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68 Cards in this Set

  • Front
  • Back
Define 'Strategic Planning'
the managerial process of creating and maintaining a fit between the organization’s objectives and resources and evolving market opportunities.
What is the goal of strategic planning?
Goal: long run profitability and growth (strategic decisions require long-term commitments of resources)
What two questions does strategic planning answer?
o What is the organization’s main activity at a particular time?

o How will it reach its goals?
Define the process of 'planning'
the process of anticipating future events and determining strategies to achieve organizational objectives in the future.
Define 'marketing planning'
involves designing activities relating to marketing objectives and the changing marketing environment.

o Basis for all marketing strategies and decisions
What is a 'Marketing Plan'?
a written document that acts as a guidebook of marketing activities for the marketing manager.
Why should someone write a marketing plan?
Provides clearly stated activities that help employees and managers understand and work toward common goals.
What does a Marketing plan allow you to do?
Allows you to examine the marketing environment in conjunction with the inner workings of the business.

Serves as reference point for success of future activities.

Gives an awareness of the problems and possibilities of the marketplace.
List the four elements of a marketing plan
1) Define the business mission and objectives

2) perform a situation analysis

3) delineating a target market

4) Establishing components of a marketing mix.
What is the foundation of a marketing plan?
Firm's mission statement
What is a mission statement?
a statement of the firm’s business based on a careful analysis of benefits sought by present and potential customers and an analysis of existing and anticipated environmental conditions.
What questions does a mission statement answer?
Mission statements answers the question, “What business are we in?”
What boundaries does the mission statement set, and what does it focus on?
Establishes boundaries for all subsequent decisions, objectives, and strategies.

Focus on the market that the organization is attempting to serve rather than on the good or service offered.
What is marketing myopia?
defining a business in terms of goods and services rather than in terms of the benefits that customers seek.

Narrow or short term thinking.
What is a SBU?
Properly defined sbu: distinct mission, specific target market, control over its resources, its own competitors, and plans independent of the other SBUs in the organization.
__________ must be stated before the details of a marketing plan are developed.
Objectives must be stated before the details of a marketing plan are developed.

Without objectives, there is no basis for measuring the success of marketing plan activities.
What is a Marketing Objective?
Marketing objective – statement of what is to be accomplished through marketing activities.
What makes a Marketing objective useful?

2 things
1) Objectives should be realistic, measurable, and time specific.
“Best” – means different things to different firms

2) Objectives must also be consistent with and indicate the priorities of the organization.
Specified objectives accomplish 4 functions. List them
1) They communicate marketing management philosophies and provide direction for lower-level marketing managers so that marketing efforts are integrated and pointed in a consistent direction.

2) Serve as motivators. Motivates by creating something for employees to strive for.
•When objectives are attainable and challenging, they motivate those charged with achieving objectives.

3) Forces executives to clarify their thinking

4) Form a basis for control; the effectiveness of a plan can be gauged in light of the stated objectives.
What does a situation analysis accomplish?
Helps marketers understand the current and potential environment that the product or service will be marketed in.

Situation analysis is done before marketing activities can be defined.
Define a SWOT analysis
SWOT Analysis – identifying internal strengths (S) and weaknesses (W)

and also examining external opportunities (O) and threats (T)
How does a manager focus on Strengths and weaknesses during a SWOT analysis?
Examining Internal Strengths and Weaknesses

Marketing manager should focus on organizational resources such as production costs, marketing skills, financial resources, company or brand image, employee capabilities, and available technology.

Also consider historical background of firm (sales and profit history)
How can a manager observe external opportunities and threats during the SWOT analysis?
Analyze aspects of the marketing environment.

Perform Environmental Scanning – collection and interpretation of information about forces, events, and relationships in the external environment that may affect the future of the organization or the implementation of the marketing plan.
Define 'Environmental Scanning'
Environmental Scanning – collection and interpretation of information about forces, events, and relationships in the external environment that may affect the future of the organization or the implementation of the marketing plan.

Helps identify market opportunities and threats and provides guidelines for the design of marketing strategy.
What does performing a SWOT analysis allow a firm to do?

Think in terms of its competition?
Performing a SWOT analysis allows firms to identify their competitive advantage

Competitive advantage – the set of unique features of a company and its products that are perceived by the target market as significant and superior to the competition.
Define a 'Competitive Advantage'
Competitive advantage – the set of unique features of a company and its products that are perceived by the target market as significant and superior to the competition.

