Exam Prep Flashcards
Strategy Control & Evaluation are key components of strategic marketing process
Ongoing process of measuring & processing appropriate formulated strategy & effectiveness of its implementation
Strategic Control tools
Strategic Control - continuous monitoring, review & update of strategy
Operational Control - track performance against standards & deviation
Marketing Audit - periodic, comprehensive & systematic checklists
Operational control requires
- Set performance standards
- Measure actual performance
- Evaluate deviations
- Take necessary corrective action
Low-cost strategy as competitive strategy ( cost - leadership strategy)
Reduce manufacturing costs to lower customer price; based on interplay between cost, profit margins & market share with 2 alternatives:
- lower margin/ higher market share
- lower costs/ higher margins
Cost drivers determine cost of given activity through
- Economies of scale
- No-frills products/services
- Low-cost distribution
- Location cost advantage
- Institutional factors
Pitfalls of low-cost strategy
- concentrating only on manufacturing costs
- ignoring purchasing/procurement functions
- overlooking smaller activities
- failure to exploit linkages
- contradictory cost reduction exercises
- entry of low-cost competitors
- reduced flexibility
Strategies during decline phase of product life cycle
- Divest & Liquidate - quit the industry
- Hold or maintenance - maintain investment at minimum
- Harvesting - maximize cash flow reducing investment & costs
- Niche - identify markets with sustainability
- Be a profitable survivor - invest in purchase other competitors
Attractiveness of declining markets
- Conditions of demand - depend on rate of decline
- Exit barriers - the higher the exit barrier the less attractive the industry
- Intensity of future competitive rivalry - if rivalry intensity is high it may not justify remaining in market
Relationship Marketing
Interactions within a networks of relationship as establishment, maintenance & enhancement of relationships with customers & other players
Benefits of relationship building for organization
- Getting to know customer better
- Creating value
- Customer retention
- Improve customer loyalty
Characteristics of relationships
- longevity ( commitment)
- trust
- collaboration
Four actions to build relationships with customers
- Operating efficiency
- Offering excellency
- Customer development
- Relationship development
Framework of Marketing Plan
Executive summary Situation analysis Swot analysis Issues that plan should address Marketing goals & objectives Market strategy Marketing strategy Sales forecast, budgets e financial indicators Action plans for each strategy Appendices...
Pre-emptive strategy
Actions of a pioneer organization which establishes sustainable competitive advantage through being first in market
Requirements of pre-emotive move
Innovation
Commitment of substantial resources
Assumption that competitor struggle to copy or compete
Sources of pre-emptive opportunities
Supply systems Product opportunities Operations systems Customer opportunities Distribution & service systems
Advantages of pre-emptive strategies
Image & reputation
Early entry builds experience
Customer loyalty
Absolute cost advantage
Disadvantages of pre-emptive move
Competition
Costs
Timing on the market
Technological change
Follower strategy
Organization beaten by pre-emptive mover or chooses to let another org. take the lead
Advantages of follower strategy
Exploit competitors positioning mistakes
Exploit competitors product mistakes
Technological flexibility
Exploit competitor resources limitations
Focus strategy
Sustainable competitive advantage by occupying niche with limited product range
2 methods of Focus Strategy
Low-cost focus - organization must find buyer segment whose needs are less costly to meet (low-cost airlines)
Differentiation focus - specific buyer segment wants unique product attributes (computer applications)
Ways to achieve focus strategy
Focus on the product life
Target specific market segment
Choose limited geographical area
Target low-share competitors
Advantages of Focus strategy
Avoid distraction or dilution of strategy
Make an impact with limited resources
Provide positioning device - product line
Bypass competitor assets & skills
Sustainability of Focus strategy
Porter identified 3 factors:
- Sustainability against targeted competitors
- Sustainability against imitators
- Sustainability against segment substitution
Conditions to make Focus strategy attractive
- Profitability
- Growth potential
- Size
- Resources
- Protection
Aeker’s model of brand equity
- Brand awareness
- Brand loyalty
- Perceived quality
- Brand associations
- Other proprietary assets
Brand awareness is measured by
Recognition
Recall
Top-of-mind
Domination
Brand loyalty
Reduces marketing costs as is less costly to retain customer than to attract new customers
Perceived quality
Relationship between customer perceived benefit & its actual cost
Brand association
