Marketing Ch.2

Analyzing Actual Performance : 1. Sales analysis

1. Sales analysis uses sales figures to evaluate a firm's current performance; a.most common method because sales data partially reflect the target market's reactions to the marketing mix. b. Marketers use current sales data to monitor the impact of current marketing efforts and compare them to forecasted sales, industry sales, a competitor's sales, or related costs. -Marketers analyze sales by comparing current sales to forecasted sales, industry sales, specific competitor's sales, or the costs incurred to achieve the sales volume. Companies can analyze sales in terms of the dollar volume or market share*. c. The basic unit of measurement is the sales transaction, which includes the quantity, terms, the salesperson or sales team, and the date. d. Firms frequently use dollar volume in their sales analyses, but price increases and decreases affect total sales figures, and those effects should be factored out. e. Market share analysis lets a company compare its marketing strategy with competitor's strategies and estimate whether sales changes have resulted from the firm's marketing strategy or from uncontrollable environmental forces. However, the results must be interpreted carefully.

market

b. A market is 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 these products. The percentage of a market which actually buys a specific product from a specific company is referred to as that product's (or business unit's) market share.

D. Developing Corporate and Business-Unit Strategies

1. Strategic planning often begins at the corporate level and proceeds from there to the business-unit and marketing levels, although some firms are developing strategy from the top-down and from the bottom-up to seek expertise from multiple levels. 2. Corporate strategy should be developed with the organization's overall mission in mind, business-unit strategy should be consistent with corporate strategy, and marketing strategy should be consistent with both.

A. Strategic marketing management

A. Strategic marketing management is the process of planning, implementing, and evaluating the performance of marketing activities and strategies based on both effectiveness and efficiency. -Effectiveness is the degree to which long-term customer relationships help achieve an organizations objectives -Efficiency refers to minimizing the resources an organization uses to achieve a specific level of desired customer relationships *The overall goal of strategic marketing management is to facilitate highly desirable customer relationships and reduce costs at the same time.

IV. Evaluating Marketing Strategies

A. Strategic performance evaluation consists of establishing performance standards, measuring actual performance, comparing actual performance with established standards, and modifying the marketing strategy.

Market Orientation

The Market Orientation a. By the early 1950s, some businesspeople recognized they must produce what consumers want, rather than make products and try to persuade customers that they need what is produced. b. A market orientation requires the "organization-wide generation of market intelligence pertaining to current and future customer needs, dissemination of the intelligence across departments, and organization-wide responsiveness to it." c. Today, businesses want to satisfy customers and build meaningful, long-term buyer-seller relationships.

*Marketing Objectives *

-A *marketing objective* states what is to be accomplished through marketing activities -A statement of what is to be accomplished through marketing activities -Should: -Be based on a study of the SWOT analysis ~Match strengths to opportunities and/or eliminate weaknesses or threats -Be stated in clear, simple terms -Be accurately measurable -Specify a time frame for accomplishment -Be consistent with business-unit and corporate strategy -A plan of action for identifying and analyzing a target market and developing a marketing mix to meet the needs of that market -Required for an organization to achieve its marketing objectives

II. The Strategic Planning Process

-With competition increasing, firms must spend more time planning—determining how to use resources and capabilities to achieve objectives and satisfy customers. -The process of strategic planning helps a firm establish an organizational mission and goals, corporate strategy, marketing objectives, marketing strategy, and a marketing plan. 1. The process begins with an organization establishing or revising its mission and goals, and then developing corporate strategies to achieve these goals. 2. The company then analyzes its strengths and weaknesses and identifies opportunities and threats within the marketing environment and the industry. 3. Each functional area must support overall organizational goals and mission and should focus on market orientation. -Should be guided by a market orientation to ensure that a concern for customer satisfaction is an integral part of the process and permeates the entire company -A market orientation is also important for the successful implementation of marketing strategies

Levels of Strategic planning

1. mission statement 2. corporate strategy 3. Business-unit strategy 4. marketing strategy 5. Marketing mix elements -Product -Distribution -Promotion -Pricing

Core competencies,

Core competencies, or things a firm does extremely well and can sometimes give a company an advantage over its competition. -Walmart's core competency, which is efficiency in supply chain management, has enabled the chain to build a strong reputation for low prices at high quality levels on a wide variety of goods