Factor(s) that cause customers to patronize a firm and not the competition.
List the three types of Competitive Advantages:
cost,

product/service differentiation, and

niche strategies
Define 'Cost competitive advantage'
being the low-cost competitor in an industry while maintaining satisfactory profit margins.
How does one attain a Cost competitive advantage
Result from obtaining inexpensive raw materials, creating an efficient scale of plant operations, designing products for ease of manufacture, controlling overhead costs, and avoiding marginal customers.
What is an experience curve?
Experience Curves: curves that show costs declining at a predictable rate as experience with a product increases.


Reflect learning by doing, technological advances, and economies of scale.

Experience curves are used as a basis for predicting and setting prices.

Allow firms to forecast costs and set prices based on anticipated costs as opposed to current costs.
Name 7 to lower costs:
Use experience curves,

efficient labor, and

no-frills goods and services

Government subsidies

Product design

Reengineering

Production innovations

new methods of service delivery
What is efficient labor?
Labor costs are an important component of total costs in low-skill, labor-intensive industries such as product assembly and apparel manufacturing. Many U.S. apparel manufacturers have gone offshore to achieve cheaper manufacturing costs. Also outsourcing.
Define 'No frills goods and services'
Costs can be lowered by removing frills and options from a product or service.

EX: Southwest offers cheap tickets but no seat assignments or meals.
Define 'Government subsidies'
EX: U.S. GOVERNMENT subsidies enabled Japanese semiconductor manufacturers to become global leaders.
Define 'Product design' (used to reduce cost)
Cutting-edge technology can help offset high labor costs. Reverse engineering – disassembling a product piece by piece to learn its components and obtain clues as to the manufacturing process – can also mean savings. Save on research and design costs.
Define 'Reengineering' and how can it reduce costs?
fundamental rethinking and redesign of business processes to achieve dramatic improvements in critical measures of performance.

Reorganization from functional departments such as sales, engineering, and production to cross-disciplinary teams.
Define 'Production Innovations' and how can it reduce costs?
new technology and simplified production techniques help lower the average cost of production. Computer aided design and manufacturing technology help many companies reduce manufacturing costs.
Define 'New methods of service delivery' and how can it reduce costs?
New methods of service delivery: med expenses reduced by outpatient surgery and walk-in clinics. Self-service registers to sleep up lines to reduce the number of employees needed to handle sales.
________ tends to provide a longer lasting competitive advantage
Product/service differentiation. It is a Durable strategy that is attractive to top level managers
Define Product/service differentiation competitive advantage
the provision of something that is unique and valuable to buyers beyond simply offering a lower price than the competition’s.

EX: strong brand name (Lexus), strong dealer network (Caterpillar tractor), product reliability (maytag appliances), image (neiman Marcus in retailing), or service (Fedex).

Retail store that offers high-tech, lavish displays, that attracts image-conscious brand manufacturers (Differentiation besides price strategy. works better than retailer with low price).
Define Niche Competitive Advantage
seeks to target and effectively serve a single segment of the market.

Used only to serve a limited geographic market.

May be the only viable option for small companies with limited resources facing giant competitors.

Market segment that has good growth potential (that is not crucial to the success of major competitors) is a good candidate for developing a niche strategy.
What is the key to having a competitive advantage?
Sustaining that advantage.
Define a Sustainable Competitive Advantage
An advantage that cannot be copied by the competition.
What are 2 sources of competitive advantage?
Assets: patents, copyrights, locations, and equipment and technology that are superior to those of the competition.

Skills: functions such as customer service and promotion that the firm performs better than its competitors.
What is the end result of a SWOT analysis, after identifying a competitive advantage?
evaluate the strategic direction of the firm.
List 5 methods of developing alternatives marketing opportunities?
Ansoff’s strategic opportunity matrix

or

Market penetration,
market development,
product development,
or diversification
Define Market Penetration
a marketing strategy that tries to increase market share among existing customers.

Aggressive advertising and cents-off coupons to existing advertising (penetration strategy)
Define Marketing Development
a marketing strategy that entails attracting new customers to existing products.


New uses for old products stimulate additional sales among existing customers while bringing in new buyers.

EX: Continuing education and executive development by colleges is a marketing development strategy.
Define 'Product Development'
strategy that entails the creation of new products for current customers.

Makers of men’s suits have created new suits that can be work in hot weather (containing fibers from NASA space suits)

Managers following the product development strategy rely on their extensive knowledge of the target audience.

