CHAPTER 2 | Week 2 Pre-reading Fundamentals of Marketing

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Company and Marketing Strategy: Partnering to Build customer

engagement, value and relationships.

2.1 Company-wide strategic planning: Defining marketing’s role

Crucial to develop a game plan that is relevant for the business’ current situation,
opportunities, objectives and resources.

Strategic planning: the process of developing and maintaining a strategic fit between the
organisation’s goals and capabilities and its changing marketing opportunities.
1. Defines overall purpose and mission.
2. Mission turns into detailed objectives that guide organisation.
3. Decide what businesses and products is best and need support.
4. Marketing and departmental plans.
5. Marketing planning occurs at the business unit, product and market function levels.

Mission:
 What is our business? Who is the customer? What do consumers value? What should
our business be?
 Mission statement: a statement of the organisation’s purpose; what it wants to
accomplish in the larger environment.

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 Should be market oriented not product. For example, Pinterest does not define itself as
just an online place to post pictures, its mission is to give people a social media platform
for collecting, organising and sharing the things they love.

 Should be meaningful, specific and motivating.

 Mission leads to a hierarchy of objectives such as business and marketing objectives.
Example: Businesses overall objective of building profitable customer relationships ->
investing heavily in research and development -> expensive and requires increased
profits -> improving profits -> increased sales or reduce costs -> improving companies
share of domestic and international markets (all marketing goals).

2.2 Designing the Business Portfolio

 Guided by the mission statement.
 Business portfolio: collection of businesses and products that make up the company.
 Good portfolio = fits the company’s strengths and weaknesses to opportunities in the
environment.
 Analyse and decide which businesses should receive more, less or no investment.
 Develop strategies for growth or downsizing.
 Generally, a company will put resources towards its more profitable businesses and
scale down or drop its weaker ones.
 Strategic planning discovers ways the company can best utilise its strengths to take
advantage of attractive opportunities in the environment.

Circles
represent a
company’s 10
current SBUs,
circles are
proportional to
dollar sales.
Company is inn
fair shape,
although not in
good shape.
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Star: High-growth, high share businesses or products. Require heavy investments to finance
rapid growth eventually resulting in slowing growth that turns into cash cows.

Cash cows: Low growth, high share businesses or product. Established and successful,
require less investment to hold market share. Produce lots of cash that is used to pay bill
and supports SBU’s needing investment.

Question marks: Low share business units in high-growth markets. Require lots of cash to
hold share, let alone increase it. Consider whether question marks are worth building into
stars or phased out.

Dogs: Low growth, low share businesses or products. Generate sufficient cash to maintain
themselves but don’t promise large sources of cash.

Developing strategies for growth and downsizing

 Companies require growth if they want to compete more effectively, satisfy their
stakeholders and attract top talent.
 Marketing is responsible for achieving profitable growth by identifying, evaluating and
selecting market opportunities and laying down strategies for capturing them.

Market penetration: making more sales without changing original product lines through
making marketing mix improvements (adjustments to product design, advertising, pricing
and distribution efforts)

Marketing development: identifying and developing new markets for current products.

Product development: offering modified or new products to current markets.

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Diversification: starting up or buying businesses outside of its current products and/or

markets.

2.3 Planning marketing: Partnering to build customer relationships.

Strategic plan states the kinds of businesses the company will operate and its objectives for
each. Within in each unit more detailed plans are set out in departments such as marketing,
finance, accounting, purchasing, operations, information systems, and human resources.

 Customer engagement and value are key for marketing success, and helps attract, keep
and grow customers.
 CRM must practice closely with partner relationship management (PRM) to better
preform internally in order to serve the customer better.

Partnering with company departments

 Each department carries value in creating activities to design, produce, market, deliver
and support a firm’s product.
 An organisation’s success not only depends on how each department performs
individuals but also how well the other departments coordination and coheres together.
 Marketers must find ways to get all departments to ‘think consumer’.

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2.4 Marketing strategy and the marketing mix

Customers are central, the goal is to create value for customers and build profitable
relationships. To do this, the organisation must have a marketing strategy (the marketing
logic by which the company hopes to create this customer value and achieve these
profitable relationships). They do this by deciding which customers to serve (segmentation
and targeting) and how (differentiation and positioning). HOW? Identifies the total market,
divides it into smaller segments, selects the promising segments and focusing on those.
Then, with guidance from the marketing strategy, an integrated marking mix is designed
(things it can control) – product, price, placement, promotion, people, process and physical

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evidence. This helps with identifying and adapting to changes and forces in the marketing
environment.

