methods to compete Flashcards
What is marketing orientation
is concerned with marketing’s functional role of coordinating the 4Ps
what is the difference between the marketing and management decisions?
marketing is concerned with managing markets while management is concerned with managing organizations
What is Market Orientation
In addition to coordinating the 4Ps, market orientation is concerned with the generation and dissemination of information for the purpose of maximizing corporate value
What does excellence in marketing management aim for?
the maximization of corporate value
What must Marketing do to maximize corporate value?
marketing must:
- recognize the true indicators of corporate value
- effectively link itself to those indicators
About “recognize the true indicators of corporate value”.
What are the indicators of corporate value? And why that indicator? Where is it reflected? And why not other indicators?
The true indicator of corporate value is the discounted future cash flow of a business unit, because cash can earn interest, so what we have received today is worth more tomorrow. It is reflected in the corporation’s market value. And we don’t use the traditional accounting measures, because they are tangible assets and focused on the past performance.
About “effectively link itself to those indicators”
How can marketing link itself to the indicators of corporate value? Why?
Marketing can link itself to the indicators of corporate value:
- by shifting the business unit towards the most attractive markets, because only there can a firm hope to ever maximize its corporate value.
- by building a sustainable value proposition, because corporate value is created only when cash flow is positive and this only occur when there is a cost or differentiation advantage.
What is the basic principle of shareholder value analysis?
A firms value is determined by the sum of all the firms anticipated future cash lows, adjusted by an interest rate known as cost of capital.
What are the four operating factors that affect a firm’s CF? And give examples of it’s cash flow impact
- Anticipated level of cash flow. Enhance cash flow: decisions that affect sales growth, price levels and cost levels.
- Anticipated timing of cash flow.
Accelerate cash flow: decisions that lead to faster new product development, faster market penetration, network effects. - anticipated sustainability of cash flow.
Sustain cash flow: decisions that sustain a competitive advantage, open-up new product-markets. - anticipated riskiness of cash flow.
Secure cash flow: decisions that reduce volatility of cash flow, vulnerability of cash flow.
Why are the four operating factors fundamental?
They equip marketing with a language that is understood by those around the boardroom; they help marketing define its role and objectives to maximize the firm’s value; they demonstrate that marketing investments contribute to value creation and they help to protect marketing from arbitrary cuts.
