Chapter 3: Elements of Marketing Strategy, Planning, & Competition

Question 1

What is value?

Answer 1

ratio of the bundle of benefits a customer receives from an offering compared to the costs incurred by the customer in acquiring that bundle of benefits

Question 2

What is benefit?

Answer 2

type of utility that a company & its products provide customers

Question 3

What is utility & the 4 types?

Answer 3

• Utility - want-satisfying power of a good or service

○ 4 types:
i. Form - firm converts raw materials into finished products that are desired by the market
ii. Time
iii. Place
iv. Ownership

Question 4

What is the Customer Value Proposition (CVP)?

Answer 4

strategic tool facilitating communication of an organizations ability to share resources & offer a superior value package to targeted customers

Question 5

What is the difference between customer satisfaction & customer loyalty?

Answer 5

• Customer Satisfaction - how much the customer likes the product; doesn’t ensure long-term relationship
• Customer Loyalty - customers commitment to a company for the long run; related to value

○ Increases customer retention - lower propensity among a firms customer base to consider switching to other providers

Question 6

T/F: All satisfied customers are loyal

Answer 6

FALSE:

If a competitor comes along with a better value proposition, or if a value proposition begins to slip or is not effectively communicated, customers who are currently satisfied become good candidates for switching to another company’s products

Question 7

What is the value chain?

Answer 7

• Useful approach to bring together & understand the concepts of customer value, satisfaction, & loyalty

*Serves as a means for firms to identify ways to create, communicate, & deliver more customer value within a firm

Question 8

What are the 5 primary activities in the value chain?

Answer 8

1. Inbound logistics-how the firm goes about sourcing raw materials for production.
2. Operations-how the firm converts the raw materials into final products.
3. Outbound logistics-how the firm transports and distributes the final products to the marketplace
4. Marketing and sales-how the firm communicates the value proposition to the marketplace.
5. Service-how the firm supports customers during and after the sale.

Question 9

What are the 4 support activities in the value chain?

Answer 9

1. Firm infrastructure-how the firm is set up for doing business; are the internal processes aligned and efficient?
2. Human resource management-how the firm ensures it has the right people in place, trains them, and keeps them.
3. Technology development-how the firm embraces technology usage for the benefit of customers
4. Procurement-how the firm deals with vendors and quality issues

Question 10

T/F: It takes only one weak link in the value chain and the whole process of cultivating satisfied and loyal customers can be circumvented

Answer 10

TRUE

Question 11

What is marketing planning? What is the marketing plan?

Answer 11

• Marketing Planning - the ongoing process of developing and implementing market-driven strategies for an organization
• Marketing Plan - the resulting document that records the marketing planning process in a useful framework

Question 12

What 2 dimensions is marketing practiced on?

Answer 12

Marketing (Big M) at the strategic level & marketing (little m) at the functional/operational level

• Big M - serves as core driver of business strategy

○ Understanding of markets, competitors, attention to internal capabilities, allows a firm to successfully develop strategies for the future

• Little m - represents the specific programs & tactics aimed at customers & other stakeholder groups

○ Brand image, message sales-people, advertisements, customer service, packaging, & product features

Question 13

What is meant by everyone “owns” the customer?

Answer 13

Everyone in an organization, regardless of his or her position or title, must understand and support the concept of customer orientation, which, places the customer at the core of all aspects of the enterprise.

Question 14

What is a market-driven strategic plan?

Answer 14

process at the corporate or strategic business unit (SBU) level of marshalling the various resources & functional areas of the firm towards a central purpose around the customer

Question 15

What is the strategic business unit (SBU)?

Answer 15

relatively autonomous division or organizational unit of a large company that operates independently but within the corporate umbrella, exercising control over most of the factors affecting its long-term performance

Question 16

What is a portfolio analysis? Mame the two main approaches.

Answer 16

• Views SBUs and product lines as a series of investmentsfrom which it expects maximization of returns
• Two popular approaches: Boston Consulting Group (BCG) Growth-Share Matrix & GE Business Screen

Question 17

Portfolio Analysis: BCG

Answer 17

• positions each SBU within a firm on the two-dimensional matrix
• The competitive market-share dimension is the ratio of share to that of the largest competitor
• The growth dimension is intended as a strong indicator of overall market attractiveness

Within the BCG matrix you find four cells, each representing strategy recommendations:

§ Stars (high share, high growth): important to building the future of the business and deserving any needed investment.

§ Cash Cows (high share, low growth): key sources of internal cash generation for the firm.

§ Dogs (low share, low growth): potential high cash users and prime candidates for liquidation.

