Chapter 2- Developing Successful Marketing And Corporate Strategies

Front 1

Different Organizations- Kinds, Levels, and Teams

Back 1

Kinds: Business firms and nonprofit organizations

Levels: corporate, business unit, functional (should be tied together)

Front 2

a. business firm

b. nonprofit organization

Back 2

a. a privately owned organization that serves its customers in order to earn a profit

b. a nongovernmental organization that serves its customers but does not have profit as an organizational goal.

Front 3

Profit

Back 3

the reward to a business for the risk it undertakes in offering a product for sale ; the money left over after total expenses are subtracted from total revenues

Front 4

Corporate level

Back 4

where top management directs overall strategy for the entire organization. Creates value for the firm.

*SBUs(Strategic business units)- a portfolio of businesses (like P&G)

Front 5

Business Unit

Back 5

an organization that markets a set of related products to a clearly defined group of customers

Front 6

Business Unit Level

Back 6

the level at which business unit managers set the direction for their products and markets to exploit value-creating opportunities.

strategic direction is more specific here.

Front 7

Functional Level

Back 7

where groups of specialists actually create value for an organization (ie. marketing, research and development, and other specialized activities)

*department= specialized functions

This is where most of the organization's work gets done.

Front 8

Cross-Functional Teams

Back 8

a small number of people from different departments in an organization who are mutually accountable to a common set of performance goals

There may be conflict b/w departments.

Front 9

Strategy Issues in Organizations

Back 9

Business, Mission, and Organizational Culture, and Goals

Front 10

1)business Strategy

(actually goes more with Mission)

Back 10

purpose: accomplish something for someone

Guideline: understand the people served by the business and the value they receive.
BROAD definition is necessary!
EX. Disney is in "Entertainment" NOT "Theme Park" Business

Front 11

2)Mission (book vs. NOTES)

Back 11

a statement of the organization's scope, often identifying it's customers, markets, products, technology and values.

(NOTES) A clear statement of the markets in which the firm competes and seeks to deliver customer value

Front 12

3)Organizational Culture

Back 12

a set of values, ideas, and attitudes, that is learned and shared among the members of an organization

Mergers may = colission of cultures

Front 13

Stakeholders

Back 13

people who are effected by what the company does and how it performs.

EX. Employees, Owners, board members, suppliers, distributors, etc.

must communicate mission to them

Front 14

4) Goals/ Objectives

Back 14

convert the mission into targeted levels of performance to be achieved, often by a specific time
*need to be measurable!

A targeted level of performance set in advance of the actual work to be performed

Front 15

Goals:

a. Profit

b. Sales

Back 15

a. firm seeks to get as high a functional return on investment- profit- as possible

b. maintain or increase sales level

Front 16

Goals/Objectives:

c. Market Share

*Relative market share (NOTES)

Back 16

c. the ratio of sales revenues of the firm to the total sales revenue of all firms in the industry.

*Firm's raw market share divided by market share of largest competitor

increasing market share may require sacrificing profit/sales

Front 17

Other Objectives not in NOTES

Back 17

d.quality
e.customer satisfaction
f.employee welfare
g.social responsibility

Front 18

Strategy

*Situation Analysis is included here in BOOK

Back 18

Where are we now?- ID customers, competencies, and competitors
SWOT analysis

Where do we want to go? (Growth?) use business portfolio analysis and market-product analysis

Front 19

A)Customers

Back 19

SEGMENTATION
TARGETING
POSITIONING

Strategic decisions must be customer-focused and provide genuine value and benefits to present and prospective customers

Front 20

B)Competencies

Back 20

an organization's special capabilities, including skills, technologies, and resources that distinguish it from other organizations.

"What do we do best?"

Front 21

*NOTES: Core Competiencies

Back 21

Special Capabilities resulting from personnel, resources, or functional units, that determine the means of achieving SUSTAINABLE COMPETITIVE ADVANTAGE and, ultimately, marketplace success.

