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Chapter 02 - Developing Successful Organizational and Marketing Strategies
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d. An organization’s SBUs often start as question marks and go
counterclockwise to become stars, then cash cows, and finally dogs.
e. Because an organization has limited influence on the market growth rate, its
main objective is to try to change its relative dollar or unit market share.
f. When changing an SBU’s relative market share, management must:
g. Apple:
• Has been consistently cited as one of the top global brands over the past
decade…
h. What has made Apple so iconic?
• Its revolutionary products.
• It has infused its technology with the “human touch,” connecting
i. [Figure 2-4] Figure 2-4 shows a Boston Consulting Group (BCG) business
portfolio analysis for four of Apple’s consumer-related SBUs.
1. Apple Watch (wearable technology).
– Launched in April 2015 – Apple’s version of a smart watch.
* Competes with Samsung, Pebble, Motorola, LG and a range of
2. iPhone (smartphones).
– Launched in 2007. iPhone sales skyrocketed and Apple’s U.S. market
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3. iPad/iPad mini (tablets).
– Launched in 2010, unit sales reached 40 percent market share by 2013
4. iPod (music players).
– Apple entered the market with iPod in 2001. The product became a
cultural icon, selling more than 50 million units annually until 2010.
– In 2010, iPhone integrated a music player.
* Since then, sales have declined dramatically.
• How did you – as Tim Cook – rank the growth opportunity for each of the
four SBUs?
– Apple Watch represents the highest unit growth rate at 36 percent.
– iPhone SBU is likely to continue growing at 7 percent, while the iPad
SBU is experiencing a decline in sales.
• The primary strength of business portfolio analysis:
– Lies in forcing a firm to place each of its SBUs in the growth-share
matrix, which…
• Weaknesses of this analysis arise from the difficulty in:
– Getting the needed information.
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– Incorporating competitive data into business portfolio analysis.
2. Diversification Analysis.
a. Diversification analysis is a technique that helps a firm search for growth
opportunities from among:
b. For any market, there is both:
• A current product (what the firm now sells) and…
c. For any product, there is both:
• A current market (existing customers) and…
d. As organizations seek to increase sales revenues, they consider all four
market-product strategies.
e. [Figure 2-5] Using Ben & Jerry’s as an example, these four market-product
strategies are:
• Market penetration.
– Is a marketing strategy to increase sales of current products in current
markets.
– Example: Selling more Ben & Jerry’s Chocolate Chip Cookie Dough
ice cream to U.S. customers.
[Video 2-4: B&J’s Bonnaroo Buzz Ad]
• Market development.
– Is a marketing strategy to sell current products to new markets.
– Example: Selling Ben & Jerry’s Bonnaroo Buzz Fair Trade-sourced
ice cream to Brazilian customers, an attractive market.
– Is risky if:
* The firm has no experience selling in the new market.
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* Prospective customers are unfamiliar with the brand.
• Product development.
– Is a marketing strategy to sell a new product to current markets.
• Diversification.
– Is a marketing strategy to sell new products in new markets.
LEARNING REVIEW
2-5. What is the difference between a marketing dashboard and a marketing metric?
2-6. What is business portfolio analysis?
2-7. Explain the four market-product strategies in diversification analysis.
Chapter 02 - Developing Successful Organizational and Marketing Strategies
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IV. THE STRATEGIC MARKETING PROCESS [LO 2-5]
• After the organization assesses where it’s at and where it wants to go, it asks:
1. How do we allocate our resources to get to where we want to go?
2. How do we convert our plans into actions?
3. How do our results compare with our plans, and do deviations require new plans?
• The strategic marketing process is an approach whereby an organization allocates
its marketing mix resources to reach its target markets.
[ICA 2-2: Marketing Yourself]
• [Figure 2-6] This process has 3 phases: planning, implementation, and evaluation.
A. The Planning Phase of the Strategic Marketing Process
• A truism: “If you don’t know where you’re going, any road will get you there.”
• The planning phase consists of three steps as outlined below.