§ Problem Children, or Question Marks (low share, high growth): high cash needs that, if properly nurtured, can convert into stars

Question 18

Portfolio Analysis: GE Business Screen

Answer 18

a more realistic and complex portfolio model

• It also evaluates the business on two dimensions-market attractiveness and business position, which refers to its ability to compete
• A business that is favourable on both dimensions should usually be a candidate to grow
• When both market attractiveness and business position evaluations are unfavourable, the harvest (maximizing the remaining profits with minimal or no further investment in the SBU) or divest (selling off or closing down the SBU) options should be raised

Question 19

What is the difference between a mission statement & strategic vision?

Answer 19

• Mission statement - articulates an organization’s purpose, or reason for existence
• Defines the fundamental, unique purpose that sets a company apart from other firms of its type and identifies the scope of a company’s operations, products, and markets
• Strategic Vision - discussion of what the company would like to become in the future

Question 20

What are SMART objectives?

Answer 20

reminds folks doing marketing planning that their objectives should be specific, measurable, attainable, relevant, and time-defined

Question 21

What are generic organizational strategies?

Answer 21

• overall directional strategy at the business level
• Driven by resource capabilities of the firm & competitive landscape

1. Growth - sales, market share, assets, profits
2. Stability - continue current activities w/ little change
3. Retrenchment - pulls assets our of an underperforming part of business & reinvests into an area w/ greater potential

Question 22

What are competitive organizational strategies?

Answer 22

increase firms performance against competitors

1. Cost Leadership - strives for lowest industry costs & produces for a broad consumer base
2. Differentiation - competes by providing unique goods/services w/ valuable features; willing to pay premium
3. Focus/Niche - cost/differentiation advantage but in a limited customer group (serves a specific/niche market)

Question 23

What is a strategic type? Name the 4 types.

Answer 23

• Strategic type - Firms of a particular strategic type have a common strategic orientation and a similar combination of structure, culture, and processes consistent with that strategy

1.Prospectors - continual innovation through exploring new product/market opportunities

2. Analyzer - relies on analysis & limitations of the successes on other orgs.
3. Defender - searchers for market stability & production of a limited product line for a nice market
4. Reactor - lacks strategy; do well to survive

Question 24

What is the first movers advantage?

Answer 24

when a firm introduces a new offering to a market that the market hasn’t experienced before

Question 25

What is situation analysis?

Answer 25

marketing manager must perform a complete situation analysis of the environment within which the marketing plan is being developed

• External Environmental Factors - those a firm must be mindful of and plan for, yet has little or no direct ability to impact or change
• Internal Environmental Factors - include the firm’s structure and systems, culture, leadership, and various resources, all of which are under the firm’s control

Question 26

What are internal environmental factors?

Answer 26

1. Firm structure and systems
2. Firm culture
3. Firm Leadership
4. Resources - marketing capabilities, finances, info sx, ect.

Question 27

What are examples of competitive environmental factors?

Answer 27

• Threats of new entrants - how strong are entry barriers based on capital requirements & other factors?
• Rivalry Among Existing Firms - indirect vs direct competition
• Threat of substitute products
• Bargaining power of buyers
• Bargaining power of suppliers
• Relative power of other stakeholder - level of union activity, trade associations, local communities, citizens groups

Question 28

What is SWOT?

Answer 28

• Swot - strengths, weaknesses, opportunities, threats
• the SWOT analysis template is also useful in beginning to brainstorm marketing strategies that might be appropriate depending on which of four possible combination scenarios predominate in a firm’s situation

Question 29

Name the product-market combinations.

Answer 29

1. Market Penetration - involve investing in existing customers to gain additional usage of existing products.
2. Product Development - recognize the opportunity to invest in new products that will increase usage from the current customer base.
3. Market Development - allow for expansion of the firm’s current product line into heretofore untapped markets, often internationally
4. Diversification - seize on opportunities to serve new markets with new products

Question 30

What are contingency plans?

Answer 30

implemented should something happen that negates the viability of the marketing plan

• When developing contingency plans, the firm should be realistic about the possibilities and creative in developing options for minimizing any disruption to the firm’s operations should it become necessary to implement them

Question 31

What are tips for successful marketing planning?

Answer 31

• Stay flexible - marketing plans are not set in stone; markets and customers change, competitors do unexpected things, and the external environment has a nasty habit of creating unexpected surprises.
• Utilize input - but don’t become paralyzed by information and analysis.
• Don’t underestimate the implementation part of the plan - The quality of the action plans and metrics often make or break the success of the plan; a good plan on paper is useless without effective implementation.
• Stay strategic, but also stay on top of the tactical - Remember that marketing has these two levels of interrelated issues, Marketing (Big M) and marketing (little m), and both the strategic and tactical elements have to be right for the plan to be successful.
• Give yourself and your people room to fail and try again - Marketing planning is by no means a predictable science