Principles of Marketing Global Edition

Principles of Marketing Global Edition Kotler and Armstrong Chapter 2: Company and Marketing Strategy Lecturer: Szilvia Bíró-Szigeti, PhD Department ...
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Principles of Marketing Global Edition Kotler and Armstrong Chapter 2:

Company and Marketing Strategy Lecturer: Szilvia Bíró-Szigeti, PhD Department of Management and Corporate Economics Copyright © 2016 Pearson Education, Inc.

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Strategic planning The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities. The strategic plan involves adapting the firm to take advantage of opportunities in its constantly changing environment.

Nike’s outstanding success results from much more than just making good sports gear. The iconic company’s strategy is to build engagement and a sense of community with and between the Nike brand and its customers.

Györgyi Danó

Company and Marketing Strategy

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Steps in Strategic Planning

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The mission A mission is a general, enduring statement of overall organizational purpose. The mission statement should be market oriented! We sell tools and home repair and improvement items.

We empower consumers to achieve the homes of their dreams.

The mission Defining a Market-Oriented Mission

and again…

The mission statement is the organization’s purpose… what it wants to accomplish in the larger environment. 2-8

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The mission

’s mission is to organize the world’s information and make it universally accessible and useful.

Company-Wide Strategic Planning Setting Company Objectives and Goals Business objectives

• Build profitable customer relationships • Invest in research • Improve profits

Marketing objectives

• Increase market share • Create local partnerships • Increase promotion 2-9

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Company Objectives and Goals Heinz’s overall objective is to build profitable customer relationships by developing foods “superior in quality, taste, nutrition, and convenience” that embrace its nutrition and wellness mission.

Designing the Business Portfolio The business portfolio is the collection of businesses and products that make up the company. Portfolio analysis is a major activity in strategic planning whereby management evaluates the products and businesses that make up the company. Copyright © 2016 Pearson Education, Inc.

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Designing the Business Portfolio Strategic business units can be a • Company division • Product line within a division • Single product or brand

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Designing the Business Portfolio

Identify strategic business units (SBUs) Assess the attractiveness of its various SBUs

Decide how much support each SBU deserves Copyright © 2016 Pearson Education, Inc.

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Designing the Business Portfolio

Growth-share matrix is a portfolio-planning method that evaluates a company’s SBUs in terms of market growth rate and relative market share. Copyright © 2016 Pearson Education, Inc.

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Business portfolio planning

Business portfolio planning involves two steps: • analyzing current business portfolio and determining which businesses should receive more, less, or no investment • shaping the future portfolio by developing strategies for growth and downsizing

Györgyi Danó

Business portfolio: the collection of businesses and products that make up the company.

Market share The total number of units of a product expressed as a percentage of the total number of units sold by all competitors in the market. 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.

Györgyi Danó

BCG Matrix

Relative market share Market share of a company or a business unit divided by that of its largest competitor.

Potential strategies in BCG Matrix • Build: to increase market share • Hold: to preserve the market share

• Harvest: to increase short-term cash-flow, to reduce costs fast • Divest: to sell the business 16

Elements of the BCG Matrix Stars: generate considerable income Strategy: invest more funds for future growth Cash Cows: generate strong cash flow Strategy: use profits to finance growth of Stars and Question Marks

Question Marks: have potential to become a Star Strategy: either invest more funds for growth or consider disinvesting

Dogs: generate little profits Strategy: consider withdrawing 17

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Exercise Answers: 1: A

2: C

6: B

5: D

GE Model Strong Strong Average

Weak

Average

Weak

build invest build invest

build invest hold maintain

hold maintain harvest divest

hold maintain

harvest divest

harvest divest

Györgyi Danó

Business Strengths

Market Attractiveness

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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

Product/market expansion grid looks at new products, existing products, new markets, and existing markets for company growth opportunities.

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Designing the Business Portfolio Developing Strategies for Growth and Downsizing Existing products

New products

Existing markets New markets FIGURE 2.3 The Product/Market Expansion Grid Copyright © 2016 Pearson Education, Inc.

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Designing the Business Portfolio Developing Strategies for Growth and Downsizing

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Designing the Business Portfolio Downsizing is when a company must prune, harvest, or divest businesses that are unprofitable or that no longer fit the strategy. • The firm may have grown too fast or entered areas where it lacks experience. • The market environment might change, making some products or markets less profitable. • Some products or business units simply age and die.

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Planning Marketing: Partnering to Build Customer Relationships 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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Marketing Strategy and the Marketing Mix

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Marketing Strategy and the Marketing Mix

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 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. Copyright © 2016 Pearson Education, Inc.

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Marketing Strategy and the Marketing Mix 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.

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Marketing Strategy and the Marketing Mix Positioning:

VOLVO – or much more?

SAFE?

Volvo Trucks - The Epic Split feat. Van Damme (Live Test).mp4

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Marketing Strategy and the 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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Ansoff’s Product-Market Growth strategies

New markets

Current products

New products

Market penetration strategy

Product development strategy

-Increase

market share -Increase product usage: frequency, quantity, new application

Market development strategy -Expand markets for existing products: geographic expansion, target new segments

-Product

improvement -Product line extensions -New products for the same markets

Diversification strategy -Vertical Integration (forward or backward) -Diversification into related businesses -Diversification into unrelated businesses

Györgyi Danó

Current markets

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Marketing planning Marketing planning involves choosing marketing strategies that will help the company attain its overall strategic objectives.

A marketing objective should be: • Realistic • Measurable • Time specific • Compared to a benchmark „To increase sales of Purina brand cat food by 15% over 2016 sales of $300 million.”

Managing the Marketing Effort Marketing Analysis

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Marketing Analysis – SWOT Analysis

Internal

External

Positive

Negative 2-36

SWOT Analysis Strengths • Cost advantage • Financial resources • Human resources • Customer loyalty • Modern production • Facilities • etc.

Weaknesses • Too narrow product line • Lack of management • High-cost operation • Weak market image • etc.

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SWOT Analysis Opportunities • Add to product line • Enter new markets • Acquire company with needed technology • etc.

Threats • Changing buyer tastes • Entry of new competitors • Adverse government • Policies • etc.

Macroenvironmental elements 38

Managing the Marketing Effort Market Planning—Parts of a Marketing Plan Executive summary Objectives and issues

Marketing situation Marketing strategy

Budgets

Threats and opportunities

Action programs

Controls

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Managing the Marketing Effort Marketing Implementation • Turning marketing strategies and plans into marketing actions to accomplish strategic marketing objectives.

Who? Where? When?

How? 2-40

Geographic organization is useful for companies that sell across the country or internationally. Managers are responsible for developing strategies and plans for a specific region.

Functional organization is the most common form of marketing organization with different marketing functions headed by a functional specialist. Market organization is useful for Functional companies with one product line sold Product management organization is to many different markets. Managers Geographic useful for companies with different are responsible for developing products or brands. Managers are strategies and plans for their specific Product management responsible for developing strategies markets. and plans for a specific product or Market brand. Customer management organization involves a customer focus and not a Customer management product focus for managing customer profitability and customer equity. Managers are responsible for developing strategies and plans for their specific 2-41 Copyright © 2016customers. Pearson Education, Inc.

Marketing Department Organization

Managing the Marketing Effort

Marketing Control

• Evaluating results • Taking corrective action • Operating control • Strategic control 2-42

Measuring and Managing Return on Marketing Investment

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