MARKETING

1
C H A P T E R T W O
LINKING MARKETING AND CORPORATE STRATEGIES
Irwin/McGraw-Hill
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AFTER READING THIS CHAPTER YOU SHOULDBE ABLE TO

• Describe the three organizational levels of
  strategy and their components.
• Describe how the three organizational levels of
  strategy relate to each other and how they
  influence the marketing function.
• Describe the strategic marketing process and its
  three key phases planning, implementation, and
  control.

(continued)
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AFTER READING THIS CHAPTER YOU SHOULDBE ABLE TO

• Understand how organizations search for new
  marketing opportunities and select target
  markets.
• Explain how the marketing mix elements are
  blended into a cohesive marketing program.
• Describe how marketing control compares actual
  results with planned objectives and acts on
  deviations from the plan.

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PP2-1 Three levels of strategy in an
organization

• Corporate strategy
• Vision
• Corporate goals
• Philosophy and culture

• Business unit strategy
• Mission
• Business goals
• Competencies

Functional strategy
Research development
Information systems
Manufacturing
Finance
Marketing
Human resources
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PP2-AA Concept Check

• 1. What are the three levels in
• todays large organizations?
• 2. What is the difference between
• corporate vision and corporate
• goals?

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PP2-2
The
Organization

s
Success
Quality
Efficiency
Customer
Innovation
Relationships
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PP2-BB Definition of Corporate Vision
Corporate vision is . . . .
a clear word picture of the organizations
future, often with an inspirational theme. It
sets the overall direction for the organization,
describing what it strives to be--stretching the
organization, but not beyond reason.
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PP2-CC Definition of Corporate Goals
A goal is . . . .
a targeted level of performance set in advance of
work. Therefore, corporate goals provide
strategic performance targets that the entire
organization must reach to purse its vision.
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PP2-DD Types of Corporate Goals

• Corporate goals may be articulated in terms
  of
• - profits - quality
• - sales revenue - employee welfare
• - market share - social responsibility
• - unit sales

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PP2-EE Corporate Philosophy and Culture

• Corporate philosophy establishes the values and
  rules of conduct for running the organization.
• Corporate culture refers to a system of shared
  attitudes and behaviors held by the employees
  that distinguish it from other organizations.

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PP2-FF Business Unit Mission and Goal

• The business unit mission is a statement that
  specifies the markets and product lines in which
  a business will compete. It communicates the
  scope of a business unit.
• A business unit goal is a performance target the
  business unit seeks to reach in an effort to
  achieve its mission. Goals that are more
  specific and quantifiable are called objectives.

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PP2-3 Mission and Goals of Domestic
Merchandising Group, Sears, Roebuck Co.

• BUSINESS UNIT MISSION
• To be a compelling place to shop, work, and
  invest.
• BUSINESS UNIT GOALS (Strategic Initiatives)
• Focus on core businesses
• Serve the target customer
• Be market driven
• Achieve consistent productivity improvement
• Drive organizational transformation

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PP2-GG The Boston Consulting Group Matrix

• The Boston Consulting Group (BCG) Matrix
• The BCG business portfolio analysis analyzes a
  firms business units (SBUs) as though they were
  a collection of separate investments.
• The technique locates SBUs on a market
  growth-relative market share matrix. Then the
  SBUs are classified as either question marks,
  stars,cash cows, or dogs.

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PP2-4 Boston Consulting Group growth-share
matrix
20 High 10 Low 0
?
Question mark
Star
A
Market growth rate
D
B
Cash cow
Dog
C
10x High 1x Low 0.1x
Relative market share (share relative to largest
competitor)
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PP2-HH Specifying the SBUs Competencies Some
important definitions
competitive advantage is . . .
quality is . . .
benchmarking is . . . .
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PP2-II Concept Check

• 1. Make Sears a compelling place to
• shop, work, and invest is an example
• of what kind of business unit
• statement?
• 2. What is business portfolio analysis?
• 3. What is a competitive advantage, and
• why is it important?