EX. FedEX= Logistics
EX. Wal- Mart= Low cost logistics

*more ABSOLUTE than SCA

Front 22

Competitive Advantage (book)

Sustainable Competitive Advantage (NOTES)

Back 22

a unique strength relative to competitors, often based on quality, time, cost or innovation. SUSTAINABLE!!
*Competencies translate into SCA

EX. FedEX- Logistics=> Reliable overnight delivery
EX. Walmart- Low cost logistics=> Everyday low prices

Front 23

Quality

Back 23

those features and characteristics of a product that influence its ability to satisfy customer needs.

Strategy= Total Quality Management

Front 24

Benchmarking

Back 24

discovering how others do something better than your own firm so you can imitate or leapfrog competition

a method of improving quality or reducing new product cycles

*doesn't have to be same industry

Front 25

C) Competitors

Back 25

continuous assessment is needed of both who competitors are and how they are changing

-Market Share Analysis

*intertype competition/ competitve parity budgeting

Front 26

Growth Strategies/Setting Corporate Goals:

Business Portfolio Analysis

(GROWTH-SHARE Matrix stuff in NOTES)

Back 26

uses quantified performance measures and growth targets to analyze a firm's business units as though they were a collection of separate investments

*created by Boston Consulting Group

Front 27

Growth-Share Matrix:

MARKET GROWTH RATE

Back 27

vertical axis- market growth rate; the annual rate of growth of the specific market or industry in which given strategic business is competing

divided by 10%
ABOVE (>10%)= high growth market

BELOW (<10%)= low growth market

Front 28

Growth-Share Matrix:

RELATIVE MARKET SHARE

Back 28

horizontal axis- relative market share; the sales of the SBU divided by the largest firm in the industry

Divided by 1X:
ABOVE 1X- Largest share of the market
BELOW 1x- Low share of the market

Front 29

Question Marks/Problem Children

Back 29

LOW SHARE(<1x)/ HIGH GROWTH MARKET(>10%)
This is where products usually start out. It is a (?) because we don't know if it will be successful.
*Require large cash injections to maintain and increase market share

Front 30

Stars

Back 30

HIGH SHARE (>1x)/ HIGH-GROWTH MARKET(>10%)
question marks hopefully become Stars.
Good position for firms

Front 31

Cash Cows

Back 31

HIGH R.MARKET SHARE(>1x)/ LOW GROWTH MARKET (<10%)
SBUs that typically generate large amounts of cash/ profits. Stars become Cash Cows when their market growth slows down.

Profits generates from Cash Cows are used to invest in new SBUs(current Question marks)

Front 32

"Success Sequence" in NOTES

Back 32

Question mark-> Star-> Cash cow

money from cash cow is also reinvested back into question marks

Front 33

Dogs

Back 33

LOW R.MARKET SHARE(<1x)/ LOW GROWTH MARKET (<10%)
Although they may generate enough cash to sustain themselves, they do not hold the promise of ever becoming real winners of the firm

Front 34

"Failure Sequence"

Back 34

-Question marks never achieve market dominance
-Market slows down and moves to a dog

Front 35

Market-Product Analysis

Was part of positioning discussion on previous test

Back 35

For any product there is both a current market (existing customers) and a new market (potential customers), and there is a current product and a new product.

Part of Objective/Strategy Formulation: Where do we want to go?

Front 36

market penetration

market development

Back 36

a.increasing sales of present products in existing markets
Ex. Selling MORE B&J to Americans

b.selling existing products in new markets
EX. Selling Ben & Jerry's in Mexico for first time

Front 37

product development

Diversification

Back 37

c.a marketing strategy of selling new products to existing markets
EX. Selling new Ben&Jerry's shirts to existing American Market

d.developing new products and selling them in new markets
EX. Selling B&J clothes to new market in Mexico

Front 38

***Strategic Marketing Process

Marketing Strategy Formulation in NOTES

Back 38

An organization allocates it's marketing mix resources to reach it's target markets: Phases of planning, implementation, control
1) How do we allocate our resources?
2) How do we convert plans into actions?
3) What are our results?

