Management Final
What tool that is used in strategy is often used in marketing?
A SWOT analysis
What's the underlying premise of the focus strategy?
A firm is better able to serve a limited segment more efficiently than competitors can serve a broader range of customers.
Finish this sentence: In order to do a good job of selling goods to customers, marketers need to focus on the _____ and not just _____.
1)customer, 2)product
Finish this sentence: Ideal market exposure makes a product available _____ but not _____.
1)widely enough to satisfy target customer needs, 2)not exceed them
How is strategic marketing defined?
As an endeavor by a business unit to differentiate itself positively from its competitors, using itrs relative corporate strengths to better satisfy customer needs in a given environmental setting.
In a largely diversified company, what two ways are support functions organized within the company?
Centralized (one group of support staff for the entire company) and decentralized (a group of support staff for each business unit.
What's one of the biggest obstacles of strategy implemention?
Change, or rather the resistance to change
What are the three main environmental influence on marketing?
Company (objectives/resources/capabilities), competitors (current/potential), external market environment (economic/technological/political/legal/cultural)
What do resources that are valuable but not rare lead to?
Competitive parity.
What would be the result of adopting best practices from another firm?
Competitive parity.
What are the two types of knowledge? Explain them.
Component knowledge: a physically distinct portion of a product that embodies a core design concept. Architectural knowledge: the reconfiguring of an estanblished system to link together components in a new way.
What are the important factors to consider for the rivalry among existing firms?
Concentration ratio, exit barriers, growth rate of industry, product differentiation, branding, switching costs, economies of scale.
What are the two product classes and how mutually exclusive are they?
Consumer products and business products. It's possible for products to be in both groups.
Contrast continuous and discontinuous innovation.
Continuous is incremental and ongoing upgrade/enchancements while discontinuous innovations are new to the world products/services.
What are the different consumer product classes?
Convenience products and shopping product
What are the four consumer product classes?
Convenience, shopping, specialy, and unsought products
What are the two sources of costs in diversification?
Coordination costs (costs that are a function of the number, size, and types of businesses that are linked to each other) and influence costs (competition between strategic business units for resources)
What are the three classes of innovation in the innovation-ambition matrix?
Core (incremental changes, efficiency improvements), Adjacent (leveraging something the company does well into a new market space), and Transformational(creating new offerings to serve new markets)
What are the two axes of the Henderson/Clark model?
Core concepts (reinforced or overturned) and linkages between core concepts and components (changed and unchanged)
What are the three strategies that translate a growth objective into a set of strategies?
Cost leadership, differentiation, and focus
What are the 6 C's of distribution?
Cost, capital, coverage, control, content, congruency
Why might a company want to diversify?
Create economies of scale and scope, better leverage managerial skills, cross sudsidize products, spread financial risks over different markets
What are the three areas where marketing supports a business?
Creating opportunity, meeting the needs of customers, supporting competition.
What are some of the variables of the socio-cultural factor?
Cultural norms/values/demographics, life expectancies, aging population, immigration, diversity, rising alluence, societal values.
What is the product development process?
Customer needs analysis, idea generation, screening & evaluation, business analysis, marketing strategy development, product development, testing, commercialization, feedback
What is a generic market made of?
Customer needs, customer types, and geographic area
What factors impact the pricing situation?
Customer price sensitivity, product costs, legal/ethical constraints, and competitors' likely responses
Name off the different elements of the marketing process.
Environmental influences, customer behavior, market research, strategic marketing, marketing strategy
Explain the difference between a marger and an acquisition.
In the merger, two companies join together to form a combined entity. In an acquisition, one company takes over another, stripping it of its identity.
What some reasons for storage?
It's needed when production doesn't match consumption, it keeps prices steady, achieves economies of scale, builds channel flexibility
What's special about the political factor?
It's one of the factors that can be influenced by a single firm's action (i.e., through lobbying)
What's the definition of target selection?
It's the activity that deals with identifying the segment or segments of people/organizations in a market toward which a firm directs its positioning strategy.
How is positioning defined?
It's the art and science of fitting the product to one or more segments of the broad market.
What the experience curve effect?
It's the combined effect of economies of scale and the learning curve effect. Economies of scale drive firms more quickly and further down the learning curve than less scaled competitors.
Describe what planned emergence is and means.
It's the concept that the realized strategy of a firm comes from the higher-ups, via traditional strategy or scenario planning, as well as emergently coming from bottom up within the organization.
What are convenience products?
Items purchased quickly with little effort, usully inexpensive, bought by habit, and require little selling.
What are regularly unsought products?
Items that don't motivate customers to seek them out, even though they may need them.
What are new unsought products?
Items that potential customers don't know about yet.
What are specialty products?
Items the customer really wants because there are no acceptable substitutes.
What are the three "layers" to a product?
Its core, its packaging, its support services
What are the variables of the legal factor?
Laws, mandates, regulations, court decision, intellectual property.
Give an example of a direct competitor, an industry competitor, and a substitute.
Let's say you're BMW looking at selling their new cars. Your direct competitor would be Mercedes or Audio. Your industry competitor would be Volkswagen. And your substitute would be a used car.
Name a few psychographic customer traits.
Lifestyle, values, personality.
What are the threshold points for low, medium, and high concentration ratios?
Low is 0-50%, medisum is 50-80%, high is over 80%.
What are the three pieces of IMC?
Promotion methods, managing promotion, and the communication process
What are the four customer chracteristic bases for segmentation?
Psychographic, demographic, geographic, socioeconomic
What are the value&cost drivers?
Quality, economies of scope, mass customization, innovation, and structure/culture/routines.
Explaing the difference between radical and disruptive innovation.