Organizing the Marketing Unit

-An internal structure for the marketing unit must be developed in order to organize the marketing department and help direct marketing efforts. -Centralized organizations: Authority is concentrated at the top level Very little delegation to lower levels; top-level managers delegate very little authority to lower levels - Decentralized organizations: Decision making authority is delegated as far down the chain of command as possible

Target Market Selection

-Selecting an appropriate target market may be the most important decision a company makes in the strategic planning process -Identification and analysis of a target market provide a foundation on which a company can develop a marketing mix -Marketers should also assess whether the company has the resources to develop the right marketing mix to meet the needs of a particular target market

6. First-Mover Advantage

-First-mover advantage is the ability of an innovative company to achieve long-term competitive advantages by being the first to offer a certain product in the marketplace (1) Benefits include building a reputation as a market leader, reducing competition, establishing brand loyalty, and protecting trade secrets. (2) Risks include high costs associated with creating and marketing a new product, slower than predicted sales growth, and the potential for product failure. -Build a company's reputation as a pioneer and market leader -Market is free of competition -Helps establish brand loyalty for the company due to its customer's costs to switch to competing products later on -Company can protect its trade secrets or technology through patents

First-Mover Risks:

-Risks of being the first to enter a market: -High cost associated with creating a new product from scratch -Market research, product development, production, and marketing or buyer education costs -Early sales growth may not be as high as the company predicted if it makes mistakes with regard to the product or its marketing -Risk that the product will fail due to market uncertainty, or that the product might not meet consumers' expectations or needs

Developing *Marketing Objectives *

1. A *marketing objective* states what is to be accomplished through marketing activities. a. 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. b. They should be based on the SWOT analysis and relate matching strengths to opportunities and/or convert weaknesses and threats. c. Marketing objectives should: (1) Be expressed in clear, simple terms (2) Be written so that they can be measured (3) Specify a time frame for accomplishment (4) Be consistent with both business-unit and corporate strategy (5) Contribute to corporate strategy

E. Assessing Organizational Resources and Opportunities

-The strategic planning process begins with an analysis of the marketing environment, including a thorough analysis of the industry in which the company is operating or intends to sell its products -Any strategic planning effort must assess the organization's available financial and human resources and capabilities as well as how the level of these factors is likely to change in the future -Additional resources may be needed to achieve the organization's goals and mission -2. Strategic planning must assess an organization's available financial and human resources capabilities and how the level of these resources is likely to change in the future. Resources can include: a. Goodwill b. Reputation c. Brand names d. Core competencies

V. Creating the Marketing Plan

-A key component of marketing planning is the development of a marketing plan, which outlines all of the activities necessary to implement marketing strategies. The plan fosters communication among employees, assigns, responsibilities and schedules, specifies how resources are to be allocated to achieve objectives, and helps marketing managers monitor and evaluate the performance of the marketing strategy. -The marketing plan is a written document that outlines and explains all the activities to be performed that are necessary to implement and control the organization's marketing strategies/activities; the strategic planning process ultimately yields the framework for a marketing plan 1. It is the basis for internal communication among employees. 2. It covers the assignment of responsibilities and tasks, as well as schedules for implementation. -The systematic process of: ~Assessing marketing opportunities and resources ~Determining objectives ~Defining Strategies ~Establishing guidelines for implementation and control of the marketing program -Written in alignment with corporate and business-unit strategies and is accessible to and shared with all key employees

Sustainable Competitive Advantage

-At the marketing mix level, a company can detail how it will achieve a competitive advantage -A sustainable competitive advantage is one that the competition cannot copy in the foreseeable future -For example, Walmart maintains a sustainable competitive advantage in groceries over supermarkets because of its highly efficient and low-cost distribution system -How can an organization make its competitive advantage sustainable over time?

Business-Unit Strategy

-Business-unit strategy should be consistent with the corporate strategy -After Corporate strategy, the next step in Strategic planning is to determine future business directions and develop strategies for individual business units. A Business-unit Strategy focuses on Strategic business unit (SBU's), which is a division, product lines, or other profit centers within the parent company used to define areas for consideration in a specific strategic marketing plan -Each of these units sells a distinct set of products to an identifiable group of customers, and each competes with a well-defined set of competitors -The revenues, costs, investments, and strategic plans of each SBU can be separated from those of the parent company and evaluated -Business strategy is fundamentally focused on the measures required to create value for the company's target markets and achieve greater performance. -Strategic planners should recognize the strategic performance capacities of each SBU and carefully allocate scarce resources among those divisions -The percentage of a market that actually buys a specific product from a particular company is referred to as that product's (or business unit's) market share

