Marketing Strategy Quiz 1

The Motivational Hurdle

How do you motivate key players to move fast and tenaciously to carry out a break from the status quo?

Define Identification of a sustainable competitive advantage

One important part of any strategy is a specification of how the organization will compete in each business and product- market within its domain. How can it position itself to develop and sustain a differential advantage over current and potential competitors?

The Boston Consulting Group's (BCG) Growth-Share Matrix

One of the first—and best known—of the portfolio models is the growth-share matrix developed by the Boston Consulting Group. It analyzes the impact of investing resources in different businesses on the corporation's future earnings and cash flows. Each business is positioned within a matrix

Sales-oriented businesses

Sales-oriented response to increasing competition still focuses on selling what the firm wants to make rather than on customer needs. Worse, competitors can easily match such aggressive sales tactics. Simply spending more on selling efforts usually does not create a sustainable competitive advantage.

What is the firm's unique value added/unique selling proposition (USP)?

Something customers/consumers want that is different from or better than what others are providing

What are the four elements that a good strategic marketing plan should focus on in order to achieve ultimate success? What are the Four "Cs"?

(1) the company's internal resources, capabilities, and strategies (2) the environmental context—such as broad social, economic, and technology trends—in which the firm will compete (3) the relative strengths and weaknesses of competitors and trends in the competitive environment (4) the needs, wants, and characteristics of current and potential customers

What is the essence of strategic planning at all levels?

identifying threats to avoid and opportunities to pursue.

relative market share

is a proxy for its competitive strength within its industry

What does a successful corporate strategy illustrate?

successful corporate strategy—illustrates the importance of understanding the target customers, potential competitors, and market environment—avoiding strategic inertia

Balanced vertical integration

•Company sets up subsidiaries that both supply them with inputs and distribute their outputs

Forward Vertical integration

•Company sets up subsidiaries that distribute or market products to customers or uses the products themselves

Backward vertical integration

•Company setups up subsidiaries that produce some of the inputs used in production

Who are the shareholders in a company and what do they want?

•Employees—want competitive wages •Customers—want high quality at competitive price •Suppliers and Debt-holders—want to be satisfied with cash when financial claims are due •Stockholders—look for cash dividends and positive moment of the stock's market price

The Resource Hurdle

It is assumed that the greater the shift in strategy, the greater the resources it requires for execution

What is the future role of Marketing?

--Ability to create, manage and sustain exchange of relationships -In light of such changes, it is apparent that firms in most, if not all, industries will have to be market-oriented, tightly focused on customer needs and desires, and highly adaptive to succeed and prosper in the future.In turn, this suggests that the effective performance of marketing activities—particularly those associated with tracking, analyzing, and satisfy- ing customers' needs—will become even more critical for the successful formulation and implementation of strategies at all organizational levels.

Value-based planning

-A resource allocation tool that attempts to address questions by assessing the shareholder value a given strategy is likely to create. Provides a basis for comparing the economic returns to be gained from investing in different businesses pursuing different strategies or from alternative strategies that might be adopted by a given business unit. Value-based planning is not a substitute for strategic planning; it is only one tool for evaluating strategy alternatives identified and developed through managers' judgments.

What are the three basic features of value based plannning?

-First, they assess the economic value a strategy is likely to produce by examining the cash flows it will generate -Secondly, they estimate the shareholder value that a strategy will produce by discounting its forecasted cash flows by the business's risk-adjusted cost of capital. -Thirdly, they evaluate strategies based on the likelihood that the investments required by the strategy will deliver returns greater than the cost of capital.

Define Resource Deployments

-Formulating a strategy also involves deciding how those resources are to be obtained and allocated across businesses, product-markets, and functional departments and activities within each business or product-market. -

Marketing Strategies

-Interrelated functional decisions about how to divide the market into segments, which segments to target, what products to offer each target segment, what channels to use to distribute those products, what promotional tools and appeals to employ, and what prices to charge. -•Allocation and coordination of marketing resources and activities to accomplish the firm's objectives within a specific product-market. (key: identify target market, and well-integrated marketing mix—the 4 Ps—product, price, place, promotion) Ex: each of Samsung Electronics' various product-market entries.

