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Louise Ripley

   
Introductory Marketing
Strategy
Chapter 2 Armstrong/ Kotler Marketing: An Introduction

Company and Marketitng Strategy: Partnering to Build Consumer Relationships 
Return to Course Syllabus
 

I. Companywide Strategic Planning: Defining Marketing's Role - finding the fit between what you've got (your capabilities and resources) and what's out there (changing marketing opportunities), given what you want to achieve (the organization's goals). This occurs at the Corporate level and then at the Business level which includes the business unit, product, and market levels

Exercise
Business Unit
What is a "Business Unit"? Give an example from a company you know something about, either through work or through studying it in another course.
Post your answer in the Moodle Discussion Group. 

Defining a Market-Oriented Mission

One of the most important things in business is knowing what your business is, what customer needs it meets. Constructing a Mission Statement will help you understand this. The Mission Statement tells the world what your company is all about, and defining that Mission is one of the most important things you will do. 

The five questions posed below come from Peter Drucker, one of Management's top scholars and a prolific writer who when he died in 2005 at the age of 95, was still writing. Drucker maintained there are five questions you must answer before constructing a mission statement; they show up often in the business literature in different order and with different terms, but essentially he's saying that you have to know who your customer is and how your business is going to meet their needs. This is a laboratory exercise - you will need to get out to a coffee shop to complete it. 

Exercise: Lab
Coffee
Peter Drucker's Five Questions - Read through the Coffee Exercise below, then go to a coffee shop near you, order something and sit for a while and watch the coffee drinkers. Try to get a sense of what is important to them, why they come there. If you are comfortable doing it, talk to some of them, but you don't have to; you can learn a lot just by watching.
Post your answer in the Moodle Discussion Group.
1. What is our business? To figure out what your mission is and how you will best meet your customer's needs, you first need to know what business you're in: who you are, what you do well, what is important to you. What are you doing there every day? What service are you providing? Why are you in business?  What are you trying/hoping to do? What business is the coffee shop in? 
2. Who is our customer? In some ways your most important question, but you can't know your customer without knowing something of who you are first. Who IS the customer in this coffee shop? 
3. What is of value to our customer? What is important to customers in this coffee shop? What do they expect to get for their money? 
4. What will our business be? This is a look into the future. What do you predict will happen in the environment in which you operate that will affect what your business is? What do you think this particular coffee shop will be in five years?    ?
5. What should our business be?  

At the heart of strategic planning is what you want to do in the future. You may not want to change, and you don't necessarily have to. Remember that not everything has to grow exponentially and heed David Suzuki's advice that growth must be sustainable. You may just want to keep doing what you are doing now and if what you're doing now is good, that may be the right thing to do. If the economy keeps up and they don't lose their lease and they keep bringing in enough customers to replace those that leave, the answer to this question for the coffee shop should be pretty much what you answered in Number 3.  

But put yourself in the place of the owner of a small coffee shop. You may want to grow into a bigger coffee shop or a coffee shop with more or different customers. You may want instead to be the proprietor of a fancy downtown restaurant with a cocktail hour instead of a coffee pot. Once you know what you want to do, you will need to develop growth strategies. The crucial point here is that if what you predict you will be is the same as what you want to be, your strategic planning will focus on keeping pace with change in order to maintain your business as it is. But if your answers to Questions 4 and 5 differ radically, you are going to have to do some heavy-duty strategic planning. You start all this with a mission statement. 

 

A Mission Statement must be
Specific
Realistic
Motivating
Centred on the Customer
Good Fit With Marketing Environment
Based on Distinctive Competencies

Beatrice Foods used to produce mostly food, but some time ago they bought Samsonite Luggage. I saw one of their trucks on the road recently with the mission statement emblazoned across the side of the truck: We Deliver Good Taste

Exercise
Beatrice Foods
In what ways does this mission statement succeed, or not succeed, in meeting the 5 criteria above? What does this mission statement mean to a company that produces both ice cream and luggage? 
Post your answer in the Moodle Discussion Group.

Check the Web for one of your favourite companies; they most likely will have a mission statement. 

Exercise
Web Mission Statement
Check the Web for a company that produces a product you particularly like and use. What does it say about their mission? 
Post your answer in the Moodle Discussion Group.

Setting Company Objectives and Goals

The basic process of strategic planning is to turn the mission statement into meaningful objectives and goals that management can strive to achieve. See below for examples of how to write proper objectives.

