Chapter 2Rest Stop: Previewing the Concepts- Explain companywide strategic planning and its four steps- Discuss how to design business portfolios and growth strategies- Explain marketing’s role in strategic planning and how marketing works with its partners to create and deliver customer value- Describe the elements of a customer-driven marketing strategy and mix, and the forces that influence it- List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing return on marketing investmentStrategic planning- The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunitiesStrategic planning sets the stage for the rest of planning in the firm. 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.Mission statement- A statement of the organization’s purpose—what it wants to accomplish in the larger environmento Questions the mission statement should answer  What is our business? Who is our customer? What do consumers value? What should our business be?o Mission statements should be market- oriented, not product-orientedSetting Company Objectives and Goals• The mission should be translated into supporting objectives for each level of management• Marketing strategies and programs must be developed to support these objectives• Example• Heinz ties its diverse product portfolio together under the mission: “As the trusted leader in nutrition and wellness, Heinz—the original Pure Food Company—is dedicated to the sustainable health of people, the planet, and our company”Business Portfolio• The collection of businesses and products that make up the company• The company must• Analyze its current business portfolio or strategic business units (SBUs) and decide which SBUs should receive more, less, or no investment• Develop strategies for growth and downsizing that will shape the future business portfolioJohnson & Johnson’s PortfolioPortfolio Analysis• The process by which management evaluates the products and businesses that make up the company• Purpose of portfolio analysis• To direct resources toward more profitable businesses while phasing out or dropping weaker ones• Basis of evaluation• Attractiveness of SBU’s market or industry• Strength of SBU’s position within that market or industryThe BCG Growth-Share MatrixOn the vertical axis, market growth rate provides a measure of market attractiveness. On the horizontal axis, relative market share serves as a measure of company strength in the market. Under the classic BCG portfolio planning approach, the company invests funds from mature, successful products and businesses (cash cows) to support promising products and businesses in faster-growing markets (stars and question marks), hoping to turn them into future cash cows. The companymust decide how much it will invest in each product or business (SBU). For each SBU, it must decide whether to build, hold, harvest, or divest.• Strategies for categories of the BCG Matrix• Stars need heavy investments to finance their rapid growth• Cash cows need less investment to hold their market share• Question marks require a lot of cash to hold their share, let alone increase it• Dogs do not promise to be large sources of cashDeveloping Strategies for Growth and DownsizingCompanies can grow by better penetrating current markets with current products. Through diversification, companies can grow by starting up or buying businesses outside their current product/markets.Market penetration- Increasing sales of current products to current market segments without changing the productMarket development- Identifying and developing new market segments for current company productsProduct Development• Offering modified or new products to current market segmentsDiversification• Starting up or acquiring businesses outside the company’s current products and marketsDownsizing• Reduces the business portfolio by eliminating products of business units that are not profitable or that no longer fit the company’s overall strategy• Reasons for downsizing• Rapid growth of the company• Lack of experience in a market• Change in market environment• Decline of a particular productPlanning Marketing: Partnering to Build Customer Relationships • Marketing plays a key role in strategic planning by• Providing a guiding philosophy for the company strategy• Providing inputs to strategic planners• Designing strategies to help individual business units reach their objectivesPartnering with other company departments- Value chaino The series of internal departments that carry out value-creating activities to design, produce, market, deliver, and support a firm’s productsPartnering with Other Company Departments• Wal-Mart’s ability to help buyers “Save money. Live better” depends on the contributions of its value chain – people in all of the company’s departments• General Idea• Walmart’s ability to help you “Save Money. Live Better.” depends on the purchasing department’s skill in developing theneeded suppliers and buying from them at low cost. Walmart’s information technology department must provide fast and accurate information about which products are selling in each store. And its operations people must provide effective, low-cost merchandise handling. At Walmart, if purchasing can’t obtain the lowest prices from suppliers, or if operations can’t distribute merchandise at the lowest costs, then marketing can’t deliver on its promise of unbeatable low prices. Ideally, then, a company’s different functions should work in harmony to produce value for consumers.Partnering with Others in the Marketing System- Value delivery networko 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 systemMarketing Strategy and the Marketing Mix- Marketing strategyo The marketing logic by which the company hopes to create customer value and achieve profitable customer