Chapter 2 Flashcards
The task of every business it to deliver :
Customer value at a profit
The business unit strategic-planning process consists of the steps:
- Business Mission
- SWOT Analysis (Internal; Strengths and Weaknesses & External; Opportunity and Threats)
- Goal Formulation
- Strategy Formulation
- Program Formulation
- Implementation
- Feedback and Control
(BSGSPIF)
What is our business?
Who is the customer?
What is of value to the customer?
What will our business be?
What should our business be?
Defining the corporate mission
Each business unit needs to define its __________ within the broader company mission.
Specific or Business Mission
Good Mission Statements
-Focus on a limited number of goals
-Stress the company’s major policies and values
-Define the major competitive spheres within which the company will operate
-Take a long-term view
-Are as short, memorable, and meaningful as possible
It is a declaration of what makes the business important. By design, it guides the actions of the employees and draws in customers by creating direction by explaining what the company intends to accomplish.
Mission Statement
“Bring inspiration and innovation to every athlete in the world. If you have a body, you are an athlete.”
Nike
It is well documented and referenced. In this simple statement, it defines its purpose as well as target market.
Nike’s mission statement
What is the purpose of Nike?
Inspiration and innovation
Who is the target market of Nike?
Every athlete
The overall evaluation of a company’s _________ It’s a way of monitoring the external and internal marketing environment.
SWOT Analysis
Internal
Strengths and Weaknesses
External
Opportunities and Threats
Helpful
Strengths and Opportunities
Harmful
Weaknesses and Threats
Each business needs to evaluate its _____________. The business doesn’t have to correct all its _______, nor should it gloat about all its ________.
Internal (Strength and Weaknesses)
It is an area of buyer need and interest that a company has a high probability of profitably satisfying.
Marketing opportunity
It is a challenge posed by an unfavorable trend or development that, in the absence of defensive marketing action, would lead to lower sales or profit.
Environmental Threat
A business unit must monitor key _________________ and significant __________________ that affect its ability to earn profits. Marketers need to be good at spotting opportunities.
macro-environment forces and micro-environment factors
To evaluate opportunities, companies can use ________________ to ask questions like:
Market opportunity analysis (MOA)
Market opportunity analysis (MOA) questions:
-Can we articulate the benefits convincingly to a defined target market(s)?
-Can we locate the target market(s) and reach them with cost-effective media and trade channels?
-Does our company possess or have access to the critical capabilities and resources we need to deliver the customer benefits?
-Can we deliver the benefits better than any actual or potential competitors?
-Will the financial rate of return meet or exceed our required threshold for investment?
For a goal formulation (MBO) system to work, the unit’s objectives must meet 4 criteria:
- Unit’s objectives must be arranged hierarchically
- Objectives should be quantitative
- Goals should be realistic
- Objectives must be consistent
(AQRC)
These are objectives that are specific with respect to magnitude and time.
Goals
Most business units pursue a mix of objectives, including profitability, sales growth, market share improvement, risk containment, innovation, and reputation.
MBO – Manage by Objectives
Every business must design a strategy for achieving its goals, consisting of a marketing strategy and a compatible technology strategy and sourcing strategy.
Strategic Formulation
PORTER’S GENERIC STRATEGIES
He has proposed 3 generic strategies that provide a good starting point for strategic thinking:
Michael Porter
Firms work to achieve the lowest production and distribution costs so they can underprice competitors and win market share.
Firms aims to produce and sell products at cheaper price than competition.
Overall Cost Leadership
The business concentrates on achieving superior performance in an important customer benefit area valued by a large part of the market.
It is all about making your product’s stand out from the competition.
Differentiation
The business focuses on one or more narrow market segments, gets to know them intimately, and pursues either cost leadership or differentiation within the target segment.
