Defining Marketing's Role

Company and Marketing Strategy : Partnering to Build Customer Engagement, Value, and Relationships

Group 2

Team Member :

Charlenee Mischa Chandra (2307521102) (10) Agnes Florenza Surjadidjaja (2307521115) (13)

Natasya Eveline (2307521119) (15)

I Komang Mahadi Gautama Saputra (2307521177) (20) Gilbert Maxwell Pasau Tandipayuk (2307521112) (33)

Faculty of Economics and Business Udayana University

2024

I. Company-Wide Strategic Planning: Defining Marketing's Role

Company-wide strategic planning guides marketing strategy and planning. Like marketing strategy, the company's broader strategy must also be customer focused.

Company must find the game plan for long-run survival and growth that makes the most sense given its specific situation, opportunities, objectives, and resources. This is the focus of 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.

Strategic planning sets the stage for the rest of planning in the firm including annual plans, long-range, and strategic plans, adapting to a dynamic environment. The annual and long-range plans deal with the company's current businesses and how to keep them going. The strategic plan involves adapting the firm to take advantage of opportunities in its constantly changing environment.

Corporate-level strategic planning begins with defining overall purpose and mission, guiding detailed objectives. Portfolio decisions made at headquarters, supporting each business with tailored plans. Marketing planning spans business-unit, product, and market levels, supporting strategic goals. It supports company strategic planning with more detailed plans for specific marketing opportunities.

Steps in strategic planning :

1. Defining a Market-Oriented Mission

An organization exists to accomplish something, and this purpose should be clearly stated.



Many organizations develop formal mission statements that answer the following questions : What is our business? Who is the customer? What do consumers value Whatshouldour business be?

A mission statement is a statement of the organization's purpose-what it wants to accomplish in the larger environment. A clear mission statement acts as an "invisible hand" that guides people in the organization.

Mission statements should be market oriented and defined in terms of satisfying basic customer needs.

Products and technologies eventually become outdated, but basic market needs may last forever.

For example :

● Pinterest doesn't define itself as just an online place to post pictures. Its mission is to give people a social media platform for collect-ing, organizing, and sharing things they love.

● Microsoft's mission isn't to create the world's best software, technologies, and devices. It's to "empower every person and every organization on the planet to achieve more."

More examples :



Mission statements should be meaningful and specific yet motivating. They should emphasize the company's strengths and tell forcefully how it intends to win in the marketplace.

2. Setting Company Objectives and Goals

The company needs to turn its broad mission into detailed supporting objectives for each level of management. Each manager should have objectives and be responsible for reaching them.

For example : CVS Health

Formerly known as CVS, has rebranded itself with a broader mission focused on innovation in the pharmacy sector and improving people's health. This mission entails a hierarchy of objectives, encompassing both business and marketing goals, aimed at increasing access to

healthcare, lowering costs, and improving the quality of care. To achieve these objectives, CVS Health has developed marketing strategies and programs, such as reshaping product lines, expanding services like Minute Clinic locations, and enhancing customer engagement activities.

These initiatives are aligned with the company's overarching mission of "helping people on their path to better health" and are aimed at translating this vision into specific short-term objectives and marketing plans.

II. Designing the Business Portfolio

The management of the company now must organize its business portfolio, which is the variety of companies and goods that comprise the company. The most optimal business portfolio aligns the company's strengths and weaknesses with opportunities from the outside.

Planning a business portfolio requires two steps. The company has to determine which of its current business investments should receive more, less, or no investment by analyzing its current business portfolio. Secondly, it needs to develop strategies for growth and downsizing to shape the portfolio going forward.

1. Analyzing the Current Business Portfolio

The focus is on allocating significant resources to more profitable ventures while phasing out or discontinuing less successful ones. The first action taken by management is to determine which of the company's core businesses are known as strategic business units (SBUs). A business division, a product line inside a division, or occasionally a single product or brand can all be considered SBUs. Next, the business determines how desirable each of its different SBUs is and how much support each one should receive. It's a good idea to add and support businesses and products that closely align with the firm's core competencies and philosophy when creating a business portfolio. The majority of standard portfolio analysis techniques assess SBUs based on two crucial factors: how attractive the SBU's market or industry is and the strength of the SBU’s position in the market or industry. Leading management consulting firm Boston Consulting Group created the most well-known portfolio-planning technique ;

On the vertical axis, market growth rate provides a measure of market attractiveness. On the horizontal axis, relative market share serves as a measure of company strength in the market

A. Stars. Stars are high-growth, high-share businesses or products. They often need heavy investments to finance their rapid growth. Eventually their growth will slow down, and they will turn into cash cows.

