Chapter 2

Chapter 2
Company and Marketing Strategy

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 PEACE, LOVE, AND ICE CREAM
Embraced the concept of ‘linked prosperity’.
They achieved it through three-part mission statement: 1) product, 2) economic, and 3)
social.
Product Mission: To make, distribute and sell the finest quality all-natural ice-cream.
Economic Mission: To operate the company for sustainable financial growth.
Social Mission: To operate the company in ways that make the world a better place.
Strategies for mission-driven approach:
• Eliminate single-use plastic--- recycling is not enough.
• Free cone day --- give back to the community.
• Fair trade practices
• B-Corp Certification --- highest standards of verified social and environmental performance, public
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 Today’s Organizations

It is important to recognize:

• Kinds of organizations.

• What strategy is?

• Different level of organizations?

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 TODAY’S ORGANIZATIONS
KINDS OF ORGANIZATIONS
Organizations are legal entities with common mission. This motivates them to
develop offerings that create value for customers and organizations.
1. For-profit organization (business firm) e.g., Al-Fateh, Nike, Starbucks
2. Non-profit organization
3. Government agency e.g., Census Bureau
Industry is a group of similar companies e.g., computer industry, automobile
industry.

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 TODAY’S ORGANIZATIONS
STRATEGY AND ORGANIZATIONAL STRUCTURE

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 Visionary organizations use key elements to (1) establish a foundation and (2) set a
direction using (3) strategies that enable them to develop and market their products
successfully.

Today’s organizations must be forward-looking.

A visionary organization must specify its foundation ( why does it exist?), set a direction
(what will it do?) and formulate strategies ( how will it do?).

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 STRATEGY IN VISIONARY ORGANIZATIONS
ORGANIZATIONAL FOUNDATION (WHY)
Core values: Principles that guide organization’s conduct e.g., IKEA --- daring to be different,
cost-consciousness, constant desire for renewal.
Mission or vision: Statement of the organization’s function that often identifies what it
wants to accomplish in the larger environment. It should be clear, concise, inspirational,
long-term and focused.
Southwest Airlines: “Dedication to the highest quality of Customer Service delivered with a
sense of warmth, friendliness, individual pride, and Company Spirit.”
American Red Cross: “To prevent and alleviate human suffering in the face of emergencies
by mobilizing the power of volunteers and the generosity of donors.”
Federal Trade Commission: “To prevent business practices that are anticompetitive or
deceptive or unfair to consumers; to enhance informed consumer choice and public
understanding of the competitive process; and to accomplish this without unduly burdening
legitimate business activity.”
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 STRATEGY IN VISIONARY ORGANIZATIONS
ORGANIZATIONAL FOUNDATION (WHY)
• Market oriented mission: Expresses in terms of need satisfaction and avoid
defining it as “building & selling products”
• Stakeholders are asking to serve two purpose --- to create financial value
while also paying attention to social goals.
• Myopic mission: Short sightedness and product focused.

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 Examples

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 STRATEGY IN VISIONARY ORGANIZATIONS
ORGANIZATIONAL DIRECTION (WHAT)
Business
• What do we do? Railroad business vs transportation business, publishing business vs being in the information
and entertainment business.
• What business are we really in?
Business Model--- the strategies an organization develops to provide value to the customers it serves.
Business model e.g., NETFLIX (DVD rental model to video streaming model), Uber (limousine service  ride-
sharing service (UberX and UberPool)  transportation (UberConnect)  eating business (UberEats) ===
“FRICTIONLESS MIDDLEMAN”
Goals or objectives
• Convert organization’s mission into short term or long-term targets.
• Goal can be related to profits, sales, Market Share, Customer Satisfaction, Social Responsibility etc.
• Market Share
It is ratio of the sales revenue of the firm to the total sales revenue of all firms in the industry, including the firm
itself.
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 STRATEGY IN VISIONARY ORGANIZATIONS
ORGANIZATIONAL STRATEGIES (HOW)
Strategy: Organization’s long-term course of action designed to deliver a unique customer
experience while achieving its goals.
Strategies can vary by level:
• Corporate
• SBU
• Functional
And vary by product (or offering)
• Product
• Service
• Idea
Marketing Plan: Road map for marketing actions for a specified time period.
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 SETTING STRATEGIC DIRECTIONS
A LOOK AROUND: WHERE ARE WE NOW?
Competencies: Organization’s special capabilities that distinguish it from other
organizations and provide customer value.
• Competitive advantage: A unique strength relative to competitors that
provide superior returns, often based on quality, time, cost or innovation.
Customers
Competitors

