Chapter 2

Planning

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

Implementation

the process that turns a market plan into action assignments and ensures that these assignments are executed in a way that accomplishes

Marketing Plan

written document that acts as a guidebook of marketing actives for the marketing manager. Specify objectives, define clearly stated actions required to attain them. basis which actual and expected performance can be compared. it is a reference point of success of future activities. (Elements, creation and implementation, and unique to the firm)

Competitive Advantage

a set of unique features of company and its products that are perceived by the target market as significant and superior of 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 accomplished through marketing activities - must be stated before marketing plan & statement can be developed.

Diversification

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

Strategic Business Units (SBU)

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

Marketing Audit

A thourough, systematic, periodic evaluation of the objectives, strategies, structure, and performance of the marketing organization

Problem Children (portfolio matrix)

AKA question mark. shows rapid growth but poor profit margins. low market share and high-growth industry. need a great deal of cash. without support they become dogs or re-position and become stars.

Following Up with Market Plan

Actively following up means to Implement, Evaluate and Control, and Post-Audit Tasks

Sustainable Competitive Advantage

An Advantage that cannot be copied by the competition

Control

Proviedes the Mechanisms for evaluating markeing results in light of the plan's objectives and for correcting actions that do not help the organization reach those objectives within budget guidelines

SWOT Analysis (Strenth, Weaknesses, Opportunities, and Threats)

identifying internal strengths, and weaknesses and also examining external opportunities and threats

Dogs (portfolio matrix)

low growth potential and small market share, eventually leave marketplace. Strategies are to harvest or divest. sometimes successful in other markets.

Market Development

marketing strategy that entails attracting new customers to existing products

Product Development

marketing strategy that entails the creation of new products to present markets (established)

Market Penetration

marketing strategy that tries to increase market share among existing customers

Relative Market Share

ratio between the company's share and the share of the largest competetor. (ex. firm = 50%, competetor = 5%, ratio is 10-1)

Effective Strategic Planning

requires continual attention, creativity and management commitment. Should not be annual exercise, needs to be ongoing exercise. (lower-cost self-serving approach)

Marketing Strategy

the activities of selecting and describing one or more target markets and developing and maintain a marketing mix that will produce mutually satisfying exchanges with target markets.

Niche Competitive Advantage

the advantage achieved when a firm seeks to target and effectively serve a small segment of the market

Strategic Planning

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

Innovation Matrix

1. Core Innovation (yellow circle, bottom), 2. Adjacent Innovation (orange circle, middle), and 3. Transformational Innovation (red circle, top). This criticizes Ansoff's matrix that it doesn't reflect the reality of how business grow - that modern businesses plan growth in more fluid manner based on current capabilities rather than the clear-cut sectors outlined by the opportunity matrix. see exactly what type of assets need to be developed and what type of markets are possible to grow into (create) based on company's core capabilities

3 Common Stragtegic Alternatives

Ansoff's Strategic Opportunity Matrix, Innovation Matrix, Boston Consulting Group Model

Marketing Myopia

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

General Electric Model (GEM)

Dimensions used in this strategic alternative market attractiveness and company strength (position), this is richer and more complex than Boston Matrix and harder to quantify. =3 divisions for each dimension: high, medium and low.

Divest (portfolio matrix)

Getting rid of the SBUs with low shares of low-growth markets, problem children and dogs are most suitable for this strategy.

Ansoff's Strategic Opportunity Matrix

Method for developing alternatives that match products with markets using: Market Penetration, Market Development, Product Development, and Diversification.

Market Segments

Must be fully described described as Demographics, psycho-graphics, and buyer behavior or ethnicity, multicultural aspects, mix should be examined. (international/global as well)

Low Attractive (GEM)

Positions = Low & Medium, Harvest/Divest High, Cautiously Invest

Medium Attractive (GEM)

Positions = Low, Harvest/Digest Medium, Cautiously Invest High, Invest/Grow

High Attractiveness (GEM)

Postions= Low, Cautiously Invest Medium & High, Invest /Grow

Build (portfolio matrix)

SBU has the potential to be a star (maybe problem child at present) building would be appropriate goal. company may give up short term profits and use its financial resources to achieve this goal.

Hold (portfolio matrix)

SBU is ver successful cash cow, a key goal would be to hold or preserve market share so the organization can take advantage of the very positive cash flow

Harvest (portfolio matrix)

Strategy is appropriate for all SBUs except stars. The basic goal is to increase short-term cahs return without too much concern for long term impact.

Marketing Opportunity Analysis (MOA)

The Description and estimation of the size and sales potential of market segments that are of interest to the firma nd the assessment of key competitors in these market segments

Product/Service Differentiation Competitive Advantage

The provisions of something that is unique and valuable to buyers beyond simply offering a lower price than that of the competition

Marketing Mix aka 4 Ps

Unique blend of Strategies: Product, Place (distribution) , Promotion, and Pricing designed to produce mutually satisfying exchanges with a target market.

Reduction of Cost

Using a variety of ways we can reduce cost: Experience curves, efficient labor, no-frills good and services, government subsidized, product design, re-engineering, production innovations, new methods of service delivery.

Portfolio Matrix

a tool for allocating resources among products or strategic business units on the basis of relative market share and market growth rate. (balance organizations growth rate for long term) Portfolio Matrix is used to determine future cash contributions and cash requirements. Assumption the mareket share is strongly linked, to measure it use a relative market share. SBUs are put into four categories Stars, Cash Cows, Problem Children, and Dogs. after classification next is to allocate furture resources into 4 categories: build, hold, harvest, divest.

Cost Competitive Advantage

being the low-cost competitor in an industry while maintaining satisfactory profit margins. can result from inexpensive raw materials, creating efficient scale of plant operations, designing products for ease of manufacture, controlling overhead costs, and avoiding marginal customers,

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 market plan.

Experience Curve

curves that show cost declining at predictable rate as experience with a product increase

Marketing Plannign

designing activites relating to marketing objectives and the changing marketing environment

Characteristics of an SBU

distinct mission - specific target market, control over its resources, its own competitors, it can be a single business or collected businesses

Stars (portfolio matrix)

fast growing market leader, usually have large profits, need lots of cash to finance rapid growth. protect existing market share by reinvesting earnings in product improvement, better distribution, more promotion, and product efficiency.

Boston Consulting Group Model

finding the balance among SBUs that yields overall organization's desired growth and profits with an acceptable level of risk. SBUs can generate lots of cash, or need cash to foster,growth.

Evaluation

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

Cash Cows (portfolio matrix)

generates more cash than it needs to maintain its market sahre. low-growth market, but the product has dominant market share. (laptops and computers)

Target Market Strategy

identifies the markget segment/s on which to focus. with a market opportunity analysis (MOA) it may target one or more of them, Selected by appealing to entire market or a mix or a single or whole.