Principles Of Marketing Essay

1953 words - 8 pages

Summary of Key Points for Chapter 2

Chapter Objectives:

1. Explain companywide strategic planning and its four steps.
2. Discuss briefly how to design business portfolios and develop growth strategies.
3. Explain marketing’s role under strategic planning and how marketing works with its partners to create and deliver customer value.
4. Describe the elements of a customer-driven marketing strategy and mix, and the forces that influence it.
5. List the marketing management functions, including the elements of a marketing plan.

COMPANYWIDE STRATEGIC PLANNING: DEFINING MARKETING’S ROLE

The task of selecting an overall company strategy for long-run survival and ...view middle of the document...

Marketing strategies and programs must be developed to support these marketing objectives.

3. Designing the Business Portfolio
A business portfolio is the collection of businesses and products that make up the company.

The best portfolio is the one that best fits the company’s strengths and weaknesses to opportunities in the environment. The major activity in strategic planning is business portfolio analysis, whereby management evaluates the products and businesses making up the company.

A strategic business unit (SBU) is a unit of the company that has a separate mission and objectives and that can be planned independently from other company businesses.

The next step in business portfolio analysis calls for management to assess the attractiveness of its various SBUs and decide how much support each deserves.

Most standard portfolio-analysis methods evaluate SBUs on two important dimensions – the attractiveness of the SBU’s market or industry and the strength of the SBU’s position in that market or industry.

The Boston Consulting Group Approach: The best-known portfolio-planning method was developed by the Boston Consulting Group (Figure 2.2, pg. 66).

The company can invest more in the business unit in order to grow its share. It can invest just enough to hold the SBU’s share at the current level. It can harvest the SBU, milking its short-term cash flow regardless of the long-term effect. Or it can divest the SBU by selling it or phasing it out.

Many companies have dropped formal matrix methods in favour of more customized approaches that are better suited to their specific situations.

Developing Strategies for Growth and Downsizing

Designing the business portfolio involves finding businesses and products the company should consider in the future.

Marketing must identify, evaluate, and select market opportunities and lay down strategies for capturing them.

The product/market expansion grid is shown in Figure 2.3 on pg. 67.

• Market penetration involves making more sales to current customers without changing its products.
• Market development involves identifying and developing new markets for its current products.
• Product development is offering modified or new products to current markets.
• Diversification is where a company starts up or buys businesses outside of its current products and markets.
Companies must also develop strategies for downsizing their businesses.

4. Planning Marketing: Partnering to build customer relationships

Within each business unit, more detailed planning takes place. The major functional departments in each unit must work together to accomplish strategic objectives.

Marketing provides a guiding philosophy—the marketing concept—that suggests that company strategy should revolve around building profitable relationships with important customer groups.

Marketing provides inputs to strategic planners by helping to identify attractive...

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