Radical innovation iroduces new technologies/products to new products. Disruptive innovation leverages new technologies to attack existing markets.
What's product bundle pricing?
Setting one price for a bundle of products, making it cheaper to buy them all at one time.
What is full line pricing?
Setting prices for a whole line of products.
What are the four activities that create more value together than separately?
Strong internal competencies, sharing of technologies and resources, cost-effective capital, and reinforcing a strong brand
Name some of the variables of the political factor.
Subsidies, tax policies at varying levels, regulation, grant and investments, trade controls
Define competitive advantage.
Superior performance relative to other competitors in the same industry.
Which way are suppliers trying to drive prices? How about customers?
Suppliers want to drive them up, customers want to drive them down.
What two categories are business activities divided into? Give examples of each.
Support activities (R&D, HR, Accounting, IT) and primary activities (Operations, distribution, marketing)
What do resources that satisfy all VRIO criteria lead to?
Sustained competitive advantage.
What are business strategies also known as?
"Grand" strategies.
Finish this sentence: continuous and discontinuous innovation are _____.
"Relative to an industry," since what could be a continuous innovation for one would be a disruptive innovation for another.
Name and describe the four levels of residual uncertainty.
1) A clear enough future - typically a stable external environment with little residual uncertainty. 2) Alternative but well definable "futures" - Usually a choice between two "futures" with a trigger being a major action or shift. 3) A range of potential "futures" - a limited number of key variables define the range of likely outcomes. 4) True ambiguity - no one freaking knows any direction, which is rare and unlikely
What are the 4 types of growth strategies?
1) Concentration: refocuses on firm's core business. 2)Diversification: growing by moving into a different industry. 3) Vertical integration: growth through acqusition/gaining control over suppliers or distributors/retailers. 4) Hornizontal integration: growth by combining with a competitor via acquisition or merger.
Name the 3 levels strategy can be developed at.
1) Corporate. 2)Business/Competitive. 3)Functional.
Name the 3 approaches to creating competitive advantage.
1) Cost leadership. 2) Differentiation. 3) Focus (find a niche)
Fill in the blanks: To generate competitive advantage, each _____ needs to add _____ to the product or service offering.
1) Distinct activity (primary or support). 2) Incremental value
Name and describe the three types of "Grand" strategies.
1) Growth strategy: attempt to increase the level of its operations. 2) Stability strategy: characterized by an absence of significant change. 3) Renewal/defensive strategy: characteristic of a company reducing its size, usually in an environment of decline
Describe the traditional strategic management process
1) Identify organization's mission, goals, and strategies. 2a) External analysis of opportunities and threats. 2b) Internal analysis of strengths and weaknesses. 3) Formulate strategies. 4) Implement strategies. 5) Evaluate results.
What are the objectives of performing a PESTEL analysis?
1) Identify the external factors that most directly impact the firm. 2) Research and analyze how relevant forces are trending to the extent that predictions can be made. 3) Identify opportunities and threats based on predicted futures.
What are the two success factors of each generic strategy combiend with each of the five forces?
1) Leveraging the firm's core competencies and strategic resources. 2) Exploiting external opportunities while minimizing the risks associated with the firm's external threats.
Name and describe the 3 factors that affect planning.
1) Organizational level: impacts type and scope of plans. 2) Degree of environmental uncertainty: impacts planning methodology, specificty of the goals, and time horizon. 3) Length of future commitments: impacts planning time horizon.
What are the 4 reasons managers should plan?
1) Provides direction that can align the organization's activities. 2) Reduces uncertainty. 3) Establishes goals and standards. 4) Improves employee engagement.
What are the 4 types of plans?
1) Strategic: high level plans. Could be at corporate AND business unit level. 2) Functional: plans for each business function. 3) Operational/tactical: narrowly focused, specific to activities of an organization. 4) Contingency: address the what-ifs and creating fallback plans
What are the three categories of strategically relevant information related to uncertainty?
1) Things we know to be true or of high probability. 2) Things we don't know but can be developed with proper research and analysis. 3) Things we don't know and are likely unknowable even after analysis (called "residual uncertainty").
Describe what's found in the corporate strategy.
1) What business an organization will be in. 2) How resources will be allocated among those businesses. 3) How each business will relate to each other. 4) The "grand strategy" for each business unit.
What are some of the different ways that marketers can position themselves?
1)By attributes and benefits, 2)By price or quality, 3)By use or application, 4)By product class, 5)By product user, 6)By competitor, 7)By cultural symbol
Explain the five step approach to the marketing research process.
1)Defining the problem, 2)Analyzing the situation, 3)Getting problem-specific data, 4)Interpreting the data, 5)Solving the problem
What are John Kotter's 8 steps for leading change?
1)Establish a sense of urgency, 2)Create a guiding coalition, 3)Develop vision and strategy, 4) Communicate the change vision, 5) Empower employees for broad base action, 6) Generate short term wins, 7) Consolidate gains and produce more change, 8) Anchor new approaches in the culture
What are the five steps of the marketing segmentation process?
1)Find ways to group customers according to needs, 2)Find ways to group marketing actions available to the organization, 3)Develop a market/product grid to relate the market segments to the firm's products/actions, 4)Select the product segments toward which the firm directs its marketing actions, 5)Take marketing actions to reach target segments.
Name and describe the three generic approaches to developing positioning.
1)Functional-relying on performance attributes of product that directly contribute to satisying customer needs. 2)Experiential-focus on use of sensory cues that customer can experience. 3)Symbolic - emphasizing positive, intangible product characteristics that it symbolizes, represents, embodies, etc.
What are the steps of the strategic marketing process?