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PP2-5 The strategic marketing process
Step 2
Planning phase
Market-product focusand goal setting
Situation (SWOT) analysis
Marketing program
Marketing plan
Implementation Phase
Results
Control Phase
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PP2-6 Ben Jerrys A SWOT Analysis to
Get It Growing Again

• TYPE OF FACTOR
• Location
• of Factor Favorable Unfavorable
• Internal -Prestigious, well known brand -Danger
  that BJs social responsi-
• name among U.S. consumers bilities actions
  may add costs,
• -40 share of the U.S. super reduce focus on
  core business
• premium ice cream market -Need for
  experienced managers to
• -Strong position among customers help growth
• built on reputation for pure -Flat sales
  profits in recent years
• ingredients social responsibility

(continued)
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PP2-6 Ben Jerrys A SWOT Analysis to Get
It Growing Again

• TYPE OF FACTOR
• Location
• of Factor Favorable Unfavorable
• External -Growing demand for quality -Consumer
  concern with fatty
• ice cream in overseas markets desserts
  BJs customers are
• -Increasing U.S. demand for the type who read
  new
• frozen yogurt other low fat
  government-ordered
• desserts nutritional labels
• -Success of many U.S. firms in -Competes with
  giant Pillsbury
• extending successful brand in its
  Haagen-Dazs brand
• one product category to others -International
  downturns
• increase the risks for BJ in
• European Asian markets

(continued)
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PP2-7 Four market-product strategies
alternative ways to expand sales revenues for
Ben Jerrys

• PRODUCTS
• MARKETS CURRENT NEW
• Current Market Penetration Product Development
• Selling more Ben Jerrys Selling a new
  product
• super premium ice cream such as childrens
• to Americans clothing under the Ben
• Jerrys brand to
• Americans
• New Market Development Diversification
• Selling BJs super Selling a new product
• premium ice cream to Asian such as childrens
• markets for the first time clothing in Asian
  markets
• for the first time

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PP2-8 Elements of the marketing mix that compose
a cohesive marketing program
Marketing manager
Place Outlets Channels Coverage Transportation Sto
ck level
Promotion Advertising Personal selling Sales
promotion Publicity
Price List price Discounts Allowances Credit
items Payment period
Product Features Brand name Packaging Service Warr
anty
Cohesive marketing mix
Product
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PP2-JJ Concept Check

• 1. What is the difference between a
• strength and an opportunity in a
• SWOT analysis?
• 2. What is market segmentation?
• 3. If Ben Jerrys attempts to enter
• Asian markets with its super premium
• ice cream, which market-product
• strategy would it be using?

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PP2-A General Electrics stoplight strategy chart
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PP2-B PIMS chart showing impact of relative
market share expense/sales revenue ratio on a
firms ROI
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PP2-C Sears Ad Reflecting Its Search for a New
Mission and Focus
Courtesy of Sears, Roebuck Co.
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PP2-D Nokia Digital Cellular Phone Ad
Courtesy of Nokia Americas.
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PP2-E Kodak Enhance Station Ad
Courtesy of Eastman Kodak Co.
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PP2-F Elements in typical marketing and
business plans targeted at different audiences
Element of the plan
Marketing plan
Business plan
For internal audience(to direct firm)
For external audience (to raise capital)
For internal audience (to direct firm)
For external audience (to raise capital)
1. Executive summary
?
?
?
?
2. Description of organization
?
?
3. Strategic plan/focus
?
?
4. Situation analysis
?
?
?
5. Market-product focus
?
?
?
?
6. Marketing program strategy and tactics
?
?
?
?
7. RD and operations program
?
?
8. Financial projections
??
?
?
?
9. Organization
?
?
10. Implementation plan
?
?
?
?
11. Evaluation and control
?
?
A. Appendices
?
?
?
?
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PP2-9 Organization of a Typical Manufacturing
Firm, Showing a Breakdown of the Marketing
Department
President
Vice President Research and
Development Department
Vice President Manufacturing Department
Vice President Marketing Department
Vice President Account and Finance Department
Vice President Human Resources Department
Manager Marketing Research
Manager Sales
Manager Product Planning
Manager Advertising Sales Promotion
Sales Regions and Representatives
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PP2-10 Evaluation Control of Kodaks Marketing
Program
Target sales revenues with new plans and actions
D

32 28 24 20 16 12 8 4 0


Actual sales revenues



Planning Gap

B





B
C

Sales revenues without new plans and actions
A
Past
Future
1993 1995 1997 1999
2001 2003
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PP2-KK Steps in the Strategic Marketing Process

• Step 1 Situation (SWOT) Analysis
• Step 2 Market-Product Focus Goal Setting
• Step 3 Marketing Program
• Step 4 Implementation Phase
• Step 5 Control Phase

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PP2-LL Marketing Strategy and Tactics

• A marketing strategy is a means by which a
  marketing goal is to be achieved, usually
  characterized by a specific target market and a
  marketing program to reach it.
• Marketing tactics are detailed day-to-day
  operational decisions essential to the overall
  success of marketing strategies.

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PP2-MM Concept Check

• 1. What is the control phase of the
• strategic marketing process?
• 2. How do the objectives set for a
• marketing program in the
• planning phase relate to the
• control phase of the strategic
• marketing process?