B. Cash cows. Cash cows are low-growth, high-share businesses or products.

These estab- lished and successful SBUs need less investment to hold their market share. Thus, they produce a lot of the cash that the company uses to pay its bills

C. and support other SBUs that need investment.

D. Question marks. Question marks are low-share business units in high-growth markets. They require a lot of cash to hold their share, let alone increase it.

Management has to think hard about which question marks it should try to build into stars and which should be phased out.

E. Dogs. Dogs are low-growth, low-share businesses and products. They may generate enough cash to maintain themselves but do not promise to be large sources of cash.

The growth-share matrix's ten circles stand in for the company's ten active SBUs.

There are three question marks, two cash cows, two stars, and three dogs in the company.

Each circle's area matches to the SBU's dollar sales. While not in great shape, this company is in fair shape. In order for the more promising question marks to turn into stars and remain stars as their markets develop, it wants to invest in them. Fortunately, it has two major cash cows. The company's question marks, stars, and dogs will be supported partially by the revenue from these cash cows. The business needs to act decisively in regards to its dogs and its question marks.

Fancy planning methods had their day, but they were kind of a hassle. The BCG matrix and similar tools were a big deal for strategic planning, but they were complex, expensive, and time-consuming to use. It could be tough for managers to define their businesses and track how well they were doing. Plus, these methods just looked at what a company already had, not how to plan for the future.

Many companies are ditching the old way and doing things differently now.

Because of these problems, companies are moving away from these formal planning methods. Instead, they're creating custom plans that work better for their specific situations. Strategic planning isn't all done by top bosses anymore either. Now, teams of managers from different areas of the company work together on the plans. These managers are closer to the market and have access to lots of up-to-date data, so they can adjust their plans quickly as things change.

2. Developing Strategies for Growth and Downsizing

Building a business portfolio isn't just about what you have now, it's about what you'll have tomorrow. A good portfolio looks at businesses and products the company could invest in for the future. Companies need to grow to compete better, keep their investors happy, and attract talented people. But just focusing on growth isn't enough - the goal should be "profitable growth".

Marketing plays a key role in achieving profitable growth. The marketing team needs to find new market opportunities, see if they're a good fit, and figure out how to win them over. One tool they can use to find these opportunities is called a product/market expansion grid.

A. Market penetration : Company growth by increasing sales of current products to current market segments without changing the product.

B. Market development : Company growth by identifying and developing new market segments for current company products.

C. Product development :Company growth by offering modified or new products to current market segments.

D. Diversification :Company growth through starting up or acquiring businesses outside the company’s current products and markets.

Under Armour popular with its comfy, sweat-wicking clothes, and they became the second-biggest apparel brand in the US, chasing after Nike. Now they need to figure out how to keep growing.

1. It can focus on deepening market penetration by enhancing its current product lines and improving marketing efforts, such as expanding styles and colors and increasing advertising spending.

2. There's potential for market development by targeting new demographics and geographical areas, as seen in the company's efforts to reach women consumers and expand internationally.

3. Product development remains an option, with Under Armour continuously innovating its athletic footwear products and exploring new offerings.

4. Diversification into non-apparel markets, like digital health and fitness tracking or leisurewear, presents additional opportunities, as seen in recent acquisitions and partnerships. However, caution is necessary to avoid overextending the brand's positioning when diversifying.

Companies need plans for both growing and shrinking their business portfolios.

Reasons to downsize include:

1. Going too big, too fast: A company might enter markets or develop products they're not suited for.

2. Market shifts: Changing customer preferences or economic conditions can make products unprofitable.

3. Products reaching their end-of-life: Some products naturally lose popularity over time.

When products or businesses underperform, companies can "prune" (cut them entirely), "harvest" (sell them off), or "divest" (gradually phase them out) to focus resources on stronger areas. This allows them to concentrate on growth opportunities instead of struggling to keep failing products afloat.