Focus
The firm that carries out the strategy best will _____________
make the most profits
The combination of generic strategies was called _______________________. One way to overcome this problem is to develop separate businesses that cater to different segments of the market.
stuck in the middle
Strategic Alliances includes:
- Product or service alliances
- Promotional alliances
- Logistics alliances
- Pricing collaborations
One company licenses another to produce its product, or two companies jointly market their complementary products or a new product. Ex uber and spotify
Product or service alliances
One company agrees to carry a promotion for another company’s product or service. Ex. Mcdo promoting Disney Movies
Promotional Alliances
One company offers logistical services for another company’s product.
Logistics Alliances
One or more companies join in a special pricing collaboration. Well-managed alliances allow companies to obtain a greater sales impact at lower cost. Rather than just form a partnership, a firm may choose to just acquire another firm.
Pricing Collaboration
The McKinsey (7s) Frame Work
Structure, System, Skills, Shared Values, Strategy, Style, and Staff
True or False: Even a great marketing strategy can be sabotaged by poor implementation.
True
True or False: Once they have formulated marketing programs, marketers must estimate their costs.
True
It is the plan deployed by an organization in order to remain competitive in its industry and market.
Strategy
It is made up of its corporate hierarchy, the chain of command, and divisional makeup that outlines how the operations function and interconnect.
Structure of the organization
It refer to the daily procedures, workflow, and decisions that make up the standard operations within the organization.
Systems
These are the commonly accepted standards and norms within the company that both influence and temper the behavior of the entire staff and management.
Shared Values
It comprise the talents and capabilities of the organization’s staff and management,
Skills
It speaks to the example and approach that management takes in leading the company, as well as how this influences performance, productivity, and corporate culture.
Style
It refers to the personnel of the company, how large the workforce is, where their motivations reside, as well as how they are trained and prepared to accomplish the tasks set before them.
Staff
These are used by management to identify where a company excels and where it needs more work, in terms of creating an optimal and efficient workforce.
The McKinsey (7s) Frame Work
It is also used to evaluate performance following a merger or other restructuring to identify areas that need improvement.
The McKinsey (7s) Frame Work
A company’s strategic fit with the environment will inevitably erode because the market environment changes faster than the company’s 7s. Thus, a company might remain efficient yet lose effectiveness.
Feedback and Control
The key to organizational health is willingness to examine the changing environment and adopt new goals and behaviors.
Feedback and Control
It is more important to “do the right thing” (to be effective) than “to do things right” (to be efficient). The most successful companies, however, excel at both. Who stated this?
Peter Drucker
It refers to developing marketing strategies that will help the company accomplish its overall strategic objectives. A detailed of this is required for each business, product, or brand.
Marketing Plan
Marketing Plan Contents:
- Executive Summary
- Situation Analysis
- Marketing Strategy
- Marketing Tactics
- Financial Projection
- Implementation Controls
It is the most important part of the business plan.
Executive Summary
It is a summary of the entire business plan. It has to provide information, without boring potential investors/lender.
Executive Summary
It has lots of sub-dimensions.
Situation Analysis
It describes broad _______-environment trends that bear on a product’s future (demographic, economic, technological, political/legal, socio/cultural).
Macro-environment situation
It includes data on target market, size and growth for past years and each segment. Data on customer needs, perceptions, and buying behavior trends.
Market Situation
It includes major competitors described in terms of their size, goals, market share, product quality, marketing strategies.
Competitive Situation
This part of the plan includes broad marketing approach that will be used to achieve goals.
Marketing Strategy
Marketing Strategy like:
-Target market section
-Marketing program section
-Marketing mix (discussion on price, place, product promotion…)
It presents the special marketing programs designed to achieve the objectives.
Marketing Tactics
It is part of the plan that forecasts the plan’s expected financial outcomes.
Financial Projections
This budget shows the forecasted sales volume in units and average price.
On the revenue side
It shows the cost of producing the marketing plan.
On the expense side
It indicates how and when the plan will be monitored based on the objectives for the marketing plan.
Implementation controls