They have a good feel for what customers like/dislike, what existing needs aren’t being met, rely on established distribution channels.
Define 'Diversification'
strategy of increasing sales by introducing new products into new markets.

This strategy may be risky when a firm is entering unfamiliar markets

Can be very profitable when a firm is entering markets with little or no competition
What is a portfolio matrix?
determine future cash contributions and cash requirements expected for each SBU

classifies each SBU by its present or forecast growth and market share.

Underlying assumption: market share and profitability are strongly linked.
What is a Star?
in the portfolio matrix, a business unit that is a fast-growing market leader.


Star SBUs have large profits

Need lots of cash to finance growth

Best tactic: protect existing market share by reinvesting earnings in product improvement, better distribution, more promotion, and production efficiency.

Must capture new users as they enter the market
What is a Cash Cow?
in the portfolio matrix, a business unit that usually generates more cash than it needs to maintain its market share.

• Cash cow product has a dominant share in a low-growth market.
• Personal computers and laptops are cash cow products.
• Strategy: maintain market dominance by being the price leader and making technological improvements.
• Should not increase basic line unless they can dramatically increase demand.
• Should allocate excess cash to the product categories where growth prospects are the greatest.
What is a Problem Child?
in the portfolio matrix, a business unit that shows rapid growth but poor profit margins.

Low market share in a high-growth industry.

Need lots of cash support to keep from becoming dogs.

Strategy: invest heavily to improve market share, acquire competitors to get the necessary market share, or drop the SBU.

Sometimes can be repositioned into a star.
What is a Dog?
in the portfolio matrix, a business unit that has low growth potential and a small market share.

• Usually leave the market place
• Options: harvest or divest.
What are four basic ways of allocating resources to SBU's?
Four basic strategies for allocating future resources to SBU’s:

build,
hold,
harvest, and
divest
What SBU should you build?
organization with an SBU that has “star”-potential (probably a problem child at first). Company may decide to give up short-term profits and use its financial resources to build it.
What SBU should you hold?
If a SBU is a successful cash cow, a key goal would be to preserve market share so that the organization can take advantage of the positive cash flow.
What SBU should you harvest?
this strategy is appropriate for all SBUs except stars.

• Goal: increase short-term cash return without much concern for the long-run impact.
• Especially worthwhile when more cash is needed from a cash cow with unfavorable long-run prospects.
What SBU should you divest?
Getting rid of SBUs with low shares of low-growth markets like problem children and dogs, is often a strategically appropriate decision.
Define a "marketing strategy"
activities of selecting and describing one or more target markets and developing and maintaining a marketing mix that will produce mutually satisfying exchanges with target markets.
Define 'market opportunity analysis (MOA)'
Target market strategy begins with this process.

the description and estimation of the size and sales potential of market segments that are of interest to the firm and the assessment of key competitors in these market segments.
Define 'Marketing'
A UNIQUE BLEND OF PRODUCT, PLACE, PROMOTION, AND PRICING STRATEGIES DESIGNED TO PRODUCE MUTUALLY SATISFYING EXCHANGES WITH A TARGET MARKET.
What is the heart of the marketing mix?
The heart of the marketing mix, the starting point, is the product offering and product strategy.

Typically, marketing mixes start with the Product (P).

Hard to design a place strategy, decide on a promotion campaign, or set a price without knowing the product to be marketed.

Product includes the physical unit, package, warranty, after-sale service, brand name, company image, value, and many other factors.
Define implementation
process that turns a marketing plan in to action assignments and ensures that these assignments are executed in a way that accomplishes the plan’s objectives.

• Implementation activities: detailed job assignments, activity descriptions, timelines, budgets, and lots of communication.
• “Doing what you said you were going to do”
• Improper implementation = doomed marketing plans (however brilliant)
Define Evaluation
Step after implementation.

gauging the extent to which the marketing objectives have been achieved during the specified time period.
Define Control
provides the mechanisms for evaluating the marketing results in light of the plan’s objectives and for correcting actions that do not help the organization reach those objectives within budget guidelines.
Define Marketing Audit
a thorough, systematic, periodic evaluation of the objectives, strategies, structure, and performance of the marketing organization.

o Broadest control device available to marketing managers.
o Helps management allocate marketing resources efficiently.
o Main purpose: to develop a full profile of the organization’s marketing effort and to provide a basis for developing and revising the marketing plan, it is also an excellent way to improve communication and raise the level of marketing consciousness within the organization.