Priciples of Marketing

by Philip Kotler and Gary Armstrong

Company and Marketing Strategy

Partnering to Build Customer
Relationships
Objective Outline
Companywide Strategic Planning: Defining
Marketing’s Role
1 Explain company-wide strategic planning and its four
steps.

Designing the Business Portfolio

Discuss how to design business portfolios and
2
develop growth strategies.
Objective Outline
Planning Marketing: Partnering to Build
Customer Relationships
3 Explain Marketing’s role in strategic planning and
how marketing works with its partners to create and
deliver customer value.

Marketing Strategy and the Marketing Mix

4 Describe the elements of a customer-driven marketing
strategy and mix and the forces that influence it.
Objective Outline

Managing the Marketing Effort

Measuring and Managing Return on
Marketing Investment
List the marketing management functions, including
5 the elements of a marketing plan, and discuss the
importance of measuring and managing return on
marketing investment.
Companywide Strategic Planning:
Defining Marketing’s Role
 Strategic planning is the process of developing and
maintaining a strategic fit between the organization’s goals and
capabilities and its changing marketing opportunities.
 Companies usually prepare annual plans, long-range plans, and
strategic plans.
 The annual and long-range plans deal with the company’s
current businesses and how to keep them going.
 In contrast, the strategic plan involves adapting the firm to take
advantage of opportunities in its constantly changing
environment.
Companywide Strategic Planning:
Defining Marketing’s Role

• Like the marketing strategy, the broader company

strategy must be customer focused.
• Company-wide strategic planning guides marketing
strategy and planning.
Defining a Market-Oriented Mission
 The mission statement is the organization’s
purpose, what it wants to accomplish in the larger
environment.
 Market-oriented mission statement defines the
business in terms of satisfying basic customer
needs.
Defining a Market-Oriented Mission
Setting Company Objectives and Goals

Business Marketing
objectives objectives
• Build profitable • Increase market
customer share
relationships • Create local
• Invest in partnerships
research • Increase
• Improve profits promotion
Designing the Business Portfolio

 The business portfolio is the collection of

businesses and products that make up the
company.
 Business portfolio planning involves two steps:

the company must shape the future

analyze its current portfolio by
business portfolio and developing strategies
determine the for growth and
investment downsizing
Analyzing the Current Business Portfolio

 Portfolio analysis is a major activity in strategic

planning whereby management evaluates the
products and businesses that make up the
company
 Management’s first step is to identify
Companythe key
division
businesses that make up the company, called
strategic business units (SBUs).
Product line
SBU within a
division

Single product
or brand
Analyzing the Current Business Portfolio

The company next assesses the

attractiveness of its various SBUs and
decides how much support each deserves.

Tthe attractiveness of the SBU’s market

or industry and the strength of the SBU’s
position in that market or industry.

The best-known portfolio-planning

method was developed by the Boston
Consulting Group, a leading
management consulting firm.
 Stars are high-growth,
The Boston Consulting Group
They requireApproach
high-share businesses a lot of
or products. They often cash to hold their
need heavy investments share, let alone
 to finance
A company their rapid
classifies all
its SBUsincrease it.
according
to
growth.
the growth-share matrix. The growth-share
matrix defines four types of SBU’s:

These established They may generate

enough cash to
and successful SBUs
maintain themselves
need less investment
but do not promise to
to hold their market be large sources of
share. cash.
The Boston Consulting Group Approach

 It can pursue one of four strategies for each SBU.

Build： Hold:
It can invest more in the It can just enough to
business unit. share at the current level.

Harvest： Divest：

It can harvest the SBU, It can divest the SBU by

milking its short-term selling it or phasing it
cash. out and using the
resources elsewhere.
Problems with Matrix Approaches
 It have some limitations:
• Difficulty in defining SBUs and measuring market share and
growth
• Time consuming
• Expensive
• Focus on current businesses, not future planning
 Methods to improve:
• Dropped formal matrix methods in favor of more customized
approaches that better suit their specific situations
• Today’s strategic planning has been decentralized
 Developing Strategies for Growth and
• Market development ─ Companies can grow by developing new markets
Downsizing
for existing products. For example, Starbucks is expanding rapidly in
China, which by 2015 will be its second-largest market, behind only the
United
Product/market
States. expansion grid is a portfolio-
planning tool for identifying company growth
• Diversification ─ Through diversification, companies can grow by starting
oropportunities
buying businessesthrough market
outside their penetration,
current market
product/markets. For example,
Starbucks is entering
development, the “health
product and wellness” market
development, or with stores called
Evolution By Starbucks.
diversification.
Developing Strategies for Growth
and Downsizing

Market • Company growth by increasing sales of

current products to current market
penetration segments without changing the product

Market • The company growth by identifying and

developing new market segments for
development current company products.

Product • Company growth by offering modified

or new products to current market
development segments.

• Company growth through starting up or

Diversification acquiring businesses outside the
company’s current products and markets.
Planning Marketing: Partnering to Build
Customer Relationships
 Marketing plays a key role in the company’s strategic
planning in several ways:

First, marketing provides a guiding philosophy—the marketing

concept—that suggests the company strategy should revolve around
building profitable relationships with important consumer groups.

Second, marketing provides inputs to strategic planners by helping

to identify attractive market opportunities and assessing the firm’s
potential to take advantage of them.