III. Planning Marketing: Partnering to Build Customer Relationships

The company's strategic plan is to define its business opportunity and objectives, followed by detailed planning with individual business units. Collaboration with various functional departments such as marketing, finance, accounting, operations, and others is essential to achieve strategic goals effectively.

Marketing plays a key role in the company’s strategic planning. First, marketing provides a guiding philosophy, the marketing concept that creates customer value and builds profitable relationships with important consumer groups. Second, marketing provides inputs to strategic planners by helping to identify attractive market opportunities and assessing the firm’s potential to take advantage of them. Last, within individual business units, marketing designsstrategies for reaching the unit’s objectives. Once the unit’s objectives are set, marketing’s task is to help carry them out profitably.

Customer engagement and value are the key ingredients in the marketer's success.

Although marketing plays a leading role, it alone can not produce engagement and superior value for customers. It can be only a partner in attracting, engaging, and growing customers. In

addition to creating customer relationship management, marketers must also practice partner relationship management. They must work closely with partners in other company departments to form an effective internal value chain that serves customers. Moreover, they must partner effectively with other companies in the marketing system to form a competitively superior externalvalue delivery network.

1.

Partnering with Other Company Departments

Each company department can be thought of as a link in the company’s internal value chain(The series of internal departments that carry out value-creating activities to design, produce, market, deliver, and support a firm’s products.) The firm’s success depends not only on how well each department performs its work but also on how well the various departments coordinate their activities.

True Value Hardware’s goal is to create customer value and satisfaction by providing shoppers with the hardware and home improvement products they need at affordable prices along with top-notch customer service. Marketers at the retail-owned cooperative play an important role. They learn what customers need and help the 3,500 independent True Value retailers stock their store shelves with the desired products at competitive prices. They prepare advertising and merchandising programs and assist shoppers with customer service. Through these and other activities, True Value marketers help deliver value to customers.

True Value’s ability to help you “Start Right. Start Here.” depends on purchasing’s skill in develop- ing the needed suppliers and buying from them at low cost. True Value’s information technology people must provide fast and accurate information about which products are selling in each store. And its operations people must provide effective, low-cost merchandise handling and delivery.

A company’s value chain is only as strong as its weakest link. Success de- pends on how well each group performs its work of adding customer value and on how the company coordinates the activities of various functions.

True Value’s marketing campaign “Behind Every Project Is a True Value”

Value delivery network A network composed of the company, suppliers, distributors, and, ultimately, customers who partner with each other to improve the performance of the entire system in delivering customer value. recognizes the importance

of having everyone in the organization from in store managers and employees to home office operations managers and marketing research analysts understand the needs and aspirations of the chain’s do it yourself customers and help them handle home improvement projects.

A company’s different functions should work in harmony to produce value for consumers. But, in practice, interdepartmental relations are full of conflicts and misunderstandings. The marketing department takes the consumer’s point of view. But when marketing tries to improve customer satisfaction, it causes other departments to do a poor job. Marketing department actions can increase purchasing costs, disrupt production schedules, increase inventories, and create budget headaches. Thus, other departments may resist the marketing department’s efforts.

Marketers must find ways to get all departments to “think consumer” and develop a smoothly functioning value chain.

2.

Partnering with Others in the Marketing System

To engage customers and create customer value, the firm needs to look beyond its own internal value chain and into the value chains of its suppliers, its distributors, and, ultimately, its customers.

People do not go to McDonald’s only because they love the chain’s hamburgers.

Consumers flock to the McDonald’s system, not only to its food products. Throughout the world, McDonald’s finely tuned value delivery system delivers a high standard of QSCV—quality, service, cleanliness, and value. McDonald’s is effective only to the extent that it successfully partners with its franchisees, suppliers, and others to jointly create “our customers’ favorite place and way to eat.”

More companies today are partnering with other members of the supply chain suppliers, distributors, and, ultimately, customers to improve the performance of the customer value delivery network (A network composed of the company, suppliers, distributors, and, ultimately, customers who partner with each other to improve the performance of the entire system in delivering customer value) Competition no longer takes place only between individual competitors. Rather, it takes place between the entire value delivery network created by these competitors.

IV. Marketing Strategy and Marketing Mix

Companies use marketing strategies to create value and build profitable relationships.

