Chapter 2: Developing Marketing Strategies and a Marketing Plan

According to the BCG matrix, which type of product typically has excess resources that can be used to support other products that need additional resources?

Cash cows

One way Netflix could grow its business would be to offer its existing services to foreign markets it does not currently serve. This would represent which growth strategy?

market development

Is competitors a strength, weakness, opportunity or threat?

threat

*Threat*

Negative aspects of the company's external environment.

To evaluate the effectiveness or performance of a marketing strategy, firms typically use

marketing metrics.

*Customer Excellence*

Achieved when a firm develops value-based strategies for retaining loyal customers and provides outstanding customer service.

Companies must deliver more value and satisfaction to target consumers than its competitors to gain a

competitive advantage.

The second step in the marketing planning process

conducting a situation analysis, often incorporates the use of a SWOT analysis.

Assuming Netflix was following a marketing plan, at which stage should it have given more consideration to the impact of the July 2011 price increase?

implement the marketing mix

Pepsi has product excellence with signature colas, Pepsi & diet Pepsi.. and

it places familiar and appealing brands in more than 200 countries to market. Pricing is competitive and strategic. It has promotional efforts by many celebrities.

Is excellent location a strength, weakness, opportunity or threat?

Stregth

Is a strong brand name a strength, weakness, opportunity or threat?

Strength

The Goodyear Tire Company is organized by regions: North America, Europe, Middle East and Africa, Latin America, and Asia Pacific. These divisions of Goodyear are called.

strategic business units.

A SWOT analysis involves an analysis of factors internal to the company, which include ________, as well as factors outside the company, which include ________.

strengths and weaknesses; opportunities and threats

*Integrated Market in communication (IMC)*

All forms of communication are connected. Personal sales promotions, direct marketing, Television, radio, magazines, sales forces, news media. Used for clarity and to maximize profit.

*Performance objectives*

Compare to other firms, look at number of clicks,view the firm's products or services as a portfolio.

*Column*

Distinguishes between the firm's current marketing offering and that of a new opportunity.

*rows*

Distinguishes those opportunities a firm possesses in the current market from those it has in new markets.

* Product Line*

Group of associated items, such as those that use together or think of as a part of a group of similar products.

*Marketing managers must ask*

How quickly were plans adjusted? How rapidly and appropriately were pricing and promotional policies modified?*

performance evaluations are used to

Pinpoint problem areas.

When marketers make their offering available when and where the customer wants it, which of the following elements of the marketing mix is involved?

Place

*Identify and evaluating opportunities using STP*

Step 3- STP, Market segment, Market segmentation, Targeting, Positioning.

*Firms achieve efficiency by developing *

distribution and info systems, as well as strong relationships with vendors.

General Motors determined that it would close down divisions that were in low-growth markets that had relatively low market shares. According to the BCG product portfolio analysis, GM was identifying divisions in the ________ category for closure.

dogs

*Unrelated Diversification*

the new business lacks any common elements with the present business.

*Stars*

upper left quadrant. occur in high growth markets and are high market share products. When market growth slows, they will migrate to from heavy users to heavy generators of resources and become cows.

A written document composed of an analysis of the current marketing situation, opportunities and threats for the firm, marketing objectives and strategy specified in terms of the four Ps, action programs, and projected income statements is referred to as a(n)

marketing plan.

market positioning

involves the process of defining the marketing mix variables so that target customers have a clear, distinctive, desirable understanding of what the product does or represents in comparison with competing products

What two metrics are used in the Boston Consulting Group (BCG) portfolio analysis to evaluate the various products of a firm?

Relative market share and market growth rate

*Multiple sources of advantage*

To build an advantage that is sustainable for a long period of time, retailers typically cannot rely on a single approach (such as low prices). Have to build a wall of many advantages that make you unique.

Firms can achieve a sustainable competitive advantage through

their efficient operations, excellent supply chain management, and strong relationships with their suppliers.

*Cash Cow*

(lower- left quadrant), Low growth market. high market share.

*Sustainable Competitive Advantage Includes*

1. Customer excellence, 2. Operational excellence, 3. Product excellence, 4. Locational excellence

Is staffing a strength, weakness, opportunity or threat?

Weakness

*Strategic Business unit*

a division of the firm itself that can be managed and operated somewhat independently from other divisions and may have a different mission or objectives.

