Chapter 2 Company and Marketing Strategy Partnering to

Chapter 2 Company and Marketing Strategy: Partnering to Build Customer Relationship Kotler “It is more important to do what is strategically right than what is immediately profitable” Dwight D. Eisenhower “Plans are nothing Planning is everything” 1

Would you tell me, please, which way I ought to go from here? asked Alice. That depends a good deal on where you want to get, said the Cat. I don’t much care where, said Alice. Then it doesn’t matter which way you go, said the Cat. Lewis Carroll “Alice’s Adventures in Wonderland” 2

What is Planning? Plan your career n n n What do you do? What do you start with? How do you plan? 3

Steps in Strategic Planning Corporate Level 1 Defining the Company Mission 2 Setting Company Objectives and Goals 3 Designing the Business Portfolio Business unit, product, and market level Planning, marketing, and other functional Strategies Principles of Marketing 4

1. Mission Statement: How a business will achieve its fundamental purpose Ø What is our business? Ø Who is the customer? Ø What is the value to the customer? Ø What will our business be? Ø What should our business be? IBM’s new mission: from “Mainframes’ to “Customer Solutions” · Dedication to every client's success · Innovation that matters, for our company and for the world · Trust and personal responsibility in all relationships 5

To dedicate our business to the pursuit of social and environmental change. To creatively balance the financial and human needs of our stakeholders: employees, customers, franchisees, suppliers and shareholders. To courageously ensure that our business is ecologically sustainable: meeting the needs of the present without compromising the future. To meaningfully contribute to local, national and international communities in which we trade, by adopting a code of conduct which ensures care, honesty, fairness and respect. To passionately campaign for the protection of the environment, human and civil rights, and against animal testing within the cosmetics and toiletries industry. To tirelessly work to narrow the gap between principle and practice, whilst 6 making fun, passion and care part of our daily lives

Company Product Definition Market Definition Missouri-Pacific We run a railroad Railroad We are a people-and -goods mover Xerox We make copying equipment We help improve office productivity Standard Oil We sell gasoline We supply energy Columbia Pictures We make movies We market entertainment Encyclopaedia We sell encyclopedias We distribute Information Nokia ? ? 7

2. SMART Objectives Specific, Measurable, Achievable, Relevant, Time frame n earn an annual rate of return on investment over the next year of 15% after tax n produce net profits of $ 2 000 in 20 XX n produce a cash flow of $ 4 000 in 20 XX n increase total sales revenue by certain % in 20 XX, n achieve market share of 5% for brand A at market B in year C n increase awareness of product or brand A at market B from 20% to 40% over the planning period n expand the number of dealers by 10%. . . n Increase customers’ knowledge of a product features… n make consumer attitudes more favorable… 8

3. Designing the Business Portfolio n n The business portfolio is the collection of businesses and products that make up the company. Ex. USKO, P&G, Food. Master, Raimbek Group A variety of tools can be used: n SWOT analysis, Competitor analysis n BCG (Boston Consulting Group) Matrix n Strategic-Planning Gap Model n Product/ Market Expansion Grid n Ansoff’s Growth Matrix 9

Strategic Planning - the Process of Developing and Maintaining a Strategic Fit Between the Organization’s Goals and Capabilities and Its Changing Marketing Opportunities. S W O T Figure 5– 2 10

The Boston Consulting Group’s Growth-Share Matrix 11

Sales Strategic-Planning Gap Desired Sales Diversification growth Integrative growth Planning Gap Intensive growth Current Portfolio Time (years) 12

Growth Opportunities n Intensive growth n n n Market penetration - increase current products’ market share in their current market Market development (expansion) - new markets for current products Integrative growth n n Forward integration - acquire one or more distributors n n Backward integration - acquire one or more suppliers Horizontal integration - acquire one or more competitors Diversification growth n n n Concentric diversification - new products related to current products Horizontal diversification - new products unrelated to current products, but appeal to current customers Conglomerate diversification - new products that have no relationship to current products, markets, or technology 13

Developing Growth Strategies Product/ Market Expansion Grid Ansoff’s Growth Matrix Existing Products Existing Markets 1. Market Penetration New Markets 2. Market Development New Products 3. Product Development 4. Diversification 14

Product/ Market Expansion Grid n Market Penetration: making more sales to current customers without changing its products. n How? Add new stores in current market areas, improve advertising, prices, service or store design. § Market Development: develop new markets for its current products. § How? Identify new demographic or geographic markets. 15

Product/ Market Expansion Grid n Product Development: offering modified or new products to current markets. n n How? New styles, flavors, colors, or modified products. Diversification: new products for new markets. n How? Start up or buy new businesses. 16

Discussion Connections n n Beyond evaluating current business, designing the business portfolio involves finding future businesses and products the company should consider. Apply the product/ market expansion grid to assess how one of the following companies might grow: 1. 2. 3. 4. Meloman store GROS Foodmaster Elite Stroy (Элитстрой)

Steps in Strategic Planning Corporate Level 1 Defining the Company Mission 2 Setting Company Objectives and Goals 3 Designing the Business Portfolio Business unit, product, and market level Marketing Planning and other functional strategies 18

Managing Marketing Strategy and Marketing Mix Demographic/ economic environment Political/ legal environment Technological/ physical environment Social/ cultural environment 19