GS MKT 306 CH 2 - Strategic Planning
Situation Analysis : Market summary
A market is the group of consumers or organizations that is interested in and able to buy a particular product. describes the current state of the market. Understanding where a market is and where it might be going gives organizations a view of what resources to invest where.
marketing plan
A primary strategic planning tool is an action-oriented document that guides the firm's marketing strategy. It must be consistent with the overall strategic plan of the organization, grounded in the firm's mission statement.
global marketing : joint venture
A riskier option than exporting, licensing, or franchising is a joint venture. a domestic firm partners with a foreign company to create a new entity; through this partnership, the domestic firm enters the foreign company's market. The local partner shares equity (ownership) in the new entity and thus claims some portion of the profits. In return, the local partner provides the foreign entrant with valuable information about local consumers, suppliers, and the regulatory environment.
Controls : Organizational structure
An outline of the organizational structure assigns specific responsibility for the parts of the marketing plan. By clearly outlining who is accountable for which tasks, the marketing plan can help to drive positive results. One organizational structure trend is the increasing number of chief marketing officers (CMOs) within organizations. Recent research suggests that organizations benefit by having a CMO as part of an organization's top management team.
Tyler Cornwell Development Coordinator The Red Wolves Foundation
As a student at Arkansas State University, I understood very early on that I needed to be involved in more than just classwork. More importantly, I felt it was necessary to start planning the early stages of my professional career. I applied for a volunteer internship. Fast forward a few years. . . . That specific action has proved to be one of the more beneficial experiences of my life and career. In short, be willing to do more than just show up for class. Experience as many things as possible during your college career. "Always think—think about everything." This had a great impact on me: It challenged me not to accept the status quo, but to always question why things are a certain way and seek solutions to problems that interest you. What do you consider your personal brand to be? When I think of the great personal/company brands of our time, authenticity is the first thing that comes to mind. However, I believe first and foremost, you must know who you are and be comfortable in delivering your message to others. When others think of me, I hope they think of a genuine and caring person—someone they believe is authentic, trustworthy, and always willing to help.
The mission statement should:
Be focused on a limited number of goals. Be customer-oriented and focused on satisfying basic customer needs and wants. Capture a shared purpose and provide motivation for the employees of the firm.
Be focused on a limited number of goals.
Companies whose mission statements contain 10 or more goals are typically focusing on small, less-meaningful objectives. Instead, companies should create a broad statement that provides purpose and direction to the entire organization. Avon's mission statement had multiple goals and was over 230 words long. Although each goal was positive, the overall length distracted employees from the truly important things that define success for the organization.
The BCG matrix combines those two elements—market growth and relative market share—to produce four unique product categories.
Each of those four product categories— • stars, • cash cows, • question marks, and • dogs —requires a different marketing strategy. As part of the market summary, the BCG matrix allows a company to determine where its product will fall in the marketplace. Such knowledge serves as a starting point for developing marketing strategies to address that market position.
Capture a shared purpose and provide motivation for the employees of the firm.
Effective mission statements should emphasize the firm's strengths
Part of Burger King's marketing advantage has been its willingness to move quickly to exploit a constantly churning Internet news cycle.
For example, Burger King reentered France in 2013, following a 16-year absence. French customers besieged social media there with negative comments complaining about long lines at the restaurants. Burger King didn't waver in the face of the apparent customer-service crisis. Instead, it printed some of the "angry tweets" on construction panels at the new locations, as proof it had heard the negative feedback. That gambit generated millions of retweets, won a marketing award, and again showed Burger King to be a brand that isn't afraid to ignore conventional wisdom.
External factors can be both threats and opportunities.
For example, during the recent sluggish economy, consumers have tried to rein in their budgets by eating out less often. This reality threatens the restaurant industry, including McDonald's. However, the slow economy has also prompted consumers to look for cheaper food alternatives; as the world's leading choice for discounted dining, McDonald's has an opportunity to take advantage of this trend.
