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Chapter 2

Comm131 - Chapter 2 Notes.docx
Comm131 - Chapter 2 Notes.docx

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Queen's University
COMM 131
Jacob Brower

Marketing Chapter 2: Company and Marketing Strategy January 15, 2012 Defining Marketing’s Role - Strategic Planning: the process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities - Companies prepare annual plans, long-range plans, and strategic plans - Annual and long-range plans deal with the company’s current business - Strategic plans involve adapting the firm to take advantage of new opportunities Strategic Planning Process Setting company Designing the Planning Defining the objectives and business marketing and company goals portfolio other functional mission strategies 1. Defining a Market-Oriented Mission - Mission Statement: a statement of the organization’s purpose – what it wants to accomplish in the larger environment - Mission statements should be market oriented and defined in terms of satisfying basic customer needs - Emphasize the company’s strengths in the marketplace 2. Setting Company Objectives and Goals - Turn mission into detailed supporting objectives for each level of management - Include business objectives and marketing objectives - Marketing strategies and programs must be developed to support marketing objectives 3. Designing the Business Portfolio - Business Portfolio: the collection of businesses and products that make up the company - Good business portfolios fit the company’s strengths and weaknesses to opportunities in the environment - Business portfolio planning involves two steps: 1. Analyze current business portfolio 2. Shape the future portfolio by developing strategies for growth and downsizing 4. Planning Marketing and Other Functional Strategies Analyzing the Current Business Portfolio - Portfolio Analysis: the process by which management evaluates the products and businesses that make up the company - Company should put strong resources into more profitable businesses and phase down its weaker ones - Strategic Business Units (SBU): key businesses that make up the company (company division, product line within a division, single product, or brand) - SBUs are evaluated on two dimensions: Attractiveness of SBU’s market or industry Strength of the SBU’s position in the market or industry Boston Consulting Group Approach (BCG Matrix) - Company classifies all of its SBUs according to the growth-share matrix - Growth-Share Matrix: portfolio-planning method that evaluates a company’s SBUs in terms of its market growth rate and relative market share (SBUs are classified as stars, cash cows, question marks, or dogs) Stars - High-growth, high-share businesses or products - Need heavy investments to finance rapid growth - Eventually, growth slows down and they turn into cash cows Cash Cows - Low-growth, high-share businesses or products - Established and successful SBUs - Need less investment to hold their market share - Produce a lot of cash Question Marks - Low-share business unites in high-growth markets - Require a lot of cash to hold their share - Some turn into stars, some should be phased out Dogs - Low-growth, low-share businesses and products - May generate enough cash to maintain but are not large cash sources - Four strategies can be pursued for each SBU: the company can build, hold, harvest, or divest the SBU - Over time, SBUs change their position in the BCG matrix Problems With Matrix Approaches - Limitations: difficult, time consuming, and costly to implement - Focuses on classifying current businesses and provides little advice for future Developing Strategies for Growth and Downsizing - Companies should make “managing profitable growth” the objective rather than growth itself - Product/Market Expansion Grid: a portfolio-planning tool for identifying company growth opportunities through market penetration, market development, product development, or diversification  Market Penetration: increasing sales of current products to current market segments without changing the product  Market Development: identifying and developing new market segments for current company products  Product Development: offering modified or new products to current market segments  Diversification: starting up or acquiring businesses outside the company’s current products or markets  Downsizing: reducing the business portfolio by eliminating products or business units that are not profitable or that no longer fit the company’s strategy Partnering to Build Customer Relationships - All company departments must work together to accomplish strategic objectives - Marketing Concept: suggests that company strategy should revolve around building profitable relationships with customers - Marketing provides inputs to strategic planners by identifying market opportunities - Marketing designs strategies for reaching the unit’s objectives Partnering with Other Company Departments - Each department is a link in the company’s internal value chain - Value Chain: series of internal departments that carry out value-creating activities to design, produce, market, deliver, and support products - Departments should work together to produce value for customers - Marketers must find a
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