Chp 2 - Developing Marketing Strategies and Marketing Plan Flashcards
define marketing strategy
identifies a firm’s target market, a related marketing mix - the 4 P’s, and the bases upon which the firm plans to build sustainable competitive advantage
define sustainable competitive advantage
something the firm can persistently do better than its competitors that is not easily copied and thus can be maintained for a long period of time
4 strategies for developing customer value and sustainable competitive advantage:
1) customer excellence
2) operational excellence
3) locational excellence
4) product excellence
explain customer excellence for developing value and competitive advantage - 4 points
1) Focus on retaining loyal customers and excellent customer service
2) Loyalty is more than preferring to purchase from one firm instead of another, it means that customers are reluctant to patronize competitive firms
3) Can achieve loyalty through emotional attachment with loyalty programs, unique merchandise, strong brand, superior customer service
4) viewing customers with lifetime value perspective rather than transaction basis is key to customer retention
explain operational excellence for developing value and competitive advantage - 2 points
1) Focus on efficient operations and excellent supply chain management
2) efficient operations and good relationships with vendors can help firm offer lower-priced goods or better margins to focus on advertisement and better service
explain locational excellence for developing value and competitive advantage - 2 points
1) Focus on good physical location and internet presence
2) Competitive advantage with location is sustainable because it is not easily duplicated
explain product excellence for developing value and competitive advantage
Focus on achieving high quality products and effective branding and positioning
what do firms require with regards to sustainable competitive advantages?
require multiple sustainable competitive advantages to build a wall around their position and attract loyal customers
3 major phases of marketing plan
planning, implementation, control
what composes marketing plan?
Composed of analysis of current marketing situation, opportunities and threats, marketing objectives, strategy, 4P’s, projected financial statements
2 steps in planning phase of marketing plan
1) business mission and objectives
2) situational analysis (LO3)
define business mission
broad description of firm’s objectives and scope of activities: answers what type of business is it and what does it need to do to accomplish goals?
2 steps in implementation phase of marketing plan
3) identify opportunities (using segmentation, targeting, positioning)
4) implement marketing mix and allocate resources (4 Ps)
step in control phase of marketing plan
5) evaluate performance by using marketing metrics
what do we require in steps of marketing plan
logical link between all 5 steps
define situational analysis
using a SWOT analysis that assess both the internal environment and external environment with respect to strengths, weaknesses, opportunities, threats
with regards to external environment, what does situation analysis assess - 2 points
1) assesses opportunities and uncertainties in the market due to changes in CDSTEP (cultural, demographic, social, tech, economic, political) forces and sustainable competitive advantage relative to competition
2) assesses market trends, customer and competitive analysis
how can firms react to opportunities and threats
outside firm’s control so they can only decide how they want to respond
how can firms react to strengths and weaknesses
within control so can take actions for and against them
explain strengths
what you do well or have access to; should be maintained/enhanced
explain weaknesses
what you are lacking or do poorly; could lead to failure
explain opportunities
suggest new basis for competitive advantage, possibility for improved performance
explain threat
may impede strategy implementation; may change rules/resources required; may hurt performance
define market segment under segmentation
a group of customers who respond similarly to a firm’s marketing efforts
define market segmentation under segmentation
dividing market into distinct groups of customers, where each individual group has similar needs, wants, or characteristics, who therefore might appreciate products geared especially for them in similar ways
define target marketing under targeting
process of evaluating attractiveness of various market segments and then deciding which to pursue as a market
define market positioning under positioning
process of defining marketing mix variables so that target customers have a clear, distinct, desirable understanding of what the product does or represents in comparison with competing products
example of positioning
Hertz is positioned as quality car rental company where customers can have peace of mind
explain product implementation to increase customer value
Firms attempt to develop products that customers perceive as valuable enough to buy
explain price implementation to increase customer value - 2 points
1) Firms charge a price that customers perceive as giving them good value for the products they receive
2) Too high a price, not much volume generated. Too low a price, may result in lower than necessary margins and profits
explain promotion implementation to increase customer value
Communicate value of their offering to customers through variety of media
explain place implementation to increase customer value
Firm must make product readily accessible when and where customer wants it
step 5: define metric - 2 points
1) measuring system that identifies trend, dynamic, characteristic
2) used to explain why things happened and to project future
step 5: who is accountable for performance - 2 points
1) Business unit and manager should be held accountable only for profits it can control
2) Performance evaluations are used to pinpoint problem areas
4 things for step 5: evaluate performance with marketing metric
1) identify who is accountable for performance
2) identify performance objectives and metrics
3) identify financial performance metrics
4) identify social responsibility performance metrics
3 points in step 5: performance objectives and metrics
1) Can compare firm performance over time or to competing firms
2) Can view firm’s products as a portfolio and profits from some products are used to fuel growth for others
3) Not one metric to evaluate performance as many factors contribute
1 point in step 5: financial performance metrics
Attempt to maximize one metric may lower another, so don’t just use 1 metric. Like increase sales by lowering prices may also decrease profits
define portfolio analysis
Management evaluates firm’s products and allocates resources according to which products are expected to be most profitable for firm in future
where is portfolio analysis performed?
