PRINCIPLE OF MARKETING

Philip Kotler & Gary Armstrong

Chapter 2
Company and Marketing strategy
Senior lecturer: Asso.Prof.Dr. Le Thi My Linh

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 Companywide Strategic Planning:
Defining Marketing’s Role
Strategic Planning
 Strategic planning is the
process of developing and
maintaining a strategic fit
between the organization’s
goals and capabilities and
its changing marketing
opportunities.

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 Companywide Strategic Planning:
Defining Marketing’s Role
Defining a Market-Oriented Mission
 Mission statement: 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

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 Mission statement:
 Amazon.com: we make internet buying
experience fast, easy, and enjoyable-we are
the place where you can find and discover
any thing you want to buy online
 Adidas: we strive to be the global leader in
the sporting goods industry with sports
brands build on passion for sport and a
sporting lifestyle
 L’Ore’al: we sell life style and self
expression; success and status; memories,
hopes and dreams
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 Companywide Strategic Planning:
Defining Marketing’s Role
Setting Company Objectives and Goals
 Business objectives
 Marketing objectives

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 Developing SMART marketing
objectives

 S Specific: It should be clearly stated.

 M Measurable: The scale of measurement should be in
place.
 A Achievable: It should be achievable (given the
market situation).
 R Realistic: It should not be over- optimistic.
 T Time based: There should be a specified date of
completion.

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Example of SMART Marketing
objectives
 To increase customer satisfaction by 10% over the next
12 months.
 To retain 70% of existing customers over the next 3
years.
 To acquire a 5% increase in market share over the next
3 months.
 To expand the distribution system to an additional 5
international markets within the next 12 months.
 To increase brand awareness, in our markets, by 20%
over the next 12 months.
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 Companywide Strategic Planning:
Defining Marketing’s Role
Designing the Business Portfolio
 The business portfolio is the collection of
businesses and products that make up the
company.

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 Companywide Strategic Planning:
Defining Marketing’s Role
Analyzing the Current Business Portfolio
 Analyzing the current business portfolio is
the process by which management evaluates the
products and businesses making up the
company.

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 Companywide Strategic Planning:
Defining Marketing’s Role
Steps in Analyzing the Current Business
Portfolio
 Identify key businesses making up the
company
 Assess the attractiveness of its various SBUs
 Decide how much support each SBU deserves

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 Companywide Strategic Planning:
Defining Marketing’s Role
Steps in Analyzing the Current Business
Portfolio
 Identify key businesses making up the company:
 A strategic business unit (SBU) is a unit of the
company that has a separate mission and
objectives that can be planned separately from
other company businesses.
 Company division
 Product line within a division
 Single product or brand

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 Companywide Strategic Planning:
Defining Marketing’s Role
Steps in Analyzing the Current
Business Portfolio
 Assess the attractiveness of
various SBUs and decide how
much support each deserves.

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 Companywide Strategic Planning:
Defining Marketing’s Role
Analyzing the Current Business Portfolio
The Boston Group Approach
 Growth share matrix is a portfolio planning method
that evaluates a company’s strategic business units in
terms of their market growth rate and relative share.
 Strategic business units are classified as:
 Stars
 Cash Cows
 Question marks
 Dogs

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BCG Market Growth Relative
Share Matrix
HIGH Problem
Star
Child

Market
growth
rate

Cash cow Dog

LOW
HIGH LOW
Relative market share & profitability
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 Companywide Strategic Planning:
Defining Marketing’s Role
Analyzing the Current Business Portfolio
The Boston Group Approach
 Stars are high-growth, high-share businesses or
products requiring heavy investment to finance rapid
growth. They will eventually turn into cash cows.
 Cash cows are low-growth, high-share businesses or
products that are established and successful SBUs
requiring less investment to maintain market share.

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 Companywide Strategic Planning:
Defining Marketing’s Role
Analyzing the Current Business Portfolio
The Boston Group Approach
 Question marks are low-share business units in
high-growth markets requiring a lot of cash to hold
their share.
 Dogs are low-growth, low-share businesses and
products that may generate enough cash to maintain
themselves but do not promise to be large sources of
cash.

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 Companywide Strategic Planning:
Defining Marketing’s Role
Analyzing the Current Business Portfolio
Problems with Matrix Approaches
 Difficulty in defining SBUs and measuring market
share and growth
 Time consuming
 Expensive
 Focus on current businesses, not future planning

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 Companywide Strategic Planning:
Defining Marketing’s Role
Developing Strategies for Growth and
Downsizing
 The product/market expansion grid is a tool
for identifying company growth opportunities
through market penetration, market
development, product development, or
diversification.

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Growing Your Market
M A R K E T

Existing New

P Market penetration
Increase market share Market development
R Medium risk
Existing steal competitor’s
O
D business
U Low risk -Low return
C
T
Product development Diversify
New Same market/ High risk
new product

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 Companywide Strategic Planning:
Defining Marketing’s Role
Developing Strategies for Growth and
Downsizing
 Product/market expansion grid strategies
 Market penetration
 Market development
 Product development
 Diversification

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 Companywide Strategic Planning:
Defining Marketing’s Role
Developing Strategies for Growth and Downsizing
 Market penetration is a growth strategy
increasing sales to current market segments
without changing the product.
 Market development is a growth strategy that
identifies and develops new market segments for
current products.

