Marketing 301 Exam 2 Study Guide Chapter 2 Company and Marketing Strategy Steps in the Strategy Process o Strategic Planning the process of developing and maintaining a strategic fit between the organization s goals and capabilities and its changing marketing opportunities o Purpose to find ways in which the company can best use its strengths to take advantage of attractive opportunities in the environment o Mission Statement A statement of the organization s purpose what it wants to accomplish in the larger environment A clear mission statement acts as an invisible hand that guides people in the organization Characteristics Market oriented Realistic Specific Motivating Meaningful Illustrative of distinctive competencies Example Facebook doesn t define itself as just an online social network its mission is to give people the power to share and make the world more open and connected o Company Objectives and Goals Mission statement turned into detailed supporting objectives for each level of management Guide the entire company Must be measurable Example Heinz diverse product portfolio broad mission leads to hierarchy of objectives page 41 o Business Portfolio The collection of businesses and products that make up the company Best portfolio best fits the company s strengths and weaknesses to opportunities in the environment Planning portfolio requires two steps analyzing current business portfolio and determine which business should receive more less or no investment it must shape the future portfolio by developing strategies for growth and downsizing Examples Disney portfolio includes theme parks resorts Disney studio entertainment Disney consumer products sizeable collection of broadcast cable radio and internet media businesses ESPN ABC TV Network etc Analyzing the Current Business Portfolio The process by which management evaluates the products and businesses that make up the company Company wants strong resources in more profitable businesses and phase down drop weaker ones Strategic Business Units SBUs a company division product line within a division or sometimes a single product or brand Company assesses attractiveness of SBUs how much support each deserves The Boston Consulting Group Approach BCG Matrix The best known portfolio planning method Growth Share Matrix o A portfolio planning method that evaluates a company s SBUs in terms of its market growth rate and relative market share Market growth rate measures market attractiveness Relative market share measures company strength in market Get money from cash cow finance Question marks turn into stars grow into cash cows Dogs will exit the market Most SBUs start as question marks successful ones end up as stars then growth slows down and they become cash cows Example Coke Coke Classic Cash Cow Coke Zero Question Mark Criticisms o Limited number of variables used o Ignores interrelationships between businesses example Disney movies are considered dogs o Placement of business in the matrix is highly dependent on definition of market o Difficult time consuming costly to implement o Provide little advice for future planning o Companies stepping away from centralized strategic planning easier to manage large portfolios more even performance o Product Market Expansion Grid Companies need growth if they are to compete more effectively satisfy their stakeholders and attract top talent Should not make growth itself an objective should be to manage profitable growth A portfolio planning tool for identifying company growth opportunities through market penetration market development product development or diversification Market penetration Company growth by increasing sales of current products to current market segments without changing the product Can be achieved by price place and promotion Add promotions 2 for 1 specials rewards cards adjusting design advertising pricing distribution efforts Example Under Armour offers an ever increasing range of styles and colors in its original apparel lines recently boosted promotion spending in an effort to drive home its performance and authenticity positioning also added direct to customer distribution channels including retail stores web site and toll free call center Market Development Company growth by identifying and developing new market segments for current company products Demographic example Under Armour stepped up emphasis on women consumers and predicts women s apparel will surpass men s apparel business advertising campaign includes 30 second women s only spot Geographic Example Under Armour announced intentions to expand internationally Product Development Company growth by offering modified or new products to current market segments Example Under Armour introducing its own cotton based line Diversification Company growth through starting up or acquiring businesses outside the company s current products and markets Example example Under Armour moing into nonperformance leisurewear make market fitness equipment Managing the Marketing Effort o Managing the marketing process requires the four marketing management functions analysis planning implementation and control o Marketing Analysis SWOT Analysis An overall evaluation of the company s strengths weaknesses opportunities and threats Strengths internal capabilities resources and positive situational factors that may help the company serve its customers and achieve its objectives Weaknesses internal limitations and negative situational factors that may interfere with the company s performance Opportunities favorable factors or trends in the external environment that the company may be able to exploit to its advantage Threats unfavorable external factors or trends that may present challenges to performance Goal match the company s strengths to attractive opportunities in the environment while simultaneously eliminating or overcoming the weaknesses and minimizing the threats o Marketing Planning Involves choosing marketing strategies that will help the company attain its overall strategic objectives Detailed marketing plan needed for each business product or brand Executive summary reviews major assessments goals and recommendations SWOT Analysis main section Statement of major objectives and goals Marketing strategy consists of specific strategies for target markets positioning marketing mix and marketing expenditure levels outlines how company intends to create value for target customers in order to capture value in return Action