What advice would you give soon-to-be graduates?
Life is not fair. Sometimes you will be told no. Sometimes you will fail. At the slightest hint of success in most industries, there are more people wanting you to fail than to succeed. If you show signs of being successful at what you do, most veterans of the industry will not be your allies.
Be customer-oriented and focused on satisfying basic customer needs and wants.
Specific products and services change over time; customer needs and wants are longer-lasting. For example, advanced technological products of just a generation ago, such as the VCR or Polaroid camera, are outdated technologies today. Still, consumers desire to watch movies in their home and to take and share pictures with friends and family is stronger than ever.
Executive Summary
The executive summary in an organization's marketing plan serves as the plan's elevator pitch. It provides a one- to two-page synopsis of the marketing plan's main points. It should convey the most valuable information of the marketing plan. Although the executive summary comes first in the marketing plan, most firms complete this part of the plan last.
Controls : Implementation
The implementation section provides a detailed account of how the specific actions of the marketing plan will be carried out and who will be responsible for doing so.
global marketing : Direct Ownership
The riskiest strategy for entering an international market a domestic firm actively manages a foreign company or overseas facilities. Direct ownership is a good strategic option under certain conditions: • The firm sees substantial sales potential in the international market. • There is very little political risk (the risk of local-government unrest). • Similarities exist between the foreign and domestic cultures.
Marketers should thoroughly analyze the risks and rewards of each type of foreign entry as they develop their marketing plan.
The strategy for entering international markets must align with the firm's objectives, as defined in its mission statement and strategic planning.
BCG Matrix
The tool is a two-by-two matrix that graphically describes the strength and attractiveness of a market. One of the most popular analysis tools to describe the current market is the Boston Consulting Group (BCG) matrix. The vertical axis measures market growth; the horizontal axis measures relative market share.
Surround yourself with supporters, even if it begins with only your family.
There are good people in every industry. Seek them and stay close to them. I read an anonymous quote that said, "If you aren't a starter, stay close to the coach and be ready to play." Always be ready to play hard for the good coach.
A firm should begin the process of developing a mission statement by considering the following questions:
What is our business? Who is our customer? What is our value to the customer? What should our business be?
Financial projections provide those reading the plan with
a bottom-line numerical estimate of the organization's profitability. Financial projections can include numerous items; all should contain a • sales forecast, • an expense forecast, and • a break-even analysis:
The product section of the marketing plan consists of
a detailed description of the product being offered. This description includes not only the good or service itself, but also any related services like warranties and guarantees that accompany the good or service. The product description should clearly state what value the product holds for the customer.
Market share is typically depicted using
a pie graph, Market share is especially important to industries in which total market share can change significantly.
The first step in creating a quality strategic plan is to develop
an effective mission statement.
A strategic plan typically includes
an organization's plans for key functional areas, such as • marketing • human resources • finance, and • risk management.
Relative market share is defined
as the sales volume of a product divided by the sales volume of the largest competitor.
Diversification strategies seek to
attract new customers by offering new products that are unrelated to the firm's existing products. Disney has used this strategy over the past few decades: It used to be a company that produced animated movies and ran theme parks; it now has diversified into an international family entertainment and media enterprise. Diversification enables companies like Disney to hedge against decreasing sales in some product lines due to economic conditions.
Firms must continually undertake strategic planning. Because customer needs
change and competitive threats pop up, what worked in the past will not always work in the future. Firms must continually modify and adjust their strategies as conditions shift.
Financials : Break-even analysis
combines the data from the sales and expense forecasts. The result is an estimate of how much the company needs to sell to cover its expenses—that is, to break even
One way to achieve sustainable competitive advantage is to focus on the
complete product, rather than solely on the good or service itself. By doing so, the firm can satisfy the unmet needs and wants of potential customers and differentiate itself from its competitors. For example, McDonald's provides food and beverage products, but so do many other restaurant chains. McDonald's competitive advantage relates to its ability to provide these items in a fast, low-cost way in a clean restaurant.
