Company and Marketing

Strategy
Marketing – Week 2

Prepared by: Joe Tu

Company-wide Strategic Planning

Each company must find the game plan for long-run survival and growth that
makes the most sense given its specific situation, opportunities, objectives,
and resources. This is the focus of strategic planning—the process of
developing and maintaining a strategic fit between the organization’s goals
and capabilities and its changing marketing opportunities.
Company-wide Strategic Planning

Strategic planning sets the stage for the rest of planning in the firm.
Companies usually prepare annual plans, long-range plans, and strategic
plans. The annual and long-range plans deal with the company’s current
businesses and how to keep them going. In contrast, the strategic plan
involves adapting the firm to take advantage of opportunities in its constantly
changing environment.
How the company starts the strategic planning
process?
 1. Defining a Market-Oriented Mission
An organization exists to accomplish something, and this purpose should be
clearly stated.

 What is our business?

 Who is the customer?
 What do consumers value?
 What should our business be?

Successful companies continuously raise these questions and answer them

carefully and completely.
Many organizations develop formal mission statements that answer these questions. A
mission statement is a statement of the organization’s purpose—what it wants to accomplish
in the larger environment. A clear mission statement acts as an “invisible hand” that guides
people in the organization.
Some companies define their missions myopically in product or technology terms (“We make
and sell furniture” or “We are a chemical-processing firm”). But mission statements should be
market oriented and defined in terms of satisfying basic customer needs. Products and
technologies eventually become outdated, but basic market needs may last forever.

Product-Oriented Business Market-Oriented Business

 Mission statements should be
meaningful and specific yet motivating.
Too often, mission statements are
written for public relations purposes
and lack specific, workable guidelines.
Instead, they should emphasize the
company’s strengths and tell forcefully
how it intends to win in the
marketplace.
2. Setting Company Objectives and Goals

The company needs to turn its broad mission into detailed supporting
objectives for each level of management. Each manager should have
objectives and be responsible for reaching them.
Example
most Americans know CVS as a chain of retail pharmacies selling prescription and over-the-
counter medicines, personal care products, and a host of convenience and other items. But CVS—
recently renamed CVS Health—has a much broader mission. It views itself as a “pharmacy
innovation company,” one that is “helping people on their path to better health.” The company’s
motto: “Health is everything.”

CVS Health’s broad mission leads to a hierarchy of objectives, including business objectives and
marketing objectives. CVS Health’s overall business objective is to increase access, lower costs,
and improve the quality of care. It does this through the products it sells at its retail pharmacies and
by taking a more active role in overall healthcare management through research, consumer
outreach and education, and support of health-related programs and organizations.
3. Designing the Business Portfolio

Guided by the company’s mission statement and objectives, management

now must plan its business portfolio—the collection of businesses and
products that make up the company. The best business portfolio is the
one that best fits the company’s strengths and weaknesses to
opportunities in the environment.
Most large companies have complex port-folios of
businesses and brands. Strategic and marketing
planning for such business port-folios can be a
daunting but critical task. For example, ESPN’s
brand portfolio consists of more than 50 business
entities, ranging from multiple ESPN cable
channels to ESPN Radio, ESPN.com, ESPN The
Magazine, and even ESPN Zone sports-themed
restaurants. In turn, ESPN is just one unit in the
even more complex portfolio of its parent com-
pany, The Walt Disney Company. The best
business portfolio is the one that best fits the
company’s strengths and weaknesses to
opportunities in the environment.
But….
how to analyze the
Business Portfolio?
The major activity in strategic planning is business portfolio analysis, whereby management
evaluates the products and businesses that make up the company. The company will want to put
strong resources into its more profitable businesses and phase down or drop its weaker ones.

