Chapter 2: Company

Question 1

Different orientations (approach) to marketing)

Answer 1

1. Production
2. Product
3. Selling
4. Marketing

Question 2

Production orientation

Answer 2

• Business is centered around manufacturing
• Consumers want products widely available and affordable
• Business focuses on operational efficiencies and cost reduction rather than product quality

Question 3

Product orientation

Answer 3

• Business is centered around product
• Consumers want the highest quality, highest performance, most innovative features with the product
• Business focuses on product quality and design

Question 4

Selling orientation

Answer 4

• Business centered around volume of sales
• Focuses on sales typically for undesired goods, and they’re driven by overcapacity (Produce more than what they can sell)
• Makes you believe you’re getting the best deal
• Focuses on securing deals

Question 5

Marketing orientation

Answer 5

• Business centered around the customer
• Assumes consumers have unmet needs/wants that businesses can satisfy by selling them products/services at a profit
• Focus is to provide value to customers

Question 6

The selling concept

Answer 6

Selling Concept

Factory > Existing products > Selling/promoting > Profit from volume of sales

(This is under Starting point>Focus>Means>Ends)

Question 7

The marketing concept

Answer 7

Market > Customer needs > Integrated marketing > Profit from customer satisfaction

(This is under Starting point>Focus>Means>Ends)

Question 8

Details of the Marketing orientation

Answer 8

Company orientation
Inward
- Products
- Processes

Outward
- Customers
- Competitors

Question 9

Consequences of outward orientation

Answer 9

• Pricing: Cost-plus or value-based
• Marketing$: Expenses or Investment
• Organization Structure: By Product/Process or By Customers

Question 10

Company orientations towards the marketplace (basic managerial objective of each approach)

Answer 10

1. Production: Profit maximization via economies of scale
2. Product: Profit maximization through superior product performance
3. Sales: Profit maximization via demand generation
4. Marketing: Profit maximization via matching of products to customer wants and customer intimacy

Question 11

3 levels of strategy in an organization

Answer 11

1. Corporate vision (Statement of what company wants to accomplish)
   - Corporate goals
   - Philosophy and culture
2. Business unit strategy (Link mission to actionable goals)
   - Mission
   - Business goals
   - Competencies
3. Functional Strategy

Question 12

4 components of corporate strategic planning

Answer 12

1. Define corporate mission
2. identify corporation’s core competence and SBU’s/
3. Analysis of the current portfolio
4. Development of a corporate plan for business growth

Question 13

Vision

Answer 13

Core ideology and envisioned future
- Core ideology
1. Core values: defining who you are
2. Core purpose: Contribution to society

• Envisioned future
  1. 10 - 30 year audacious goal
  2. Vivid description

Question 14

Corporate vision

Answer 14

• Why does org exist?
  Vision must be:
  1. Broad
  2. Enduring
  3. Inspirational

Question 15

Marketing myopia

Answer 15

• Sustained business growth depends on how broadly we define our business.
• Ask ourselves, are we being near sighted (Myopic) ?
• For example, photographic film and capturing memories. Kodak failed to realize how capturing memories would evolve over the years, and were tunnel visioning with their photographic film, therefore they failed to adapt to the market and dropped a dick load in relative market share

Question 16

Core Competence

Answer 16

• Describes the company’s strengths and its competitive advantage over other companies.
• Collective learning in an organization (coordination, integration)
• Resource based view, Internal (own strengths), External (Competitive)

Ask questions like
- Are we hard to copy or scarce

Question 17

Competitive advantage

Answer 17

Company name + What you’re best at + why

Question 18

Portfolio

Answer 18

Products within a company

Question 19

Management

Answer 19

Managing different kinds of products within that company

Question 20

BCG Matrix

Answer 20

BCG growth-share matrix (Counts metrics as total revenues $)

• Y axis= Growth and cash required to grow
• X axis= Relative market share (your market share over the market share of your biggest competitor)
• Star, problem child, dog, cash cow
• Under 1 (on the x-axis) means you’re not a market leader and you’re a shrub

Question 21

Limitations of BCG Matrix

Answer 21

1. Does not address how ‘Value’ is created.
2. For diversified companies, relatedness of businesses is crucial
3. Assumes need for self-sufficiency

Question 22

Stars

Answer 22

• Descriptions:
  1. Market leaders
  2. Fast Growing
  3. Require investment to grow
• Strategy:
  1. Protect share
  2. Reinvest earnings through price cuts, product improvement, more efficiency
  3. Obtain large shares of new users

Question 23

Problem Children

Answer 23

• Descriptions:
  1. Rapid growth
  2. Poor profit margins
  3. Enormous demand for cash
• Strategy:
  1. Invest aggressively to build shares
  2. Buy existing share by acquiring

Question 24

Cash Cows

Answer 24

• Descriptions:
  1. Profitable products.
  2. Generate more cash than needed for share maintenance.
  3. Slow sales growth
• Strategy:
  1. Maintain market dominance
  2. Invest in process technology improvement and price leadership, R&D in other product markets

Question 25

Dogs

Answer 25

• Descriptions:
  1. Many products may fall in this category
  2. Cost disadvantage - few growth opportunities at reasonable cost
  3. Markets not growing
• Strategy:
  1. Focus on a specialized, defendable segment
  2. Harvest: cut back maintenance support
  3. Divest (sell); abandon (Delete from line)