1)Identify markets with broad similar needs, 2)Determine market segmentation, 3)Select market to target, 4)Positioning through marketing strategies
What are the steps to developing a positioning platform?
1)Identify the competitors, 2)Assess perceptions of them, 3)Determine their positions, 4)Analyze consumer preferences, 5)Make the positioning decision, 6)Monitor the position
How can you summarize the strategic marketing planning process in two steps?
1)Narrow down to best opportunities, 2)Develop a strategy
Name and describe the two generic strategic options for target selection.
1)Selective targeting - marketer identifies and selects one or very few market segments.(Specialization) 2)Extensive targeting - marketer identifies and selects many more multiple segments.(variety)
In the 3x3 matrix created after the PESTEL analysis, which cell gets which of the three options?
<PICTURE NEEDED>
What are economies of scope?
Any situation where savings can be recognized from producing or selling two or more products for less than producing or selling each one individually.
What are the four types of innocation in the Henderson/Clark model?
Architectural, incremental, modular, and radical.
What's a generic market?
A market with broadly similar needs.
What's a product market?
A market with very similar needs.
What is encoding?
A part of the communication process that is the process of deciding what to say and how to say it, in such a way that the recipient intends it as the sender meant it.
What does the focus strategy concentrate on?
A particular customer, product line, geographical area, channel of distribution, or market niche.
What's the relationship between prices and demand for substitute products?
A product is considered to be a substitute product if a price-increase in your product results in a demand-increase for their product.
What's a complement?
A product, service, or competency that adds value to the original product offering when the two are used in tandem. It's potentially a sixth force to add to the Porter model.
What's a strategic group?
A set of companies that pursue a similar strategy within a specific industry and face the same environmental forces.
What's the mission statement?
A statement of how the organization intends to achieve its vision and its responsibilities towards the key stakeholders.
What's a corporate strategy?
A strategy that addresses which businesses an organization will be in, how resources will be allocated among those businesses, and how the businesses will relate to oen another.
What's a business strategy?
A strategy that focuses on how to compete in a given business, directed towards achieving a sustainable competitive advantage. It's also known as competitive strategy.
What's a corporate strategy?
A strategy that specifies what businesses a firm is in or wants to be in and what it wants to do with those businesses.
In order for change to happen, what must there be according to John Kotter?
A sufficient number of people within a firm that want the change to happen (at least 75%).
What's a PESTEL analysis used for?
A tool external exnvorinment analysis to identify the key macro-economic forces that have the potential to affect the industry or firm.
What is an agent wholesaler?
A wholesaler that doesn't own the product they're selling.
What's the "leader and bait" price approach?
Advertise and sell something that's highly discounted and then hope customers buy other full price items while in the store
What factor dictates which approach to take to develop business strategy?
Amount of environmental uncertainty
What is demand oriented pricing?
An approach that accounts for consumers' reactions to price.
What is the vision statement?
An expression about what the organization ultimately wants to accomplish.
What is the strategic intent?
An extension of the vision. It's the staking out of a desired leadership position in the industry.Focus is on the future.
Describe the AFI framework
Analysis: vision, values, external/internal analysis. Formulation: corporate, business, functional strategies. Implementation: structure, culture, processes, technology, etc.
Explain the economies of scale concept, including diseconomies of scale.
As the quantity of output increases, the price per unit decreases until it hits a plateau point. At a certain point, though, the cost per unit will beging to increase again due to diseconomies of scale, like excessive overtime or raw material price increases.
Give an example of agent wholesalers.
Auction houses or brokers or selling agents
What are the two types of price setting?
Average cost pricing and demand-oriented pricing
What is meant by "industry attractiveness"?
It's how easy or hard it would be for the company to compete in the market and earn profits.
If resources are not valuable, what should the firm do with them?
Outsource them to be more cost-efficient.
Which forces make up the "power alignemnt" of the Porter model?
Bargaining power if suppliers, bargaining power of customers, and competitive rivalry.
What are the five forces in the Porter model?
Bargaining power of suppliers, bargaining power of customers, competitive rivalry, threat of new entrants, and threat of substitutes.
How should a transformative innovation team be managed differently than incremental teams?
Be made up of multi-disciplinary folks, isolated from interference from core business, have a separate funding mechanism, product development should be iterative, aboid measuring progress using financial metrics early in the process.
Why is combining segments risky?
Because another marketer may be targeting a portion of your segment and win them away from you because you were too general.
What are the four buying situation bases for segmentation?
Behavior, outlets, benefits, and usage
What are the variables of the ecological factor?
Broad environmental issues like water management, clean air, alternate energy, and society's changing view of business responsibility.
Finish this sentence: The generic strategies of cost leadership and differentiation are oriented toward ____.
Broad, industry-wide markets.
What are the different roles in buying centers?
Buyers, users, influencers, gatekeepers, deciders
What are shopping products?
Products compared with competing products.
What are some of the variables of the economic factor?
Growth rates, interest rates, inflation rates, cost of capital, levels of employment, price stability, exchange rates.
What is the primary impact of the ecological factor?
Can affect buyer's choice of procurement partners and brand image, potential for increased regulation, employee engagement
What are the important factors to consider for the threat of new entrants?
Capital requirements, intellectual property, government regulation, switching costs, product differentiation, economies of scale.
What are the three types of business strategies?
Growth, stabilize, and renewal
What does the Henderson and Clark model look at?
The types of technological knowledge behind innovation.
What is planning?
Defining objectives and goals for the organization.
What are the three considerations for business product strategy?
Derived demand, inelastic industry demand, and differing tax treatments.
What are the five steps of the industry life cycle? And where does profit peak?
