Chapter 2 Marketing Review

Cash Cows

Have a dominant share of the market but low prospects for growth, and they typically generate more cash than is required to maintain market share

Strategic Business Unit (SBU)

A division, product line, or other profit center within the parent company -Each of these units sell a distinct set of products to an identifiable group of customers and each competes with a well-defined set of competitors

Market

A group of individuals and/or organizations that have needs for products in a product class and have the ability, willingness, and authority to purchase those products

Market Growth/Market Share Mix

A helpful business tool, based on the philosophy that a product's market growth rate and its market share are important considerations in determining its marketing strategy -To develop such a tool, all of the company's SBUs and products should be integrated into a single matrix and compared and evaluated to determine appropriate strategies for individual products and overall portfolio strategies

Mission Statement

A long-term view, or vision, of what the organization wants to become -The goals of any organization should derive from its mission statement -An organization's mission statement should answer two questions: Who are our customers? What is our core competency?

Marketing Strategy

A plan of action for identifying and analyzing a target market and developing a marketing mix to meet the needs of that market

Product Development

A strategy of increasing sales by improving present products or developing new products for current markets

Marketing Penetration

A strategy of increasing sales in current markets with current products

Marketing Development

A strategy of increasing sales of current products in new markets

Corporate Strategy

A strategy that determines the means for utilizing resources in the various functional areas to reach the organization's goals -Is the broadest of the three levels of strategy (corporate, business-unit, and marketing) and should be developed with the organization's overall mission in mind -Addresses the two questions posed in the organization's mission statement: Who are our customers? What is our core competency?

Decentralized Organization

A structure in which decision-making authority is delegated as far down the chain of command as possible

Centralized Organization

A structure in which top-level managers delegate little authority to lower levels

Marketing Plan

A written document that specifies the activities to be performed to implement and control the organization's marketing strategies

Diversification

Allows firms to make better and wider use of their managerial, technological, and financial resources

SWOT Analysis

Assessment of an organization's strengths, weaknesses, opportunities, and threats -Strengths and weaknesses are internal factors that can influence an organization's ability to satisfy its target market -Opportunities and threats affect all organizations within an industry, market, or geographic region because they exist outside of and independently of the company

Question Marks

Have a small share of a growing market and generally require a large amount of cash to build market share

Dogs

Have a subordinate share of the market and low prospects for growth

Stars

Products with a dominant share of the market and good prospects for growth but use more cash than they generate to finance growth, add capacity, and increase market share

Components of Marketing Strategy

Selecting an appropriate target market may be the most important decision a company makes in the strategic planning process -Identification and analysis of a target market provide a foundation on which a company can develop a marketing mix -Marketers should also assess whether the company has the appropriate resources to develop a marketing mix that meets the needs of a particular target market

First Mover Advantage

The ability of an innovative company to achieve long-term competitive advantages by being the first to offer a certain product in the marketplace -Helps a company build a reputation as a pioneer and market leader The market is free of competition -Helps establish customer brand loyalty in cases when switching to another brand later may be costly or difficult -The firm can protect its trade secrets and technology through patents

Late Mover Advantage

The ability of later market entrants to achieve long-term competitive advantages by not being the first to offer a certain product in a marketplace -Can benefit from the first mover's mistakes and have a chance to improve on the product design and marketing strategy -Is likely to have lower initial investment costs than the first mover because the first mover has already developed a distribution infrastructure and educated buyers about the product -There is more data and certainty about product success

Market Share

The percentage of a market that actually buys a specific product from a particular company

Core Competencies

Things a company does extremely well, which sometimes give it an advantage over its competition