*Target market/ Targeting*

the process of evaluating the attractiveness of various segments and then deciding which to pursue as a market. ex: Suv's are mostly for young families. Target that market.

Is health a strength, weakness, opportunity or threat for a 24 hour fast food place?

threat

*Dog*

(Lower- right quadrant)Low growth markets and low market shares.

*Question Mark*

(Upper right quadrant), high growth market, low market share. (Magisterially insensitive products that require significant resources increase the market share).

*Metrics used to evaluate a firm depending on*

1. Level of organization 2. Resource management controls.

*A marketing plan entails 5 steps*

1. Planning phase, 2. Situation Analysis (SWOT), 3. Identify opportunities, 4. Implementation marketing mix, 5. Evaluate performance

* Market Growth Rate*

The annual rate of growth of the specific market in which the product competes. (Measures how attributive a particular market is). (stars, question marks, cash cows, dogs).

*Market Segmentation*

The process of dividing the market into groups of customers with different needs, wants, or characteristics- therefore might appreciate products or services geared especially for them. ex: Hertz has luxury cars, green options, and commercial vans.

*Value Proposition*

The unique value that a product or service provides to it customers and how its better and different from its competitors.

*Price and value capture*

Value-based marketing requires that firms charge a price that customers perceive as giving them a good value for the product they receive (too high= not enough volume. too low= lower than optimal margins).

*Product and Value creation products*

Want to make products that the consumers deem valuable enough to buy.

*Product Development*

a growth strategy that offers new or modified products or service to existing market segments/ target market. Ex: Marvel movies

*Diversification Strategy*

a growth strategy whereby a firm introduces a new product or service to a market segment that it does not currently serve. New market and product.

*Related Diversification*

a growth strategy whereby the current target market and/or marketing mix shares something in common with the new opportunity. Ex: Marvel makes lamps and throw pillows.

Marketing metrics make it possible to compare results

across regions, strategic business units (SBUs), product lines, and time periods. By using metrics, the firm can determine why it achieved or did not achieve its performance goals.

A SWOT analysis involves

an objective assessment of a firm's internal factors (strengths and weaknesses) as well as those external to the firm (opportunities and threats) to provide a snapshot of the firm's current situation.

*Market Penetration*

existing marketing mix, existing customers Growth achieved through attracting new customers to the firm's current target market or encourage current customers.

*Market Development strategy*

existing marketing offering to reach new market segments, whether domestic or international. Current products and services.

*Segmentation, targeting, and Positioning (STP)*

firms use these processes to identify and evaluate opportunities for increasing sales and profits (breaks into segments to meet thier needs).

Price is the only marketing mix variable that

generates revenue, therefore capturing value from consumers.

*Portfolio Analysis*

management evaluates the products and businesses that make up the company and allocates resources according to expected probability of products. SBU, Product line, Market share, relative market sharemarket growth rate.

*Market Share*

percentage of a market accounted for by a specific entity (used to establish a product's strength in a particular market).

*Strengths*

positive internal characteristics of the firm.

*Relative Market Share*

provides managers with a product's relative strength, compared with that of the largest firm in the industry.

By completely separating Qwickster and Netflix into independent companies, Reed Hastings essentially created two

strategic business units.

When Netflix first offered streaming, it expected that many rental customers would move to the new service. However, there were far less movie titles available through streaming as compared to DVD mail rentals. In a SWOT analysis, the lack of movies available for streaming would be classified as a(n)

weakness.

A local coffee shop is known for poor customer service and an unclean, dirty environment. These factors would be classified as ________ in a SWOT analysis.

weaknesses

Retaining loyal customers

1.Sometimes use method used to maintain competitive advantage. 2.Strong brand, unique merchandise, and superior customer service. 3. Loyalty programs.

*Marketing Plan*

A blue print for implementing Marketing strategy. A written document comosed of analysis of current marketing situation, opportunities for threat for the firm, marketing objectives, marketing strategies, 4P's, action programs, projected income and other financial statements.

*Mission Statement*

A broad description of a firm's objectives and the scope of activities it plans to undertake; attempts to answer two main questions: 1. What type of business is it? 2. What does it need to do to accomplish its goals and objectives?

*Location Excellence*

A method of achieving excellence by having a strong physical location and/or internet presence. 3 most important things in retailing are location, location, location.