1. Step 1: Situation (SWOT) Analysis.
a. A situation analysis involves taking stock of where the firm or product has
been recently, where it is now, and where it is headed in terms of the
organization’s marketing plans and the external forces and trends affecting it.
b. [Figure 2-7] A SWOT analysis is an acronym describing an organization’s
appraisal of its internal Strengths and Weaknesses and its external
Opportunities and Threats.
c. A SWOT analysis studies four areas to build a firm’s marketing program:
• Identifying trends in the organization’s industry.
d. The Ben & Jerry’s SWOT analysis table in Figure 2-7 shows:
• The combination of internal versus external factors (the rows).
e. The goal is to identify the critical strategy-related factors that impact the firm.
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f. The task is to translate the SWOT analysis into specific marketing actions.
g. The Ben & Jerry’s SWOT analysis suggests the following:
• Build on a strength. Find distribution efficiencies with Unilever’s
existing ice cream brands.
2. Step 2: Market-Product Focus and Goal Setting.
a. Developing a marketing program involves determining what products will be
targeted at which customers.
b. This decision is often based on market segmentation, which involves
aggregating prospective buyers into groups, or segments, that (1) have
common needs and (2) will respond similarly to a marketing action. The
3. Step 3: Marketing Program.
a. This step is the “how” aspect of the planning phase: developing the marketing
program’s marketing mix and the budget.
b. [Figure 2-8] Shows the components of each marketing mix element that
comprise a cohesive marketing program.
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LEARNING REVIEW
2-8. What are the three steps of the planning phase of the strategic marketing process?
Answer: The three steps of the planning phase of the strategic marketing process are:
2-9. What are points of difference and why are they important?
B. The Implementation Phase of the Strategic Marketing Process [LO 2-6]
• The second phase of the strategic marketing process—implementation—involves
carrying out the marketing plan that emerges from the planning phase.
1. Obtaining Resources.
a. The marketing manager must obtain the human and financial resources
necessary to successfully execute the marketing program.
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2. Designing the Marketing Organization.
a. A marketing program needs a marketing organization to implement it by
converting marketing plans into reality.
b. [Figure 2-9] Shows the organization chart of a typical manufacturing firm,
giving some details of the marketing department’s structure.
• Four managers of marketing activities are shown to report to chief
marketing officer or CMO.
c. The entire marketing organization is responsible for converting these
marketing plans to reality as part of the corporate marketing team.
3. Defining Precise Tasks, Responsibilities, and Deadlines.
a. Successful implementation requires that people know the tasks for which they
are responsible and the deadlines for completing them.
b. The outcome of meetings should be an action item list, which is an aid to
implementing a marketing plan, consisting of four columns:
• The task.
• The person responsible for completing that task.
c. Within hours of completing a meeting, the action item list:
• Is circulated to those attending.
• Serves as the starting agenda for the next meeting.
d. An action item list:
• Is forward looking.
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e. You are part of a team that is required to do a term project on the problem,
“How can the college increase attendance at its performing arts concerts?”
• The instructor limits the project in the following ways:
– Must involve a survey of a sample of students
– The written report with the survey results must be submitted by the
end of the 11th week of the term.
• To begin the assignment, you need to:
f. [Figure 2-10] Scheduling activities can be done efficiently with a Gantt chart:
• Is a graphical representation of a program schedule, which:
– Shows the relationships through time of the various program tasks.
– Are related to action item lists.
• Software applications such as Microsoft Project simplify the task of
developing a program schedule or Gantt chart.
• The key to all scheduling techniques is to distinguish:
g. Tasks 1 and 2 that are shaded yellow in Figure 2-10 must be done
sequentially.
• This is because in order to type and copy the final questionnaire before
mailing (Task 2)…
• The student must have a final draft of the questionnaire (Task 1).
h. Tasks 6 and 7 that are shaded blue can be done concurrently.
Chapter 02 - Developing Successful Organizational and Marketing Strategies
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• This overlap speeds up project completion.
4. Executing the Marketing Program.
a. The effective execution of a marketing plan requires attention to detail for
both marketing strategies and marketing tactics.
b. Marketing strategy.