** To succeed in today’s competitive marketplace, companies need to be customer centred.

Before a company can satisfy its customers, it must identify their needs, wants and
demands. To do this, it is easier for a company to focus and serve one target market rather
than attempting to address every consumer. This is done by market segmentation, market
targeting, differentiation and positioning.

Market Segmentation  Determine which segments offer the best

DEFINITION: Market segment
consists of consumers who respond
in a similar way to a given set of
marketing efforts.
Market Targeting
DEFINITION: Selecting one or more
segments to enter.
Market differentiation & positioning
DEFINITION
Positioning: arranging a product to
occupy a clear, distinctive and
desirable place in the minds of
target consumers.
Differentiation: making it distinct a
company’s market offerings as
opposed to those offered by
competitors so that it appears more
valuable to consumers.
opportunities.
 Geographic, demographic, psychographic and
behavioural factors.
 Analysing the needs, characteristics or
behaviours of groups.
 Identifying what requires tailoring or
marketing programs.
 Recommended to target segments which
profitably generate the greatest customer
value and sustain it over time.
 Depending on the size of the company may
determine the number of segments chosen to
target.
 A products position is the place the product
occupies relative to competitors’ products in a
consumer’s mind.
 If a product is perceived identical to that of
another in the same market, consumers would
have no reason or desire to buy it.
 Identify customer value differences that
provide competitive advantages upon which to
build position.

Marketing Mix
A set of controllable, tactical marketing tools that the company blends to produce the
response it wants in the target market. Consists of everything the company can do to
influence demand for its product.

 Product combination of goods and services on offer.

 Price amount of money customers are required to pay in order to obtain the product.
 Placement company activities that make the product available to targeted customers
and end-consumers.

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 Promotion activities which communicate the benefits of a product and persuade target
customers to purchase it.
 People customer service, expertise or helpfulness that may influence a buys choice to
purchase a product or go to a different supplier.
 Process the steps a customer experiences when going through the process of purchasing
a product or service.
 Physical evidence necessary to manager customer and potential customer expectations,
commencing with an explanation of criteria to use when comparing products.

** An effective marketing program blends all aspects of the marketing mix into an
integrated marketing program designed to achieve the company’s overall marketing
objectives by delivering value to customers.

Four Ps (sellers perspective)

Four Cs (buys perspective) – Customer solution, customer cost, convenience and
communication. Customers see themselves buying value or solutions to problems. They
aren’t just interested in price but also the costs of obtaining, using and disposing of the
product.

2.5 Managing the marketing effort

Managing the marketing process requires four management functions: analysis, planning,
implementation and control.

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Analysis

Planning
 Decides what it wants to do with each unit and which strategies it will implement to
attain overall strategic objectives.

Implementation

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The process that turns marketing plans into marketing actions in order to accomplish
strategic marketing objectives.
 Planning addresses the what and why, implementation addresses the who, where, when
and how.
 Two firms can have the same or similar strategy as the other yet one may overtake the
other in the marketplace through faster or better execution.

MARKETING DEPARTMENT ORGANISATION

- Larger companies may benefit from introducing a chief marketing officer (CMO)
position that oversees the company’s entire marketing operation and represents
marketing on the management team. The CMO’s role is to champion the customer’s
cause.
- Most common form of marketing organisation is functional organisation, whereby
different activities are overseen by a functional specialist (sales manager, advertising
manager, marketing research manager, customer service manager or new product
manager).
- Companies with a variety of products/service may use the product management
organisation approach.
- Companies that sell one product line to a variety of markets that have different
needs/preferences, a market or customer management organisation is
recommended.
- Large companies that produce many different products into different
segments/geographic markets employ a combination of all.

Control
Evaluating the results of marketing strategies and plans, and taking corrective action to
ensure objectives are attained.
Four steps:
1. Sets marketing goals.
2. Measures performance in the marketplace (benchmarking?).
3. Evaluates the causes of any differences between expected and actual performance.
4. Take corrective action to close the gaps between its goals and performance.
Operating control involves checking ongoing performance against annual plan and taking
corrective action.

2.6 Measuring and managing return on marketing investment

The free spending days have been replaced by marketing measurement and accountability.
 Today’s marketers are now responsible for linking their strategies and tactics to
measurable marketing performance outcomes.
 Return on marketing investment (ROI) is the net return from a marketing investment
divided by the costs of the marketing investment, ultimately measuring the profits
generated by investments in marketing activities.
 ROI can be assessed in dollars but also in performance measures such as brand
awareness, sales or market share, as well as customer centred measures such as

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customer acquisition, customer loyalty/retention, customer lifetime value and customer
equity.

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