Ch 2 - Developing Successful Marketing and Organizational Strategies

Question 1

Describe two kinds of organizations and the three levels of strategy in them.

Answer 1

An organization is a legal entity of people who share a common mission. There are two kinds. One is a business firm that is a privately owned organization that serves its customers to earn a profit so that it can survive. The other is a nonprofit, nongovernmental organization that serves its customers but does not have profit as a goal. Most large business firms and nonprofit organizations are divided into three levels of strategy: (a) the corporate level, where top management directs overall strategy for the entire organization; (b) the strategic business unit level, where managers set a more specific strategic direction for their businesses to exploit value-creating opportunities; and (c) the functional level, where groups of specialists actually create value for the organization.

Question 2

Describe how core values, mission, organizational culture, business, and goals are important to organizations.

Answer 2

Organizations exist to accomplish something for someone. To give organizations direction and focus, they continuously assess their core values, mission, organizational culture, business, and goals. Today’s organizations specify their foundation, set a direction, and formulate strategies—the “why,” “what,” and “how” factors, respectively. Core values are the organization’s fundamental, passionate, and enduring principles that guide its conduct over time—what Enron forgot when it lost sight of its responsibilities to its stakeholders. The organization’s mission is a statement of its function in society, often identifying its customers, markets, products, and technologies. Organizational culture is a set of values, ideas, attitudes, and norms of behavior that is learned and shared among the members of an organization. To answer the question, “What business are we in?” an organization defines its “business”—the clear, broad, underlying industry category or market sector of its offering. Finally, the organization’s goals (or objectives) are statements of an accomplishment of a task to be achieved, often by a specific time.

Question 3

Explain why managers use marketing dashboards and marketing metrics.

Answer 3

Marketing managers use marketing dashboards to visually display on a single computer screen the essential information required to make a decision to take an action or further analyze a problem. This information consists of key performance measures of a product category, such as sales or market share, and is known as a marketing metric, which is a measure of the quantitative value or trend of a marketing activity or result. Most organizations tie their marketing metrics to the quantitative objectives established in their marketing plan, which is a road map for the marketing activities of an organization for a specified future time period, such as one year or five years.

Question 4

Discuss how an organization assesses where it is now and where it seeks to be.

Answer 4

Managers of an organization ask two key questions to set a strategic direction. The first question, “Where are we now?” requires an organization to (a) reevaluate its competencies to ensure that its special capabilities still provide a competitive advantage; (b) assess its present and prospective customers to ensure they have a satisfying customer experience—the central goal of marketing today; and (c) analyze its current and potential competitors from a global perspective to determine whether it needs to redefine its business.
The second question, “Where do we want to go?” requires an organization to set a specific direction and allocate resources to move it in that direction. Business portfolio and diversification analyses help an organization do this. Managers use business portfolio analysis to assess the organization’s strategic business units (SBUs), product lines, or individual products as though they were a collection of separate investments (cash cows, stars, question marks, and dogs) to determine the amount of cash each should receive. Diversification analysis is a tool that helps managers use one or a combination of four strategies to increase revenues: market penetration (selling more of an existing product to existing markets); market development (selling an existing product to new markets); product development (selling a new product to existing markets); and diversification (selling new products to new markets).

Question 5

Explain the three steps of the planning phase of the strategic marketing process.

Answer 5

An organization uses the strategic marketing process to allocate its marketing mix resources to reach its target markets. This process is divided into three phases: planning, implementation, and evaluation. The planning phase consists of (a) a situation (SWOT) analysis, which involves taking stock of where the firm or product has been recently, where it is now, and where it is headed. This assessment focuses on the organization’s internal factors (strengths and weaknesses) and the external forces and trends affecting it (opportunities and threats); (b) a market-product focus through market segmentation (grouping buyers into segments with common needs and similar responses to marketing programs) and goal setting, which in part requires creating points of difference (those characteristics of a product that make it superior to competitive substitutes); and (c) a marketing program that specifies the budget and activities (marketing strategies and tactics) for each marketing mix element.

Question 6

Describe the elements of the implementation and evaluation phases of the strategic marketing process.

Answer 6

The implementation phase of the strategic marketing process carries out the marketing plan that emerges from the planning phase. It has four key elements: (a) obtaining resources; (b) designing the marketing organization to perform product management, marketing research, sales, and advertising and promotion activities; (c) developing schedules to identify the tasks that need to be done, the time that is allocated to each one, the people responsible for each task, and the deadlines for each task—often with an action item list and Gantt chart; and (d) executing the marketing strategies, which are the means by which marketing goals are to be achieved, and their associated marketing tactics, which are the detailed day-to-day operational decisions essential to the overall success of a firm’s marketing strategies. These are the marketing program actions a firm takes to achieve the goals set forth in its marketing plan.
The evaluation phase of the strategic marketing process seeks to keep the marketing program moving in the direction that was established in the marketing plan. This requires the marketing manager to compare the results from the marketing program with the marketing plan’s goals to (a) identify deviations or “planning gaps” and (b) take corrective actions to exploit positive deviations or correct negative ones.

Question 7

business

Answer 7

The clear, broad, underlying industry or market sector of an organization’s offering.

Question 8

business portfolio analysis

Answer 8

A technique that managers use to quantify performance measures and growth targets to analyze their firms’ strategic business units (SBUs) as though they were a collection of separate investments.

Question 9

core values

Answer 9

The fundamental, passionate, and enduring principles of an organization that guide its conduct over time.

Question 10

diversification analysis

Answer 10

A technique that helps a firm search for growth opportunities from among current and new markets as well as current and new products.

Question 11

goals

Answer 11

Statements of an accomplishment of a task to be achieved, often by a specific time. Also called objectives.