• The means by which a marketing goal is to be achieved, usually
c. Marketing tactics.
• Are the detailed day-to-day operational marketing actions for each
C. The Evaluation Phase of the Strategic Marketing Process [LO 2-7]
• The evaluation phase of the strategic marketing process:
a. Seeks to keep the marketing program moving in the direction set for it.
b. Follows the planning and implementation phases.
• Accomplishing this requires the marketing manager to:
a. Compare:
• The results of the marketing program with…
• The goals in the written plans to identify deviations.
b. Act on these deviations by:
1. Comparing Results with Plans to Identify Deviations.
a. [Figure 2-11] Apple begins the evaluation phase of its strategic marketing
process at the end of its fiscal year, which is September 30.
Chapter 02 - Developing Successful Organizational and Marketing Strategies
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c. You observe that:
• Extending the 2004 to 2009 trend of Apple’s recent sales revenues
(line AB) to 2016 along line BC…
• Shows an annual growth in sales revenue unacceptable to Apple’s
management.
d. Looking at potential new products in the Apple pipeline:
• Your task force set an aggressive annual sales growth target of 25 percent
per year—the line BD in Figure 2-11.
• Results in sales revenues of $104 billion in 2013 and $204 billion in 2016.
e. This reveals a white wedge-shaped gap DBC in the figure:
• Planners call this the planning gap:
• The purpose of a firm’s marketing program is to “fill in” the planning gap.
• In the case of Apple:
– Move its future sales revenue line from the slow-growth line BC…
– Up to the more challenging target of line BD.
f. This is the essence of evaluation: Comparing actual results with goals set.
2. Acting on Deviations.
a. When evaluation shows that actual performance differs from expectations:
• Managers need to take immediate marketing actions…
• Exploiting positive deviations and correcting negative ones.
b. Apple’s:
• Explosion in actual sales revenues from 2006 to 2014 (line BE)…
• Compared to its target sales revenues (line BD)…
• Shows Apple’s rare, world-class ability to both:
– Generate and anticipate consumer demand and…
– Commercialize new technologies for its revolutionary offerings.
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c. Let’s consider some of Apple’s marketing actions:
• Exploiting a positive deviation.
– Favorable customer reactions to Apple’s iPhone (2007) and its iPad
(2010) enable it to…
• Correcting a negative deviation.
– As Apple’s desktop PCs became dated, it moved aggressively to
replace them with new iMacs and MacBooks.
– Apple refreshed its MacBook Air (2015) and MacBook Pro (2016)
lines of laptops.
d. In the BCG business portfolio analysis of the four Apple product lines:
LEARNING REVIEW
2-10. What is the implementation phase of the strategic marketing process?
2-11. How do the goals set for a marketing program in the planning phase relate to the
evaluation phase of the strategic marketing process?
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APPLYING MARKETING KNOWLEDGE
1. (a) Using Netflix as an example, explain how a mission statement gives a strategic
direction. (b) Create a mission statement for your own career.
Answers:
2. What competencies best describe (a) your college or university and (b) your favorite
restaurant?
Answers:
3. Compare the advantages and disadvantages of Ben & Jerry’s attempting to expand
sales revenues by using (a) a product development strategy or (b) a market
development strategy.
Answers:
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4. Select one strength, one weakness, one opportunity, and one threat from the SWOT
analysis for Ben & Jerry’s shown in Figure 2-7. Suggest an action that a marketing
manager might take to address each factor.
Answers:
5. What is the main result of each of the three phases of the strategic marketing process?
(a) planning, (b) implementation, and (c) evaluation.
Answers:
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6. Parts of tasks 5 and 6 in Figure 2-10 are done both concurrently and sequentially.
(a) How can this be? (b) How does it help the students meet the term paper deadline?
(c) What is the main advantage of scheduling tasks concurrently rather than
sequentially?
Answers:
7. The goal-setting step in the planning phase of the strategic marketing process sets
quantified objectives for use in the evaluation phase. What does a manager do if
measured results fail to meet objectives? Exceed objectives?
