CHAPTER TWO

LINKING MARKETING AND

CORPORATE STRATEGIES

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© 2000 McGraw-Hill Ryerson Limited
 AFTER READING THIS CHAPTER YOU SHOULD
BE 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.
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© 2000 McGraw-Hill Ryerson Limited
 AFTER READING THIS CHAPTER YOU SHOULD
BE 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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© 2000 McGraw-Hill Ryerson Limited
 PP2-1 Three levels of strategy in an organization
Corporate
Corporatestrategy
strategy
••Vision
Vision
••Corporate
Corporategoals
goals
••Philosophy
Philosophy andculture
and culture

Business
Businessunit
unit strategy
strategy
••Mission
Mission
••Business
Businessgoals
goals
••Competencies
Competencies

Functional strategy

Information Research &

Manufacturing
systems development

Human
Finance Marketing
resources

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© 2000 McGraw-Hill Ryerson Limited
 Concept Check
1. What are the three levels in
today’s large organizations?

2. What is the difference between

corporate vision and corporate
goals?
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© 2000 McGraw-Hill Ryerson Limited
PP2-2 A Combination of Customer Relationships

The
Organization’s
Success

Quality Efficiency

Customer
Relationships Innovation

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© 2000 McGraw-Hill Ryerson Limited
 Definition of Corporate Vision

Corporate
Corporate vision is .. .. .. ..
vision is
aa clear
clear word
word picture
picture of
of the
the organization’s
organization’s
future,
future, often
often with
with an
an inspirational
inspirational theme.
theme.
It
It sets
sets the
the overall
overall direction
direction for
for the
the
organization,
organization, describing
describing what
what itit strives
strives to
to be--
be--
stretching
stretching the
the organization,
organization, but
but not
not beyond
beyond
reason.
reason.
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© 2000 McGraw-Hill Ryerson Limited
 Definition of Corporate Goals

A
A goal is .. .. .. ..
goal is
aa targeted
targeted level
level of
of performance
performance set
set in
in
advance
advance ofof work.
work.
Therefore,
Therefore, corporate
corporate goals
goals provide
provide
strategic
strategic performance
performance targets
targets that
that the
the
entire
entire organization
organization must
must reach
reach to
to pursue
pursue its
its
vision.
vision.
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© 2000 McGraw-Hill Ryerson Limited
 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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© 2000 McGraw-Hill Ryerson Limited
 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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© 2000 McGraw-Hill Ryerson Limited
 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, measurable and quantifiable are
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called objectives.
© 2000 McGraw-Hill Ryerson Limited
 PP2-3 Mission and Guiding Principles of the Holiday Inn
Burlington

BUSINESS UNIT MISSION

We are dedicated to providing quality hospitality product
and service..

Guiding Principles
• If a customer has a need or want, we fill it.
• If a customer has a question, we find the answer.
• If a customer has a concern, we resolve it.
• If a customer is lost, we show them the way.

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© 2000 McGraw-Hill Ryerson Limited
 The Boston Consulting Group Matrix

The Boston Consulting Group (BCG) Matrix

The BCG business portfolio analysis analyzes
a firm’s 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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© 2000 McGraw-Hill Ryerson Limited
 PP2-4 Boston Consulting Group Growth-Share Matrix
20%

Star
Question
mark ?
Market growth rate

High
A

10%

D
Low B

Cash
cow C Dog
0%
10x High 1x Low 0.1x
Relative market share
(share relative to largest competitor)
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© 2000 McGraw-Hill Ryerson Limited
 Specifying the SBU’s Competencies: Some Important Definitions

competitive
competitive advantage
advantage is
is .. .. ..

quality
quality isis .. .. ..
benchmarking is .. .. .. ..
benchmarking is
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© 2000 McGraw-Hill Ryerson Limited
 Concept Check

1. What is business portfolio analysis?

2. What is a competitive advantage, and

why is it important?

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© 2000 McGraw-Hill Ryerson Limited
 PP2-5 The strategic marketing process
Planning phase
Situation (SWOT) Market-product focus Marketing
analysis and goal setting program

Corrective Action
Marketing plan

Implementation
Phase

Results

Control
Phase

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© 2000 McGraw-Hill Ryerson Limited
 PP2-6a A “SWOT” Analysis for Rollerblade, Inc.
TYPE OF FACTOR
Location
of Factor Favourable Unfavourable
Internal -Industry leader -Premium-priced position
-Innovative, in products and puts off the “value
design conscious” consumer
-Strong brand awareness -Limited distribution in
-Strong position in sporting mass merchandising
goods and specialty outlets outlets

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© 2000 McGraw-Hill Ryerson Limited
 PP2-6b A “SWOT” Analysis for Rollerblade, Inc.