A mission statement is a
concise affirmation of the firm's long-term purpose. It describes the markets in which the firm will compete and the products or services it will provide. An effective mission statement provides employees with a shared sense of ambition, direction, and opportunity. A firm's mission statement drives many of the other decisions it makes, including how best to market its goods and services to consumers. The mission statement provides a standard to ensure that the business never strays too far from its core goals and values through changing times. A sound mission statement provides a basis for developing the marketing plan.
Firms must continually modify their strategies as
conditions shift. Strategic planning helps to ensure that the organization will have the needed resources—financial, human, and operational—to succeed. Such planning helps marketers select and execute the right marketing mix strategies to maximize success. The strategic plan is shaped by the organization's mission.
Thinking of the product as a combination of goods, services, and ideas allows McDonald's to
consider what the consumer is actually buying beyond just burgers, fries, and chicken nuggets. For a family stopping at McDonald's on a vacation, the value might be the combination of clean restrooms, free wireless Internet access, and the comfort of choosing a familiar place to eat. The marketing plan should clearly address how the firm communicates what its product is and what value the product holds for the consumer.
global marketing : Franchising is a
contractual arrangement in which the franchisor (McDonald's) provides a franchisee (local owner-operator) the right to use its name and marketing and operational support; in return, the franchisee pays the franchisor a fee and, typically, a share of the profits. International franchise agreements are essentially the same as domestic agreements. The obvious difference is that they must meet the commercial laws of the country in which the franchise exists.
Product development strategies involve
creating new goods and services for existing markets. A new product can also be an improved product or one with a new feature or innovation.
Threats are
current or potential external factors that may challenge the firm's short- and long-term performance. McDonald's faces a number of potential threats, including: • A declining global economy. • The U.S. consumer trend of eating healthier and consuming less fast food. • Increasing production costs.
Marketers often use two important metrics to evaluate profitability:
customer acquisition and customer profitability.
A product possesses a competitive advantage when
customers perceive that it has more value than other products in its category. Competitive advantage can be short-lived if competitors are quickly able to offer the same or better features. The firm's real goal is to develop products that achieve sustainable competitive advantage—that outperform competitors over a long period of time
Controls : Contingency planning
defines the actions the company will take if the initial marketing strategy falls short of expected results. For example, Coca-Cola famously changed direction after its New Coke product failed to meet company objectives. The firm reintroduced the old Coke formula as Coca-Cola Classic and began to add profits and market share again.
Once the situation analysis is complete in the marketing plan, marketers focus on
defining the firm's marketing strategy.
A SWOT analysis can be a valuable tool in the
development of a marketing plan. Perhaps the most common mistake a firm makes when conducting a SWOT analysis is failing to separate internal issues from external issues. The strengths and the weaknesses aspects of the analysis focus on internal characteristics of the firm. The opportunities and threats aspects of the SWOT analysis focus on the external environment.
The market summary sets the stage for the situation analysis section by
focusing on the current state of the market to which the firm will sell its products. For example, a market summary for McDonald's might look at the size of the fast-food market in the United States and how rapidly its numbers are growing or declining.
Recall that the marketing mix is the combination of activities that a firm can do to influence demand for its good or service. It is often referred to as the
four Ps of marketing: product, price, place, and promotion. The final tool used in the marketing strategy section of the marketing plan focuses on determining how each element of the marketing mix will support the chosen strategy.
The disadvantages of franchising include the risks of
granting your name to a franchisee in a faraway place where direct oversight is difficult. If a Burger King in Asia were involved in a negative public event, it could damage the Burger King name throughout the world. Franchisors also run the risk of providing such detailed information that a franchisee could potentially have a competitive advantage if they chose to open a competing business.