Development, Introdcution, Growth, Maturiy (peak profit), Decline
What are the four pieces of the organizational environment?
Direct competitors, customers, community, and suppliers.
Between direct and indirect distribution, which method has a high concentration of business customers?
Direct distribution
What are the four components of distribution strategy?
Direct vs indirect, distribution arrangement, distribution intensity, distribution configuration
What is "place" in the 4 PCs also known as?
Distribution
What are the three general investment strategies in the GE-McKinsey Matrix?
Divest/harvest, selective investment, and high potential
What does the "V" question ask?
Does a resource add value by enabling a firm to exploirt opportunities or defend against a threat?
What are the qualities of marketing efforts for product markets?
Efforts offer close/similar ways to satisfy market needs.
Explain the harvest/divest strategy.
Either divest the business altogether or limit investment to only what's necessary to sustain the business until it can be harvested.
What typically follows the identification of the PESTEL forces?
Establishing priorities for strategy formulation. One way could be to build a 3x3 matrix with impact on one axis and probability of occurrence on the other.
What is the product market made of?
Everything in the generic market (customer needs, customer types, georgraphic area) along with the product type.
What's one of the biggest mistakes managers make today in developing strategy?
Failing to adapt to the changing world.
What are the different types of functional appeals?
Feature, competitive, price, news, popularity (4 out of 5 dentists recommend...)
What are the two types of customers marketers are concerned with?
Final customers (B2C) and Businesses (B@B)
What are the two types of goals?
Financial goals (for profitability) and strategic goals (how to achieve the financial goals).
How do you plot strategic groups?
Find the two competitive attributes that most differentiate them, then plot where the individual companies show up on the plot. For example, Southwest and Delta would appear in two different groups while United and Delta would show up in the same group.
What is the basic difficulty in the communication process?
Finding a common frame of reference for those doing the encoding and those doing the decoding - you want them to interpret things the way you meant them
Define competitive disadvantage.
Firm underperformance relative to competitors in the same industry.
Describe monopolistic competition and give examples of it.
Firms carve out market niches mainly through differentiation. Examples include universities/eolleges, automobile makers, and fine dining restaurants.
Explain the high potential strategy.
Firms should invest in these business units since they promise the highest returns.
What are the two focus strategies? Which is more common?
Focus-differentiation (more common) and focus-cost.
What is "crossing the chasm"?
For a product, it's the move from being purchased by the early adopter to being purchased by the early majority. It's a hard space to gap sometimes (e.g., 3D TVs)
What does the concentration ratio measure?
Fragmentation of a given industry.
What are the three main approaches to making creative appeals (i.e., attracting the target user/audience)?
Functional appeal (gaining attention through a message consisting of rational/functional characteristics), image appeal (sensory cues to capture attention), emotional appeal (get attention through emotions)
What are the three steps in putting together the Porter Five Forces model?
Gather information on each of the five forces, analyze the results, prepare to formulate strategies based on your conclusions.
What is "showrooming"?
Going to a brick and mortar store to inspect a product and then purchase it online for a lower price
What are the three reasons why resources can be hard to imitate?
Historical condition (resources developed over a long period), causal ambiguity (difficult to pinpoint the source of a competitive advantage), and social complexity (Resources/capabilities are interwoven into the fabric of the firm's culture)
Which are more common - vertical or horizontal integrations?
Horizontal are more common.
Describe what's found in a business strategy.
How to compete in a given business. It's about creating and sustaining a competitive advantage.
What are the different types of emotional appeals?
Humor, sex, fear, love, etc
What is integrated marketing communication also known as?
IMC (again, obviously)
What should be considered when going through media selection?
IMC objectives, target audience characteristics, funds available, reach & frequency
What are the requirements for segmentation?
Identifiable, homogeneity within the segment relative to marketing responsiveness, heterogeneity across different segments, actionable, profitable size, stable over time
Value chain analysis can also help strategists do what?
Identify how operational costs can be reduced or improved.
Quickly describe how strategic planning works.
Identify what the organization will focus on. Brainstorm the different factors that could affect the focal issue. Focusing on the two most critical uncertainties, construct a 2x2 scenario matrix, developing a story for each of the four resulting scenarios. For each scenario, assess internal and external environments in a SWOT fashion. Identify robust strategic options and implications. Pick most likely scenario. Identify the drivers and triggers to be monitored so the firm knows whether or not to abandon the dominant scenario.
What is meant by "business strength"?
If a business unit has a sustainable or at least temporary competitive advantage.
What's the difference between related and unrelated diversification?
If a company wants to expand to products distinctly different than anything they offer, it's unrelated. If it's similar of complementary, it's related.
In what situations would the corporate and business strategies be combined?
If it's a small company with only one line of business or a large company with little product variety.
At what point does a company become "diversified"?
If less than 70% of its business comes from its largest line of business.
At what point is a business considered to be a "dominant business" in the context of diversification?
If the company makes 70-90% of its revenue from its primary activitiy.
At what point is a business considered to be a "single business" in the context of diversification?
If they make 95% of their revenue from their primary activity.
In the 3x3 matrix created after the PESTEL analysis, describe the three options for each cell.
Ignore, monitor, and strategy.
What are the primary impacts of the socio-cultural factor?
Impacting what consumers want to buy, impacting market sizes, increasing management complexity of a diverse workforce.
Whhich is easier: implementing a strategic plan or developing a firm strategy?
Implementing it is much more difficult, by a long shot.
How is the vision written?
In aspirational terms meant to inspire stakeholders.
Where does "perfect competition" typically occur?
In commodity markets like crude oil, since there's no way to create differentiation. Also in industries where customers make purchasing decisions solely on price, like a dry cleaner.