Designing the Business Portfolio
Analyzing the Current Business Portfolio

The Boston Consulting Group Matrix
A practical example, using the terms from your text and some imaginary breakfast cereals. Suppose you are a cereal manufacturer and you make four products (or Strategic Business Units - SBU's) for four different markets. Some cereal markets are still growing rapidly, for example heart-healthy cereal, while some are slowing down, as is the market for children's sugary cereal. In some markets you sell a large percentage of the cereal sold, for example in both the heart healthy and children's sugar cereal markets, but in one market you sell very little, less than 0.05% of the market. Here is how they fit into the Boston Consulting Group Matrix. 
Name of Cereal Market Description Market Growth Rate Your Share of This Market BCG Category Strategy
Sugar Bits Children who crave sugar  a sugary sweet cereal which actually provides less nutrition than if you ate the cardboard box it comes in Low High, you sell a lot of Sugar Bits Cash Cow Keep selling it; put some support into it but no major development; in other words - milk it
             
Liver Bits Those seeking New-Age alternative health cures a cereal with small liver-shaped pieces that taste of liver and onions and contain active neprhoniphytes Very Low Low, almost nothing; for some reason almost no-one buys this product  Dog Dump it; itís not worth investing any more time or money here
             
Bran Bits Heart-Healthy a health-food cereal made with finest ingredients and a high level of healthy protein High High, you sell a lot of Bran Bits Star Keep it going, support it, rake in the profits and use to support other products
             
Apple Bits Basic Adult  an apple and cinnamon flavoured cereal with pieces shaped like slices of apple and tiny cinnamon buns High Low, you're going to be a brand new product in this market Question Mark You have to decide: support it or drop it

For each SBU, you have essentially four choices of what to do with it:

Strategy Meaning
Build Keep putting more money into the brand and get it to grow even bigger and better
Hold Just keep doing what you're doing now, no more and no less; keep the status quo
Harvest Bring in the cash; reap the rewards of money previously invested in the brand
Divest Get rid of it; sell it off or pull it from the market
Exercise
Cash Cows
Think of a specific real-life example of a product that is a cash cow, under the these definitions.
Post your answer in the Moodle Discussion Group. 
Marketing Plan Hint - Your Marketing Plan Assignment suggests that you use the Boston Consulting Group Matrix for some ideas on describing the other products your company already produces.

Developing Strategies for Growth and Downsizing
The Product-Market Expansion Grid

As the owner of a small bicycle shop in the downtown core selling only bicycles, you have decided you want to grow. You can grow in four major different ways: 

Present Products New Products
Present Markets Market Penetration Product Development
New Markets Market Development Diversification
Market Penetration  Sell more bikes to more of the people who live in your area 
Product Development Sell bicycle equipment like helmets and clothing
Market Development Set up a new similar shop out in the suburbs
Diversification Open a fast food franchise in another city
Exercise
Bicycle Shop

Using this example of a goods marketer, construct a similar set of growth scenarios for an Internet marketer selling vacation travel packages.
Post your answer in the Moodle Discussion Group.

This cartoon shows how common the concept of growth scenarios is:


II. Planning Marketing: Partnering to Build Customer Relationships

Partnering With Other Company DepartmentsPlanning Cross-Functional Strategies
This is where one of those three legs of the Marketing Concept comes into play. A company aims to meet the needs of the firm at a profit, but it must do so by ensuring that the whole organization functions as a team. All strategic planning must be done with this in mind. If only Marketing is working for the customer, if Marketing doesn't talk to Finance who is bickering with Accounting, while Human Resources keeps above it all by talking to no one, the needs of the customer don't get met. 

Five Steps in the Value-Creation Chain
Obtaining raw materials
Transforming raw materials into basic products
Combining enhanced products into more complex ones
Distributing products to customers
Interacting: the only one performed by the customer, involving undertaking activities required in obtaining the product
Exercise
Value Chain

What are some of the value-creating activities done by different parts of the company when bringing a product to market?
Post your answer in the Moodle Discussion Group.

Partnering With Others in the Marketing System
The value delivery network is made up of

Value Delivery Network
Company
Suppliers
Distributors
Customers

III. Marketing Strategy and the Marketing Mix

Customer-Centred Marketing Strategy

Exercise
Connecting With Consumers
Using a product you buy regularly, comment on how the company that makes or sells it makes an effort to communicate with YOU the purchaser.
Post your answer in the Moodle Discussion Group.

Market Segmentation, Target Marketing, and Market Positioning 
(We will look at these in more depth in the Unit on Segmentation)

Demand Forecasting - make some estimate of the demand for your product
Segmentation - divide the market into several potential target markets, groups of people with something in common whose needs might be met by your product
Targeting - decide on one target market to go after (in real life you could do more than one, but for the purpose of the Marketing Plan in this introductory Marketing course, you choose only one in order to simplify your life)
Positioning is something you do in the mind of the consumer. It doesn't matter what you think your product is. What matters is how your target market sees your product, in comparison with your competition. 
Exercise
Positioning
Think about a product you buy often. What is its "position" in the market? That is, what does it have that makes it different from its close competitors? What does it have that makes you choose to buy it?
Post your answer in the Moodle Discussion Group. 