Typically performed at strategic business unit (SBU) or product line level
define strategic business unit (SBU)
division that can be managed independently from other divisions since it markets a specific set of products to a clearly defined group of customers
define product line
group of products that consumers may use together or perceive similar in some way
define relative market share
measure of product’s strength in particular market, defined as sales of focal product divide by sales achieved by largest firm in industry
define market growth rate
annual rate of growth of the specific market in which product competes
portfolio analysis table - high relative market share, high market growth rate
stars
portfolio analysis table - low relative market share, high market growth rate
question marks
portfolio analysis table - high relative market share, low market growth rate
cash cows
portfolio analysis table - low relative market share, low market growth rate
dogs
portfolio analysis: define stars - 2 points
1) often require heavy resource investment line in promotions and new production facilities to facilitate growth
2) Will move to cash cows as market growth slows
portfolio analysis: define cash cows - 2 points
1) products have already received high investment
2) resources can be used for products that need it
portfolio analysis: define question marks - 2 points
1) significant resources to maintain market share
2) Managers can phase out product or infuse it with cash cow resources so they become stars
portfolio analysis: define dogs
should be phased out unless needed to boost sales of another product or for competitive purposes
growth strategies: current products, current market
market penetration
growth strategy: new product, current market
product development
growth strategy: current product, new market
market development
growth strategy: new product, new market
diversification
growth strategy: define market penetration - 3 points, 2 example
1) Employs existing marketing mix and focuses firm’s efforts on existing customers
2) Example: encouraging current customers to visit store more often by using advertisements or discounts/sales to current customers.
3) Example: sending email coupon out to current customers to drive sales
4) Generally requires greater marketing efforts
5) Easiest to implement
growth strategy: define market development
Employs existing market offering to reach new market segments
growth strategy: define product development
Offers a new product/service to a firm’s current target market
growth strategy: define diversification
Firm introduces new product/service to market segment it does not currently serve
growth strategy: 2 types of diversification
1) related diversification
2) unrelated diversification
growth strategy: define related diversification and give example
1) current target market and/or market mix shares something in common with the new opportunity
2) Example: firm may be able to purchase from existing vendors
growth strategy: define unrelated diversification
new business lacks common elements with present business
growth strategy: define downsizing
exiting markets, reducing product portfolios, closing certain businesses or store or plant locations
lecture - what do we use to implement marketing mix and define it
tactics - an action or strategy carefully planned to achieve a specific end
lecture - 3 things to do after situational assessment and note
1) set objectives - what you want to achieve
2) develop strategy - decide how you’ll do it
3) develop tactics - how you’ll make it happen
Note: all decisions are made in context of environment you just analyzed
STP: explain process
first understand customer needs and wants through market research, then divide market into distinct segments, determine which segments it should target, and decide how it should position products to best meet needs of chosen target market
STP: Segmentation: 4 ways to segment market
by demographics, benefits sought, geographic areas, behavioural factors (how products are used)
2 examples of step 5: social responsibility performance metrics
impact on environment, ability to diversify workforce
2 strategies that have been responsible for making marketing firms successful:
portfolio analysis, product-market growth strategies
what does each circle represent in portfolio analysis BCG strategy?
circles represent brands, larger circles correspond to higher levels of sales, smaller circles correspond to lower levels of sales
x and y axis of portfolio analysis
x axis is relative market share, y axis is market growth rate
