MKT 3401 Ch. 2

-Ansoff's strategic opportunity matrix -Boston Consulting Group model -General Electric model

A company, or an SBU, can use several tools to manage the strategic direction of its portfolio of businesses:

skills and assets of an organization (patents, copyrights, locations, equipment, technology, customer service, and promotion)

Building sustainable competative advantage sources:

-To profile and make recommendations about weaknesses and inhibiting factors as well as strengths and new opportunities -To ensure that the role of the audit has been clearly communicated -To make someone accountable for implementing recommendations

Following up on the Marketing Plan: What are the three post-audit tasks?

•Should be realistic, measurable, time specific, and compared to a benchmark •Should be consistent with and indicate the priorities of the organization

A marketing objective should be what?

Ansoff's strategic opportunity matrix

A method for developing alternatives is ___, which matches products with market

"what business are we in?"

A mission statement answers what question?

market penetration, market development, product development, diversification

Ansoff's matrix includes four options:

threats

Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness

experience curves, efficient labor, no-frills products and services, government subsides, product design, reengineering, product innovations, new methods of service industry

Costs can be reduced in a variety of ways:

•The creation and implementation of a marketing plan allows the organization to achieve marketing objectives and succeed •Having a good marketing information system and a wealth of competitive intelligence is critical to a thorough and accurate situation analysis •Managerial intuition is also important in the creation and selection of marketing strategies •The structure of the marketing plan is not a series of sequential planning steps -There is not one single correct format for a marketing plan

Elements of Writing the Marketing Plan:

-Starbucks opens stores in Brazil and Chile -McDonald's has opened in various countries

Examples of Market development?

-Starbucks launches Hear Music and buys Ethos Water -Google introduced a WiFi network called Google Station in India

Examples of diversification?

-Starbucks sells more coffee to customers who register their reloadable Starbucks card -McDonald's introduces all day breakfast

Examples of market penetration?

-Starbucks develops powdered instant coffee called Via -Abbott laboratories introduced a new line of healthy snacks called Curate bars

Examples of product development?

divest

Getting rid of SBUs with low shares of low-growth markets is often appropriate. Problem children and dogs are suitable for this strategy

build

If an SBU has the potential to be a star (probably a problem child at present), building would be an appropriate goal

hold

If an SBU is a successful cash cow, a key goal would be to hold or preserve market share

budgets, implementation timetables, required marketing research efforts, or elements of advanced strategic planning.

Other elements that may be included in a marketing plan are?

top management's support and participation

Perhaps the most critical element in successful strategic planning is ___

-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

SBUs have the following chracteristics:

•Communicate marketing management philosophy •Provide directions for lower-level marketing managers to integrate and point marketing efforts in a consistent direction •Motivate employees •Force executives to clarify their thinking •Form a basis for control

Setting market plan objectives:

the business mission and objectives, performing a SWOT analysis, determining a target market, and establishing a marketing mix.

Some elements are commin to all marketing plans. These include:

-What is the organization's main activity at a particular time? -How will it reach its goals?

Strategic marketing management addresses two questions:

-Appeal to the entire market with one marketing mix -Concentrate on one marketing segment -Appeal to multiple market segments with multiple marketing mixes

Strategies for selecting target markets (consumer behavior):

Boston Consulting Group matrix

The ____ classifies each SBU by its present or forecast growth and market share. The underlying assumption is that market share and profitability are strongly linked.

relative market share

The measure of market share used in the portfolio approach is ___, the ratio between the company's share and the share of the largest competitor

stars, cash cows, problem children, dogs

The portfolio matrix breaks SBUs into four categories:

harvest

This is an appropriate strategy for all SBUs except stars. The basic goal is to increase short-term cash return without much concern for the long-run impact

product, place/distribution, promotion, price

What are the four P's?

-is the starting point of the marketing mix. It is difficult to decide on a promotion campaign, determine a price, or design a distribution strategy until the product offering and product strategy are defined -not only the physical unit but also its package, warranty, after-sale service, brand name, company image, value, and other factors -involves tangible goods, ideas, or services

What do product strategies involve?

identifying internal strengths (S) and weaknesses (W) and also examining external opportunities (O) and threats (T)

What does a SWOT analysis involve?

continual attention, creativity, and management commitment

What does effective strategic planning require?

-Physical distribution that includes storage and transportation -Making product available where and when customers want them -Ensuring that products arrive in usable condition at designated places when needed

What does place/distribution (supply chain) strategies involve?

-What a buyer must give up to obtain a product -Most flexible of the "four Ps" -Price is an important competitive weapon. Of the four Ps, it can be changed most quickly -Price multiplied by the number of units sold equals total revenue for the firm

What does pricing strategies involve?