What's the difference between direct and indriect distribution?
In direct distribution, the manufacturer is able to distribute the product straight to the customer. In in direct, there are any number of intermediaries between the manufacturer and the customer.
How many "innovations" are usually part of an architectural innovation?
In many cases, it is two innovations - one at product level and another at operational level.
What are the primary impacts of the economic factor?
Increase/decrease in disposable income, can impact types of goods or services provided
What is customer behavior?
Individuals, groups, or organizations and the processes they use to select, secure, use and dispose of products, services, experiences, or ideas to satusfy needs and the impacts that these processes have in return.
What are the three dimensions of corporate scope?
Industry value chain (degree of vertical integration), products and services (horizontal intengration, diversification), geography (where to compete on the global stage, yo)
What are the three basic IMC objectives?
Informing, persuading, and reminding
What are the different business product classes?
Installations, Accessories, Raw Materials, Component Parts & Materials, MRO Supplies (Maintenance/repair/operating), professional services
Between tangible and intangible assets, which are more likely to create a sustainable competitive advantage?
Intangible assets are since tangible assets can be purchased by other companies to level the playing field. Intangible assets aren't so easily obtained.
What is another name for promotion?
Integrated marketing communication (obviously)
What are the three types of desired intensity of distribution?
Intensive, selective, and exclusive
What does internal innovation typically lead to? How about external?
Internal leads to cost savings while external leads to increased revenue.
What does the "I" question ask?
Is a resource costly to imitate?
What does the "R" question ask?
Is a resource difficult to obtain or acquired by only a few firms? If so, then it's rare.
What's the idea behind the structure-conduct-performance model?
It assumes that an industry's structure determines a firm's conduct, and that conduct then drives performance.
Does the SWOT analysis come before or after other frameworks/analyses (like VRIO, PESTEL, Porter Five Forces, value chain analysis, and benchmarking)?
It comes after since it uses the results of those other analyses.
What does value chain analysis do?
It helps strategists understand how a firm creates value for its customers. It describes the internal activities a firm engages in when transforming inputs into outputs.
Describe the Porter Five Forces model.
It identifies 5 competitive forces that managers consider when analyzing the external environment and formulating strategy, driving managers toward "industry attractiveness"
What does Ansoff's Matrix look at? How is it set up?
It identifies the different concentration growth alternatives. It has existing/new product on one axis and existing/new markets on another.
What does the VRIO framework do?
It identifies those resources that create a sustained competitive advantage.
Explaing what "positioning" is in strategic marketing.
It refers to placing a brand in that part of the consumer's mind where it will have a favorable reception compared to competing products, essentially positively differentiating itself from the competition.
What must an innovation do to drive growth?
It should be useful, successfully implemented, and create economic value in the market.
What should a balanced innovation portfolio have in it?
It should have some examples from all three classes of the innovation-ambition matrix, at varying degrees.
What are the different activities of market research?
It specifies the information required to answer questions, designs the method for collecting information, manages and implements the data collection process, analyzes the results, and communicates the findings and their implications.
You have an item that cost you $10.00 and you are selling it for $15.00. What is your markup percent?
It's 33%, since $5 is a third of the selling price.
What is the AIDA model and what does the acronym stand for?
It's a way to conceptualize the basic IMC objectives. Stands for get Attention, hold Interest, arouse Desire, and obtain Action
What is the primary impact of the technological factor?
It's an enabler of new business models, business processes, products, and services. Can be efficiency driven, product sustainable, or disruptive in character.
What's the risk of using average cost pricing?
It's easy to lose money if you sell less than you planned since it doesn't make allowances for cost variations as output changes.
What are the key characteristics of organizational customers?
Manufacturers, producers/service providers, retailed and wholesales, government units, non-profits
Name some group that perform marketing functions.
Manufacturers, wholesalers, retailers, product testing firms, research firms, consumer, ad agencies, transport firms
What are the three types of diversification strategies?
Market diversification (sell existing products in new markets), product diversification (market new products in existing markets), product-market diversification (new product in new market)
What's the least risky option in Ansoff's Matrix?
Market penetration (e.g., existing product and existing markets)
What are the qualities of marketing efforts for generic markets?
Marketing efforts are various and diverse in terms of satisfying those needs.
Describe the micro-macro dilemma of contemporary marketing.
Marketing today is tasked with satisyfing the needs of the individual along with societal needs, and those two purposes are often in conflict.
What are the two components of media strategy?
Media selection and media scheduling
Who are typically most resistant to change?
Middle managers
What are some of the benefits of vertical integration?
More control over the value chain, creates a source of differentiation, lowers costs, improves quality, facilitates scheduling and planning, captures greater profits
What are the key differences between marketing to organization customers and final consumers?
Multiple buying influence, emphasis on economic needs, more systemic and formal evaluation of options, purchase criteria/specifications
What are the three most common new product strategies?
New product lines, improvements/revisions, and product line additions
What are the different pricing situations?
New product pricing, life cycle pricing, positioning strategy change, and countering competitive threats
Give a couple examples of substitutes.
New vs used cars, air travel vs train travel, coffee vs tea.
Is price an approach to differentiation? How or how not?
Nope - it's not a driver as much as it is a result of cost leadership.
When using a cost/differentiation combo strategy, does the firm need to be the best in both of those strategies?
Nope, it just needs to understand how to optimize the difference between the value created and the cost incurred.
Are VRIO resources essential to a sustained competitive advantage?
Nope, it's the interplay between resources and capabilities that create a competitive advantage.
How rigid is the five step approach to the marketing research process?
Not very - you can go back any number of steps after learning more, and it's also possible to get an early identification of the solution that skips some steps.
