Chapter 02 – Developing Successful Organizational and Marketing Strategies
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CHAPTER CONTENTS
PAGE
POWERPOINT RESOURCES TO USE WITH LECTURES ……………………………………. 2-2
LEARNING OBJECTIVES (LO) …………………………………………………………………………….. 2-4
KEY TERMS …………………………………………………………………………………………………………… 2-4
LECTURE NOTES
• Chapter Opener: Ben & Jerry on a Mission ………………………………………………………… 2-5
• Today’s Organizations (LO 2-1) ………………………………………………………………………. 2-5
• Strategy in Visionary Organizations (LO 2-2; LO 2-3) ………………………………………. 2-10
• Setting Strategic Directions (LO 2-4) ……………………………………………………………….. 2-18
CONNECT EXERCISES ………………………………………………………………… 2-55
• Growth Opportunities at Nike Click and Drag*
• The Strategic Marketing Process Click and Drag*
• The Strategic Marketing Process at Kodak Click and Drag*
• Setting Strategic Directions, Growth Strategies Click and Drag*
Chapter 02 – Developing Successful Organizational and Marketing Strategies
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POWERPOINT RESOURCES TO USE WITH LECTURES
PowerPoint
Textbook Figures Slide
Figure 2-1 The board of directors oversees the three levels of strategy in organizations:
corporate, business unit, and functional ………………………………………………………………. 2-7
Figure 2-2 Visionary organizations: (1) establish a foundation, (2) set a direction, and
(3) create strategies to successfully develop and market their offerings …………………. 2-10
Figure 2-3 An effective marketing dashboard like Sonatica’s helps managers assess a
business situation at a glance …………………………..……………………………………………….. 2-16
Figure 2-6 The strategic marketing process has three phases: planning, implementation,
and evaluation …………………………………………………………………………………………………. 2-27
Figure 2-7 Ben & Jerry’s SWOT analysis that serves as the basis for management actions
regarding growth ……………………………………………………………………………………………. 2-30
Figure 2-8 The 4 Ps elements of the marketing mix must be blended to produce a cohesive
marketing program …………………………………………………………………………………………. 2-34
Applying Marketing Metrics
How Well is Ben & Jerry’s Doing?: Dollar Sales and Dollar Market Share
Chapter 02 – Developing Successful Organizational and Marketing Strategies
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POWERPOINT RESOURCES TO USE WITH LECTURES
PowerPoint
Marketing Matters Slide
Making Responsible Decisions—Social Entrepreneurs are Creating New Types of Organizations to
Pursue Social Goals …………………………………………………………………………………………………………… 2-6
Videos
2-1: Ben & Jerry’s ………………………………………………………………………………………………………………. 2-4
2-3: Uber Video ……………………………………………………………………………………………………………….. 2-12
2-5: IBM Video Case ………………………………………………………………………………………………………… 2-41
In-Class Activities (ICA)
ICA 2-2: Marketing Yourself ………………………………………………………………………………………………. 2-49
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LEARNING OBJECTIVES (LO)
After reading this chapter students should be able to:
LO 2-2: Describe core values, mission, organizational culture, business, and goals.
LO 2-4: Discuss how an organization assesses where it is now and where it seeks to be.
LO 2-6: Describe the four components of the implementation phase of the strategic marketing
process.
LO 2-7: Discuss how managers identify and act on deviations from plans.
KEY TERMS
business
marketing tactics
business portfolio analysis
mission
core values
objectives (goals)
diversification analysis
organizational culture
goals (objectives)
points of difference
market segmentation
profit
market share
situation analysis
marketing dashboard
strategic marketing process
marketing metric
strategy
marketing plan
SWOT analysis
marketing strategy
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LECTURE NOTES
BEN & JERRY ARE ON A MISSION: TO MAKE FANTASTIC,
SUSTAINABLE, WORLD-CHANGING ICE CREAM
• Ben & Jerry’s started in 1978 when friends Ben Cohen and Jerry Greenfield:
a. Had “aced” their $5 college correspondence course in ice cream making.
• Three part mission statement: Product – finest quality; Economic – sustainable
financial growth; Social – make the world a better place.
• Highly creative organizational and marketing strategies including:
a. Free Cone Day. One day a year, give away free ice cream to more than a
million fans around the world.
b. Fair Trade. Farmers receive a fair price and agree to use sustainable farming
practices, fair working standards, and invest in local communities.
c. B-Corp Certified. One of the first in the Benefit Corp. movement; a rigorous set
of principles and standards in terms of social and environmental performance,
[Video 2-1: Ben & Jerry’s]
I. TODAY’S ORGANIZATIONS [LO 2-1]
In studying today’s visionary organizations, one must understand:
• The kinds of organizations that exist.
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• What strategy is.
• How strategy relates to the three levels of structure found in large organizations.
A. Kinds of Organizations
• An organization is a legal entity of people who share a common mission.
• This mission motivates organizations to:
• Organizations consist of three types:
a. For-profit organization.