Finally, within individual business units, marketing designs

strategies for reaching the unit’s objectives. Once the unit’s
objectives are set, marketing’s task is to help carry them out
profitably.
Partnering with Other Company
Departments
 Value chain is a series of departments that carry out
value-creating activities to design, produce, market,
deliver, and support a firm’s products.
 That is, each department carries out value-creating
activities to design, produce, market, deliver, and support
the firm’s products.
Partnering with Others in the Marketing
System
 Value delivery network is the network made up of the
company, its suppliers, its distributors, and, ultimately, its
customers who partner with each other to improve the
performance of the entire system.
 Toyota’s performance against Ford depends on the quality
of Toyota’s overall value delivery network versus Ford’s.
Marketing Strategy and the Marketing
Mix
 Next comes marketing strategy—the marketing
logic by which the company hopes to create this
customer value and achieve these profitable
relationships.
Customer-Driven Marketing Strategy
 Most companies are in a position to serve some segments
better than others.
 Thus, each company must divide up the total market, choose
the best segments, and design strategies for profitably serving
chosen segments.
 This process involves:

Marketing
segmentation Positioning

Market
targeting
Market Segmentation
 The process of dividing a market into distinct groups of
buyers who have different needs, characteristics, or
behaviors, and who might require separate products or
marketing programs, is called market segmentation.
 Market segment is a group of consumers who respond in
a similar way to a given set of marketing efforts.
Marketing Targeting
 Market targeting is the process of evaluating each
market segment’s attractiveness and selecting one or more
segments to enter.
 A company with limited resources might decide to serve
only one or a few special segments or market niches.
 Most companies enter a new market by serving a single
segment; if this proves successful, they add more
segments.
Marketing Differentiation and Positioning
 Positioning is arranging for a product to occupy a clear,
distinctive, and desirable place relative to competing
products in the minds of the target consumer.
 Thus, effective positioning begins with differentiation—
actually differentiating the company’s market offering so
that it gives consumers more value.
 Product means the
Price is the amount
Developing an Integrated Marketing Mix
goods-and-services
combination the
of money customers
The
marketing
must pay to obtain
company offers to the
the product. mix ─ or
 Marketing mix is the set
target market. of controllable tacticalthe four Ps
marketing tools—product, price, place, and ─ consists
of tactical
promotion—that
Promotion refersthe
to firm blends to produce themarketing
An effective marketing program blends tools
the
response it wants
activities that in the target market.Place includes
marketing the
communicate mixmerits
elements into an integrated blended
company activities
of marketing
the product program
and designed to achieve the
that make the
into an
company’s
persuade targetmarketing
customers objectives byproduct
delivering integrated
value to consumers. The marketing mix available
constitutes to
marketing
to buy it. target consumers.
the company’s tactical tool kit for establishing program
strong positioning in target incentives. that
actually
delivers the
intended
value to
target
customers.
 Developing an Integrated Marketing Mix
 It holds that the four Ps concept takes the seller’s view of
the market, not the buyer’s view. From the buyer’s
viewpoint, in this age of customer value and relationships,
the four Ps might be better described as the four Cs:

4Ps 4Cs
Product Customer solution
Price Customer cost
Place Convenience
Promotion Communication
Managing the Marketing Effort
 Managing the marketing process requires the four marketing
management functions:
Marketing Analysis
 The marketer should conduct a SWOT analysis ,by which it
evaluates the company’s overall strengths (S), weaknesses (W),
opportunities (O), and threats (T).
 Marketing Planning
 Through strategic planning, the company decides what it wants
to do with each business unit. Marketing planning involves
choosing marketing strategies that will help the company attain
its overall strategic objectives.
Positioning

Marketing Strategy:
It outlines how the Marketi
company intends to Target ng Market mix
markets strategy
create value for target
customers in order to
capture value in return.
Marketing
expenditure
level
Marketing Implementation
 Marketing implementation is the process that turns
marketing plans into marketing actions to accomplish
strategic marketing objectives.
 Whereas marketing planning addresses:
what
 Many managers think that “doing things right” (implementation)
why
is as important as, or even more important than, “dong the right
things”(strategy). who
where
when
how
Marketing Department Organization
• This is the most common form of marketing
organization with different marketing functions
Functional organization headed by a functional specialist.

• Useful for companies that sell across the country or

Geographic internationally. Managers are responsible for
organization developing strategies and plans for a specific
region.

• Useful for companies with different products or

brands. Managers are responsible for developing
Product management strategies and plans for a specific product or brand.

Market or customer • Useful for companies with one product line sold to
many different markets and customers. Managers
management are responsible for developing strategies and plans
organization for their specific markets or customers.
Marketing Control
 Marketing control is the measuring and evaluating the
results of marketing strategies and plans and taking
corrective action to ensure that the objectives are
achieved.
Management first sets Measures its
specific marketing performance in the
goals. market place

Four steps of
marketing
control:
Management takes Evaluates the causes of
corrective action to any differences
close the gaps between between expected and
goals and performance actual performance
Measuring and Managing Return on
Marketing Investment
 Return on marketing investment (or marketing ROI)
is the net return from a marketing investment divided by
the costs of the marketing investment.
 It measures the profits generated by investments in
marketing activities.
 Many companies are assembling such measures into
marketing dashboards ─ meaningful sets of marketing
performance measures in a single display used to monitor
strategic marketing performance.
Measuring and Managing Return on
Marketing Investment
The End