Portfolio Models

-Portfolio models help managers allocate corporate resources across multiple businesses. These models enable managers to classify and review their current and prospective businesses by viewing them as portfolios of investment opportunities and then evaluating each business's competitive strength and the attractiveness of the markets it serves -•In 1970 and 1980 widespread adoption of portfolio models was used to help mgmt allocate corporate resources across their multiple Strategic Business Units (SBUs)/Divisions

The Four P's of formulating a marketing strategy

-Product (tangible or intangible) -Price -Place/distribution channels -Promotion

Define Synergy

-Synergy exists when the firm's businesses, product-markets, resource deployments, and competencies complement and reinforce one another. Synergy enables the total performance of the related businesses to be greater than it would otherwise be: The whole becomes greater than the sum of its parts. -Related product-markets, resource deployment greater than it would otherwise

Define scope

-The scope of an organization refers to the breadth of its strategic domain—the number and types of industries, product lines, and market segments it competes in or plans to enter. Decisions about an organization's strategic scope should reflect management's view of the firm's purpose or mission. -industries, product lines, market segments

How to gain competitive advantage

-The trick is to develop a competitive strategy for each division or business unit within the firm, and a strategic marketing program for each of its product-market entries, that convert one or more of the company's unique resources into something of value to customers. -such as—their information systems, market research operations, and/or cooperative relationships with customers/supplies that give them a superior ability to respond to emerging customer needs and desires. Others have a brand name that customers recognize and trust (loyal customers who are predisposed to buy related products or services).

Business-Level Strategy

-This level of strategy primarily addresses how a business will compete in its industry in order to attain a sustainable advantage over its rivals. -how will their distinctive competencies best match the needs and wants of customers in the business's target segments Ex: attempts to establish a unique competitive position for its products by using technical innovation and cool design to appeal to younger and relatively upscale customer segments around the world reflect Samsung Electronics

corporate strategy

-This level of strategy provides direction concerning the organization's overall mission, the kinds of businesses it should be in, and its growth policies. -•Coordination of activities of multiple business units, decisions about org. scope and resource deployment across its divisions/Strategic Business Units (SBUs -Ex: Samsung's decision to increase the resources devoted to R&D in order to become a pioneer in digital technolo

Market penetration strategies

-current market, current products -increase market share, product usage, frequency of use, quantity used, add new applications -One way for a company to expand is by increasing its share of existing markets. This typically requires actions such as making product or service improvements, cutting costs and prices as Ryanair has done, or outspending competitors on advertising or promotions.

Product development strategies

-current market, new products -product improvement, product line extensions, new products for same market -A second avenue to future growth is through a product-development strategy emphasizing the introduction of product-line extensions or new product or service offerings aimed at existing customers

Market Development strategies

-new markets, current products -expand markets for existing products; geographics expansion, target new segments -development of new markets for their existing goods or services.

Diversifying strategies

-new markets, new products Firms also seek growth by diversifying their operations -vertical integration 1. Forward vertical integration: occurs when a firm moves downstream in terms of the product flow, as when a manufacturer integrates by acquiring or launching a wholesale distributor or retail outlet. For example, most of Europe's fashion houses—like Ermenegeldo Zegna and Georgio Armani—own at least some of their own retail outlets in major cities in order to gain bet- ter control over their companies' merchandising programs and more direct feedback from customers. 2. Backward integration: occurs when a firm moves upstream by acquiring a new supplier Related (concentric) diversification:occurs when a firm internally develops or acquires another business that does not have products or customers in common with its current businesses but that might contribute to internal synergy through the sharing of production facilities, brand names, R&D know-how, or marketing and distribution skills. Unrelated (conglomerate) diversification: are primarily financial rather than operational. By definition, an unrelated diversification involves two businesses that have no commonalities in products, customers, production facilities, or functional areas of expertise.

What are the four necessary components of a corporate objective?

1. A performance dimension or attribute sought. 2. A measure or index for evaluating progress. 3. A target or hurdle level to be achieved. 4. A time frame within which the target is to be accomplished.

What hurdles to companies face when executing marketing strategies?

1. Cognitive hurdles 2. Resource hurdles 3. Motivational hurdles 4. Political hurdles

What are the factors that mediate a firm's market orientation? What are some reasons many companies are not very focused on their customers or competitors?

1. Competitive conditions may enable a company to be successful in the short run without being particularly sensitive to customer desires 2. Different levels of economic development across industries or countries may favor different business philosophies. 3. Firms can suffer from strategic inertia—the automatic continuation of strategies successful in the past, even though current market conditions are changing AKA Global Markets

What is the hierarchy of Strategies? Three levels of Strategy?

1. Corporate Strategies 2. Business-level Strategies 3. Marketing Strategies (Functional Strategies)

What are the recent developments affecting the strategic role of marketing?

1. Globalization 2. Increased importance of service 3. Information technology 4. Relationships across functions and firms

Sources of Synergy

1. Knowledge-Based Synergies:•Knowing / transferring competencies / customer-related intangibles—such as brand name recognition reputation—can the implementation of R&D across multiple SBUs be implemented 2. Corporate Identity and Corporate Brand as a source of synergy:•Can strong Public Relations / Corporate Image give a company a sustainable advantage in the market 3. Corporate branding strategy: •Will your product carry the Corporate Brand name as a driver or just the product name, i.e. Gillette—does not always have Proctor & Gamble as a lead name 4. Synergy from shared resources:Can the firm experience economies of scale by taking advantage of multiple external and internal resources

What are the four growth strategies? Ansoff Strategies

1. Market penetration strategy (current market, current product) 2. Product development strategy (current market, new product) 3. Market development strategy (new market, current product) 4. Diversification strategy (new market, new product)

What are the FIVE components of strategy?

