Principles of Marketing: Chapter 2

Strength (internal)

Core competencies or competitive advantage

Corporate Strategy

a strategy that determines the means for utilizing resources in the various functional areas to reach the organizations's goals

Market Opportunity

A combination of circumstances and timing that permits an organization to take action to reach a particular target market

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

Marketing Objective

A statement of what is to be accomplished through marketing activities

Marketing Objective

A statement of what is to be accomplished through marketing activities Characteristics: -Clear, simple terms -Measurable -Specify Time Frame -Consistent with Unit and Corporate Strategy

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

Sustainable Competitive Advantage

An advantage that the competition cannot copy

Marketing Cost Analysis

Analysis of costs to determine which are associated with specific marketing efforts

Weaknesses (internal)

Any internal limitations an organization may face

SWOT Analysis; Why is it important?

Assessment of an organization's strengths, weaknesses, opportunities, and threats; it shows how marketers must seek to convert weaknesses into strengths, threats into opportunities, and match internal strengths with external opportunities to develop competitive advantages.

Threats (external)

Conditions or barriers preventing firm from reaching goals

Evaluating Marketing Activities

Establishing Performance Standards Analyze Actual Performance Sales Analyses Cost Analyses Taking Corrective Action

Identify and explain the major components of a marketing plan.

Executive Summary, Environmental Analysis, SWOT Analysis, Marketing Objectives, Marketing Strategies, Marketing Implementation, Performance Evaluation

Opportunities (external)

Favorable conditions that could produce possible outcomes

How can an organization make its competitive advantage sustainable over time? How difficult is it to create sustainable competitive advantages?

Maintaining a sustainable competitive advantage requires flexibility in the marketing mix when facing uncertain competitive environments. It can be done by being a first-mover in a market or by offering the highest quality products.

Identify the major components of strategic planning, and explain how they are interrelated.

Organizational Mission and Goals Corporate and Business-Unit Strategies SWOT Analysis Marketing, Production, Finance, Human Resources

Strategic Windows

Temporary periods of optimal fit between the key requirements of a market and the particular capabilities of a company competing in the market

Identify and explain the major managerial actions that are a part of managing the implementation of marketing strategies.

The implementation of marketing strategies requires managers to: -organize the marketing department (with centralized or decentralized power) -motivate marketing personnel (through both financial and non-financial incentives) -effectively communicate within the marketing department and with other departments -coordinate all marketing activities and ensure that all employees understand how they are contributing to the marketing strategy -establish a timetable for the completion of each marketing activity.

Marketing Planning

The process of determining marketing objectives, defining marketing strategies, and establishing guidelines for implementation and evaluation of the marketing program

Marketing Implementation

The process of putting marketing strategies into action

Competitive Advantage

The result of a company matching a core competency to opportunities it has discovered in the marketplace

What are some issues to consider in analyzing a company's resources and opportunities? How do those issues affect marketing objectives and marketing strategy?

The strategic planning process begins with an analysis of the marketing environment, including economic, competitive, political, legal and regulatory, technological, and socio-cultural forces. The process must also include an assessment of an organization's available financial and human resources and capabilities, as well as how the level of these resources is likely to change. These analyses help the firm pinpoint its core competencies and identify market opportunities which the organization can exploit through carefully crafted marketing strategies.

Core Competencies

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

When assessing actual performance of a marketing strategy, should a marketer perform marketing cost analysis? Why or why not?

Yes, because a marketing strategy that successfully generates sales may also be extremely costly, so firms should know the marketing costs associated with using a given strategy.

Strategic Business Unit (SBU)

a division, product line, or other profit center within the parent company

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 Matrix

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

Mission Statement

a long-term view, or vision, of what the organization wants to become

Market Share

the percentage of a total market that actually buys/exchanges a specific product from a particular organization

Strategic Planning

the process of establishing an organizational mission and formulating goals, corporate strategy, marketing objectives, marketing strategy, and a marketing plan determining how to use resources and abilities to best achieve objectives

Strategic Marketing

the process of planning, implementing, and evaluating the performance of marketing activities and strategies, both effectively and efficiently

Primary Demand

total combined demand for an entire product category (Beer, Cigarettes)

Secondary Demand

total demand for a specific brand (Coors, Marlboro)

Marketing Plan

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

Performance Standard

An expected level of performance against which actual performance can be compared

Explain how an organization can create a competitive advantage at the corporate strategy level and at the business-unit strategy level.

A competitive advantage exists when an organization matches its core competency to opportunities it has discovered in the marketplace. One way a firm can achieve a competitive advantage at the corporate level is through corporate mergers. The talents and abilities one corporation possesses can be combined with different competencies of another organization and matched to opportunities in the marketplace. At the business-unit level, an organization can develop a competitive advantage by intensifying growth in those products or services that the organization has mastered and those that also have great customer-market potential, when a company has the foresight to diversify into other markets and/or products which capitalize on existing skills and knowledge.

When considering the strategic planning process, what factors influence the development of a marketing strategy?

A marketing strategy should match the organization's corporate strategy and help the organization to achieve its goals. A marketing strategy articulates the best use of the company's resources to achieve its marketing objectives. It should also match customers' desires for value with the organization's distinctive capabilities.

Sales Analysis

Analysis of sales figures to evaluate a firm's performance

Strategic Performance Evaluation

Establishing performance standards, measuring actual performance, comparing actual performance with established standards, and modifying the marketing strategy, if needed

Which element of the strategic planning process plays a major role in the establishment of performance standards? Explain.

As part of the strategic planning process, marketers set marketing objectives that indicate what a marketing strategy is supposed to accomplish. Marketing objectives directly or indirectly set forth performance standards, usually in terms of sales, costs, or communication dimensions, such as brand awareness or product feature recall. Actual performance should be measured in similar terms to facilitate comparisons and to make sure that the marketing department is achieving its objectives.

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 -Market is free of competition -Helps establish customer brand loyalty -Secrets and technology is protected by 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 -Opportunities to learn from first-mover mistakes -Lower initial investment than the first mover -More data availability and certainty about the success of the market for the product

What are the two major parts of a marketing strategy?

The two major parts of a marketing strategy are selecting a target market and creating a marketing mix. The target market must be chosen before the organization can adapt its marketing mix to meet the customers' needs and preferences. The marketing mix should be consistent with the business-unit and corporate strategies and flexible enough to adapt to changing conditions.

How should organizations set marketing objectives?

These objectives can be stated in terms of product introduction, product improvement or innovation, sales volume, profitability, market share, pricing, distribution, advertising, or employee training activities. Marketing objectives must be consistent with the organization's goals. They should be written so that they are clear and measurable, and should state what is to be accomplished in what time frame.