Profitability analysis : Customer acquisition measures
how much the firm spent to gain new customers. Customer-acquisition costs typically include spending on marketing advertising, public relations, and sales. Why measure customer-acquisition costs? Because sometimes additional customers don't equal additional profit. The firm's goal should be to allocate marketing resources to obtain additional customers at a low cost. However, a firm's marketing strategy sometimes makes this goal impossible. For example, Netflix increased its customer-acquisition costs 59 percent in 2015.45 Netflix marketers made a strategic choice to accept the higher acquisition costs in the short term; they believed that those customers would become profitable repeat subscribers in the months and years ahead.
The promotion section of the marketing plan details
how the firm will communicate the value of its product. This section builds on the strengths of the product section. It references the specific promotional tools— • advertising, • sales promotion, • personal selling, or • public relations— the firm will use to reach its target market.
The SWOT analysis enables managers to look for
ideas and strategies that might produce a competitive advantage.
Social media tools enable small businesses to engage global customers in a way that was not possible a decade ago. Logistics firms like FedEx and UPS also help to
increase export opportunities; they provide small businesses with a quick, efficient way to deliver products almost anywhere in the world. These tools provide almost any small business in the U.S. with the opportunity to become an exporter.
In recent years, the use of licensing to enter international markets has increased significantly. More regulation, rising research and development (R&D) costs, and shortened product life cycles have
increased domestic development costs. Licensing helps to overcome some of these barriers because the licensee is typically locally owned and brings unique insight about its local consumers, Licensing offers marketers the advantages of expanding the reach of their products quickly in a low-cost way.
Market share analysis indicates
indicates market share, which is the percentage of the total market sales captured by a brand, product, or firm. Market share provides marketers with a quick look at how they are performing relative to their competitors
Strengths are
internal capabilities that help the company achieve its objectives. • Strong brand recognition with consumers of all ages and backgrounds. • Long-term profitability and a franchise system that ties individual store owners' profits to company profits. The company has the financial strength to consistently develop new products, promote its brand, and make strategic acquisitions. • McDonald's continuing reputation as the most popular breakfast restaurant in the United States.
Weaknesses are
internal limitations that may prevent or disrupt the firm's ability to meet its stated objectives. Marketers must be honest with themselves when identifying weaknesses. The firm cannot develop strategies to overcome weaknesses if it doesn't recognize them as problems. For McDonald's, weaknesses might be: • The challenge of finding and keeping quality employees. • The perception that its food is unhealthy. • Longer wait times. Since 2007, the company has expanded its menus by 70 percent. The longer menu has complicated food preparation and slowed food delivery.
Return on marketing investment (ROMI)
is a measure of the firm's effectiveness in using the resources allocated to its marketing effort. Specifically, it indicates the rate at which spending on marketing contributes to profits In the calculation: • Sales include all of the revenue generated by core and noncore business activities. • Gross margin equals the difference between price (the amount paid by the customer) and cost (the amount required to produce the good or service), which is expressed as a percentage. Gross margin is calculated by subtracting the cost of goods sold per unit from the selling price of the item, divided by the selling price. • Marketing expenditures is the amount of money spent on all marketing activities during a specified period of time.
Situation Analysis
is a systematic collection of data to identify market trends, conditions, and competitive forces. The situation analysis has three subsections: • Market summary • SWOT analysis • Competition analysis
Financials : Expense forecast
is an estimate of the costs the company will incur to create, communicate, and deliver the product. Without an expense forecast, the firm will have a difficult time allocating resources and predicting profits.
Situation Analysis : SWOT analysis
is an evaluation of a firm's strengths (S), weaknesses (W), opportunities (O), and threats (T).
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it will be hard to succeed in achieving your desired result: a college diploma.
Star products combine
large market share in an industry with a high growth rate. Apple's iPhone falls in this category. Marketing efforts around star products focus on maintaining the product's market position for as long as possible. Firms with star products generally have to invest heavily in marketing to communicate value as the industry continues to grow.
