and strategic
plans.
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Company-Wide Strategic Planning
Defining a Market-Oriented Mission
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Company-Wide Strategic Planning
Defining a Market-Oriented Mission
The mission statement is the organization’s purpose; what it wants to
accomplish in the larger environment.
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Company-Wide Strategic Planning
Defining a Market-Oriented Mission
To create a strong mission, it's important to start by considering the
following questions:
• What is our business?
• Who is the customer?
• What do consumers value?
• What should our business be?
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Evolution of Starbucks Mission
2008 - 2023
1990
Source: Internet
2024
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Company-Wide Strategic Planning
Defining a Market-Oriented Mission
A mission statement should:
[Link] be myopic in product terms
[Link] meaningful and specific
[Link] motivating
[Link] the company’s strengths
[Link] specific workable guidelines
[Link] be stated as making sales or profits
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Examples of mission statements
Source: Internet
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Company-Wide Strategic Planning
Setting Company Objectives and Goals
Business Marketing
objectives objectives
• Build profitable • Increase
customer market share
relationships • Create local
• Invest in partnerships
research • Increase
• Improve profits promotion
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Learning Objective 2
Discuss how to design business portfolios and develop growth strategies.
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Designing The Business Portfolio
Designing the Business Portfolio
The business portfolio is the collection
of businesses and products that make
up the company.
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Starbucks Business Portfolio
Source: Internet
Coffee shop Drinks menu Food menu
Merchandise Starbuck Reserve Franchise
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Designing The Business Portfolio
Analyzing the Current Business Portfolio
Portfolio analysis is the process by which management evaluates the
products and businesses that make up the company.
ÞThe company wants to put strong resources into its more profitable
businesses and drop its weaker ones.
Strategic business units (SBUs) – products and businesses that make
up the company - can be a
• Company division
• Product line within a division
• Single product or brand
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Designing The Business Portfolio
Analyzing The Current Business Portfolio
Identify strategic business units
(SBUs)
Assess the attractiveness of its
various SBUs
Decide how much support each
SBU deserves
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Designing The Business Portfolio
Boston Consulting Group (BCG) Growth-Share matrix
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Designing The Business Portfolio
BCG Growth-share Matrix
• 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.
• 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.
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Designing The 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
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Designing The Business Portfolio
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.
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Designing The Business Portfolio
Developing Strategies for Growth and Downsizing
Market penetration involves making more sales to current customers without
changing its original product.
Market development involves identifying and developing new markets for its
current products.
Product development involves offering modified or new products to current
markets.
Diversification involves starting up or buying businesses beyond its current
products and markets.
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Designing The Business Portfolio
Developing Strategies for Growth and Downsizing
Downsizing is when a company must prune, harvest, or divest businesses
that are unprofitable or that no longer fit the strategy.
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Designing The Business Portfolio
Developing Strategies for Growth and Downsizing
Examples?
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Learning Objective 3
Explain marketing’s role in strategic planning and how marketing works with
its partners to create and deliver customer value.
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Planning Marketing: Partnering to Build
Customer Relationships
Partnering with Other Company Departments
Value chain is a series of departments that carry out value creating activities
to design, produce, market, deliver, and support a firm’s products.
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.
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Learning Objective 4
Describe the elements of a customer value-driven marketing strategy and mix,
and the forces that influence it.
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Marketing Strategy and the Marketing Mix
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Marketing Strategy and the Marketing Mix
Customer Value-Driven Marketing Strategy
Marketing strategy is the marketing logic by which the company hopes to
create customer value and achieve profitable customer relationships.
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Marketing Strategy and the Marketing Mix
Customer Value-Driven Marketing Strategy
Market segmentation is the division of a market into distinct groups of
buyers who have different needs, characteristics, or behaviors and who might
require separate products or marketing mixes.
Market segment is a group of consumers who respond in a similar way to a
given set of marketing efforts.
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Marketing Strategy and the Marketing Mix
Customer Value-Driven Marketing Strategy
Market targeting is the process of evaluating each market segment’s
attractiveness and selecting one or more segments to enter.
Market positioning is the arranging for a product to occupy a clear, distinctive,
and desirable place relative to competing products in the minds of target
consumers.
Differentiation begins the positioning process.
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Marketing Strategy and the Marketing Mix
Customer Value-Driven Marketing Strategy
Positioning and Differentiation: Vietnam Airlines – National Airlines
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Marketing Strategy and the Marketing Mix
Developing an Integrated Marketing Mix
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.
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Marketing Strategy and the Marketing Mix
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Marketing Strategy and the Marketing Mix
• Product: the goods-and-services combination the company offers to
the target market.
• Price is the amount of money customers must pay to obtain the
product.
• Place includes company activities that make the product available to
target consumers.
• Promotion refers to activities that communicate the merits of the
product and persuade target customers to buy it.
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Learning Objective 5
List the marketing management functions, including the elements of a
marketing plan, and discuss the importance of measuring and managing
marketing return on investment.
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Managing the Marketing Effort
Figure 2.6 Analysis, Planning, Implementation, and Control
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Managing the Marketing Effort
Figure 2.7 Marketing Analysis: SWOT Analysis
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Managing the Marketing Effort
Market Planning—Parts of a Marketing Plan
Executive Marketing Threats and
summary situation opportunities
Objectives and Marketing Action
issues strategy programs
Budgets Controls
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Managing the Marketing Effort
Marketing Implementation
• Turning marketing strategies and plans into marketing actions to
accomplish strategic marketing objectives
• Addresses who, where, when, and how
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Measuring and Managing Return on Marketing Investment
Return on Marketing Investment (Marketing ROI)
• Net return from a marketing investment divided by the costs of the
marketing investment
• Measurement of the profits generated by investments in marketing
activities
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Measuring and Managing Return on Marketing Investment
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