Honda marketed its CR-Z hybrid model to a distinct segment of consumers as a fun, green, sporty hybrid that stands out as being uniquely different from other hybrid models. This is an example of which of the following?

Market positioning

Which of the following represents the three major phases of a marketing plan?

Planning, implementation, control

*Metric*

a measuring system that quantifies a trend, dynamic, or characteristic. Used to predict why things happen, predict the future, compare results against regions, achievement of goals.

competitive advantage

acts like a wall that the firm has built around its position in a market. This requires that companies sustain their advantage over time, minimize competitive pressure, and boost profits in the long term to remain viable in a highly competitive marketplace.

mission statement of an organization

addresses two major issues: the type of business a company is in and the overall objectives it hopes to achieve. Defining the mission is the first step in the process of developing the marketing plan.

A ________ is a measuring system that quantifies a trend, dynamic, or characteristic and is used by marketers to help explain why things happened and also to predict the future.

metric

Customer excellence

one of the strategies available to companies to develop a sustainable competitive advantage in the marketplace and focuses on retaining loyal customers and excellent customer service.

One of Netflix's original competitive advantages was its efficiency. The company delivered movies quickly and charged a relatively low cost for the service. Strategically, this is known as _____ excellence.

operational

When Netflix launched its streaming-only plan, the company anticipated that most current users would drop the rental plan and move to the new plan. In strategic terms, this is a growth strategy of

product development.

*Planning Phase*

Step 1- Defining business misison: Marketing executives, in conjunction with other top managers, define the mission and/or vision of the business. Step 2- SWOT

*Implementing the Marketing Mix & allocation of resources*

Step 4- implement marketing mix for each product according to target market. 1.Product and value creation products. 2. Price and value capture, 3. Place and value delivery, 4. Promotion and value communication.

*Evaluate performance using marketing metrics*

Step 5- Who is accountable for the performance, performance objectives, marketing analytic/ metrics, financial performance metrics, portfolio analysis.

*Place and Value delivery*

Must be able to make the product/ service readily accessible when and where the customer wants it.

Is a late night eating a strength, weakness, opportunity or threat for 24 hour fast food place?

opportunity

*Implementation Phase*

Marketing managers identify and evaulate different opportunities by engaging in a process known as STP. and implement marketing mix

Toothpaste manufacturers understand that consumers have different needs when it comes to toothpaste (i.e., teeth whitening, sensitive teeth, breath freshening, and tartar control). Knowing that, they have divided the market based on these various needs and developed toothpaste to accommodate each group. By doing so, these toothpaste manufacturers are involved in

market segmentation

Most firms want to

maximize stockholder's wealth.

When marketers strive to get their customers the merchandise they want, when they want it, in the required quantities, and at a lower delivered cost than that of their competitors, they are hoping to achieve a sustainable competitive advantage through ________ excellence.

operational

Is a demand a strength, weakness, opportunity or threat?

opportunity (external)

When managers at General Motors evaluated all the firms' various divisions and then chose to close both the Saturn and Pontiac divisions, it was involved in

portfolio analysis.

*Everyone involved in implementing the plan should know*

the overall objectives of the firm and how they are gonna be met (stakeholders, ect).

A situation analysis identified increasing competition, potential downsizing of the U.S. Postal Service, and cable pay-per-view expansion, which were ______ for Netflix. In response, Netflix was initially able to capitalize on the _____ of streaming, gaming platforms, and an iPhone app.

threats; opportunities

*Customer Loyalty Programs*

(CRM). Program identifies members though loyalty card or member info at purchase, analyst determine which types of merchandise certain types of customers are buying to tailor better to meet the needs of loyal customers.

*3 phases of a strategic plan*

1. planning, 2. implementing, 3. controlling

*After they identify target segments the firm must evaluate strategic opportunities*

A firm is often more successful when they focus on opportunities that build their strengths relative to those of the competition.

*Sustainable comparative advantage*

An advantage over the competition that is not easily copied and can be maintained for a long period of time. (makes it hard for competitors to take firm's target market, leads to long- term financial performance).

The SWOT analysis is typically conducted during which of the following steps in the marketing planning process?

Conducting a situation analysis

When a firm considers its overall objectives and considers the type of business it is in, it is engaged in which of the following steps of the marketing planning process?