• Serves its customers in order to earn a profit, which is the:
• Must earn a profit to survive.
[Web Links 2-1: Brita Ad]
b. Nonprofit organization.
• Is a nongovernmental organization that…
• Goals include operational efficiency or client satisfaction.
• Examples: Charities and cooperatives.
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MAKING RESPONSIBLE DECISIONS
New Types of Organizations Help Entrepreneurs Focus on Passion and Purpose
• Social entrepreneurs use a variety of organizational models to address social needs.
• Some enterprises are organized as traditional for-profit companies; they can also be
benefit corporations which are for-profit organizations with legal requirements for
social and environmental impact assessment.
c. Government agency.
• Is a federal, state, county, or city unit that…
• The terms firm, company, and organization are used interchangeably to cover
both for-profit and nonprofit organizations.
• Organizations that develop similar offerings, when grouped together, create an
industry, such as the automobile industry or the ice cream industry.
a. [Figure 2-A] The dynamics of an industry and how it is structured impact the
B. What Is Strategy?
Chapter 02 – Developing Successful Organizational and Marketing Strategies
• Strategy is an organization’s long-term course of action designed to deliver a
unique customer experience while achieving its goals.
C. The Structure of Today’s Organizations
[Figure 2-1] Large organizations are very complex and consist of three levels:
1. Corporate Level. Is the level in an organization where top management directs
overall strategy for the entire organization. Consists of:
a. Board of directors, individuals both inside and outside the organization.
b. Chief executive officer (CEO), the highest ranking officer in the organization.
• CEOs must possess leadership skills.
• CEOs must have the expertise to:
c. Chief marketing officer (CMO), who:
• Develops and implements the organization’s strategy to achieve its goals.
• Must think strategically to deliver value to the organization.
• Must have:
2. Strategic Business Unit Level. This is the level in multimarket, multiproduct
firms where managers manage a portfolio or groups of businesses.
a. A strategic business unit (SBU) is a subsidiary, division, or unit of an
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3. Functional Level. Is the level in an organization where groups of specialists
actually create value for the organization.
a. A department refers to those specialized functions, such as marketing.
b. At this level, the strategic direction becomes more specific and focused.
c. A key role of the marketing department is to:
• Listen to customers.
d. Cross-functional teams:
• Are formed by senior management to develop new or improve existing
offerings.
• Consist of a small number of people from different departments…
• Are mutually accountable to accomplish a task or common set of
performance goals.
• Will sometimes have representatives from outside the organization, such
as suppliers and customers, to assist them.
LEARNING REVIEW
2-1. What is the difference between a for-profit and a nonprofit organization?
2-2. What are examples of a functional level in an organization?
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II. STRATEGY IN VISIONARY ORGANIZATIONS [LO 2-2]
• Successful organizations must be forward looking—anticipating and responding
quickly and effectively to future events.
• [Figure 2-2] A visionary organization:
a. Specifies its foundation (why does it exist?).
b. Sets a direction (what will it do?).
c. Formulates strategies (how will it do it?).
A. Organizational Foundation: Why Does It Exist?
1. Core Values.
a. Are the fundamental, passionate, and enduring principles of an organization
that guide its conduct over time.
b. Are developed by an organization’s founders or senior management.
f. Motivates stakeholders of an organization, which consist of its:
• Employees • Creditors
g. Are timeless.
h. Guide the organization’s conduct.
i. Must be communicated and supported by top management and employees.
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[Video 2-2: Southwest Airlines]
2. Mission.
a. Is a statement of the organization’s function in society that often identifies its
customers, markets, products, and technologies.
e. Inspiration and focus appear in mission statements of for-profit and
nonprofits.
• Example: Southwest Airlines – “To be dedicated to the highest
quality of Customer Service delivered with a sense of warmth,
friendliness, individual price and Company Spirit.”
f. Some organizations, such as Ben & Jerry’s, have added a social element to
their mission statements to reflect their moral ideals.
3. Organizational Culture.
a. An important corporate-level marketing function is communicating its core
values and mission to its stakeholders.
[DICA 2-1: The Importance of Mission, Vision, Values]
B. Organizational Direction: What Will It Do?
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1. Business.
a. A business describes the clear, broad, underlying industry or market sector of
an organization’s offering.
b. An organization defines its business by looking at the set of organizations that
sell similar offerings—those that are in direct competition with each other.
c. Example: The ice cream business—for Ben & Jerry’s.
d. The organization answers these questions:
[Video 2-3: Uber Video]
• Uber, known for transportation services, continually redefines its business.
• Started as a limo service called UberCab, business was redefined as a
2. Goals.
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b. Goals convert the organization’s mission and business into performance
targets to measure how well it is doing.
c. Business firms pursue several different types of goals:
• Profit. Most firms seek the highest financial return on their investments
• Market share.
– Is the ratio of sales revenue of the firm to…
• Customer satisfaction.