Managing Marketing Implementation

Marketing implementation is the process of putting marketing strategies into action. Through planning, marketing managers provide purpose and direction for an organization's marketing efforts. Marketing managers must understand the problems and elements of marketing implementation before they can effectively implement specific marketing activities. Proper implementation requires creating efficient organizational structures, motivating marketing personnel, properly communicating within the marketing unit, coordinating the marketing activities, and establishing a timetable for implementation.

b. Creating Marketing Mixes

(1) The decisions made in creating a marketing mix are only as good as the organization's understandings of the target market. (2) Understanding comes from careful in-depth research into demographics as well as customer needs, preferences, and behavior with respect to product design, pricing, distribution, and promotion. (3) Marketing mix decisions should also be flexible and consistent with the business-unit and corporate strategies. (4) The organization details how it will achieve a competitive advantage at the marketing mix level. (5) It is important that the organization attempt to make this advantage sustainable. *A sustainable competitive advantage is one that cannot be copied by the competition. -Decisions made in creating a marketing mix are only as good as the organization's understanding of its target market Requires: -In-depth research into the characteristics of the target market -Analysis of customer needs, preferences, and behaviors with respect to product design, pricing, distribution, and promotion -How has Kimberly-Clark's marketing researchers met the varied needs of customers who buy Kleenex tissues? -All marketing mix decisions should be: -Consistent with the business-unit and corporate strategies -Flexible to permit the organization to alter the marketing mix in response to changes in market conditions, competition, and customer needs

Corporate Identity

-Companies try to develop and manage their corporate identity—their unique symbols, personalities, and philosophies—to support all corporate activities, including marketing Managing identity requires: -Broadcasting a company's mission, goals, and values -Sending a consistent image -Implementing a visual identity with stakeholders -Mission statements, goals, and objectives must be properly implemented to achieve the desired corporate identity. An organization's goals and objectives, derived from its mission statement, guide the remainder of its planning efforts. Goals focus on the end results the organization seeks

competitive advantage

-Competitive advantage is the result of a company matching a core competency (things a company does real well-gives advantage against competitors) to opportunities it has discovered in the marketplace; A company is said to have a competitive advantage when it matches a core competency to opportunities in the marketplace. *Competitive advantage is The place where opportunities, core competencies, market opportunities, and strategic windows meet* -Tesco, a large-scale grocery chain from the United Kingdom, entered the western U.S. market with its Fresh & Easy Neighborhood Markets -The company seeks competitive advantage by offering cheap, healthy food options such as 98-cent produce packages and cheap cuts of meat -The store seeks to source produce and meats locally as much as possible, offer organic and hormone-free foods, and use less energy than typical grocery stores

Analyzing Actual Performance : 2. Marketing Cost Analysis

-Marketing cost analysis breaks down and classifies costs to determine which are associated with specific marketing efforts. -It can help marketers identify profitable or unprofitable customers, products, and geographic areas and better allocate the firm's marketing resources for future years. -A company that understands and manages its costs appropriately has a competitive advantage and can compete on price. -One way to analyze costs is by comparing a company's costs with industry averages; however, a company should take into account its own unique situation. -Costs can be categorized into fixed costs (always the same over time) such as rent as well as variable costs (affected by sales or production volume) such as the cost to produce product. They can also be categorized by whether they can be linked to a specific business function. -Marketers can compare current costs to pervious years costs, forecasted costs, industry averages, competitors' costs, or to the results generated by those costs. Companies should indentify which of it costs are affected by sales and share not related to sales volume. Companies should also categorize costs based on whether or not they can be linked to a specific business function, specifically marketing.

