Principles of Marketing

Chapter 2 Company & Marketing Strategy Partnering to Build Customer Relationships

The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities.

Strategic Planning

1. 2. 3. 4.

Defining the company mission Setting company objectives and goals Designing the business portfolio Planning marketing and other functional strategies

Steps in Strategic Planning

A statement representing the organization’s purpose – what it wants to accomplish.

Mission Statement

• Should be market oriented and defined in terms of customer needs. • Should be realistic • Should be specific (not too narrow or broad) • Should fit the market environment. • Should be motivating.

Mission Statement Guidelines

• The business portfolio is the collection of businesses and products that make up the company. • The company must:

– analyze its current business portfolio or Strategic Business Units (SBUs), – decide which SBUs should receive more, less, or no investment, – develop growth strategies for growth or downsizing.

Designing the Business Portfolio

.

The BCG Growth-Share Matrix

Star Often need heavy investment to finance rapid growth. These turn into Cash Cows. Cash Cow Question Mark Dog

High Low Market Growth Rate Market Growth Rate

Established. Need less investment to hold market share. These support other SBUs.

High

Require a lot of cash to hold market share. Some are built into stars and some are phased out. May generate enough cash to sustain themselves but do not support other SBUs.

Low

Relative Market Share

Star

iPod

The BCG Growth-Share Matrix Example: Macintosh

Question Mark Dog

High Low

Market Growth Rate Market Growth Rate

Cash Cow

Mac Computers

High

MacOS

Low

Relative Market Share

• Difficult to quantify market share and market growth. • Focus on current business not future planning. • Companies have shifted...