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 SETTING STRATEGIC DIRECTIONS
WHERE DO WE WANT TO GO?
• How would you rank four Apple SBUs through 2019-2022 from highest to
lowest in percentage growth in expect unit sales: Apple card, iPod, iPhone,
and iPad?
• Business portfolio analysis (Boston Consulting Group - BCG Matrix)
1. Question marks: Low share of high-growth market.
2. Stars: High share of high-growth markets.
3. Cash cows: Generate large amounts of cash.
4. Dogs: Low share of slow-growth markets.

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 BCG business portfolio analysis for Apple’s consumer
SBUs

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 SETTING STRATEGIC DIRECTIONS
WHERE DO WE WANT TO GO?
Diversification Analysis: Technique that helps a firm search growth
opportunities from among current and new markets as well as current and new
products.
1. Market penetration: Increase sales of current product in current markets.
2. Market development: Sell current products to new markets.
3. Product development: Sell new products to current markets.
4. Diversification: Develop new products to sell in new markets.

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 Four market-product strategies: alternative ways to expand sales
revenues for Ben & Jerry’s using diversification analysis.

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 THE STRATEGIC MARKETING PROCESS

Strategic marketing process: is an approach whereby an organization allocates

its marketing mix resources to reach its target markets.
Four principles and assumptions:
1. Customers are different.
2. Customers change.
3. Competitors change and react.
4. Organizational resources are limited.

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 THE STRATEGIC MARKETING PROCESS
THE PLANNING PHASE
Step 1: Situation (SWOT) analysis

• Strengths

• Weaknesses

• Opportunities

• Threats

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 THE STRATEGIC MARKETING PROCESS
THE PLANNING PHASE
SWOT Analysis actions:
• Build on a strength.
• Correct a weakness.
• Exploit an opportunity.
• Avoid a disaster-laden threat.

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 THE STRATEGIC MARKETING PROCESS
THE PLANNING PHASE
Step 2: Develop a market focus, customer value proposition, and goals.
Market segmentation: Aggregating prospective buyers into groups or segments
that (1) have common needs and (2) will respond similarly to a marketing action.
Customer value proposition: Cluster of benefits that an organization promises
to satisfy their needs. Why customer should buy your product and not
competitor’s? It should solve the problem and should specify benefits in clear
terms.
Points of difference
Ikea, a wide range of well-designed, ready to assemble, functional home
furnishing at low price.
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 THE STRATEGIC MARKETING PROCESS
THE PLANNING PHASE
Step 3: Design a marketing program.
• Product strategy
• Price strategy
• Promotion strategy
• Place (distribution) strategy

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 The four Ps elements of the marketing mix must be blended to
produce a cohesive marketing program.

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 THE STRATEGIC MARKETING PROCESS
THE IMPLEMENTATION PHASE
The implementation phase:
1. Obtaining resources
2. Designing the marketing organization
3. Defining precise tasks, responsibilities, and deadlines
4. Executing the marketing program

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 THE STRATEGIC MARKETING PROCESS
THE EVALUATION PHASE
Comparing results with plans:
• Identify deviations
• Planning Gap
Acting on Deviations:
• Exploiting a Positive Deviation
• Correcting a Negative Deviation

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