TYPE OF FACTOR
Location
of Factor Opportunities Threats
External -Identify new market -Fierce competition at
segments to serve both the premium and
-Develop a brand for the low-end of market
“value-conscious” consumer -Brand name may become
-Expand distribution globally a generic term for in-line
-Expand accessories line skates

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© 2000 McGraw-Hill Ryerson Limited
 PP2-7 Four market-product strategies: alternative ways to
expand sales revenue for Rollerblade, Inc.
PRODUCTS
MARKETS CURRENT NEW
Current Market Penetration Product Development
Selling more in-line skates Selling a new product like
to Canadians the Xten-plus to Canadians

New Market Development Diversification

Selling in-line skates in Selling in-line skating
Australia accessories like helmets and
clothing, or entering the
bicycle business

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© 2000 McGraw-Hill Ryerson Limited
 PP2-8 Elements of the marketing mix that compose a cohesive
marketing program
Marketing
Marketing
manager
manager

Product
Product Price
Price Promotion
Promotion Place
Place
Features
Features List
Listprice
price Advertising
Advertising Outlets
Outlets
Brand
Brandname
name Discounts
Discounts Personal
Personalselling
selling Channels
Channels
Packaging
Packaging Allowances
Allowances Sales promotion
Sales promotion Coverage
Coverage
Service
Service Credit
Credititems
items Publicity
Publicity Transportation
Transportation
Warranty
Warranty Payment
Paymentperiod
period Stock
Stocklevel
level

Cohesive marketing mix

Promotion
Promotion
Place
Place
Product

Price

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© 2000 McGraw-Hill Ryerson Limited
 Concept Check
1. What is the difference between a
strength and an opportunity in a
SWOT analysis?
2. If Rollerblade, Inc. attempts to enter
Australia with its in-line skates, which
market-product strategy would it be
using?
3. What is market segmentation?
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© 2000 McGraw-Hill Ryerson Limited
 PP2-9 Organization of a Typical Manufacturing Firm, Showing a
Breakdown of the Marketing Department
President

Vice President Vice President Vice President Vice President Vice President
Research and Manufacturing Marketing Account and Human
Development Department Department Finance Resources
Department Department Department

Manager Manager Manager Manager

Product Marketing Sales Advertising &
Planning Research Sales Promotion

Sales Regions
and
Representatives

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© 2000 McGraw-Hill Ryerson Limited
 PP2-10 Evaluation & Control of Kodak’s Marketing Program

$32 Target sales revenues D

with new plans and actions +
28
Actual sales
+
24
revenues
+
20
+ Planning Gap
+ B
16 + +
+ + + + + +
+
+ B+ C
12 +
A Sales revenues without new
8 plans and actions
4
Past Future
0
1993 1995 1997 1999 2001 2003
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© 2000 McGraw-Hill Ryerson Limited
 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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© 2000 McGraw-Hill Ryerson Limited
 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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© 2000 McGraw-Hill Ryerson Limited
 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?
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© 2000 McGraw-Hill Ryerson Limited
 PP2-A General Electric’s stoplight strategy chart
Green band = “Go” signal = Build Yellow band = “Caution” signal = Hold

s
s

s
es

ne
en

e
High
Market attractiveness

iv
tiv

ct
ac

a
tr
ttr

at
la
al
er
ov

l
h

al
Medium

s
ig

es
er
H

en
ov

tiv
Red band =

ac
ttr
“Stop” signal = Divest
B la A
al
m

er
Low
iu

ov
ed

w
M

Lo

Strong Medium Weak

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Business position
© 2000 McGraw-Hill Ryerson Limited
 PP2-B PIMS chart showing impact of relative market share
expense/sales revenue ratio on a firm’s ROI

Low
Relative market share

20
20 13
13 77
26%

21
21 19
19 19
19
63%

34
34 31
31 34
34
High
Low 6% 11% High
Marketing expense/sales revenue ratio
Note: Numbers in cells represent ROI.
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© 2000 McGraw-Hill Ryerson Limited
 PP2-C Elements in typical marketing and business plans
targeted at different audiences
Marketing
Marketingplan
plan Business
Businessplan
plan
For For
Element
Element of
ofthe
theplan
plan
For
Forinternal
internal
audience
audience
For
external
external
audience
For
Forinternal
internal
audience
audience
For
external
external
audience
(to audience audience
(todirect
direct (to
(toraise
raise
(to
(todirect
direct (to
(toraise
raise
firm)
firm) firm)
firm)
capital)
capital) capital)
capital)
1.1. Executive
Executivesummary
summary √√ √√ √√ √√
2.2. Description
Descriptionofoforganization
organization √√ √√
3.3. Strategic
Strategicplan/focus
plan/focus √√ √√
4.4. Situation
Situationanalysis
analysis √√ √√ √√
5.5. Market-product
Market-productfocus
focus √√ √√ √√ √√
6.6. Marketing
Marketingprogram
programstrategy
strategyand
andtactics
tactics √√ √√ √√ √√
7.7. R&D
R&Dandandoperations
operationsprogram
program √√ √√
8.8. Financial
Financialprojections
projections √√ √√ √√ √√
9.9. Organization
Organization √√ √√
10.
10. Implementation
Implementationplanplan √√ √√ √√ √√
11.
11. Evaluation
Evaluationand
andcontrol
control √√ √√
A.
A. Appendices
Appendices √√ √√ √√ √√
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© 2000 McGraw-Hill Ryerson Limited