Principles of Marketing BMKT300 CH2 S2

Lebanese International University
BMKT300 – Marketing Theory and

Principles
CHAPTER 2
Company and Marketing Strategy - Partnering

to Build Customer Engagement, Value, and
Relationships
Designing the Business Portfolio
Step 3 - Part B. Developing Strategies for Growth
Product/Market Expansion Grid is a tool for identifying

company growth opportunities through market penetration,
market development, product development, or diversification
to achieve profitable growth.
Product/Market Expansion Grid

1) Market Penetration
Strategy the company can grow
by increasing sales of current
products to current market
segments without changing the
product.
Ex: decreasing prices, increasing
promotions, enhancing
distribution.

Market Penetration Example
Due to the incredible strength of
Coca-Cola’s brand, the company has
been able to utilize market
penetration by creating an association
between Coca-Cola and Christmas,
such as through the famous Coca-
Cola Christmas advert (promotion),
which has helped boost sales during
the festive period.

2) Market Development
Strategy the company
can grow by identifying
and developing new
market segments for
current products.
Ex: geographic (new
location) or demographic
(new age or gender, etc.)

Market Development
Example
The launch of Coke Zero with zero
sugar and low calories where more
females drink it every day than any
other soft drink brand
(demographic).
3) Product Development
Strategy the company
can grow by offering new
or modified products to
existing market segments.
Ex: adding new brands,
new flavors, new colors,
new styles, increasing
variety.

Product Development
Example
A prime example of this was the
launch of Cherry Coke (new
flavour). The company has since
gone on to successfully launch
other flavoured variants including
lime, lemon and vanilla.

4) Diversification Strategy
The company can grow by

starting up or acquiring
businesses outside company’s
current products and markets.
Ex: new product to new
customers.

Diversification Example
In order to penetrate a new but
related market, Coca-Cola spent
$4.1 billion to acquire Glaceau,
including its health drink brand
Vitamin water. It also markets T-
shirts with Coca-Cola logo.
Step 3 - Part B. Developing Strategies for Downsizing
• Downsizing is the reduction of the business portfolio by eliminating

products or business units.
• Reasons for Downsizing:
o Market environmental change, making some products or markets
less profitable.
o Company might have grown too fast or entered some markets
where it lacks experience.
o Some products or SBUs simply age and die.
Strategy
• A strategy, is a GENERAL IDEA, a
conceptualization of how the goal could
be achieved.
Ta c ti c
- A tactic is an action that we take to execute the strategy.
-Guided by the strategy, the company specify and designs the tactics
that it will use to implement the strategy.
In marketing for example, one strategy to gain market share would be
brand building. As part of a company's brand building strategy, they
may adopt different tactics like:
(a) online advertising and
(b) celebrity supports.

The Marketing Strategy (At the Functional Level)
The Marketing Strategy is a functional strategy that presents the
broad marketing approach which will be used to achieve the
marketing plan's objectives. Via its marketing strategy, the
company decides which customers it will serve (segmentation and
targeting) and how (differentiation and positioning) – STP .

Ch 2 -22 Copyright © 2011 Pearson Education
Segmentation, Targeting, Positioning – STP:
The Essence of Strategic Marketing
The Marketing Strategy and the Marketing Mix (At the Functional Level)
Guided by Marketing Strategy, the company designs an

integrated marketing mix, the set of tactical marketing
tools that marketers use to implement their strategies,
engage customers, and deliver superior customer value.
The marketing mix consists of everything the firm can do to
influence the demand for its product. The many possibilities
can be collected into four groups of variables—the 4 Ps.

Principles of Marketing - LU 22
What is a Product?
• Anything that can be offered to a market for attention,

acquisition, use, or consumption that might satisfy a want
or need.
• Products includes:
-Goods
- Services
- Persons
- Places
- Organizations
- Ideas
- Combinations of the above
P l a c e
Place is where you sell your product and the distribution
channels you use to get it to your customer.

P r o m o ti o n
Promotion refers to the entire set of activities that
communicate the intrinsic worth of the product and
persuade target customers to buy it.
Price
Price is the amount of money charged for a product or a

service, or the sum of the values that customer exchange for
the benefits of having or using the product or service.
The Marketing Mix of a Good
The Marketing Strategy and the Marketing Mix (At the Functional Level)
To develop an integrated 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.

Managing Marketing Strategy and the Marketing Mix

Developing an Integrated Marketing Mix
• Some critics think that the 4Ps may omit certain important
activities.
• Answer: Invalid concern; many marketing activities that
may appear to be left out of the marketing mix are
included under each one of the four elements.
Developing an Integrated Marketing Mix
• Another concern, which is valid, holds that the 4Ps concept
takes the seller’s view of the market, not the buyer’s view.
• Answer: from the buyer’s viewpoint, the 4Ps might be
better described as the 4As – customer-centered framework.
Product Price
Acceptability Affordability
Place Promotion
Accessibility Awareness
Marketers should think through the 4As first and then

build the 4Ps on that platform.
Developing an Integrated Marketing Mix 4As
Definitions
• The extent to which the product exceeds

Acceptability customers expectations.
• The extent to which customers are willing

Affordability and able to pay the product’s price (e.g.,
selling Rolls Royce in Sudan).
• The extent to which customers can readily

Accessibility acquire the product (e.g., The product is
strictly sold online in Sudan).
• The extent to which customers are
informed about product’s features,
Awareness persuaded to try it, and reminded to
repurchase (Does such product exist ?!!).

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Lebanese International University

BMKT300 – Marketing Theory and

Company and Marketing Strategy - Partnering

Step 3 - Part B. Developing Strategies for Growth

Product/Market Expansion Grid is a tool for identifying

Step 3 - Part B. Developing Strategies for Growth

Product/Market Expansion Grid

Step 3 - Part B. Developing Strategies for Growth

Step 3 - Part B. Developing Strategies for Growth

Step 3 - Part B. Developing Strategies for Growth

Step 3 - Part B. Developing Strategies for Growth

Step 3 - Part B. Developing Strategies for Growth

The company can grow by

Step 3 - Part B. Developing Strategies for Growth

Step 3 - Part B. Developing Strategies for Downsizing

• Downsizing is the reduction of the business portfolio by eliminating

conceptualization of how the goal could

that it will use to implement the strategy.

In marketing for example, one strategy to gain market share would be

brand building. As part of a company's brand building strategy, they

may adopt different tactics like:

(a) online advertising and

(b) celebrity supports.

The Marketing Strategy is a functional strategy that presents the

broad marketing approach which will be used to achieve the

marketing plan's objectives. Via its marketing strategy, the

company decides which customers it will serve (segmentation and

targeting) and how (differentiation and positioning) – STP .

Guided by Marketing Strategy, the company designs an

Ch 2 -22 Copyright © 2011 Pearson Education

• Anything that can be offered to a market for attention,

Place is where you sell your product and the distribution

channels you use to get it to your customer.

Price is the amount of money charged for a product or a

To develop an integrated 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.

Ch 2 -22 Copyright © 2011 Pearson Education

Ch 2 -19 Copyright © 2011 Pearson Education

Marketers should think through the 4As first and then

• The extent to which the product exceeds

• The extent to which customers are willing

• The extent to which customers can readily

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