They decide who to target (segmentation) and how to stand out (differentiation and positioning).

This involves dividing the whole market into smaller groups and focusing on the best ones.

Marketing mix made up of factors under its control product, price, place, and promotion (the four Ps). To find the best marketing strategy and mix, the company engages in marketing analysis, planning, implementation, and control. Through these activities, the company watches and adapts to the actors and forces in the marketing environment.

To succeed in today’s competitive marketplace, companies must be customer centered. They must win customers from competitors and then engage and grow them by delivering greater value. Thus, each company must divide up the total market, choose the best segments, and design strategies for profitably serving chosen segments. This process involves market segmentation, market targeting, market differentiation and positioning.

Market segmentation

The market consists of many types of consumers, products, and needs. The marketer must determine which segments offer the best opportunities. Consumers can be grouped and served in various ways based on geographic, demographic, psychographic, and behavioral factors. The process of dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors and who might require separate marketing strategies or mixes is called market segmentation. A market segment consists of consumers who respond in a similar way to a given set of marketing efforts.

Market Targeting

Market targeting involves evaluating each market segment’s attractiveness and selecting one or more segments to enter. A company should target segments in which it can profitably generate the greatest customer value and sustain it over time. Most companies enter a new market by serving a single segment; if this proves successful, they add more segments. For example, Nike started with innovative running shoes for serious runners. Nike now makes and sells a broad

range of sports apparel and equipment for just about anyone and everyone in about every sport. It designs different products to meet the special needs of each segment it serves.

Market differentiation and Positioning

-Positioning is arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. Marketers plan positions that distinguish their products from competing brands and give them the greatest advantage in their target markets.

-differentiation actually differentiating the company’s market offering to create superior customer value. Once the company has chosen a desired position, it must take strong steps to deliver and communicate that position to target consumers. The company’s entire marketing program should support the chosen positioning strategy.

After determining its overall marketing strategy, the company is ready to begin planning the details of the marketing mix, one of the major concepts in modern marketing. The marketing mix is the set of tactical marketing tools that the firm blends to produce the response it wants in the target market. The marketing mix consists of everything the firm can do to engage consumers and deliver customer value. The many possibilities can be collected into four groups of variables—the four Ps

· Product means the goods-and-services combination the company offers to the target market.

· Price is the amount of money customers must pay to obtain the product.

· Place includes company activities that make the product available to target consumers.

· Promotion refers to activities that communicate the merits of the product and persuade target customers to buy it.

An effective marketing program blends the marketing mix elements into an integrated marketing program designed to achieve the company’s marketing objectives by engaging consumers and

delivering value to them. The marketing mix constitutes the company’s tactical tool kit for establishing strong positioning in target markets.

There is another concern, however, that is valid. It holds that the four Ps concept takes the seller’s view of the market, not the buyer’s view. From the buyer’s viewpoint, in this age of customer value and relationships, the four Ps might be better described as the four As

Under this more customer-centered framework, acceptability is the extent to which the product exceeds customer expectations; affordability the extent to which customers are willing and able to pay the product’s price; accessibility the extent to which customers can readily acquire the product; and awarenessthe extent to which customers are informed about the product’s features, persuaded to try it, and reminded to repurchase. The four As relate closely to the traditional four Ps. Product design influences acceptability, price affects affordability, place affects accessibility, and promotion influences awareness.

V. Managing the Marketing Effort and Marketing Return on Investment.

Besides being good at marketing in Marketing Management, companies need to pay attention to management. Managing marketing requires 5 marketing management function:

analysis, planning, implementation, organization, and control.

Figure (2.6)

Managing Marketing : Analysis, Planning, Implementation and Control.

The company develops a strategic plan and then makes it into marketing and other plans for each division, product and brand. Through implementation and organization, the company turns the plan into actions. Then Control consists of measuring the results of the marketing activities and taking corrective actions when needed. Finally, marketing analysis provides information and evaluation needed for all the other marketing activities.

Marketing Analysis

Managing the marketing function begins with an analysis of the company’s situation. The marketers should conduct a “SWOT” analysis

It evaluates the company's overall strength, weakness, opportunities and threats. Strength includes capabilities, resources and positive situations that help a company serve its customers and achieve its objectives.