Answers:
If the marketing manager discovers a planning gap, which is a difference between the
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BUILDING YOUR MARKETING PLAN
1. Read Appendix A, “Building an Effective Marketing Plan.” Then write a 600-word
executive summary for the Paradise Kitchens marketing plan using the numbered
headings shown in the plan. When you have completed the draft of your own
marketing plan, write a 600-word executive summary to go in the front of your own
2. Using Chapter 2 and Appendix A as guides, give focus to your marketing plan by
(a) writing your mission statement in 25 words of less, (b) listing three nonfinancial
goals and three financial goals, (c) writing your competitive advantage in 35 words or
less, and (d) doing a SWOT analysis table.
3. Draw a simple organization chart for your organization.
Helping with Common Student Problems
Our experience from working with thousands of students writing marketing plans is the
need to encourage them to (a) get started and get something on paper and (b) be specific. One
way to accomplish this is to have students hand in a two-page draft of the start of their marketing
plan containing the four items listed above in Question #2.
Our experience is that it is useful to have instructors make comments directly on this
draft using the grading standard (perhaps using the grading sheet contained in the Instructor’s
Resource Manual: See Section V—MP-9: Evaluation Form Useful for All Written Materials or
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TEACHING NOTE FOR VIDEO CASE VC-2
IBM: Using Strategy to Build a “Smarter Planet”
This case describes how IBM’s Smarter Planet initiative is (1) encapsulated to the
company’s mission and values, (2) translated into a business strategy, and (3) implemented in a
coherent and comprehensive fashion for companies in a variety of industries. Interviews with
senior IBM executives explain how this is done from both a conceptual and practical perspective.
Synopsis
Show Slide 2-37. IBM was founded in 1911, when several business machine companies
merged to form the Computing-Tabulating-Recording Company (CTR). The company had
1,300 employees and sold scales, time recorders, meat and cheese slicers, and tabulators. In
1914, Thomas J. Watson, Sr. joined the company as general manager and implemented several
important business practices including a focus on customer service, conservative dress for
salespeople, development of large-scale custom-built solutions for businesses, and a positive,
professional outlook communicated by his favorite slogan “THINK.”
As CTR grew it offered new products such as an electric adding machine and a punch
card press, and, as a result, it adopted the name International Business Machines from one of its
Canadian subsidiaries. Blue covers on the computers, blue letters in the IBM logo, and dark blue
suits worn by IBM salespeople, led to the now popular company nickname, “Big Blue.” Today,
Fortune magazine ranks IBM as the 20th largest company in the United States with sales of
$104.5 billion and over 380,000 employees in more than 170 countries. Forbes magazine ranks
IBM as the fifth most valuable brand in the world.
In support of its mission IBM developed an overarching strategy called “Building a
Smarter Planet.” The Smarter Planet initiative is designed for clients who value IBM’s industry
and process expertise, systems integration capability, and research capacity. In addition, IBM
created a Smarter Planet marketing plan to describe the company’s view of the next era of
information technology and its impact on business and society.
Teaching Suggestions
Students can use the case information, the IBM corporate home page (www.ibm.com),
the IBM Smarter Planet website (www.ibm.com/smarterplanet/us/en), and their own perceptions
of IBM and observations of the Smarter Planet campaign.
1. Ask your students about their perceptions of IBM, what business it is in, and what its
mission might be.
2. Ask your students to describe their perceptions of changes in the environment that would
be important to IBM. Are they aware of declining trade barriers, the growth of developing
economies, and the impact of the World Wide Web?
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3. Some students may remember seeing “Smarter Planet” ads on television or in magazines.
Ask them to describe the ads and how they represent a strategy at IBM.
Answers to Questions
1. What is IBM’s Smarter Planet business strategy? How does this strategy relate to
IBM’s mission and values?
Answers:
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2. Conduct a SWOT analysis for IBM’s Smarter Planet initiative. What are the relevant
trends to consider for the next three to five years?
Answers:
As the first step in the planning phase of the strategic marketing process, a SWOT analysis
is part of a situational analysis a firm conducts to: (1) identify industry trends; (2) analyze
