Topic 02 - Principles of Marketing

Principles of Marketing

Philip Kotler and Gary Armstrong

Partnering to Build Customer

Relationships
Prepared by: J.R. Esguerra

Companywide Strategic Planning:
Defining Marketing’s Role
Strategic Planning
The process of developing and maintaining a

strategic fit between the organization’s goals and
capabilities and its changing marketing opportunities.
Strategic Planning in 2 minutes:

https://www.youtube.com/watch?v=G_-IqmYJj1E
Steps in Strategic Planning
Corporate level Business unit, product, and

market level
Planning
Setting company
Defining the Designing the marketing and
objectives and
company mission business portfolio other functional
goals
strategies
I. Defining a Market-Oriented Mission
Mission Statement
A statement of the organization’s purpose – what

it wants to accomplish in the larger environment.
Examples:
Nike MS : “To bring inspiration and innovation to every
athlete.”
EBay MS : “To provide a global trading platform where
practically anyone can trade practically anything.”
Wal-Mart MS : “To give ordinary folks the chance to
buy the same things as rich people.”
Characteristics of a Mission Statement
Realistic
Specific
Fit the market environment
Base on distinctive competencies
Motivating
Writing a Mission Statement

https://www.youtube.com/watch?v=-pA40igxWe8

Setting Company Objectives and Goals
Objectives/Goals
It is an estimated result expected in the future.

The desired or needed result to be achieved by a specific
time. It is expressed in quantifiable manner and should
be as specific as possible.
Example: “Increase our market share” is not as useful

as “increase our market share to 15 percent by the
end of the second year.”
Objective/Goals
Examples: Nike
Over-all objective (corporate level):

“To build profitable customer relationships by
manufacturing and distributing quality and innovative
shoes and apparel.” - to increase profit
Functional level objective (departments level):

“To increase its products availability and promotion –
entering a new market.”
Lower level objective ( sections and individuals):

“ To hire and train additional salespeople to distribute
the product and intensive advertising to support the
distribution.”
Designing the Business Portfolio
Business Portfolio
The collection of businesses and products that

make up the company.
Steps involve in business portfolio planning:
1. Analyzing the current business portfolio

2. Developing strategies for growth and downsizing

Analyzing the current business portfolio
Portfolio Analysis
The process by which management evaluates

the products and businesses making up the company.
Two Steps in Business Portfolio Analysis
1. Identify the company’s SBUs.
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.
2. Assess the attractiveness of each SBUs and decide

how much support each deserves.
Two dimensions used in evaluating SBUs:
1. Market/Industry attractiveness (Growth)

2. Strength of position in that market (Share)
THE BOSTON CONSULTING GROUP APPROACH
Growth-share Matrix – A portfolio-planning

method that evaluates a company’s strategic business
units in terms of their market growth rate and relative
market share. SBUs are classified as stars, cash cows,
question marks, or dogs.
The BCG Growth-Share Matrix
Market Growth Rate Star Question mark
High
Cash Cow Dog

Low
High Low
Relative market Share

BCG Matrix:
https://www.youtube.com/watch?v=gNR49lk5dS0
Developing Strategies for Growth and
Downsizing
Product/Market Expansion Grid
A portfolio-planning tool for identifying company

growth opportunities through market penetration,
market development, product development, or
diversification.
Existing products New products
Existing Market Product

markets penetration development
New Market
markets Diversification
development
The Ansoff Matrix
https://www.youtube.com/watch?v=4dKliWrCywM
Market Penetration
A strategy for company growth by increasing

sales of current products to current market segments
without changing the product.
Market Development
A strategy for company growth by identifying and

developing new market segments for current company
products.
Product Development
A strategy for company growth by offering

modified or new products to current market
segments.
Diversification
A strategy for company growth through

starting up or acquiring businesses outside the
company’s current products.
Downsizing
Reducing the business portfolio by eliminating

products of business units that are not profitable or that
no longer fit the company’s overall strategy.

Planning Marketing: Partnering to
Build Customer Relationships
Role of Marketing in strategic planning:
1. Provides guiding philosophy – the marketing concept

2. Provides inputs to strategic planners
3. Designs strategies for reaching the unit’s
objectives.
Partner relationship management
Partnering with Other Company Departments (Inside –
to form an effective value chain that serves the
customers)
Value Chain
The series of departments that carry out value-

creating activities to design, produce, market, deliver
and support a firm’s products.
Partner relationship management
Partnering with Others in the Marketing System

(Outside – to form competitively superior value-delivery
network)
Value-delivery Network
The network made up of the company, suppliers,

distributors, and ultimately customers who “partner”
with each other to improve the performance of the
entire system.
Marketing Strategy and the
Marketing Competitors
Intermediaries
Marketing Mix
Product
Customer
value and
relation-
Place Price
ship
Promotion
Suppliers Publics