The company should analyze its market and marketing environment to find and identify threats.

It should analyze company strengths and weaknesses as well as current and possible marketing actions to determine which opportunities it can best pursue.

Marketing Planning

Marketing planning helps companies to choose marketing strategies that will help companies to get its overall strategic objectives. The outline sections of a product/brand marketing plan begins with an executive summary that reviews the major assessments, goals, and recommendations.

The main section of the plan is a detailed SWOT analysis of the current marketing situations and as well as the potential threats and opportunities. Then it states the next major objectives for the brand and outlines the specifics of a marketing strategy for achieving them.

A marketing strategy consists of specific strategies for target markets, positioning, the marketing mix, and marketing expenditure levels. It explains how each strategy responds to the threats, opportunities and critical issues spelled out on the plan.

Contents of a Marketing Plan

- Executive summary

Presents a brief summary of the main goals and recommendation of the plan for management review.

- Current marketing situation

Describes the target market and the company’s position including the market, product performance, competition and distribution.

- Threats and Opportunities Analysis

Assess major threats and opportunities that the product might face including helping management to anticipate the important positive or negative developments that might have an impact on the firm and its strategies.

- Objectives and Issues

States the marketing objectives that the company attain during the plan’s term and discusses a key issue that will affect their attainment

- Marketing Strategies

Outline the marketing logic hopes to engage customers, create customer value and build customer relationships including specific target markets. Positioning and marketing expenditure levels.

- Action Programs

It questions specific action programs for the marketing strategies such as “what will be done? Who will do it? How much will it cost?”

- Budgets

A projected profit-and-loss statement. It shows expected revenues and expected costs of production, distribution, and marketing. The budget becomes the basis for materials buying, production scheduling, personnel planning, and marketing operations.

- Controls

Outline the controls that will be used to monitor progress and allow management to review and implement results that are not meeting the goals. Including the returns of marketing investments.

Strategic marketing objectives

This implements and addresses the WHO, WHERE, WHEN, and HOW. One firm can essentially have the same strategy as another firm yet win in the marketplace through faster and better execution. It is often easier to think up a good marketing strategy than to carry them out in implementation. Marketing managers make decisions about target segments, branding, production development, pricing, promotion and distribution.

Marketing Department Organization

The company must design a marketing organization to carry marketing strategies and plan. This department contains many specialists, market managers, sales managers and salespeople. To head up large marketing organizations, many companies created a chief marketing officer product (CMO). It heads up the entire marketing operation and represents marketing on the company’s top management team. Marketing organization has become an increasingly important issue in recent years. More companies are shifting their brand management focus towards customer management, moving away from managing only brand profitability and towards managing customers profitability and customer equity.

Marketing Control

Measuring and evaluating the results of marketing strategies and plans and taking corrective action to ensure that the objectives are achieved. Marketing control evaluates results and takes corrective action to ensure that the objectives are attained. Marketing control involves four steps.

Management first sets specific marketing goals. Then it measures performance in the marketplace and evaluates the cause of differences between expected and actual performance.

Finally, management takes corrective action to close the gaps between goals and performance.

Measuring and Managing Marketing return on Investment

Marketing managers must ensure that their marketing dollars are well spent. Marketers are being held accountable for linking their strategies and tactics to measurable marketing performance outcomes. Marketing performance measure is “marketing Return On Investment (Marketing ROI). Marketing ROI is the net return from a marketing investment divided by the costs of the marketing investment. It measures the profits generated by investments in marketing activities.

A company can assess marketing ROI in terms of standard marketing performance measures such as brand awareness, sales, or market share. Many companies are assembling such measures into marketing dashboards. Marketing dashboard tracks brand equity and trends, share of voice, market share, online sentiment, and marketing ROI in key markets worldwide.

However, beyond standard performance measures, marketers are using customer-centered measures of marketing impact such as customer acquisition, customer engagement, customer experience, customer retention, customer lifetime value, and customer equity. These measures capture not only current marketing performance but also future performance making a stronger customer relationship.

Views marketing expenditure as investments that produce returns in the form of more profitable customer relationships. Marketing investments result in improved customer value, engagement, and satisfaction, which in return increases customer attraction and retention. This increases individual customer attraction and retention. Increases individual customer lifetime values and the firm's overall customer equity.