Chapter 2 Flashcards
Strategic planning
The process of the developing and maintaining a strategic fit between the organisation’s goals and capabilities and its changing marketing opportunities
Mission statement
A statement of the organisation’s purpose - what it wants to accomplish in the larger environment
What should the mission statement be about?
Mission statements shouldn’t be focused on the products itself (myopia), but rather in terms of satisfying the customers’ needs and wants
Setting Company Objectives and Goals
The company should turn its mission statement into detailed
supporting objectives for each level of management
Business portfolio
The collection of businesses and products that make up the company
TWO steps in planning business portfolios
Analyse the company’s current business portfolio and determine which businesses should receive more or less resources/investment
Shape the future portfolio by developing strategies for growth and downsizing
Portfolio analysis
The process by which management evaluates the products and businesses that make up the company
Strategic business units
Key businesses that make up the company
TWO ways to evaluate SBUs
Attractiveness of SBU’s market or industry
Strength of the SBU’s position in their market or industry
A matrix that classifies SBUs into four categories based on two criteria
Market growth rate
Relative market share
Stars
High growth rate & high market share
What do stars need?
Stars require heavy investment to finance their rapid growth
Growth will eventually plateau and they will turn into cash cows
Cash cows
Low growth rate & high market share
What do cows need?
Requires little investment as it is already well-established
Generates capital to be invested in other SBUs and operating costs
Question marks
High growth rate & low market share
What do question marks needs?
Requires a lot of investment to hold current position, even more to increase it
Management has to decide which ones to keep and which to phase out
Dog
Low growth rate and low market share
What does dog need?
Generate enough money to sustain themselves but do not promise to be large sources of cash
FOUR actions to be taken by management for SBUs
Build
Hold
Harvest
Divest
Build
Invest more into the SBU and build its shares
Hold
Invest just enough to hold the SBU’s shares at current level
Harvest
Milk the SBU’s short-term cash flow regardless of long- term effects
Divest
Selling or phasing out the SBU, using its resources elsewhere
Problems with Matrix Approaches
It is difficult to measure market growth rate and market share accurately
These approaches focus only on classifying current businesses but
don’t provide much advice for future planning
Centralised strategic planning is costly, time-consuming, and difficult to implement
Product/market expansion grid
A portfolio-planning tool for identifying company growth opportunities through market penetration, market development, product development, or diversification
Market development
Company growth by identifying and
developing new market segments for current company products
Product development
Company growth by offering modified or new products to current market segments
Diversification
Company growth through starting up or acquiring
businesses outside the company’s current products or markets
Value chain
The series of internal departments that carry out value- creating activities to design, produce, market, deliver, and support a firm’s products
Value delivery network
A network composed of the company,
suppliers, distributors, and, ultimately, customers who partner with each other to improve the performance of the entire system in delivering customer value
Marketing strategy
The marketing logic by which the company hopes to create customer value and achieve profitable customer relationships
Market segmentation
Dividing a market into distinct groups of
buyers who have different needs, characteristics, or behaviours and
who might require separate marketing strategies or mixes
Market segment
A group of consumers who respond in a similar way
to a given set of marketing efforts
Market targeting
Evaluating each segment’s attractiveness and
selecting one or more segments to serve
Nicher
A company that serves only one or a few special segments or
market niches
Companies usually enter a new market by serving a single segment,
they will add more segments if the first proves successful
Positioning
Arranging for a product to occupy a clear, distinctive, and
desirable place relative to competing products in the minds of target
consumers
With what does effective positioning with?
Differentiation
Marketing mix
The set of marketing tools - product, price, place, and promotion – that the firm blends to produce the response it wants in the target market
Product
The market offering provided to the market by a company
Price
Amount of money required for the consumer to acquire the market offering
Place
Company activities that make the product available to target consumers
Promotion
Activities that communicate the benefits and merits of the products and persuade the customers to buy it
Critics believe that the 4 P’s omit or underemphasise certain activities:
Does not discuss services
Does not discuss packaging
It is is seller focused and not customer focused
FIVE processes required for effective management of marketing
Analysis
Planning
Implementation
Organisational
Control
What does a SWOT analysis offer
A better understanding of the company’s situation
Marketing implementation
Turning marketing strategies and plans
into marketing actions to accomplish strategic marketing objectives
Since everything is more connected now, more parties are required to
coordinate in order to successfully implement a strategic plan
Marketing Department Organisation
A company must design a marketing organisation that can carry out marketing strategies and plans
4 ways for the marketing departments
Functional organisation
Geographic organisation
Product management organisation
Market or customer management organisation
Functional organisation
Different marketing activities are headed by a functional specialist – sales manager, advertising manager…
Geographic organisation
Assigning sales and marketing people to specific countries, regions, and districts, often used by companies selling goods across countries and internationally
Product management organisation
Used by companies with many different products and brands
Market/customer management organisation
Used by companies who sell one product line to many different types of markets and customers who have different needs
Marketing control
Measuring and evaluating the results of
marketing strategies and plans and taking corrective action to ensure
that the objectives are achieved
FOUR steps to marketing control
Set specific marketing goals
Measure performance
Determines causes for any difference between expectation and performance
Take corrective action
Marketing return on investment (ROI)
The net return from a marketing investment divided by the costs of the marketing investment
Return may be measured by brand awareness, social media response, sales, or market share