Front 39

Marketing Plan

Back 39

a road map for marketing activities of an organization for a specified future period of time.

*formal, written document

Front 40

Planning Phase (book steps)

Back 40

1) Situation Analysis
2) market-product focus and goal setting
3) marketing program

Front 41

Situation (SWOT) Analysis

Back 41

Taking stock of where the form or product has been recently, where it is now, and where it is headed in terms of the organization's plans and the external factors and trends affecting it.
-ID trends in industry
-Analyze competitors
-Analyze firm itself
-Research present and prospective customers

Front 42

SWOT analysis

Back 42

acronym describing an organization's appraisal of its internal Strengths, Weaknesses, Opportunities, and Threats.
Can be done at any level in organization.

*Goal: translate results of the analysis into into specific actions that can help the firm grow and succeed

Front 43

SWOT Factors and goals:

A)Strengths

B)Weaknesses

Back 43

A) Internal to the firm/ Favorable= something we do well
Goal: Build on a strength

B) Internal to the firm/ Unfavorable
Goal: Correct a weakness

Front 44

SWOT Factors and goals:

C) Opportunities

D) Threats

Back 44

C) EXternal to the firm/ Favorable
Goal: Exploit/take advantage of opps.

D) EXternal to the firm/ Unfavorable
Goal: Avoid a disaster-laden threat

Front 45

Market Segmentation

Back 45

aggregating prospective buyers into groups, or segments that 1) have common needs and 2) will respond similarly to a marketing action

Front 46

Product/Market Segments cont.

Back 46

- Set marketing and product goals

- Select target markets

- Find *points of difference

- Position the product in consumer's mind

Front 47

Points of difference

Back 47

those characteristics of the product that make it superior to competitive substitutes

kind of like sust. competitive advantage, but for a product

EX. Bud light- all beers are low carb., choose on taste

Front 48

Marketing Program

Back 48

"HOW" of the Strategic Marketing Program

Product, Price, Promotion, Place

Front 49

a)Product

b)Price

Back 49

a)Product strategy:
Features, Brand name, Packaging, Service, Warranty

b)Price: List price, discounts, allowances, credit, payment
*no effect on long term market share growth

Front 50

c)promotion

d) Place

Back 50

c) Advertising, Personal Selling, Sales Promo, PR, Direct Marketing

d) Outlets, Channels, Coverage, Transport, Stock
*no effect on long term market share growth

Front 51

Implementation

Steps in Implementation

Back 51

carrying out the plan that emerges from the planning phase
- Obtain resources

- Design marketing organization

- Develop schedules

- Execute marketing program

Front 52

Marketing Strategy

Back 52

Means by which a marketing goal is to be achieved, usually characterized by a specified target market and a marketing program to reach it

Both the end sought (target market) and the means (program)

Front 53

Marketing Tactics

Back 53

detailed day-to-day operational decisions essential to the overall success of marketing strategies
ie. writing adds and setting prices

Front 54

Control Phase of SMP

Back 54

keeping the program moving in the direction set for it

1) compare results with goals
2) act on deviations

Front 55

planning gap

Back 55

the difference between the projection of the path to reach to reach a new goal and the projection of the path of the results
*graph

Front 56

Actions for deviations

Back 56

Exploiting a positive deviation

Correcting a negative deviation

Front 57

Grow (Notes)

Back 57

strategy to expand the market share we capture.

In competitive parity budgeting we need to remember to use the 1.5 rule to determine the new share of voice we want in the market

Front 58

Maintain

Back 58

don't want to expand our market share, just maintain it

Maintenance requires that our share of voice equals our market share

Front 59

Harvest

Back 59

strategy where we stop investing in a product and let it erode over time.

EX. Coors stopped investing in low-carb beer

Front 60

Divest

Back 60

strategy where we pull the product off of the market completely.

Getting rid of the brand!
Dont distribute, just kill it or sell it