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Chapter 2

Chapter 2.docx


Department
Commerce
Course Code
COMM 131
Professor
Ethan Pancer
Chapter
2

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Chapter Two: Company and Marketing Strategy
Company-Wide Strategic Planning: Defining Marketing’s Role
Strategic Planning is the process of developing and maintaining a strategic fit between
the org’s goals and capabilities and it’s changing market opportunities
Companies prepare annual plans, long-range plans, and strategic plans
o Annual and long-range plans deal with the company’s current businesses and how
to keep them going
o Strategic plans involve adapting the firm to take advantage of opportunities in its
constantly changing environment
Strategic planning process: Define mission, set objectives & goals, design business
portfolio, planning marketing and other functional strategies
Defining a Market-Oriented Mission
A Mission Statement is a statement of the org’s purpose – what it wants to accomplish in
the larger environment acts as an “invisible hand” that guides the org
Forging a sound mission begins with the following questions
o What is our business? Who is the customer? What do customers value?
They should be market-oriented and defined in terms of satisfying basic customer needs
They should be meaningful and specific, yet motivating they should emphasize the
company’s strengths in the marketplace
It should focus on customers and the customer experience the company seeks to create
Setting Company Objectives and Goals
The company needs to turn this mission into detailed supporting objectives for each level
of mgmt. Each manager needs objective and be responsible for reaching them
Objectives might include obtaining bigger profits, more sales, a bigger market share,
higher customer satisfaction and retention marketing strategies must support these
Designing the Business Portfolio
A Business Portfolio is a collection of businesses or products that make up a company
o This is guided by a company’s mission, objectives, and goals
The best portfolio is one that best fits the org’s strengths and weaknesses, given O & T’s
Business portfolio planning involves two steps
o The company must analyze its current business portfolio and decide which parts
should receive more, less, or no investment
o Then, you must shape the future portfolio by developing strategies to for growth
and downsizing

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Analyzing the Current Business Portfolio
The major activity in the strategic planning process is portfolio analysis whereby mgmt.
evaluates the products and businesses that make up the company
o The company will put resources into the profitable ones, and downsize or get rid
of the weaker ones
First, identify the key businesses that make up the company Strategic Business Units
o An SBU can be a division, product line, a single product, or a brand
Next, assess each SBU for its attractiveness to decide how much support each deserves
The purpose of strategic planning is to find ways in which the company can best use its
strengths to take advg of opportunities in the environment best known method is…
The Boston Consulting Group Approach
Came up with a method called the Growth-Share Matrix
o The vertical axis shows market attractiveness via market growth rate
o The horizontal axis measures the company’s strength in the market via relative
market share
Problems with Matrix Approaches
It can be difficult, costly, and time-consuming to implement
It might be difficult to define certain SBUs and measure market share or growth
These approaches focus on current product, but provide little advice for future planning
Now, strategic planning is put into the hands of cross-functional teams of divisional
managers who are close to the markets
Stars
High-growth, high share business
or products. Often need heavy
investment to finance their rapid
growth. Eventually growth will
slow and they will turn into cash
cows.
Question Mark
Low-share business units in high-
growth markets. They require less
cash to hold their share, let alone
increase it. Mgmt has to think hard
about whigh to build into stars and
which should be phased off.
Cash Cows
Low-growth, high-share businesses
or products. These established &
successful SBUs need less
investment to hold their market
share. Thus, they produce a lot of
cash to be used for other things.
Dogs
Low-growth, low-share businesses
and products. They may generate
enough cash to maintain
themselves but do not promise to
be large sources of cash.
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