Management’s first step is to identify the key businesses that make up the company, called
strategic business units (SBUs). An SBU can be a company division, a product line within a
division, or sometimes a single product or brand. The company next assesses the attractiveness of
its various SBUs and decides how much support each deserves. When designing a business
portfolio, it’s a good idea to add and support products and businesses that fit closely with the firm’s
core philosophy and competencies.
The best-known portfolio-planning
method was developed by the Boston
Consulting Group, a leading
management consulting firm. Using
the now-classic Boston Consulting
Group (BCG) approach, a company
classifies all its SBUs according to
the growth-share matrix, as shown
in the next slide.
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.
4. Planning Marketing: Partnering to Build Customer
Relationships

The company’s strategic plan establishes what kinds of businesses the

company will operate and its objectives for each. Then, within each business
unit, more detailed planning takes place. The major functional departments in
each unit—marketing, finance, accounting, purchasing, operations,
information systems, human resources, and others—must work together to
accomplish strategic objectives.
Marketing plays a key role in the company’s strategic planning in several ways:

1. Marketing provides a guiding philosophy—the marketing concept—that suggests the

company strategy should revolve around creating customer value and building profitable
relationships with important consumer groups;

2. Marketing provides inputs to strategic planners by helping to identify attractive market

opportunities and assessing the firm’s potential to take advantage of them;

3. Within individual business units, marketing designs strategies for reaching the unit’s
objectives.
Market Segmentation

The market consists of many types of consumers, products, and needs. The marketer must
determine which segments offer the best opportunities. Consumers can be grouped and served
in various ways based on geographic, demographic, psychographic, and behavioral factors. The
process of dividing a market into distinct groups of buyers who have different needs,
characteristics, or behaviors and who might require separate marketing strategies or mixes is
called market segmentation.
Market Targeting

After a company has defined its market segments, it can enter one or many of these segments.
Market targeting involves evaluating each market segment’s attractiveness and selecting one or
more segments to enter. A company should target segments in which it can profitably generate
the greatest customer value and sustain it over time.
Positioning
A product’s position is the place it occupies relative to competitors’ products in consumers’ minds.
Marketers want to develop unique market positions for their products. If a product is perceived to
be exactly like others on the market, consumers would have no reason to buy it.

Positioning is arranging for a product to occupy a clear, distinctive, and desirable place relative to
competing products in the minds of target consumers. Marketers plan positions that distinguish
their products from competing brands and give them the greatest advantage in their target markets.
Example

BMW promises “Sheer driving pleasure”;

Subaru is “Confidence in motion.” Coca-Cola
wants you to “Taste the feeling”; Pepsi says
“Live for now.” Del Monte is “Bursting with
Life”; Cascadian Farm products are “Certified
Organic. Guaranteed Delicious.” At Panera,
you’ll find “Food as it should be”; at Wendy’s,
“Quality Is Our Recipe.”
 Managing the marketing function begins with
Marketing Analysis a complete analysis of the company’s
situation.
In-Class Activity (30 mins)

Do you still remember?

Define strategic planning and briefly describe the four steps that lead managers
and the firm through the strategic planning process. Discuss the role marketing
plays in this process.

(An individual can describe a single step each time)

Analyzing the
Marketing
Environment
Marketing – Week 2
Marketing Environment

The marketing environment consists of a microenvironment and a macroenvironment. The

microenvironment consists of the actors close to the company that affect its ability to engage
and serve its customers—the company, suppliers, marketing intermediaries, customer markets,
competitors, and publics. The macroenvironment consists of the larger societal forces that affect
the microenvironment—demographic, economic, natural, technological, political, and cultural
forces. We look first at the company’s microenvironment.
Marketing management’s job is to build relationships with customers by creating customer value
and satisfaction. However, marketing managers cannot do this alone. The figure below shows
the major actors in the marketer’s microenvironment. Marketing success requires building
relationships with other company departments, suppliers, marketing intermediaries, competitors,
various publics, and customers, which combine to make up the company’s value delivery
network.
The Company
In designing marketing plans, marketing management takes other company groups into account—
groups such as top management, finance, research and development (R&D), purchasing, operations,
human resources, and accounting.

Suppliers
Suppliers form an important link in the company’s overall customer value delivery network. They
provide the resources needed by the company to produce its goods and services.