Cash cows are products that have a
large market share in an industry with low growth rates. An example of a cash cow is the Apple iPod. The market growth rate for MP3 type players has slowed in recent years, but the iPod still retains a large share of the market. As a result, Apple marketers may decide to allocate only enough marketing resources (e.g., television commercials, special pricing discounts) to keep sales strong without increasing product development costs or negatively affecting profits.
global marketing : Licensing is a
legal process in which one firm pays to use or distribute another firm's resources. The resources being licensed might include products, trademarks, patents, intellectual property, or other proprietary knowledge. Through such arrangements, the domestic licensor allows a foreign company to use its resources.
Situation Analysis : Competition analysis
lists the firm's direct competitors. This list should include both direct and indirect competitors.
marketing strategy
lists the specific actions the firm must take to accomplish the marketing objectives it has established. The basic tools and techniques of marketing strategy include decisions about (1) segmentation, target markets, and positioning; (2) strategic directions; and (3) the marketing mix. The effectiveness of the marketing strategy depends, in part, on the clarity of the short- and medium-term objectives the firm has defined.
firms should not analyze market share data in isolation. Rather, they should
look at market share data relative to revenue and profitability. A firm can gain market share by drastically reducing prices, but such action will likely lead to decreased revenue and profitability. Ultimately, firms should seek revenue and market share levels that maximize profits for the firm.
Even in the best of conditions, direct ownership can be risky
maintaining 100 percent ownership of offices, plants, and facilities in a foreign country exposes the domestic firm to significant risks Even in the best of conditions, direct ownership can be risky, as illustrated by Target, which announced in 2015 it was liquidating all 133 stores it owned in Canada, due to their lack of success. The international direct ownership strategy cost Target over $2 billion since its start in 2011, sucking up resources from other strategic initiatives the company could have pursued.
Marketing is one of the biggest expenditures for most organizations. But
many organizations have performed marketing activities without knowing what value they add to the firm. Such scattered efforts have frustrated executives, and sometimes even led them to question the value of marketing investments.
It is important to understand what market share does and does not show. It does
measure the firm's sales as a percentage of total market sales. It does not indicate the size of the market sales. You can see that though percentages for the various manufacturers are similar, each represents more vehicles sold in 2015 than in 2009. For example, Hyundai's 4.2 percent market share in 2009 represented 435,064 vehicles sold. Its 4.35 percent market share in 2015 represented 755,869 vehicles sold.
The pricing section of the marketing plan specifies how much
money customers must pay for the product and explains why the firm selected that price. For example, McDonald's increased menu prices by 1 percent in 2011 because of an increase in the price of commodities like hamburger meat and buns. However, those commodity prices rose several percentage points more than 1 percent. McDonald's didn't increase its prices by the same amount because the firm's marketers understood that consumers remained concerned about overspending in a weak economy. McDonald's marketers believed that keeping price increases small was essential to keeping customer volume up. The pricing section of the marketing plan should include this type of information.
Joint ventures come with inherent risk. Domestic and international firms often
operate differently, which can lead to culture clashes. Joint ventures also can result in mistrust over proprietary knowledge, conflict over new investments, and disagreements about how to share revenue and profits. AT&T entered into a joint venture with Philips NV, an Amsterdam-based electronics company, to produce telecommunications equipment in Europe. The venture was ultimately unsuccessful due to Philips NV's inability to help AT&T penetrate the French telecom market.
The external considerations in a SWOT analysis are the
opportunities and threats the firm faces. Opportunities are external factors that the firm may be able to capitalize on to meet its stated objectives. Opportunities for McDonald's in the years ahead include: • Increased international expansion. McDonald's currently serves approximately 69 million customers each day in over 100 countries.16 International growth, especially in Europe and Asia, has exceeded earnings growth at domestic McDonald's restaurants in recent years. • Expanded service menu. • Public interest in ethical and sustainable business practices.