E. Coordinating Marketing Activities

-Marketing managers must also be able to effectively coordinate marketing activities. This entails both coordinating the activities of the marketing staff within the firms and integrating those activities with the marketing actions of external organizations that are also involved in implementing the marketing strategies 1. To achieve marketing objectives, marketing managers must coordinate actions within and across departments, firms, and external organizations. 2. Marketing managers can improve coordination by making each employee aware of how his or her job relates to others and how his or her actions contribute to the achievement of marketing objectives. -Marketing managers must work with other departments to ensure marketing activities mesh with other functions of the firm -Must coordinate the activities of marketing staff within the firm and integrate those activities with the marketing efforts of external organizations

C. Motivating Marketing Personnel

-Motivating marketing employees is crucial to effectively implementing marketing strategies. Marketing managers 1. To motivate personnel, Managers must discover their employees' needs and then develop different methods to motivate those employees to help the organization meet its goals. 2. A firm can motivate its workers by directly linking pay with performance, informing workers how their performance affects department and corporate results, following through with appropriate compensation, implementing a flexible benefits program, and adopting a participative management approach. -Rewards to employees should be tied to organizational goals and be fair, ethical, and well understood by employees 3. Managers should also use a variety of other tools, including nonfinancial rewards such as prestige or recognition, job autonomy, skill variety, task significance, increased feedback, or even a more relaxed dress code. -Selecting effective motivational tools has become more complex because of greater differences among workers in terms of race, ethnicity, gender, and age

C. Establishing an Organizational Mission and Goals

-Once an organization has assessed its resources and opportunities, it can begin to establish goals and strategies to take advantage of those opportunities; these goals are derived from the mission statement. 1. The goals of any organization derive from its mission statement, which is a long-term view, or vision, of what the organization wants to become; A mission statement can be valuable if it shows employees what the organization aims to achieve and guides their work activities in the right direction. An organization's mission really answers two questions: a. Who are our customers? b. What is our core competency? (-Defining customers' needs and wants gives direction to what the company must do to satisfy them) -A well-formulated mission statement helps give an organization a clear purpose and direction, distinguish it from competitors, provide direction for strategic planning, and foster a focus on customers. An organization's goals, which focus on the end results sought, guide the remainder of its planning efforts. 2. A company's mission, goals, and objectives must be properly implemented to achieve and communicate the desired corporate identity—a company's unique symbols, personalities, and philosophies to support all corporate activities, including marketing. a. An organization's goals and objectives should guide its planning efforts. b. Goals focus on the end results sought by the organization.

D. Communicating within the Marketing Unit

-Proper communication within the marketing unit is a key element in successful marketing implementation. Communication should go both downward (from top management to the lower-level employees) and upward (from lower-level employees to top management) 1. With good communication, marketing managers can motivate personnel and coordinate their efforts. 2. Marketing managers must be able to communicate with the firm's upper-level management to ensure marketing activities are consistent with the company's overall goals. 3. Communication that flows upward from the frontline of the marketing unit to higher-level marketing managers provides important information about the needs of customers and employees. 4. Training helps employees to learn, ask questions, and become accountable for marketing performance. 5. Marketers need an information system to support a variety of activities, such as planning, budgeting, sales analyses, performance evaluations, report preparation, and improving communication. Communication is facilitated by an: -Effective training program where employees can learn, ask questions, and become accountable for marketing performance -Information system within the marketing unit and with other departments in the organization

SWOT Analysis (opportunities and threats)

-SWOT analysis is one tool marketers use to assess an organization's strengths, weaknesses, opportunities, and threats in the marketing environment. -Opportunities and threats exist independently of the company and therefore represent issues to be considered by all organizations, even those that do not compete with the company -Opportunities: refer to favorable conditions in the environment that could produce rewards for the organization if acted on properly; that is, opportunities are situations that exist but must be exploited for the company to benefit from them -Threats: refer to conditions or barriers that may prevent the company from reaching its objectives; threats must be acted upon to prevent them from limiting the organization's capabilities c. When an organization matches internal strengths to external opportunities, it creates competitive advantages in meeting the needs of its customers. d. Companies should attempt to convert internal weaknesses into strengths and external threats into opportunities. -When a competitor's introduction of a new product threatens a company, a defensive strategy may be required; if the company can develop and launch a new product that meets or exceeds the competition's offering, it can transform the threat into an opportunity. -If marketers want to understand how the timing of entry into a market place can create competitive advantage, they can examine first-mover and late-mover advantage

SWOT Analysis (strengths and weaknesses)

-SWOT analysis is one tool marketers use to assess an organization's strengths, weaknesses, opportunities, and threats in the marketing environment. -Strengths and weaknesses are internal factors that can influence an organization's ability to satisfy its target markets (1) Strengths refer to competitive advantages or core competencies that give the organization an advantage in meeting the needs of its target markets. (2) Weaknesses refer to any (internal) limitations that a company faces in developing or implementing a marketing strategy. (3) Both strengths and weaknesses should be examined from a customer perspective.