– Customers:
• Employee welfare.
– Employees play a critical role in the firm’s success.
• Social responsibility. A firm may seek to balance the conflicting goals of
its stakeholders to:
d. Nonprofit organizations also set goals:
C. Organizational Strategies: How Will It Do It?
1. Variation by Level. Moving from the corporate level to the strategic business
unit level to the functional level involves creating increasingly detailed strategies
and plans.
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2. Variation by Product. Organizational strategies also vary by the organization’s
products.
a. The strategy will be far different when marketing a very tangible physical
good, a service, or an idea.
b. Most organizations develop a marketing plan as a part of their strategic
marketing planning efforts.
[ICA 2-1: Calculating a “Fog Index” for Your Own Writing]
LEARNING REVIEW
2-3. What is the meaning of an organization’s mission?
2-4. What is the difference between an organization’s business and its goals?
Answer: An organization’s business describes the clear, broad, underlying industry or
D. Tracking Strategic Performance with Marketing Analytics [LO 2-3]
How do marketing managers know if they are making progress to goals?
• “You can’t manage what you don’t measure.”
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1. Car Dashboards and Marketing Dashboards.
a. A marketing dashboard is the visual computer display of the essential
information related to achieving a marketing objective.
b. Business intelligence tools allow real-time streaming data to provide point-in–
time and trend displays.
c. On a car’s dashboard, we glance at the fuel gauge and take action when our
2. Dashboards, Metrics, and Plans.
a. [Figure 2-3] Sonatica’s marketing dashboard graphically displays key
performance indicators linked to its product lines.
b. Each performance variable is a marketing metric, which is:
c. Only a few metrics should be shown on a marketing dashboard so that
managers aren’t overwhelmed with too much irrelevant data.
d. Today’s marketers use data visualization, which:
e. This book uses data visualization in many of its figures to highlight in color
key points described in the text.
f. To show how parts of a business are performing, data visualization tools
include:
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g. [Figure 2-3A] Website Traffic Sources.
• The color-coded perimeter of the pie chart shows the three main sources of
website traffic.
• These three colors link to those of the circles in the column of website
traffic sources.
• Each of eight specific sources represented as one slice in the pie.
– Referral sites at 47%, of which:
– Search engines at 37 percent.
h. [Figure 2-3B] Sales Performance by SBU.
• The spark lines:
• The trends in electronics and peripherals are generally up, causing their
sales to exceed their YTD (year to date) targets.
• Conversely:
i. [Figure 2-3C] Website Visits by State.
• The U.S. map shows that the darker the state, the greater the number of
website visits for the current month.
• In terms of monthly visits:
j. The Ben & Jerry’s dashboard in the Using Marketing Dashboards box:
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APPLYING MARKETING METRICS
How Well is Ben & Jerry’s Doing?
Dollar Sales and Dollar Market Share
Marketers use the common dollar sales and dollar market share metrics to assess their
organization’s growth performance in the marketplace.
Your Challenge.
Scanner data from checkout counters in grocery stores and other retailers show that
the total industry sales for the super-premium category of ice cream—the segment of the
Your Findings. Dollar sales and dollar market share metrics for 2018 are calculated as
follows:
Dollar Sales ($) = Average Price × Quantity Sold
[See UMD02SalesMktShare.xls]
Your Action.
These results need to be compared with (1) the goals established for these metrics
and (2) with previous years’ results to see if the trends are increasing, flat, or decreasing.
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III. SETTING STRATEGIC DIRECTIONS [LO 2-4]
Setting strategic directions involves answering two questions:
• Where are we now?
• Where do we want to go?
A. A Look Around: Where Are We Now?
1. Competencies. Answers the question, “What do we do best?”
2. Customers. Strategy must provide genuine value and benefits to present and
prospective customers to ensure they have a satisfying customer experience.
3. Competitors. Globally, the lines among competitors are increasingly blurred.
a. Lands’ End initially defined other catalog retailers as its competitors.
b. Intertype Competition:
• Means that very dissimilar types of retail outlets compete with each other.
• Today, Lands’ End competes with:
– Not only other catalog clothing retailers…
B. Growth Strategies: Where Do We Want to Go?
Chapter 02 – Developing Successful Organizational and Marketing Strategies
1. Business Portfolio Analysis.
a. The Boston Consulting Group’s (BCG) uses business portfolio analysis,
which:
• Is a technique that managers use to quantify performance measures and
growth targets to…
b. [Figure 2-D] A firm using business portfolio analysis positions each of its SBUs
on a growth-share matrix.
• The vertical axis is the market growth rate, which is the annual rate of
growth of the SBU’s industry.
• The horizontal axis is the relative market share, defined as the sales of the
SBU divided by the sales of the largest firm in the industry.
c. The BCG has given specific names and descriptions to the four quadrants in
its growth-share matrix based on the amount of cash they generate for or
require from the organization:
1. Question marks (or problem children—upper right).
2. Stars (upper left).