Chapter 2

Company and Marketing Strategy Partnering to Build Customer Relationships

Strategy : Future course of action. Strategic Plan-Definition of companys over all mission, objectives and

Strategic Planning

strategies

Strategic Planning-A process of selecting an overall strategy for the

company. it is a process of developing and maintaining strategic fit between the org goals and capabilities and its changing marketing opportunities. - It makes you think ahead - Better coordinates the companys efforts - Sharpens company objectives - Provide clear performance standards
Role of Marketing :
To provide information as to help in preparing a marketing plan (strategic plan)

- Current (Annual Plan)& Long range plan is Reviewed and adopted through strategic plan - Many companies operate without formal strategic plans, as New companies - small companies - matured companies (they argue as to collect dust at the end because of fast changing environment) - but the opposite is true i.e it enables response quickly to the changing environment.

and to coordinate and guide the marketing and other activities of the company.

Steps of strategic planning (Fig: 2.1)

Defining the Co. Mission Setting the Company objectives and goals Designing the business portfolio Planning the marketing & other functional strategies

1. Defining the company mission

Mission : - Reason for existence

- statements of organizations purpose (an invisible hand)

- All other strategic marketing / business objectives are derived from it

- It must be changed if does not match with the changing environment

or if unclear (no commitment)

Some questions to search the new purpose / mission

(very carefully as it is difficult to answer.) What is our business ? Who is our customer ? What will our business be ? What should our business be ?

- It should be clearly defined for better management commitment/customer loyalty - Its better to define it in marketing terms not in product terms (see table 2.1) -Should be neither too narrow nor too broad e.g. Pencil producers say the communication equipment. - It should be realistic, e.g. not the worlds biggest or best. - It should be specific e.g. to increase market share but up to a certain percentage -It should fit the market environmental conditions e.g. to sale (not the) radio - It should be based on distinctive competencies e.g. fruit producers not to enter into furniture manufacturing - It should be motivating (i.e. contributing to life of quality) e.g. Not like IBM i.e. to be a hundred billion dollar company next year But like Microsoft i.e. to provide IAYF - It should be guided by a vision i.e. An almost impossible dream (Imagination) e.g. by Sony i.e. to give everyone an excess to the personal portable sound i.e. created walkman
transistors

Market Oriented Business Definitions

Company
Product-Oriented Definition

Market-Oriented Definition

Revlon Disney

We make cosmetics We run parks

We sell lifestyle and self-expression; success and status ; memories, hopes and dreams

We provide fantasies and entertainment

We offer products and services that deliver value

Wal-Mart We run discount stores Xerox We make copying, fax, & other office machines

We make businesses more productive by helping them scan, store, retrieve, revise, distribute, print, and publish documents We deliver green healthy looking yards
We provide advise and solutions that transform ham-handed homeowners into Mr. and Mrs. fixits

O.M.Scott

We sell grass seed & fertilizer

Home Depot

sell tools & home repair / improvement items

2. Setting company objectives and goals

Mission is to be turned into detailed objectives at each management level (i.e. hierarchy of objectives) e.g. fertilizer division of a company, with a mission

To increase agricultural productivity This mission has a hierarchy of both business and marketing objectives e.g. - Research for new and more productive fertilizers.
-

As research is expensive so it requires more money i.e. more profits / sales.

For more sales the objective may be more market share / entry into new mkts

- These objectives must be supported by broader strategy e.g. To increase market share, more promotional activities - This broader strategy should be define in specific details e.g. What sort of resources (funds or sales people) are required promotion and how much?

3. Designing the business portfolio

Business

The collection of business or products that make up the

portfolio :

(a) Analyzing the current business portfolio

Portfolio analysis :

company should be carefully selected in accordance with the company strengths and weaknesses

A tool by which management identifies and evaluate the various businesses (SBUs) that make up the company. (So as to recognize the weaker or attractive ones for more concentration or phasing out)
SBU

Some companies do portfolio analysis informally and

: A companys business unit with separate mission , objectives and plans i.e. a division , product line, or a brand.

others use the formal tools such as the growth share matrix/BCG model or General Electric strategic business/planning grid

This and other relative tools have some problems such as 1)they are difficult ,time taking & costly to use. 2) it is difficult to measure the proper market growth & share. 3)These approaches focus only on current bus., not future planning so management has still to rely on its own notion to set future objectives. 4) SBUs change positions over time Still about 75% of the 500 fortune companies use these techniques

Fig:2.3 : G.Es strategic business planning grid.