What factors does "structure" refer to in the SCP model?
Number of competitors, heterogeneity of products, cost of entry and exit.
What are the important factors to consider for the threat of substitutes?
Number of substitutes, switching costs, performance of substitutes.
What are the two general ways that primary data is obtained?
Observation and questioning
What are capabilities?
Organizational and managerial skills.
What are the five key components necessary to support implementation?
People, resources, structure, systems, and culture.
What are the 5 different traditional ways to allocate IMC budget? Explain a little bit about each one.
Percent of sales (most common - computer percentage of past sales), arbitrary (management goes with their gut in assigning dollars), competitive parity (setting budgets based on what competitors spend), affordable method (management decides how much to spend on production/operations and gives rest to IMC), ROI (IMC efforts are considered investments and budgeted using ROI)
What's a tool that can help marketers with positioning?
Perceptual mapping
What are the four industry structures in the structure continuum (in order), and how is profitability affected by their place?
Perfect competition, monopolistic competition, oligopoly, monopoly. There's lower profitability on the perfect competition side and higher profitability on the monopoly side.
What's another name for logistics?
Physical distribution (also just distribution, also the "place" item of the 4 P's)
Describe the management process.
Planning leads to organizing leads to directing leads to controlling leads back to planning.
In the context of business strategy, what's the primary function of management?
Planning.
What does PESTEL stand for?
Political, Economic, Socio-cultural, Technological, Ecological, and Legal.
What are the 4 characteristics of a guiding coalition?
Position power, expertise, credibility, and leadership
What are the two axes of a SWOT analysis?
Positve/Negative assesment, and Internal/External Control (things managers can change)
What are some disadvantages of vertical integration?
Possible lower economies of scale, less efficient operations (due to diluting core competencies), increased costs, reduced quality, reduced flexibility, requires lots of capital
Using the two axes of the SWOT, describe which quadrant is which.
Postive, Internal: Strengths. Negative, Internal: Weaknesses. Positive, External: Opportunities. Negative, External: Threats.
What must be taken into consideration when considering the pricing strategic options?
Pricing objectives, pricing strategy, pricing situation, and determining factors
What's value-in-use pricing?
Pricing something for less than what the customer will save for choosing their product.
What is the primary value driver referred to as? How about the secondary?
Primary is "dominant" and secondary is "differentiator"
What are the different types or business/organization customers?
Producers (manufacturers, farms, mines), intermediaries (retailers, wholesalers), government units (federal/state/local)
What are some of the ways that firms adds value via differentiation?
Product features (most important/obvious), customer service, customization, complements, customer experience
What are the two general types of mission statements?
Product focused mission statements and customer focused ones.
What are the key features that affect consumers' retail choice?
Product selection, place decisions, promption, prices, social/emotional needs, shopping atmosphere
What are the four areas of marketing strategy?
Product, distribution (place), promotion, and pricing.
What are the four P's of marketing?
Product, price, place, and promotion
Describe strategy as simple rules.
Rather than having an explicit business or corporate strategy, a firm could have simple rules or guidelines that inform their actions. And these actions then become their strategies.
What are the different evaluation tools to see how well your strategy did?
Recall tests, ratings services, controlled tests, test marketing, sales & expense analysis
What are some benefits of horizontal integration?
Reduction in competitive intensity, lowering cost through economies of scale, increased differentiation, access to new markets and channels
What are the three categories of switching costs?
Redundant investments, disruption risk, and contractual penalties.
Which type of diversification typically fares better than others?
Related diversification
From the context of sources of value creation and costs, what's different between related diversification and unrelated diversification?
Related diversification can bring with it economies of scale and scope while unrelated doesn't.
What are the variables of the technological factor?
Relentless application of knowledge to create new products and processes, IP protections, productivity improvements, emerging industries, digital communications.
Whata re the different types of new product strategies?
Repositionings, cost reductions, new to world or brealthrough products, new product lines, product line additions, improvements/revisions
What are the two critical assumptions of the resource-based view of competitive advantage? Explain them.
Resources must be heterogeneous and immobile. Heterogeneous means that individual firms have skills, capabilities, and resources that differ from other firms. Immobile means that resources do not move from company to company.
What are the four internal aspects of a firm?
Resources, capabilites, core competencies, and activities.
Name the 4 types of renewal strategies.
Retrenchment, Turnaround, Divestiture, Liquidation
What are the four positions typically involved in IMC?
Sales managers, advertising managers, marketing managers, and sales promotion managers
What the difference between primary and secondary data sources?
Secondary data is information that was published in the past and idn't specific to a current issue or problem. Primary data is information that is to be or has just been collected to address a specific current problem.
What are the elements that make up strategic marketing?
Segmentation, target selection, and positioning
What are the three elements of strategic marketing?
Segmentation, target selection, and positioning
What's sequential price reductions?
Selling the product for as much as you can until people stop buying it, then lowering the price and selling until no one buys it, then lowering the price, etc until it's all sold
What are the 6 steps of the communication process?
Sender/source, encoding, message channel, decoding, receiver, feedback from receiver to source
What are the two types of merchant wholesalers and what differentiates them?
Service and limited-function wholesalers. Service oness provide all the wholesaling functions while the limited-function ones provide some part of the wholesaling functions.
What are the "support services" of a product?
Services and features that help maintain or insure the product's ability to continue satisfying customer needs
What's the minimum length of the time horizon for planning?
Should be at least as long as the length of the longest commitment being made by management.
Name the different eras of marketing along with their focus.
Simple trade era (sell surplus), Production era (increase supply), Sales era (beat competition), Marketing department era (coordinate and control), Marketing company era (long-run customer satisfaction)
What are the 4 characteristics of a good vision?
