Chapter 2
Company and Marketing Strategy:
Partnering to Build Customer Engagement, Value, and
Relationships
Principles of Marketing
Philip Kotler, Gary Armstrong
Company and Marketing Strategy
Topic Outline
• Companywide Strategic Planning: Defining Marketing’s Role
• Designing the Business Portfolio
• Planning Marketing: Partnering to Build Customer
Relationships
• Marketing Strategy and the Marketing Mix
• Managing the Marketing Effort
• Measuring and Managing Return on Marketing Investment
What Is Marketing?
The Marketing Process
Companywide Strategic Planning
Strategic Planning
Strategy is theory about how to gain competitive
advantage
Strategic Planning is the process of developing and
maintaining a strategic fit between the
organization’s goals, capabilities and its changing
marketing opportunities
Companywide Strategic Planning
Steps in Strategic Planning
Companywide Strategic Planning
Defining a Market-Oriented Mission
• The mission statement is the organization’s purpose,
what it wants to accomplish in the larger environment
• Market-oriented mission statement defines the
business in terms of satisfying basic customer needs
Grameenphone is here to inspire. We provide the
power of digital communication, enabling
everyone to improve their lives, build societies
and secure a better future for all.
We exist to help our customers get the full benefit
of being connected. Our success is measured by
how passionately they promote
Companywide Strategic Planning
Product Orientation vs. Market Orientation
Company Product Orientation Market Orientation
Xerox We make copying We improve office
equipment productivity
Paramount Pictures We make movies We market
entertainment
Facebook We are an online social We connect people
network around the world and
help them share
important moments in
their lives
Companywide Strategic Planning
Setting Company Objectives and Goals
Turn broad missions into detailed supporting
objectives. Objectives must meet SMART criteria:
S Specific
M Measurable
A Attainable
R Realistic
T Time-bound
“To achieve a market share of 25% in 5 years”
Companywide Strategic Planning
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
Companywide Strategic Planning
Analyzing the Current Business Portfolio
Strategic business units can be
• Company division (Unilever – Food & Drink, Home care, Personal Care, Water
purifier)
• Product line within a division (e.g. Personal care)
• Single product or brand (e.g. Clear shampoo)
Companywide Strategic Planning
Analyzing the Current Business Portfolio
Companywide Strategic Planning
Analyzing the Current Business Portfolio
High
Low BCG Portfolio Planning Approach
High Low
Companywide Strategic Planning
Role of each SBU in future in matrix
approach
• It can pursue on of the 4 strategies:
• Build – invest more in the business unit’s share
• Hold – invest just enough in the business unit’s
share
• Harvest – milking its short-term cash flow
regardless of the long-term effect
• Divest – selling or phasing SBU and using resources
elsewhere
Companywide Strategic Planning
Problems with Matrix Approaches
• Difficulty in defining SBUs and measuring market share
and growth
• Time consuming
• Expensive
• Focus on current businesses, not future planning
Companywide Strategic Planning
Developing Strategies for Growth and
Downsizing
Product/market expansion grid is a tool for identifying
company growth opportunities through market
penetration, market development, product
development, or diversification
Companywide Strategic Planning
Developing Strategies for Growth and Downsizing
Product/Market Expansion Grid Strategies
Companywide Strategic Planning
Developing Strategies for Growth and Downsizing
Product/Market Expansion Grid Strategies
Market penetration is a growth strategy increasing sales
to current market segments without changing the
product
Market development is a growth strategy that identifies
and develops new market segments for current
products
Companywide Strategic Planning
Developing Strategies for Growth and Downsizing
Product/Market Expansion Grid Strategies
Product development is a growth strategy that offers new
or modified products to existing market segments
Diversification is a growth strategy through starting up or
acquiring businesses outside the company’s current
products and markets
Companywide Strategic Planning
Developing Strategies for Growth and Downsizing
Downsizing is the reduction of the business portfolio by
eliminating products or business units that are not
profitable or that no longer fit the company’s overall
strategy
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
Planning Marketing
Partnering to Build Customer Relationships
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
Marketing Strategy and the Marketing
Mix
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 behavior 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
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
Marketing Strategy and the Marketing
Mix
Customer Value-Driven Marketing Strategy
Market positioning is the arranging for a product to
occupy a clear, distinctive, and desirable place
relative to competing products in the minds of the
target consumer
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
Marketing Strategy and the Marketing
Mix
Developing an Integrated Marketing Mix
Managing the Marketing Effort
Managing the Marketing Effort
Marketing Analysis – SWOT Analysis
Managing the Marketing Effort
Market Planning – Parts of a Market Plan
Managing the Marketing Effort
Market Implementation
• Implementation is the process that turns
marketing plans into marketing actions to
accomplish strategic marketing objectives
Faster or better execution can help a company
win the marketplace compared to other players in
the market.
Managing the Marketing Effort
Marketing Control
• Controlling is the measurement and evaluation of
results and the taking of corrective action as
needed to ensure the objectives are achieved.
• Operating control
• Strategic control
Measuring and Managing Return on
Marketing Investment
Return on Marketing Investment (Marketing ROI)
Return on marketing investment (Marketing ROI) is
the net return from a marketing investment
divided by the costs of the marketing investment.
Marketing ROI provides a measurement of the
profits generated by investments in marketing
activities.