Developing an Integrated Marketing Mix

Borden's 4 P's
Although the 4 P's concept is somewhat outdated (because we've added customer and competition and a number of other important issues), they still comprise much of the focus of Marketing.
You can click on each of the 4 P's below and go to the Learning Unit in which it is covered. 

The 4 C's
Another way to look at the 4 P's is as four C's

Exercise
P's and C's

Think of a favourite product you buy; in what way is that product a customer solution? What customer needs do you have that this product meets?
Post your answer in the Moodle Discussion Group.

It is important to learn early on to distinguish between Strategy and Tactics. A strategy is the broad concept of where you want to go; a tactic is a specific detail of how you're going to get there. From a 1989 article by Gerald A. Michaelson in Marketing News, (June 5, 1989):

"Strategy means doing the right thing. It is marketing. Tactics means doing things right. It is selling. In war, strategy ends at the border. In Marketing, it ends at the door of corporate headquarters. When the corporate president, marketing manager, or sales manager is planning how to accomplish objectives, this activity is strategic. When these same individuals are in contact with the customer, this activity is tactical by nature."


IV. Managing the Marketing Effort

Marketing Analysis (More on this in Marketing Research)

Use all the tools you can get your hands on but don't forget your own judgment 

Marketing is both science    and art
Exercise
Art of Marketing
It's early in the course yet, but take a stab at clarifying what I mean when I say Marketing is an Art as much as a Science. What does this mean for a marketer? 
Post your answer in the Moodle Discussion Group.

Marketing Planning - Deciding on marketing strategies to help the company achieve its objectives. The Marketing Plan that you will design as part of this course consists of a formal list of required parts. Read about it now as part of this Unit.

Marketing Implementation - Turning marketing strategies and plans into actions to accomplish objectives. You have a good idea of what you want to do, now, what will you actually do to accomplish all this? 

Marketing Department Organization - there is no one right way to organize for all companies. There will be a right organization for a particular company at a particular time while pursuing a particular goal. At different times, different companies may choose to organize their marketing in one of these ways

Functional
specialists in charge of different marketing activities
Geographic
arranged by regional proximity
Product Management
grouped by individual products, product lines, or groups of similar products
Customer Equity Management
focus is on customer profitability
Market or Customer Management
In a company that sells one product to several markets, each area has a manager to ensure that this area's needs are met

Marketing Control

Set Goals (Objectives) - These two terms are often used interchangeably. These 3 broad categories of objectives or goals for almost any organization should remind you of 3 cornerstones of Marketing we looked at in the Introductory unit 
Objectives Cornerstones of Marketing Concept
Engage in Useful Function = answer
Organize for Business = ?
Earn Enough to Survive = ?

Objectives or Goals must be

Measurable
Reasonable
Specific
Time Limited
Written Down
With Criteria for Measuring Success
Pringles Potato chips were not the success that was planned for them; they were successful yes, but the planned goal for them was to replace all nationally packaged chips, which they did not

Examples of Objectives 

Poorly Stated Well Stated
We're going to spend more on advertising We will increase our market share from 16% to 18% by the end of fiscal 2002, by increasing our community sponsorship budget by 15%
We want to get bigger Our objective is to open three new units by the end of fiscal 2002 in each of the 3 Atlantic provinces where we have no stores
Exercise
Objective
State, in proper form for an objective, one of the main objectives you have in either your paid work or school work.
Post your answer in the Moodle Discussion Group.
Measure Performance As objectively as you can, try to find out what is causing any discrepancies between what you expect from employees and from sales and what you are actually getting. 
Evaluate Performance
This is a diagnostic step, not just performance reviews for workers, and it may include examining and analyzing
environmental changes
new competitive threats
unrealistic goals
faulty assumptions
Take Corrective Action
Use feedback from all sources to adjust the plan and improve overall performance
The company's shared values and beliefs provide meaning and identity to employees and customers. Recruitment and training of motivated people with the right skills and abilities and attitudes 
is part of Walmart's success. Sam says he doesn't care what your skills are because he can teach you skills but he can't teach you a friendly attitude
Where something needs fixing, fix it quickly and fairly, with respect for your employees and your customers
Reward systems will include not only compensation but other methods of telling employees they did a good job. 
Don't forget the incredible power of praise and a simple
:  

 

Exercise: Lab
Walmart
Walmart is supposedly founded on the principle of good salespersonship. Visit a Walmart and talk to some of the sales people there. How do they feel about their job? How is their attitude? 
Post your answer in the Moodle Discussion Group.

Other Units

Introduction Strategy Society Environments Research Buyers
Segmentation Product Price Place Promotion The Marketing Plan

Return to Course Syllabus

AP/ADMS 2200 3.0 Introductory Marketing
York University, Toronto
© M Louise Ripley, M.B.A., Ph.D.