Simple, vivid, repeatable, and invitational
What are the important factors to consider for the bargaining power of suppliers?
Size/concentration, forward integration, available substitutes, customer price sensitivity, switching costs.
What are the three generic pricing strategic options?
Skimming strategy (charging more than competition), neutral strategy (charging the same as competition), and penetration strategy (charging less than competition)
What do economic factors typically impact?
Spending
What are the different types of convenience products?
Staples (bought routinely without much though), Impulse (unplanned purchases bought quickly because of a strongly felt need), Emergency (purchased immediately when the need is great)
How is the alternative SWOT analysis set up?
Strengths and weaknesses on one axis and opportunities and threats on the other.
Are human beings tangible or intangible assets?
TRICK QUESTION! They're both since they have know-how and intellectual capital but are also able to move from one firm to another.
What are the different ways that goods and services differ?
Tangibility, inseparability, perishability, durability, quality consistency
What are resources?
Tangible and intangible assets of the firm.
What are the components of IMC component strategy?
Target audience, objectives, budget, creative strategy, media strategy, production/execution, evaluation of effectiveness
What's promotion all about?
Telling the target customers that the right product is available at the right place at the right price.
What do resources that are valuable and rare but not costly to imitate lead to?
Temporary competitive advantage.
What do resources that are valuable, rare, and costly to imitate for a company that is NOT organized to capture value lead to?
Temporary competitive advantage.
What's the central idea behind "open" innovation?
That firms can't afford to rely entirely on their own research, but should instead buy or license other research/inventions and then also sell/license their own research/inventions.
What's the one non-traditional way to allocate IMC budget?
The "objective & task" method, aka zero-based budgeting - it links the IMC budget to a careful determination of what must be done to reach the objectives.
To help them decide which option to select of all the distribution strategic options, what do marketers use?
The 6 C's of Distribution
Describe what is contained in the functional strategy.
The activities of the different functional areas of the organization and the short to long term methods to be used to help achieve the overall business strategy.
What is "inventory"?
The amount of goods beinng stored
What is the CR4?
The combined market share of the four pargest competitors in an industry.
What is innovation?
The commercialization of a new or improved product, process, or business model.
What are the three C's of marketing?
The company/corporation, the customer, the competition
What does "perfect competition" mean?
There are large numbers of competing firms, products are homogeneous, and exntry and exit are low cost.
Who decides to create shared services?
The corporate level.
Which cell is Ansoff's matrix is called the suicide cell?
The diversification cell since the amount of investment and the amount of risk are both so high.
What is a firm's business model?
The end result of the strategic options and trade offs made by managers over time.
Where is the major source of uncertainty for a firm?
The external environment, including market factors (e.g., competitino, suppliers, customers) and industry factors (technology, economic, political).
Contrast incremental/efficiency innovation with architectural/disruptive/radical innovation.
The first is targeted at the core business, improves existing products/bottom lines, has less risk and quicker payback. The second requires a firm to divert resources from the core business, isn't targeted toward current customers, and has high risk and delayed payout.
What is "storage"?
The function of holding goods so they're available when they're needed.
What is business strategy?
The goal directed actions a firm intends to take in its quest to gain and sustain competitive advantage.
Finish this sentence: In the Porter Five Forces model, the stronger the force...
The greater the downward pressure on industry gross margins.
Finish this line: The more negative the forces are affecting a market...
The harder it is to do business in it.
What are the two continuums to use to examine innovation?
The internal/external and continuous/discontinuous continuums.
Give an example of an architectural innovation.
The laptop computer, compared to the desktop computer.
Complete this sentence: In the Porter model, the stronger the forces are...
The less likely the industry and firm are likely to be.
What's the outermost level of a firm's external environment?
The macro-economic environment the firm operates in, including political, economic, technology, ecological, regulatory, and demographic factors.
How are the level of environmental uncertainty and the planning time horizon related?
The more uncertainty, the shorter the time horizon.
What's the learning curve effect?
The more you do something, the easier it is to do, so the cheaper it is to do.
What are switching costs?
The non-product related costs that a consumer or business incurs as a result of changing suppliers, brands, or products.
How is market segmentation defined?
The process of placing buyers in a market into sub-groups so that the members of each segment display similar responsiveness to a particular positioning strategy.
What does a product's S curve illustrate?
The product's life cycle along the dimensions of time and growth.
What's typically the decision point for how much to segment vs combine?
The profit potential that you'd get from the different decisions.
What factors does "conduct" refer to in the SCP model?
The specific firm actions in an industry including price setting, product differentiation, innovation, and exploitation of market power.
What risk do firms with combination strategies take on?
The strategic tradeoffs of the combination will need to be resolved, or else the firm will be "stuck in the middle" with neither a differentiation nor cost advantage.
What's the difference between creative strategy and creative tactics?
The strategy piece is what will be communicated and the tactics are the how.
What is logistics?
The transporting, storing, and handling of goods in ways that match target customers' needs with the firm's marketing mix.
Describe oligopoly and give examples of it.
There's a small number of competing firms, homogeneous or heterogeneous products, and costly entry and exit. Examples include soft drinks, tobacco products, and smartphone makers. Also, marketing firm strategies are interdependent since they'd affect the whole industry.
Describe monopoly and give examples of it.
There's only a single firm, and cost of entry is incredibly high. Examples include Microsoft (for PC OS industry) and public utilities.
Perfect competition consists of "price takers." What does that mean?
These firms respond to supply and demand by adjusting prices rather than trying to influence the level of supply and demand.
How do pricing objectives break out?