A quality market summary should provide a
perspective on important marketplace trends. Market summaries for both markets would also consider the growth opportunities internationally and potential sales through international expansion.
Distribution strategies fall within the
place marketing-mix element. The distribution section of the marketing plan describes where and when the firm will deliver value to its customers. The distribution section should outline all the different companies, people, and technologies that will be involved in the process of delivering the product to customers.
The firm has total control over this element of its marketing efforts
positioning the concept is critical to how it develops the rest of its marketing strategy.
Marketing analytics is the
practice of measuring, managing, and analyzing marketing performance. Its goal is to maximize marketing effectiveness and optimize return on investment. Use of marketing analytics enables organizations to measure and evaluate marketing outcomes. Marketing strategy becomes more accountable when organizations base decisions on analytics.
Strategic planning is essential to meeting both
professional and personal objectives. In the same way that a strategic plan will help you accomplish your goal of earning a college degree, a firm's strategic plan helps guide it to success.
Profitability analysis measures how much
profit the firm generates. It can also be broken down to measure the profit contribution of regions, channels, or customer segments. Profits are the positive gain from a business operation after subtracting all expenses.
Financials : Sales forecast
projects how many units of a product the company expects to sell during a specific time period. Sales forecasts must be as accurate as possible. A sales forecast that is too low can lead a company to run out of product to sell. A forecast that is too high can leave a firm with unused inventory, which can severely strain a firm's financial resources.
Direct ownership requires far more
resources and commitment than any of the other options. It can be difficult to manage local resources from afar. However, direct ownership provides the firm with more control over its intellectual property, advertising, pricing, and product distribution.
Revenue analysis measures and evaluates
revenue from specific products or regions. Revenue analysis pinpoints the specific sources of revenue. The firm also will want to keep an eye on the size of revenue and its growth over time, to monitor whether revenues are keeping pace with the goals set in the strategic plan. Marketing professionals must understand the limitations of simply measuring revenue. They must combine this analysis with an evaluation of market share and profitability before making decisions
global marketing : Exporting is
selling domestically produced products to foreign markets. It typically is the least risky option for entering international markets. But exporting is popular not just among the companies that make up the Fortune 500. Small companies, like those that many of you will work for after college, account for 98 percent of all U.S. exporters.
Market development strategies focus on
selling existing goods and services to new customers. The targeted new customers could be of a different gender, age group, or education level. For virtually any company or industry, globalization is an increasingly critical market development strategy. A company maximizes its chances for success by having a clear strategy for implementation as it expands into foreign markets.
Question marks have
small market share in a high-growth industry. Products in this quadrant are typically new to the market. They require significant marketing investment in promotion, product management, and distribution. The new Apple Watch is a question-mark product. Marketers for the new watch must move quickly and creatively to reach potential users before competitors develop comparable products. Question marks have an uncertain future. As a result, marketers must monitor the product's position to determine whether to continue allocating resources to it.
Dogs are products that have
small market share in industries with low growth rates. An example of a dog product might be compact discs, an industry in which no firm has large market share and the growth rate is declining. Products that fall into this category typically should be discontinued. Doing so frees up resources for products with more profit potential.
However, a budget size advantage doesn't go as far as it used to because of
social media. By utilizing social media as part of a marketing plan, marketers can generate more buzz than they can with paid media.
Another technique used in the marketing strategy section of the marketing plan relates to
strategic direction. A company's marketing strategy can follow various paths, which depend on the product and industry.
Market penetration
strategies emphasize selling more of the firm's existing goods and services to existing customers. This growth strategy often involves encouraging current customers to buy more each time they patronize a store or to buy from the store on a more frequent basis. For a market penetration strategy to succeed, firms often must increase advertising expenses, develop new distribution frameworks, or enhance their social media offerings.
Indirect competitors are those that can
take market share as macro trends or consumer preferences change. It is often easier to identify direct competitors than it is to understand who might be indirect competitors. Indirect competitors, though, typically receive far less attention, or are overlooked entirely.