Question 12

market segmentation

Answer 12

Involves aggregating prospective buyers into groups, or segments, that (1) have common needs and (2) will respond similarly to a marketing action.

Question 13

market share

Answer 13

The ratio of sales revenue of the firm to the total sales revenue of all firms in the industry, including the firm itself.

Question 14

marketing dashboard

Answer 14

The visual computer display of the essential information related to achieving a marketing objective.

Question 15

marketing metric

Answer 15

A measure of the quantitative value or trend of a marketing activity or result.

Question 16

marketing plan

Answer 16

A road map for the marketing activities of an organization for a specified future time period, such as one year or five years.

Question 17

marketing strategy

Answer 17

The means by which a marketing goal is to be achieved, usually characterized by a specified target market and a marketing program to reach it.

Question 18

marketing tactics

Answer 18

Detailed day-to-day operational decisions essential to the overall success of marketing strategies.

Question 19

mission

Answer 19

A statement of the organization’s function in society that often identifies its customers, markets, products, and technologies. Often used interchangeably with vision.

Question 20

objectives

Answer 20

Statements of an accomplishment of a task to be achieved, often by a specific time. Also called goals.

Question 21

organizational culture

Answer 21

The set of values, ideas, attitudes, and norms of behavior that is learned and shared among the members of an organization.

Question 22

points of difference

Answer 22

Those characteristics of a product that make it superior to competitive substitutes.

Question 23

profit

Answer 23

The money left after a business firm’s total expenses are subtracted from its total revenues and is the reward for the risk it undertakes in marketing its offerings.

Question 24

situation analysis

Answer 24

Taking stock of where the firm or product has been recently, where it is now, and where it is headed in terms of the organization’s marketing plans and the external forces and trends affecting it.

Question 25

strategic marketing process

Answer 25

The approach whereby an organization allocates its marketing mix resources to reach its target markets.

Question 26

strategy

Answer 26

An organization’s long-term course of action designed to deliver a unique customer experience while achieving its goals.

Question 27

SWOT analysis

Answer 27

An acronym describing an organization’s appraisal of its internal Strengths and Weaknesses and its external Opportunities and Threats.

Question 28

What is the difference between a business firm and a nonprofit organization?

Answer 28

A business firm is a privately owned organization that serves its customers to earn a profit so that it can survive. A nonprofit organization is a nongovernmental organization that serves its customers but does not have profit as an organizational goal. Instead, its goals may be operational efficiency or client satisfaction.

Question 29

What are examples of a functional level in an organization?

Answer 29

The functional level in an organization is where groups of specialists from the marketing, finance, manufacturing/operations, accounting, information systems, research & development, and/or human resources departments focus on a specific strategic direction to create value for the organization.

Question 30

What is the meaning of an organization’s mission?

Answer 30

A mission is a statement of the organization’s function in society, often identifying its customers, markets, products, and technologies. It is often used interchangeably with vision.

Question 31

What is the difference between an organization’s business and its goals?

Answer 31

An organization’s business describes the clear, broad, underlying industry or market sector of an organization’s offering. An organization’s goals (or objectives) are statements of an accomplishment of a task to be achieved, often by a specific time. Goals convert an organization’s mission and business into long- and short-term performance targets to measure how well it is doing.

Question 32

What is the difference between a marketing dashboard and a marketing metric?

Answer 32

A marketing dashboard is the visual computer display of the essential information related to achieving a marketing objective. Each variable in a marketing dashboard is a marketing metric, which is a measure of the quantitative value or trend of a marketing activity or result.

Question 33

What is business portfolio analysis?

Answer 33

Business portfolio analysis is a technique that managers use to quantify performance measures and growth targets to analyze their firms’ strategic business units (SBUs) as though they were a collection of separate investments.

Question 34

Explain the four market-product strategies in diversification analysis.

Answer 34

The four market-product strategies in diversification analysis are: (1) Market penetration, which is a marketing strategy to increase sales of current products in current markets. There is no change in either the basic product line or the markets served. Rather, selling more of the product or selling the product at a higher price generates increased sales. (2) Market development, which is a marketing strategy to sell current products to new markets. (3) Product development, which is a marketing strategy of selling new products to current markets. (4) Diversification, which is a potentially high-risk marketing strategy of developing new products and selling them in new markets.

Question 35

What are the three steps of the planning phase of the strategic marketing process?

Answer 35

The three steps of the planning phase of the strategic marketing process are: (1) Situation (SWOT) analysis, which involves taking stock of where the firm or product has been recently, where it is now, and where it is headed in terms of the organization’s marketing plans and the external forces and trends affecting it. To do this, an organization uses a SWOT analysis, an acronym that describes an organization’s appraisal of its internal Strengths and Weaknesses and its external Opportunities and Threats. (2) Market-product focus and goal setting, which determines what products an organization will offer to which customers. This is often based on market segmentation—aggregating prospective buyers into groups or segments that have common needs and will respond similarly to a marketing action. (3) Marketing program, which is where an organization develops the marketing mix elements and budget for each offering.

Question 36

What are points of difference and why are they important?

Answer 36

Points of difference are those characteristics of a product that make it superior to competitive substitutes—offerings it faces in the marketplace. They are the single most important factor in the success or failure of a new product.

Question 37

What is the implementation phase of the strategic marketing process?

Answer 37

The implementation phase carries out the marketing plan that emerges from the planning phase and consists of: (1) obtaining resources; (2) designing the marketing organization; (3) developing planning schedules; and (4) executing the marketing program designed in the planning phase.

Question 38

How do the goals set for a marketing program in the planning phase relate to the evaluation phase of the strategic marketing process?

Answer 38

The planning phase objectives are used as the benchmarks with which the actual performance results are compared in the evaluation phase to identify deviations from the written marketing plans and then correct negative ones or exploit positive ones.