Factors of industry attractiveness Market size, market growth , profit margins , competitions , seasonality of demandand the cost structure of industry.

Factors of business strengths

Market share, price competitiveness, quality, customer and market knowledge, sales effectiveness and geographic advantage.

(b)Shape the future business portfolio

Determine the future role of each SBU and choose the appropriate resource allocation strategy: - To increase sales volume by - securing more distribution outlets - Call on prospective and current accounts - high quality customer service

a) Build

b) Hold

- To maintain sales volume by - Solidifying organization - Specially by providing even better quality of service to be used else where - Reducing service level up to only most profitable mkt

c) Harvest - To reduce sales cost or to milk products cash flows,

d) Divest

-To minimize cost and clear out inventory by dumping inventory on even liquidation prices

Designing the business portfolio also involves:

Develop strategies for growth by identifying, evaluating, and selecting promising new market opportunities.

Product/market expansion grid (for market opportunity identification).

Developing strategies for downsizing the business portfolio.

4.Planning Marketing
Marketers

must practice CRM and Partner Relationship Management. Partnering with other departments in the company as well as other firms in the marketing system helps to build a superior value delivery-network.

Strategic planning & the small business

THE MARKETING PROCESS

(Fig: 2.5)The factors influencing company marketing strategy and the marketing process DemographicEconomic environment
Marketing channels
Marketing analysis Marketing planning

Technological Natural environment

Product Suppliers Target Place Customers Price Promotion

Marketing control Marketing implement

Publics

Political Legal environment

Competitors

Social cultural environment

(A)Analyzing marketing opportunities

The strategic planning and business portfolio analysis processes help to

identify &evaluate marketing opportunities.

The purpose of the marketing process is to help the firm plan how to capitalize on these opportunities.

Target consumers

As different types of customers with different needs/perception, so it is not to satisfy all in best manner
Demand measurement:

* Estimation of current and future market size -Total product available & sales in the market - Market capacity for more products * Future market growth - Prospect growth rate (age, income etc) - Environmental developments (economic conditions, crime rate etc)

(B)Selecting target markets.

i) Market segmentation :

Divide the market to select more attractive markets

- Market segment :

A group of consumers who respond similar way to a given set of marketing stimuli
- Market segmentation:

Dividing a market into distinct groups of buyers with different needs, characteristics, or behavior who require separate products or M.Mixes (On geographic , demographic or psychographic basis)

ii) Market targeting :

Process of evaluating each market segments attractiveness and selecting one or more segments to enter that the company can serve best, according to resources/strengths of the company. It limits sales but improves profits. Arranging for a product to occupy a clear distinctive and desirable place relative to competing products in the minds of target customers , it requires to formulate competitive positioning for a product and detailed marketing mix.

iii) Market positioning :

- Two ways a) using different attractive (deceptive) slogans

b) by competitive advantage(cost leadership, focus, differentiation - it requires competitive analysis by answering the following questions Who are the competitors ? What are their strengths & weaknesses as in all 4 Ps ?, What are their reactions to our strategies? Box. A -Then according to co.s industry position, adopt any of the types of competitive *Market Leaders --- Dominant marketing positions, shown in box A
*Challengers *Followers *Nichers

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Runner up Copiers Small

B) Developing the marketing mix

Competitor analysis guides competitive marketing strategy / tactics development. i.e. 4Ps Four Ps product, price, place, promotion (seller viewpoint). Corresponding to Four Cs customer solution, cost, convenience, communication (buyer viewpoint)
The marketing mix : A set of controllable , tactical marketing tools i.e. 4Ps

that the firm utilizes to implement its marketing/sales plan and to pursue its objectives o to produce the desired

Managing Marketing Effort

Contents of a marketing plan

SECTIONS
- Executive summary - Current marketing situation - Threats and opportunity analysis - Objectives and issues - Marketing strategy growth or competitive ad: strategies - Action programs - Budgets - Controls

PURPOSES
Presents a brief overview of the proposed plan for quick management review Presents relevant background data on the markets, products, competition & distribution Identifies the main threats opportunities that might impact the product Companys objectives for the prospects in the area of sales, market share, profit issues that will effect these objectives Presents broad marketing approach that will be used to achieve the plans objectives Specifies what will be done, who will do, it when it will be done and how much it will cost A projected profit and loss statements that forecast the expected financial aspects for the plan Indicates how the progress of plan will be monitored e.g. monthly or weekly check / meeting for correction.