-Includes advertising, public relations, sales promotion, and personal selling -Brings about mutually satisfying exchanges by informing, educating, persuading, and reminding buyers about the product -Each element of the promotion mix is coordinated with the others to create a promotional blend A good promotion strategy can increase sales

What does promotion strategies involve?

the market segment or segments to focus on

What does the target market strategy identify?

to develop a full profile of the organization's marketing effort and to provide a basis for developing and revising the marketing plan

What is a marketing audit's main purpose?

the marketing environment

What should external opportunities and threats focus on?

organizational resources such as production costs, marketing skills, financial resources, company or brand image, employee capabilities, and available technology

What should internal strengths and weaknesses focus on?

marketing plans

___ are only as good as the information they contain and the effort, creativity, and thought that went into their creation.

notion

___ is that a successful firm will stake out a position unique in some manner from its rivals

cash cow (ex: personal computers and laptops)

a business unit that generates more cash than it needs to maintain a market share

dog (ex: Blackberry phones)

a business unit that has low growth potential and a small market share

star (ex: iPad for Apple)

a business unit that is a fast-growing market leader

problem child a.k.a question mark (ex: elixir guitar strings that were originally marketed to Disney for puppet strings but then transferred back to musicians)

a business unit that shows rapid growth but poor profit margins

market development

a marketing strategy that entails attracting new customers to existing products (same product, new market)

product development

a marketing strategy that entails the creation of new products for present markets (new product, same market)

market penetration

a marketing strategy that tries to increase market share among existing customers (same product, same market)

competative advantage

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

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

marketing objective

a statement of what is to be accomplishes through marketing activities

diversification

a strategy of increasing sales by introducing new products into new markets (new product, new market)

marketing audit

a thorough, systematic, periodic evaluation of the objectives, strategies, structure, and performance of the marketing organization -broadest control device available to marketing managers -can also improve communication

portfolio matrix

a tool for allocating resources among products or strategic business units on the basis of relative market share and market growth rate

marketing mix (four Ps)

a unique blend of product, place (distribution), promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market

marketing plan

a written document that acts as a guidebook of marketing activities for the marketing manager

sustainable competitive advantage

an advantage that cannot be copied by the competition; lasts only as long as the time it takes a competitor to imitate the strategy and plans

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

marketing myopia

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

opportunites

conditions in hte external environment that favor strengths

experience curves

curves that show costs declining at a predictable rate as experience with a product increases

product design

cutting-edge design and reverse engineering can offset costs

-medical expenses have been lowered by the use of outpatient surgery and walk-in clinics. -Online-only magazines can help save on material and shipping costs

examples of new methods of service delivery:

reengineering

fundamental rethinking and redesign of business processes help achieve dramatic improvements in critical measures of performance

evaluation

gauging the extent to which the marketing objectives have been achieved during the specified time period

government subsides

governments may provide grants and interest-free loans to target industries

efficient labor

labor costs can be an important component of total costs in low-skill, labor-intensive industries

product innovations

new technology and simplified production techniques can reduce the average production costs

strengths

things the company does well weaknesses

control

provides the mechanisms for evaluating 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

no-frills products and services

removing frills and options from a product or service can reduce costs

cost, product/service differentiation, niche

three types of competative advantage:

marketing strategy

the 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

Market opportunity analysis (MOA)

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

strategic planning

the managerial process of creating and maintaining a fit between the organization's objectives and resources and the evolving market opportunities

planning

the process of anticipating future events and determining strategies to achieve organizational objectives in the future

marketing planning

the process of anticipating future events and determining strategies to achieve organizational objectives in the future; the basis for all marketing strategies and decisions

product/service differentiation competitive advantage

the provision of something unique and valuable to buyers beyond simply offering a lower price than that of the competition; as a result, this strategy is more attractive ti many top managers -brand names, strong dealer network, product reliability, image, service

weaknesses

things the company does not do well

build, hold, harvest, divest

•After classifying the SBUs in the matrix, a company must determine how to allocate resources to each SBU. •Four basic strategies:

strategic business units (SBUs)

•a subgroup of a single business or collection of related businesses within the larger organization

cost competative advantage

•being the low-cost competitor in an industry while maintaining satisfactory profit margins

niche competitive advantage

•the advantage achieved when a firm seeks to target and effectively serve a single segment of the market -used by small companies with limited resources -usually serve a limited geographic market -Effective for market segments with good growth potential but is not crucial to success of competitors

implementation

•the process that turns a marketing plan into action assignments and ensures these assignments are executed in a way that accomplishes the plan's objectives -requires delegating authority and responsibility -determining a time frame for completing tasks -allocating resources