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 Companywide Strategic Planning:
Defining Marketing’s Role
Developing Strategies for Growth and
Downsizing
 Product development is a growth strategy that
offers new or modified products to existing
market segments.
 Diversification is a growth strategy through
starting up or acquiring businesses outside the
company’s current products and markets.

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 Companywide Strategic Planning:
Defining Marketing’s Role
Developing Strategies for Growth and
Downsizing
 Downsizing is the reduction of the business
portfolio by eliminating products or business
units that are not profitable or that no longer fit
the company’s overall strategy.

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 Planning Marketing: Partnering to
Build Customer Relationships
Partner Relationship Management
 Partner relationship management is the
process of:
 Working closely with partners in other company
departments to form an effective value chain that
serves the customer, as well as
 Partnering effectively with other companies in the
marketing system to form a competitively superior
value-delivery network.

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Planning Marketing: Partnering to
Build Customer Relationships
Partnering with Other Company Departments
• A value chain is a series of departments that
carry out value-creating activities to design,
produce, market, deliver, and support a firm’s
products.

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 Planning Marketing: Partnering to
Build Customer Relationships
Partnering with Others in the Marketing
System
 A value delivery network is made up of the
company, suppliers, distributors, and ultimately
customers who partner with each other to
improve performance of the entire system.

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 Marketing Strategy and the
Marketing Mix
Marketing Strategy
 A marketing strategy is the
marketing logic by which the
business unit hopes to achieve its
marketing objectives.
 The company decide which customer it will
serve (segmentation and targeting) and how
(differentiation and positioning)

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 Marketing Strategy and the
Marketing Mix
Customer-Driven Marketing
Strategy
 Market segmentation is the
division of a market into
distinct groups of buyers who
have distinct needs,
characteristics, or behavior and
who might require separate
products or marketing mixes.

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 Marketing Strategy and the
Marketing Mix
Customer-Driven Marketing Strategy
 A market segment is a group of consumers who
respond in a similar way to a given set of
marketing efforts.
 Target marketing is the process of evaluating
each market segment’s attractiveness and
selecting one or more segments to enter.

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 Marketing Strategy and the
Marketing Mix
Customer-Driven Marketing Strategy
 Market positioning is the arranging for a product
to occupy a clear, distinctive, and desirable place
relative to competing products in the minds of the
target consumer.

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 Marketing Strategy and the
Marketing Mix
Developing an Integrated Marketing Mix
 The marketing mix is the set of controllable
tactical marketing tools—product, price, place,
and promotion—that the firm blends to produce
the response it wants in the target market.

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 Marketing Strategy and the
Marketing Mix
Developing an Integrated Marketing Mix
 The four Ps
 Product
 Price
 Place
 Promotion

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 Marketing Strategy and the
Marketing Mix
Developing an Integrated Marketing Mix
The four Ps
 Product is the goods and services in combination that the
company offers to the target market.
 Price is the amount of money customers have to pay to obtain
the product.

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 Marketing Strategy and the
Marketing Mix
Developing an Integrated Marketing Mix
The four Ps
 Place is the company activities that make the product
available to target customers.
 Promotion is the activities that communicate the
merits of the product and persuade target customers to
buy it.

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Marketing Strategy and the
Marketing Mix
The 4 Ps versus The 4 Cs
Product Customer solution
Price Customer cost
Place Convenience
Promotion Communication

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 Managing the Marketing Effort

Managing the marketing effort requires:

 Analysis
 Planning
 Implementing
 Controlling

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 Managing the Marketing Effort
Marketing Analysis
 Marketing analysis is the complete analysis of
the company’s situation in a SWOT analysis that
evaluates the company’s:
 Strengths
 Weaknesses
 Opportunities
 Threats

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Managing the Marketing Effort
Marketing Analysis
 Strengths include internal capabilities, resources, and
positive situational factors that may help to serve company
customers and achieve company objectives.
 Weaknesses include internal limitations and negative
situational factors that may interfere with company
performance.
 Opportunities are favorable factors or trends in the
external environment that the company may be able to
exploit to its advantage.
 Threats are unfavorable factors or trends that
may present challenges to performance.

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 Managing the Marketing Effort
Market Planning
 Planning is the development of strategic and
marketing plans to achieve company objectives.
 Marketing strategy consists of the
specific strategies for target markets,
positioning, the marketing mix, and
marketing expenditure levels.

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Managing the Marketing Effort
Market Planning
 Sections of a marketing plan include:
 Executive summary
 Current marketing situation
 Threats and opportunities
 Objective and issues
 Action programs
 Budgets
 Controls

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 Managing the Marketing Effort

Marketing Implementation
 Implementing is the process that turns
marketing plans into marketing actions to
accomplish strategic marketing objectives.
 Successful implementation depends on how well
the company blends its people, organizational
structure, decision and reward system, and
company culture into a cohesive action plan that
supports its strategies.

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Managing the Marketing Effort
Marketing Control
 Controlling is measuring and evaluating results and
taking corrective action as needed.
 Operating control
 Strategic control
 Operating control involves checking ongoing
performance against annual plan and taking corrective
action as needed.
 Strategic control involves looking at whether the
company’s basic strategies are well matched to its
opportunities.

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