They break out into profit oriented, sales oriented, and status quo oriented. Those further break out into target return/maximize profits (profit oriented), dollar or unit sales growth/growth in market share (sales oriented), and matting competition/nonprice competition (status quo oriented)
What do VRIO resources typically do?
They create competitive advantage for companies.
What's common between corporate and business strategies?
They follow the same "grand" strategies as the business units. (growth, stability, and renewal)
What do resources that are not considered valuable do?
They lead to competitive parity or competitive disadvantage.
What should a company do if it costs less to performa a service in-house than to procure it from an outside firm?
They should either do it themselves or buy a company that can.
What's the stauts of wholesalers?
They're a bit in decline since retailers are trying to "take out the middle man," so some wholesalers have closed and others are trying to adapt.
What are activities?
Things that transform inputs into outputs.
What are wholesalers?
Those concerned with the activities of persons or establishments that sell to retailers, other merchants, business users, or institutional user, but do not sell in large amounts to final consumers.
What are heterogeneous shopping products?
Those items seen as different in quality and/or suitability
What are unsought products?
Those items that need promption because the customers don't want them yet and don't know they can buy them.
What are homogenous shopping products?
Those items that the customer sees as basically the same and wants at the lowest price.
What is the "core" of a product?
Those product attributes that most directly satisfy or meet the customer's needs
What is the "packaging" of a product?
Those product features that surround the core and enhance the product's ability to satisfy customer needs
What are rack jobbers?
Those that sell hard to handle assortments of products on their own point-of-purchase display racks.
Which forces make up the "composite competition" of the Power model?
Threat of new entrants, competitive rivalry, and threat of substitutes.
Give an example of a complement.
Tire companies and automobile manufacturers or video games and gaming consoles.
What's the goal of the differentiation strategy?
To add unique features that will increase the perceived value of goods or services in the minds of the customers sp they're willing to pay a higher price.
What's the goal of strategic positioning?
To create as large a gap as possible between the value of the firm's product to the customer and the cost incurred to produce, sell, and support that value.
What are some of the reasons to choose a direct distribution system?
To get more control over getting the product to the customer, lowering cost, enables using the internet, allows direct contact with customers, suitable intermediaries not available
What's the goal of a cost/differentiation combination strategy?
To provude unique value in an efficient manner.
What are the three kinds of total costs?
Total fixed costs, total variable cost, total cost (sum of total fixed and variable costs), average cost, average fixed cost, average variable cost
Contrast traditional strategic planning with scenario planning.
Traditional strategic planning is the usual top-down approach to strategic planning that works best in predictable environments. Scenario planning is used when there is uncertainty by having managers think through various events that could occur and consider alternatives if they should happen.
What form of transportation handles at least 75% of US consumer products?
Trucks
What does "performance" refer to in the SCP model?
Two things: performance of individual firms and performance of industry as a whole.
What are the three strategic elements in the development of distribution strategy?
Type of channel arrangement (alignment), desired intensity of distribution (density), selection of a channel configuration (length)
What is the primary impact of the legal factor?
Typically creates limitations in marketing/operational practices, increases operational costs, can create entrepreneurial opportunities.
What are the different types of positioning errors?
Under-positioning (customers have only vague ideas, like Kmart), Over-positioning (customers have specific but too narrow understanding), Confused positioning (frequent changes or contradictory messages, like JCPenney), Doubtful positioning (positioning claims aren't perceived as credible)
Describe the primary impacts of the political factor.
Underwriting emerging technology, encouraging R&D, opening or restricting access to markets
What's a core competency?
Unique strengths that drive competitive advantage.
What does the resource-based views of competitive advantage say is the best way to exploit external opportunities?
Using existing resources in a new way, rather than trying to acquire new skills.
When pursuing a differentiation strategy, how many of the approaches would a firm concentrate on?
Usually two
What does VRIO stand for?
Valuable, rare, costly to imitate, and organized to capture value.
What are the two typical approaches to creating superior profits?
Value creation and cost leadership.
What are the different types of image appeals?
Visual, audio/verbal, touch, taste, smell
What are the important factors to consider for the bargaining power of buyers?
Volume, buyer concentration, switching costs, backward integration, available substitutes, product standardization.
What are core values?
What the company believes to be important.
What's the most important issue dealt with at the corporate level?
What the overall scope of the firm should be (what businesses its in)
What is backward integration?
When a firm purchases or becomes its own supplier.
What if forward integration?
When a firm purchases or builds its own distribution capabilities.
What's one of the reasons storage is necessary?
When production does not evenly match consumption and it can increase the value of goods by making them more available when customers want them.
When is a competitive advantage not sustainable?
When the source of the advantage is easily imitated or can be independently attained.
Define completitive parity.
When two or more firms in the same industry perform at the same level.
What are merchant wholesalers?
Wholesalers that actually own the product they're selling. This is the most common type of wholesaling.
What are drop shippers?
Wholesalers that take title but don't handle the product. Instead, they find buyers and then have the producer ship directly to the buyers.
Where do a firm's core competentcies and VRIO resources fit in a SWOT?
Within the strength quadrant.
What's one of the big difficulties with full line pricing?
You have to set a price for everything that will recoup all of your costs, and it's difficult to do that.
Explain the selective investment strategy.
You should only invest in these projects/units if the business has capital left over after investments in the higher potential businesses.
Explain how the GE-McKinsey 9 Box Matarix is set up.
You've got two axes - one with business unit strength and another with market attractiveness. Each of these axes has a high, medium, and low section. Then you drop your business unit into the corresponding cell, each having its own default investment strategy.
Finish this sentence: Marketing is all about _____
satisfying customer needs better than the competition consistently for the long term.