1. Scope 2. Goals and Objectives 3. Resource Deployments 4. Identification of a sustainable competitive advantage 5. Synergy

What are the three sets of analytical tools that have proven useful in making decisions?

1. portfolio models 2. value-based planning 3. models that measure customer equity

What is a marketing plan?

A marketing plan is a written document detailing the current situation with respect to cus- tomers, competitors, and the external environment and providing guidelines for objectives, marketing actions, and resource allocations over the planning period for either an existing or a proposed product or service.

Strategy

A strategy is a fundamental pattern/timeframe of present and planned objectives, resource deployments, and interactions of an organization with markets, competitors, and other environmental factors

The Political Hurdle

As one manager put it, "In our organization you get shot down before you stand up."

Which two major directions can a firm go into when seeking future growth?

Expansion of its current business and activities or diversification into new businesses

What is the ultimate Corporate Objective?

Enhancing shareholder value

Ethics

Ethics is concerned with the development of moral standards by which actions and situ- ations can be judged. It focuses on those actions that may result in actual or potential harm of some kind (e.g., economic, mental, physical) to an individual, group, or organization.

Market-oriented firms

Firms that systematically incorporate such market and competitive analyses into their planning processes. They also coordinate their activities around the primary goal of satisfying unmet customer needs.Such firms are market-oriented and follow a business philosophy commonly called the marketing concept. Market-oriented firms have been shown to be among the more profitable and successful at maintaining strong competitive positions in their industries over time.

How many components does strategy have?

Five

Discounted cash flow model

Perhaps the best-known and most widely used approach to value-based planning is the discounted cash flow model

Economic value added or market value added (MVA)

Recently, some executives have begun expressing such corporate objectives in terms of economic value added or market value added (MVA). A firm's MVA is calculated by combining its debt and the market value of its stock and then subtracting the capital that has been invested in the company. The result, if positive, shows how much wealth the company has created

Define Goals and Objectives

Strategies also should detail desired levels of accomplishment on one or more dimensions of performance—such as volume growth, profit contribution, or return on investment—over specified time periods for each of those businesses and product-markets and for the organization as a whole.

Economic value added

The amount of return a strategy or operating program generates in excess of the cost of capital

Strategic Inertia

The automatic continuation of strategies successful in the past, even though current market conditions are changing. In the future, strategic inertia will be even more dangerous in many industries because they are facing increasing magnitudes and rates of change in their environments

Defining the corporate mission

The most useful mission statements focus on the customer need to be satisfied and the functions that must be performed to satisfy that need, and they are specific as to the customer groups and the products or technologies on which to concentrate.

Functional Strategies

The primary focus of marketing strategy is to effectively allocate and coordinate marketing resources and activities to accomplish the firm's objectives within a specific product market

Product-oriented or production-oriented businesses

They focus most of their attention and resources on such functions as product and process engineering, production, and finance in order to acquire and manage the resources necessary to keep pace with growing demand

The Cognitive Hurdle

Waking employees up to the need for a strategic shift. Red oceans may not be the paths to future profitable growth, but they may have served the organization well historically, so why rock the boat?

market growth rate

is a proxy measure for the maturity and attractiveness of an industry

Horizontal integration

is a strategy where a company creates or acquires products / units for outputs which are alike - either complementary or competitive. •An example would be when a company acquires competitors in the same industry doing the same stage of production

Marketing Concept

marketing concept holds that the planning and coordination of all company activities around the primary goal of satisfying customer needs is the most effective means to attain and sustain a competitive advantage and achieve company objectives over time. Market-oriented organizations tend to operate according to the business philosophy known as the marketing concept. the marketing concept is consistent with the notion of focusing on only those segments of the customer population that the firm can satisfy both effectively and profitably.

Related (Concentric) diversification

•Means that there is a technological similarity between the industries, which means that the firm is able to leverage its technical know-how to gain some advantage.

Alternative portfolio models--GE McKinsey Nine Cell Matrix

•Measure Industry attractiveness and Business's competitive strength •Managers select factors most appropriate for their firm and weight them according to their relative importance •Then rate each business and its industry on the two sets of factors -•The GE/McKinsey Matrix differs from other tools, like BCG Matrix, in that multiple factors are used to define Industry Attractiveness and Business Unit Strength

Unrelated (conglomerate) diversification

•The company markets new products or services that have no technological or commercial synergies with current products, but which may appeal to new groups of customers.