F. Establishing a Timetable for Implementation

-Successful marketing implementation requires that a timetable for implementation be established. Establishment of an implementation timetable involves several steps, and ensures that employees know the specific activities of which they are responsible and the timeline for completing each activity. Completing all activities on schedule requires tight coordination among departments, and many organizations use sophisticated computer programs to plan the timing of marketing activities. 1. Successful marketing implementation requires that employees know the specific activities for which they are responsible and the timetable for completing each activity. -Establishing an implementation timetable involves several steps: 1. Identifying the activities to be performed 2. Determining the time required to complete each activity 3. Separating the activities to be performed in sequence from those to be performed simultaneously 4. Organizing the activities in the proper order 5. Assigning responsibility for completing each activity to one or more employees, teams, or managers

market-growth/market-share matrix

-The market-growth/market-share matrix, the Boston Consulting Group (BCG) approach, is based on the philosophy that a product's market growth rate and its market share are important considerations in determining its marketing strategy. -The market growth/market share matrix integrates a company's products or SBUs into a single, overall matrix for evaluation to determine appropriate strategies for individual product and business units. (1) All the organization's SBUs and products should be integrated into a single, overall matrix and evaluated to determine appropriate strategies for individual products and overall portfolio strategies. (2) Managers can use this model to determine and classify each product's expected future cash contributions and future cash requirements. (3) This model classifies an organization's products into four basic types: (a) Stars have a dominant share of the market and good prospects for growth; they use more cash than they generate to finance growth, add capacity, and increase market share. Example: Apple's iPod (b) Cash cows have a dominant share of the market but low prospects for growth; typically they generate more cash than is required to maintain market share. Example: Procter & Gamble's Bounty paper towels (c) Dogs have a subordinate share of the market and low prospects for growth; these products are often found in established markets. Example: General Motors' (now defunct) Oldsmobile brand (d) Question marks, sometimes called "problem children," have a small share of a growing market and generally require a large amount of cash to build market share. Example: Mercedes mountain bikes -The market growth/market share matrix is 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 market strategy; Developed by the Boston Consulting Group (BCG) -All the companies SBUs and products should be integrated into a single, overall matrix and evaluated to determine appropriate strategies for individual products and overall portfolio strategies -The long-term health of an organization depends on having some products that generate cash (and provide acceptable profits) and others that use cash to support growth.

Developing a *Marketing Strategy*

-To achieve its marketing objectives, an organization must develop a marketing strategy, which includes identifying a target market and developing a plan of action for developing, distributing, promoting, and pricing products that meet the needs of customers in the target market. -A marketing strategy is the selection of a target market and the creation of a marketing mix that will satisfy the needs of target market members. -Marketing strategies, the most detailed and specific of the three levels of strategy, are composed of two elements: selecting a target market and the creation of a marketing mix that will satisfy the needs of the of the target market members; the selection of the target market serves as the basis for the creation of the marketing mix to satisfy the needs of that market. Marketing mix decisions should also be consistent with business-unit and corporate strategies and be flexible enough to respond to changes in market conditions, competition, and customer needs. Different elements of the marketing mix can be changed to accommodate different marketing strategies a. Selecting the Target Market (1) Selecting a target market is the most important decision a company makes in the strategic planning process. (2) Identification and analysis of a target market provide a foundation on which a marketing mix can be developed. (3) When exploring possible target markets, marketing managers try to evaluate how entering them would affect the company's sales, costs, and profits. (4) Marketers should also assess whether the company has the resources to develop the right marketing mix to meet the needs of a particular target market. The size and number of competitors is also a concern.

B. Establishing Performance Standards

-strategic performance evaluation consists of establishing performance standards, analyzing actual performance, and modifying the marketing strategy. When actual performance is compared with performance standards, marketers must determine whether a discrepancy exists and if so, whether it requires corrective action, such as changing the performance standard or improving actual performance. Two possible ways to evaluate the actual performance of marketing strategies are sales analysis and marketing cost analysis. 1. A performance standard is an expected level of performance against which actual performance can be compared, such as a reduction in customer complaints, a sales quota, or an increase in customer accounts. 2. Marketing objectives directly or indirectly set forth performance standards, usually in terms of sales, costs, or communication dimensions. -For example, a 20% reduction in customer complaints, a monthly sales quota of $150,000, or a 10% increase per month in new-customer accounts -Performance standards are derived from marketing objectives that are set while developing marketing strategies