Positive attitudes & feelings towards a brand
Keller’s brand equity pyramid
Brand identity - who are you? ( SALIENCE)
Brand meaning - what are you? ( MEANING) performance & imagery
Brand response - what about you? What do I feel about you? ( RESPONSE) Judgements & Feelings
Brand relationships - what about you and me? (RELATIONSHIP) Resonance
Porter’s 5 force model of competitive forces
- Threat of new entrants / competitors
- Threat of substitutes
- Bargaining power of buyers
- Bargaining power of suppliers
- Rivalry between competitors
Threat of new entrants
Economies of scale Cost advantage Cost of switching Limited access to distribution channels Government policy Product differentiation Strong brand identity Likelihood of retaliation from competitors
Threat of substitutes
Willingness of buyer to substitute Price & performance Advantages over traditional products Cost of switching Image/ identity of substitutes
Bargaining power of buyers
Few dominant buyers & many sellers in industry
Products are standardized
Buyers threaten to integrate backward into industry
Industry is not key suppliers to buyers
Rivalry between direct competitors
Industry costs
Switching costs
Product differences
To secure competitive advantage over rivalry, companies must:
Select price, added features, choice of distribution channel, exploit supplier relationships
Market Analysis
Actual & potential market size Market growth Market profitability Cost structure Distribution system Market trends & developments Key success factors
Market growth - market share mix is based on
Share of the market
Growth rate of the market
BCG matrix
Stars - high market share in high growth market
Cash cows - high market share in low growth
Question marks - low market share in high growth market
Dogs - low market share in low growth market
BCG strategies
Build - company invest to increase market share
Hold - company invest enough to keep position
Harvest - company reduce investment to maximize cash-flow & profit
Divest - company phase out or sell business
Porter’s strategy model
Competitive scope - broad or narrow
Competitive advantage - cost or differentiation
Cost leadership
Operate at lower cost than competitors to be competitive; when value for money is important; increase market share & apply low-cost strategy
Differentiation
Offering product or service different from competitors; unique product offer; high prices high investment return
Focus
Most intense; focus segment to achieve cost advantage or differentiation; high customer loyalty
Strategies in Growth phase of PLC
- Growth in existing product markets
- Growth through product development
- Growth through market development
- Growth through diversification
Growth in existing markets
- growth through increasing market share
- growth through increasing quantity of usage
- growth through increasing frequency of usage
Growth through product development
- development of new product features
- development of new generation products
- development of new products for existing markets
Growth through market development
Looking for new markets to sell existing products - expand geographically ( locally, regionally, nationally or internationally )
Growth through diversification
- Related diversification - org. acquires another organization with similar products & services which contributes to synergy & economies of scale
- Unrelated diversification - expansion into unrelated fields, risky expansion
Define marketing
Process of creating, distributing, promoting, pricing goods & services & ideas to satisfy exchange relationships with customers
Components of marketing strategy
Market segment strategy Position strategy Product strategy Price strategy Distribution strategy Promotion strategy
Forward segmentation
Classifies customers on the basis of personal characteristics - demographic, geographic & psychographic
Backward segmentation
Identifies groups of customers who demonstrate different behavior towards products & brands trough:
- cluster analysis - statistical tools to cluster customers into groups
- perceptual maps - construct maps of costumer perceptions
Five steps of segmentation research process
- Gather raw data from customers
- Interpret raw data in terms of customer needs
- Organize needs hierarchy of primary & secondary needs
- Establish relative importance of needs
- Reflect on results & process
Identifying customer segments
Homogeneity/Heterogeneity - customers response to offer should be homogeneous but segments response should be heterogeneous
Size - segments large enough to justify marketing effort
Measurable/identifiable - customers should be identifiable & described in unique needs & characteristics
Accessible - segment must be accessible via marketing distribution & communication
Attractiveness of potential segments
- Segment size & growth possibilities
- Attractiveness & potential profitability
- Resources & skills of organization
- Compatibility with organization’s objectives
- Cost of reaching target market