Defining the mission

Singapore Airlines is recognized as an industry leader for exemplary customer service, and has continued to add new ways to serve customers better than competitors. In doing so, it has focused on sustaining its competitive advantage through ________ excellence.

customer

*Conduct a situation Analysis*

Step two of the marketing plan. Assesses the internal environment with regard to its *Strengths & weakness* and external environment in terms of *opportunities and threats* Assess the opportunities of uncertainty in the marketplace due to changes in: * C*ultural, *D*emographic, *S*ocial, *T*echnical, *E*conomic, and *P*olitical forces (CDSTEP).

*Product excellence*

focus on achieving high-quality products; effective branding and positioning is key (3rd way to achieve a sustainable competitive advantage) Products with high perceived value and effective branding and positioning. Hard to do sometimes because sustainable competitive advantage is hard to keep with similar products. Other brand can get advantage though investigation, positioning, reinforcing image, service promotion.

growth strategies

market penetration, product development, market development, and diversification.

Marriott Hotels recognizes that there are different groups of travelers with different needs, wants, and characteristics in their choice of lodging. The process of dividing Marriott's market into these various groups is

market segmentation.

*Business unit and its managers should be accountable for*

revenues, expenses and profits . Only accountable for inadequate sales force job or setting inappropriate forecasts.

*Market Segment*

A group of consumers who respond in a similar way to a given set of marketing efforts.

Which growth strategy is being used when a firm introduces a new product or service to a market segment that is currently not served by the firm?

Diversification

* Control Phase*

Evaluating the performance of the marketing strategy using marketing metrics and taking necessary corrective actions.

Which of the following is a marketing metric that might be used to evaluate the performance of a company's implementation of its marketing plan?

GM (gross margin)

After a firm has conducted a SWOT analysis, it would typically progress to the next step of marketing planning, which is ________ and involves using STP (segmentation, targeting, and positioning).

Identifying and evaluating opportunities

In an attempt to increase sales during a lagging economy, Macy's has increased its advertising and sales promotions for its current products to stimulate sales in its current markets. Which growth strategy is Macy's employing?

Market penetration

*Weaknesses*

Negative attributes of the internal firm.

Through which of the following marketing mix variables do companies capture value from consumers, resulting in the generation of revenue?

Price

Starbucks recently introduced Via, its brand of instant coffee, to exploit the growth opportunities for new products in current markets. As he prepared for the instant coffee product's North American rollout, Chief Executive Howard Schultz called Starbucks Corporation's Via Ready Brew "perhaps the biggest opportunity" in company history. This is an example of which growth strategy?

Product development

Which of the following is one of the four major growth strategies marketers typically utilize?

Product development

Marketers communicate the value proposition to their customers through a variety of media, such as television and the Internet. Which of the four Ps does this represent?

Promotion

*Marketing Strategy*

Special actions a firm plans to implement to appeal to potential customers. Identifies the 1. firm's target market(s), 2. Related marketing mix (4Ps), 3. The basis on which the firm plans to build a sustainable comparative advantage.

*Market Positioning*

The process of defining the marketing mix variables so that target customers have a clear, distinctive, desirable understanding of what the product does or represents in comparison with competing products.

he third step in the marketing planning process involves

identifying opportunities by using STP (segmentation, targeting, and positioning).

strategic business unit (SBU)

a division of the firm itself that can be managed and operated somewhat independently from other divisions.

diversification strategy

a firm introduces a new product or service to a market segment that currently is not served. Diversification opportunities may be either related or unrelated.

market development strategy

employs the existing market offering to reach new market segments, whether domestic or international.

*Operational excellence*

firm's focus on efficient operations and excellent supply chain management, and strong relationships with suppliers (2nd way to achieve competitive advantage). Strive for *efficient operations* to get customer the merchandise they want, when they want it in the required quantities, and delivered at *lower cost than competitors*. This leads to * good value to customer* and *profitability for self* with *customer satisfaction*

Cash cows

have already received heavy investments to develop their high market share. Thus, they typically have excess resources that can be spun off to other products.

Which of the following is one of the major considerations involved when a company develops its marketing strategy?

identification of target markets

Marketing strategy

identifies a firm's target markets(s), a related marketing mix (four Ps), and the bases on which the firm plans to build a sustainable competitive advantage.