D. Comparing Actual Performance with Performance Standards and Making Changes, If Needed

1. Comparing actual performance with established performance standards can result in actual performance exceeding performance standards or actual performance failing to meet performance standards. 2. It is important to find out why a particular strategy is effective or ineffective so that it can be improved. 3. Marketers may have to alter the marketing objective to make it more realistic. If actual performance exceeds performance standards: Marketing strategy is viewed as being effective Try to gain an understanding of why the strategy is effective If actual performance does not meet performance standards: Determine why a marketing strategy was less effective Determine whether the marketing objective, against which performance is measured, is realistic or not

B. Organizing the Marketing Unit

1. The structure and relationships of a marketing unit strongly affect marketing activities. 2. Companies that truly adopt the marketing concept develop an organizational culture based on a shared set of beliefs that makes the customer's needs the pivotal point of the company's decisions about strategy and operations. 3. An important decision regarding structural authority is whether the marketing operation should be centralized or decentralized. a. In a centralized organization, top-level managers delegate little authority to lower levels. Most traditional organizations are highly centralized. b. In a decentralized organization, decision-making authority is delegated as far down the chain of command as possible. Decentralized authority allows the company to respond to customer needs more quickly 4. Organizing marketing activities in ways that mesh with a company's strategic marketing approach enhances performance. -Companies that truly adopt the marketing concept develop a distinct organizational culture: -A culture based on a shared set of beliefs that makes the customer's needs the pivotal point of the company's decisions about strategy and operations

Market Opportunity and Strategic Windows

3. Analysis of the marketing environment also involves identification of opportunities in the marketplace. a. A market opportunity exists when the right combination of circumstances and timing permits an organization to take action to reach a particular target market. b. Strategic windows are temporary periods during which there is an optimum fit between the key requirements of a market and the particular capabilities of a firm competing in that market. -Brita, known for its water-filter pitchers is taking advantage of the growing Spanish-language target market through product placement on Univision's weight-loss show, called Dale Con Ganas

Late-Mover Risks:

Disadvantages of being a late mover: -First mover may have patents on its technology and trade secrets that prevent the late mover from reverse engineering its product or producing a product that is too similar -Customers who have already purchased the first mover's product may believe that switching to the late mover's product is too expensive or time-consuming for them -Timing of entry to the market is crucial and can determine the amount of late-mover advantage that is actually possible

Corporate Strategy

a. Corporate strategy determines the means for utilizing resources in the functional areas of marketing, production, finance, research and development (R&D), and human resources to reach the organization's goals; Corporate strategy determines the scope of the business and its resource development, competitive advantages, and overall coordination of functional areas. b. Corporate strategy planners are concerned with broad issues (corporate culture, competition, differentiation, diversification, interrelationships between business units, and environmental and social issues). c. They are also concerned with defining the scope and role of the organization's business units so the units coordinate efforts to reach the desired ends. Corporate strategy planners are concerned with broad issues such as: -Corporate culture -Competition -Differentiation -Diversification -Interrelationships among business units -Environmental and social issues -Corporate strategy planners attempt to match the resources of the organization with the opportunities and threats in the environment --The broadest of the three levels of strategy (corporate, business unit, and marketing) and should be developed with the organization's overall mission in mind; Corporate strategy doesn't solely apply to corporations, simply refers to the top-level (highest) strategy developed within an organization. Addresses the two questions posed in the mission statement: -Who are our customers? -What is our core competency?

Late-Mover Advantage

b. A late-mover advantage is 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. (1) Benefits include learning from first-movers' mistakes, improved products and marketing strategies, lower initial investment costs, more market certainty, and more educated buyers. (2) Risks include first-movers holding patents and other protections on products and difficulty in convincing consumers to change brands. (3) The timing of entry to the market is crucial and can determine the amount of late-mover advantage. Learn from first mover's mistakes and thus create an updated/improved product design and marketing strategy Lower initial costs since first mover has developed an infrastructure and educated buyers about the product More certainty about the success of the market for the product -Learn from first mover's mistakes and thus create an updated/improved product design and marketing strategy -Lower initial costs since first mover has developed an infrastructure and educated buyers about the product -More certainty about the success of the market for the product