CH 2: Company and Marketing Strategy: Partnering to Build Customer Relationships
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
o Annual and long-range plans current business and how to keep them going
o Strategic plan adapting the firm to take advantage of opportunities in its constantly changing
Mission Statement- A statement of the organization’s purpose- what it wants to accomplish in the larger
o Should be market oriented and defined in terms of satisfying basic customer needs
o Emphasize the company’s strengths in the marketplace.
o Profit are only a reward for creating value for customers
o Translated in to a set of objectives for the current period marketing strategies and programs
developed must support these.
Business Portfolio- The collection of businesses and products that make up the company.
o Best one fit with the company’s strengths and weaknesses to opportunities in the environment.
o Business portfolio planning involves 2 steps:
1. Analyze its current business portfolio and decide which businesses should receive more,
less, or no investment
2. Shape the future portfolio by developing strategies for growth and downsizing.
Portfolio Analysis- The process by which management evaluates the products and businesses that make up
o Put strong resources into more profitable businesses and phase down or drop its weaker ones.
o Step 1:
• Identify the key business that make up the company (strategic business unit, SBUs)
• SBU- company division, product line, single product or brand
o Step 2:
• Assess the attractiveness of its various SBUs and decides how much support each
o Purpose: find ways in which the company can best use its strengths to take advantage of attractive
opportunities in the environment.
o Evaluate SBU on 2 dimensions
1. attractiveness of the SBU’s market or industry
2. strength of the SBU’s position
o Best-known portfolio-planning method was developed by Boston Consulting Group (leading
management consulting firm)
o Growth-share matrix- A portfolio-planning method that evaluates a company’s strategic business
units 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. Slow down to cash
• Cash cows: low-growth, high-share businesses
or products. Established SBUS need less investment
• Question marks: low-share business units in
high-growth markets. Requires lots of cash. Think
hard • Dogs: low-growth, low-share businesses or products. Generate enough cash to
4 Strategies that can be pursued for each SBU
o Invest more in business unit to build its share
o Invest just enough to hold the SBU’s share at the current level
o Harvest, to gain short-term cash flow regardless of long-term effect
o Divest by selling it or phasing it out
SBUs change positions over time and will die out so companies have to add new SBUs
Limitations: difficult, time consuming, costly to implement, difficult to classify, centralized
o Focus on classifying current businesses, but provide little advice for future planning.
Becoming more decentralized cross-functional teams of divisional managers who are close to their
Company’s objective is to manage “profitable growth”
Product/market expansion grid- A portfolio-planning tool for identifying company growth opportunities
through market penetration, market development, product development, or diversification.
Market Penetration- A strategy for company growth by increasing sales of current products to current
market segments without changing the product.
o Critical mass of outlets in a predefined geographic region, then support them with advertising
o Increase awareness and building a strong brand equity franchise
Market Development- A strategy for company growth by identifying and developing new market segments
for current company products. I.e. demographic and geographic
Product Development- A strategy for company growth by offering modified or new products to current
Diversification- A strategy for company growth through starting up or acquiring businesses outside the
company’s current products and markets.
o Companies that diversify too broadly into unfamiliar products or industries can lose their market
Downsizing- Reducing the business portfolio by eliminating products or business units that are not
profitable or that no longer fit the company’s overall strategy.
market environment might change
entered area where it lacks experience
enter international markets without proper research
product that do not offer superior customer value
products or business units simply age and die
Strategic Plan kinds of businesses to operate and the objectives of each (missions & goals)
Marketing key role in strategic planning
1. Guiding philosophy- marketing concept- suggests that company strategy should revolve around
building profitable relationships with important consumer groups.
2. Inputs to strategic planners by helping to identify attractive mar