Marketing Intermediaries
Marketing intermediaries help the company promote, sell, and distribute its products to final buyers.
They include resellers, physical distribution firms, marketing services agencies, and financial
intermediaries.
Competitors
To be successful, a company must provide greater customer value and satisfaction than its competitors do.
Thus, marketers must do more than simply adapt to the needs of target consumers. They also must gain
strategic advantage by positioning their offerings strongly against competitors’ offerings in the minds of
consumers.

Publics
The company’s marketing environment also includes various publics. A public is any group that has an actual
or potential interest in or impact on an organization’s ability to achieve its objectives.

Customers
Customers are the most important actors in the company’s microenvironment. The aim of the entire value
delivery network is to engage target customers and create strong relationships with them.
The company and all of the other actors operate in a larger macroenvironment of forces that
shape opportunities and pose threats to the company. The figure below shows the six major
forces in the company’s macroenvironment. Even the most dominant companies can be
vulnerable to the often turbulent and changing forces in the marketing environment.
1. Demography

Demography is the study of human

populations in terms of size, density,
location, age, gender, race, occupation, and
other statistics. The demographic
environment is of major interest to
marketers because it involves people, and
people make up markets.
Some notions you should know:

• Baby Boomers: The post–World War II baby boom produced 78 million baby boomers,
who were born between 1946 and 1964.

• Generation X: The baby boom was followed by a “birth dearth,” creating another
generation of 49 million people born between 1965 and 1976. Author Douglas Coupland
calls them Generation X because they lie in the shadow of the boomers.
• Millennials: Both the baby boomers and Gen Xers will one day be passing the reins to the
millennials (also called Generation Y or the echo boomers). Born between 1977 and 2000,
these children of the baby boomers number 83 million or more, dwarfing the Gen Xers and
becoming larger even than the baby boomer segment.

• Generation Z: Hard on the heels of the millennials is Generation Z, young people born after
2000 (although many analysts include people born after 1995 in this group).
Think it through….

Do brands need to create separate products and marketing programs

for each generation?
2. The Economic Environment
Markets require buying power as well as people. The economic
environment consists of economic factors that affect consumer
purchasing power and spending patterns. Economic factors can
have a dramatic effect on consumer spending and buying
behavior.
For example, until fairly recently, American consumers spent
freely, fueled by income growth, a boom in the stock market,
rapid increases in housing values, and other economic good
fortunes. They bought and bought, seemingly without caution,
amassing record levels of debt. However, the free spending and
high expectations of those days were dashed by the Great
Recession of 2008–2009.
3. The Natural Environment
The natural environment involves the physical environment
and the natural resources that are needed as inputs by
marketers or that are affected by marketing activities. At the
most basic level, unexpected happenings in the physical
environment—anything from weather to natural disasters—
can affect companies and their marketing strategies.
For example, during a recent cold winter—in which the
term polar vortex gusted into the American vocabulary—
sales suffered across a wide range of businesses, from
florists and auto dealers to restaurants, airlines, and tourist
destinations. In contrast, the severe weather boosted demand
for products such as salt, snowblowers, winter clothing, and
auto repair centers.
4. The Technological Environment
The technological environment is perhaps
the most dramatic force now shaping our
destiny. Technology has released such
wonders as antibiotics, robotic surgery,
smartphones, and the internet. It also has
released such horrors as nuclear missiles and
assault rifles. It has released such mixed
blessings as the automobile, television, and
credit cards. Our attitude toward technology
depends on whether we are more impressed
with its wonders or its blunders.
5. The Political and Social Environment

Marketing decisions are strongly affected by

developments in the political environment. The political
environment consists of laws, government agencies,
and pressure groups that influence or limit various
organizations and individuals in a given society.
6. The Cultural Environment

The cultural environment consists of

institutions and other forces that affect a
society’s basic values, perceptions,
preferences, and behaviors. People grow up
in a particular society that shapes their basic
beliefs and values. They absorb a worldview
that defines their relationships with others.
The following cultural characteristics can
affect marketing decision making.
Discussion (30+ mins)

Describe Generation Z. What differentiates GenZers from other demographic

groups, such as baby boomers, Generation X, and millennials?

Why should marketers play close attention to the political environment?

Assignment for today
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