1 Flashcards
What is the difference between marketing and management?
Marketing is concerned with managing markets and management is concerned with managing organisations.
What is marketing orientation?
Marketing orientation is concerned with marketing’s functional role of coordinating the 4Ps
What is Market orientation?
Market orientation is concerned with the generation and dissemination of information concerning service users, competitors and collaborators to maximise corporate value.
What does excellence in marketing aim for?
Maximising corporate value.
What must marketing do to maximise corporate value?
Marketing must recognise the true indicators of corporate value and effectively link itself to those indicators.
What are the indicators of corporate value?
The discounted future cash flow of a business unit.
Where is discounted future cash flow reflected?
In the corporation’s market value.
How can marketing link itself to the indicators of corporate value?
By shifting business units to the most attractive markets and by building a sustainable value proposition.
What is the basic principle of shareholder value analysis?
A firms value is determined by the sum of all the firms anticipated future cash lows, adjusted by an interest rate known as cost of capital.
What are the four operating factors that affect a firm’s CF?
Level, timing, sustainability and riskiness.
Why are the four operating factors fundamental?
They equip marketing with a language that is understood by those around the boardroom, they help marketing define its roles and objectives to maximise the firm’s value, they demonstrate that marketing investments contribute to value creation and they help to protect marketing from arbitrary cuts.
Why discounted future CF?
Because cash can earn interest.
Why not focus on traditional accounting measures?
The assets of accounting are tangible assets and the focus of accounting is on past performance. Today the most variable assets are intangible assets. Corporate value is a reflection of expected future performance, not past performance.
Why shift business to the most attractive markets?
Because there can a firm only hope to ever maximise its corporate value.
Why build a sustainable value proposition?
Because corporate value is created only when Cf is positive. And this will only occur if there is a cost or differentiation advantage.
