Marketing Midterm Chap 2

What are the sources of competitive advantages?

Economies of scale Experience curves Cheap labor (outsourcing abroad) No-frills goods/services Government subsidies New technologies, engineering, design, processes

What is Product/service differentiation competitive advantage?

Provision of something unique and valuable to buyers beyond simply offering a lower price than competitors this tends to provide a longer-lasting competitive advantage than cost competitive advantage.As a result, this strategy is more attractive to many top managers.

What is the four categories of the portfolio matrx?

Stars Cash Cows Problem children Dogs

What is a SWOT analysis and what can a company accomplish with it?

This is a situational analysis by which firms should -Identify their internal strengths and weaknesses Done by focusing on organizational resources -Examine their external opportunities and threats •Strengths—Things the company does well •Weaknesses—Things the company does not do well •Opportunities—Conditions in the external environment that favor strengths Threats—Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness

What is a niche competitive advantage?

seeks to target and effectively serve a single segment of the market and used by small companies with limited resources. Effective for market segments with good growth potential but is not crucial to success of competitors

What is a cash cow?

these generate more cash than it needs to maintain its market share. It is in a low-growth market, but the product has a dominant market share. The marketing strategy is to maintain market dominance by being the price leader and making technological improvements in the product. It allocates excess cash to products with high-growth prospects.

What is a dog?

these have low growth potential and a small market share. Most dogs leave the market. The strategy options are to divest or harvest.

What is a problem child?

these show rapid growth but poor profit margins. It has a low market share in a high-growth industry. It needs a great deal of cash to prevent conversion to the status of dogs. The strategies are to invest heavily to gain better market share, acquire competitors to get the necessary market share or drop the SBU.

What is Boston Consulting Group Matrix (a.k.a. portfolio matrix)?

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

What is environmental scanning?

this is a 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

What is a star?

this is a fast-growing market leader, usually have large profits but need cash to finance growth. A marketing tactic is to protect market share by reinvesting earnings in product improvement, better distribution, more promotion, and production efficiency. They strive to capture new users as they enter the market.

What is Ansoff's Strategic Opportunity Matrix?

this is a method for developing alternatives which matches products with markets

What is competitive advantage?

this is a set of unique features of a company and its products that are perceived by the target market as significant and superior to those of the competition.

What is product development?

this is a strategy entailing the creation of new products for present markets

What is diversification?

this is a strategy of increasing sales by introducing new products into new markets

What is an SBU (Strategic Business Unit)?

this is a subgroup of a single business or a collection of related businesses within the larger organization. •Distinct mission and specific target market •Control over its resources •Its own competitors •A single business or a collection of related businesses •Plans independent of other SBUs in the total organization

What is sustainable competitive advantage?

this is an advantage that cannot be copied by the competition The belief is that a successful firm will stake out a position unique in some manner from its rivals These come from the skills and assets of an organization (Patents, copyrights, locations, equipment, technology, customer service, and promotion)

What is market penetration?

this is an increase in market share among existing customers

What is marketing myopia?

this is defining a business in terms of goods and services rather than the benefits customers seek

What is the relative market share?

this is used in the portfolio matrix to determine the ratio between the company's share and the share of the largest competitor.

What is market development?

this is when new customers are attracted to existing products