Marketing Strategy and the Marketing Mix
Marketing Strategy
The marketing logic by which the business unit

hopes to achieve its marketing objectives.
Customer Value-Driven Marketing
Strategy
Market Segmentation
Dividing the market into distinct groups of

buyers who have distinct needs, characteristics, or
behavior and who might require separate products
or marketing programs.
Market Segment – a group of consumers

who respond in a similar way to a given set of
marketing efforts.
Customer-Driven Marketing Strategy
Market targeting
The process of evaluating each market

segment’s attractiveness and selecting one or more
segments to enter.
Market Differentiation and Positioning
Differentiation – actually differentiating the

market offering to create superior customer value.
Positioning – arranging for a product to occupy

a clear, distinctive, and desirable place relative to
competing products in the minds of target consumers.
Developing an Integrated Marketing
Mix
Marketing Mix
The set of controllable tactical marketing

tools that the firm blends to produce the
response it wants in the target market.
Product, Price, Place, and Promotion

(4P’s of Marketing)
The Four P’s of the Marketing Mix
Product Price
Variety
Quality List price
Design Discounts
Features Allowances
Brand name Payment period
Packaging Credit terms
Services
Target
Customers
Intended
positioning
Place
Promotion
Channels, Coverage
Assortments
Advertising
Locations
Personal selling
Inventory
Sales promotion
Transportation
Public relations
Logistics
Four Ps concept
Buyer’s Viewpoint
4Ps 4As
Product Acceptability (Customer solution)

Price Affordability (Customer cost)
Place Accessibility (Convenience)
Promotion Awareness (Communication)
Managing the Marketing Effort
Four Marketing Management Functions
Analysis
Control
Planning
Measure results
Developing Strategic
plans
Implementation
Carry out the plans Evaluate results
Developing
Take corrective
marketing plans
action
Marketing Management Functions
Marketing Analysis
SWOT Analysis – An overall evaluation of the

company’s strengths (S), weaknesses (W),
opportunities (O), and threats (T).
What for additional information:

https://www.youtube.com/watch?v=JXXHqM6RzZQ
Internal
External
Positive Negative
Marketing Planning
Involves deciding on marketing strategies that

will help the company attain its overall strategic
objectives.
Marketing Plan – outlines how the company

intends to grow in the marketplace and win against
competitors.
Contents of a Marketing Plan:
a. Executive Summary
b. Current marketing situation
c. Threats and opportunities analysis
d. Objectives and issues
e. Marketing Strategy
f. Action programs
g. Budgets
h. Controls
Watch this link for additional information:

https://www.youtube.com/watch?v=4ti_uK60nLk
Marketing Implementation
The process that turns marketing strategies and

plans into marketing actions in order to accomplish
strategic marketing objectives.
Marketing Department Organization
Functional organization
Geographic organization
Product management organization
Market or customer management organization
Marketing Control
The process of measuring and evaluating the

results of marketing strategies and plans and taking
corrective action to ensure that objectives are
achieved.
Market Audit – a comprehensive, systematic,

independent and periodic examination of a company’s
environment, objectives, strategies, and activities to
determine problem areas and opportunities and to
recommend a plan of action to improve the company’s
marketing performance.
Measuring and Managing Return on
Marketing Investment
Return on marketing investment (Marketing ROI)
The net return from a marketing investment

divided by the costs of the marketing investment.
End of Chapter 2
Next Topic:
The Marketing
Environment

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Principles of Marketing

Philip Kotler and Gary Armstrong

Partnering to Build Customer

Prepared by: J.R. Esguerra

The process of developing and maintaining a

Strategic Planning in 2 minutes:

Corporate level Business unit, product, and

A statement of the organization’s purpose – what

Writing a Mission Statement

Prepared by: J.R. Esguerra

It is an estimated result expected in the future.

Example: “Increase our market share” is not as useful

Over-all objective (corporate level):

Functional level objective (departments level):

Lower level objective ( sections and individuals):

The collection of businesses and products that

Steps involve in business portfolio planning:

1. Analyzing the current business portfolio

Prepared by: J.R. Esguerra

The process by which management evaluates

1. Identify the company’s SBUs.

Strategic Business Unit (SBU) - is a unit of the

2. Assess the attractiveness of each SBUs and decide

1. Market/Industry attractiveness (Growth)

THE BOSTON CONSULTING GROUP APPROACH

Growth-share Matrix – A portfolio-planning

Cash Cow Dog

Relative market Share

A portfolio-planning tool for identifying company

Existing Market Product

A strategy for company growth by increasing

A strategy for company growth by identifying and

A strategy for company growth by offering

A strategy for company growth through

Reducing the business portfolio by eliminating

Prepared by: J.R. Esguerra

Role of Marketing in strategic planning:

1. Provides guiding philosophy – the marketing concept

The series of departments that carry out value-

Partnering with Others in the Marketing System

The network made up of the company, suppliers,

Prepared by: J.R. Esguerra

The marketing logic by which the business unit

Dividing the market into distinct groups of

Market Segment – a group of consumers

The process of evaluating each market

Market Differentiation and Positioning

Differentiation – actually differentiating the

Positioning – arranging for a product to occupy

The set of controllable tactical marketing

Product, Price, Place, and Promotion

Product Acceptability (Customer solution)

SWOT Analysis – An overall evaluation of the

What for additional information:

Involves deciding on marketing strategies that

Marketing Plan – outlines how the company

Watch this link for additional information:

The process that turns marketing strategies and

Marketing Department Organization

The process of measuring and evaluating the