Positioning refers to
the activities a firm undertakes to create a certain perception of its product in the eyes of the target market. To position its product, the firm must take into consideration various issues. These include the competition, the needs and wants of the target market, and the element of mystique or drama that the good or service naturally has.
The final section in most marketing plans outlines
the controls the firm will put in place to monitor performance and adjust the plan over time. Good strategy planning alone does not guarantee marketing success. Evaluation and control is a critical link between an organization and its environment. The controls section includes the following three items: • Implementation • Organizational structure • Contingency planning
A target market is
the group of customers toward which an organization directs its marketing efforts. Small firms may have only one target market. Large organizations might enter multiple target markets. Regardless of size, firms tend to enter multiple markets by first serving one group and then expanding based on success with that group.
market segments
the groups of consumers who have shared characteristics and similar product needs. Market segmentation plays an important role in the success of almost every organization in the U.S. and throughout the world. Without it, marketing efforts are often unfocused and largely wasted.
Creating a marketing plan requires
the input, guidance, and review of employees throughout various departments of a firm, not just the marketing department. Therefore, it is important that every future business professional understand the components of the marketing plan.
Franchising is an attractive method of entering foreign markets. The franchisee assumes
the majority of the capital costs and human resource issues. The franchisor provides knowledge and information about running the business. That division of responsibility increases the likelihood of success. Franchisors typically allow companies to offer new products for consumers in specific international markets, adding further product appeal.
The fourth section of the marketing plan is the financials section. It details
the overall profitability of both the firm and its individual units.
Market segmentation is
the process of dividing a large market into smaller groups.
Strategic planning is
the process of thoughtfully defining a firm's objectives and developing a method for achieving those objectives.
Marketing Strategy : A strategy is
the set of actions taken to accomplish organizational objectives. The marketing strategy component lists the actions the firm must take to accomplish the marketing objectives it established in its mission statement and strategic planning. A successful marketing strategy can lead to higher profits, stronger brands, and larger market share.
Profitability analysis : individual customer profitability
which is the profit a firm makes from a customer over a specified period of time. Netflix marketers found that profitability per customer was lower internationally than in the United States. That analysis spurred Netflix marketers to allocate additional resources to international markets, to try to increase customer profitability in its international segment.
Most marketing strategies seek to move the product in one of four directions:
• Market penetration: selling more of existing goods and services to existing customers. • Product development: creating new goods and services for existing markets. • Market development: selling existing goods and services to new customers. • Diversification: offering new goods and services to attract new customers.
Despite its growing popularity, licensing is typically a riskier option than exporting. Major risks include:
• The licensor may be inadvertently creating a future competitor in the form of the licensee. • The licensor shares information and the right to use its proprietary technology with the licensee, who might use that knowledge in the future. • The licensee could potentially misuse trademarks. However, the short-term benefits of licensing often outweigh the potential longer-term risks facing marketers.
Joint ventures work best when:
• The partners' strategic goals align. • Their competitive goals diverge. • They are able to learn from one another without infringing on each other's proprietary skills.
Quality marketing objectives have three basic characteristics:
• They are specific. Vague marketing objectives lead to a lack of focus and accountability. • They are measurable. Objectives must be measurable so that marketers know if their strategies are working. A common phrase used in offices around the globe is, "If it can't be measured, it can't be managed." • They are realistic. Objectives need to be realistic so that marketers do not demotivate their organizations with unattainable goals. Objectives also should be realistic in order to show those reading the marketing plan that it is a serious, thoughtful document.
Most marketing plans include five components:
• executive summary • situation analysis • marketing strategy • financials section • controls section These five components communicate what the organization desires to accomplish and how it plans to achieve its goals.
As part of a global marketing plan that involves global marketing, the firm has five major strategic options:
• exporting, • licensing, • franchising, • joint venture, or • direct ownership