Chapter 2

Company and Marketing Strategy

Strategic planning

Strategic planning

The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities.

Forging a sound mission begins with the following questions:

What is our business? Who is the customer? What do consumers value? What should our business be? These simple-sounding questions are among the most difficult the company will ever have to answer. Successful companies continuously raise these questions and answer them carefully and completely.

Mission statement

A statement of the organization’s purpose—what it wants to accomplish in the larger environment.

Mission statements should be

meaningful and specific yet motivating.

Business portfolio

The collection of businesses and products that make up the company.

Portfolio analysis

The process by which management evaluates the products and businesses that make up the company.

Growth-share matrix

A portfolio-planning method that evaluates a company’s SBUs in terms of market growth rate and relative market share.

By focusing on a niche and mainly one product only, the company displays what successful business portfolio management in the form of niche marketing is all about—

a well-defined brand engaging a focused customer com- munity with meaningful brand relationships that even larger and more resourceful com- petitors can’t crack.

Product/market expansion grid

A portfolio-planning tool for identifying company growth opportunities through market penetration, market development, product development, or diversification.

Market penetration

Company growth by increasing sales
of current products to current market segments without changing the product.

Market development

Company growth by identifying and developing new market segments for current company products.

Product development

Company growth by offering modified or new products to current market segments.

Diversification

Company growth through starting up
or acquiring businesses outside the company’s current products and markets.

Value chain

The series of internal departments that carry out value-creating activities to design, produce, market, deliver, and support a firm’s products.

Value delivery network

A network composed of the company, suppliers, distributors, and, ultimately, customers who partner with each other to improve the performance of the entire system in delivering customer value.

Marketing strategy

The marketing logic by which the company hopes to create customer value and achieve profitable customer relationships.

Market segmentation

Dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors and who might require separate marketing strategies or mixes.

Market segment

A group of consumers who respond in a similar way to a given set of marketing efforts.

Market targeting

Evaluating each market segment’s attractiveness and selecting one or more segments to serve.

Positioning

Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.

Differentiation

Actually differentiating the market offering to create superior customer value.

effective positioning begins with

differentiation—actually differentiating the company’s market offering to create superior customer value.

Marketing mix

The set of tactical marketing tools— product, price, place, and promotion— that the firm blends to produce the response it wants in the target market.

SWOT analysis

An overall evaluation of the company’s strengths (S), weaknesses (W), opportunities (O), and threats (T).

Marketing implementation

Turning marketing strategies and plans into marketing actions to accomplish strategic marketing objectives.

A marketing strategy consists of

specific strategies for target markets, positioning, the marketing mix, and marketing expenditure levels.

The importance of implementation and strategy comparison:

Many managers think that “doing things right” (implementation) is as important as, or even more important than, “doing the right things” (strategy). The fact is that both are critical to success, and companies can gain competitive advantages through effective implementation. One firm can have essentially the same strategy as another yet win in the marketplace through faster or better execution. Still, implementation is difficult—it is often easier to think up good marketing strategies than it is to carry them out.

Customer management

moving away from managing only product or brand profitability and to- ward managing customer profitability and customer equity. They think of themselves not as managing portfolios of brands but as managing portfolios of customers. And rather than managing the fortunes of a brand, they see themselves as managing customer-brand engagement, experiences, and relationships.

Marketing control

Measuring and evaluating the results
of marketing strategies and plans and taking corrective action to ensure that the objectives are achieved.

Marketing return on investment (marketing ROI)

The net return from a marketing investment divided by the costs of the marketing investment.

A company can assess marketing ROI in terms of standard marketing performance measures, such as

brand awareness, sales, or market share.

however, beyond standard performance measures, marketers are using customer-centered measures of marketing impact, such as

customer acquisition, customer engagement, customer experience, customer retention, customer lifetime value, and customer equity.