Models / Theories Flashcards
Marketing Mix (4 or 7Ps)
**Product: **
Brand / quality / USPs
**Promotion: **
(Push vs Pull) / Advertising (consumer awareness) / PR / Personal selling (i.e. cold calling) / Sales promotions (buying shelf space)
Place (distribution):
Direct (Retailer, personal selling, internet sales, retailer) vs Indirect (Wholesaler, agent, franchisee)
Price (4C’s) / Pricing strategies
Services: (e.g. apps)
People: Staff appearance, service training, technical knowledge
Processes: Efficiency of the service
Physical evidence: intangible brand on show
4C’s of Pricing
Cost
Competitors
Customers
Corporate objectives
Pricing strategies
Price skimming - high prices to skim of customers willing to get product early (e.g. Apple)
Premium pricing - for perceived quality (e.g. Nike)
Price discrimination - different prices for different customer segments (e..g flights)
Going rate - match competition (e.g. Aldi & Lidl)
Penetration pricing - low price to increase market share
Porter’s generic strategies
3 ways to gain a sustainable competitive advantage:
1) Cost leadership - lowest cost producer
2) Differentiation - create tangible / intangible product diffeatures customers will be willing to pay more for
3) Focus / niche - Either 1 or 2 for a narrow range of market segments
Porter’s value chain
Examines how businesses can gain a competitive advantage by breaking it down into primary and supporting activities and looking for cost or /& quality advantages over competitors
The value chain can be used to examine where value can be created using the resources of a business to generate strategic options. It can also help identify the cost drivers / differentiation factors behind the XXX generic strategy.
The primary activities are those that create value and are directly concerned with providing the product/service. The support activities do not create value of themselves but enable the primary activities to take place with maximum efficiency.
Support activities:
Infrastructure
HR Management
Technology development
Procurement
Primary Activities:
Inbound logistics
Operations
outbound logistics
Sales and marketing
Services
9M’s of resources
Resources are either a) Threshold or b) Unique
Men - skill/motivation/attitudes
Money - financing/IPOs
Management - leadership team/C-suite
Make-up - culture/attitidues
Machinery - tangible NCA
Methods - processes
Markets - customers/brands/network
Materials - supply chain relationships
Management information systems (MIS)
Stages of product life cycle
1) Development
2) Introduction
3) Growth
4) Maturity
5) Decline
Market research
1) Desk research - gathering and analysis of existing or secondary data. Usually for background understanding e.g. total size of market in UK/city/region using industry publications, population stats form government
2) Field research - collection of new (primary) information direct from respondents (more expensive so only do if desk research ineffective).
SOurce sinclude surveys of existing / potential customers, samples,
Benchmarking Definition
Benchmarking uses comparisons with best practice to encourage improvement and change to achieve sustainable competitive advantage over competitors.
Types of benchmarking
Internal - comparison between PY branches / divisions
Competitive - against competitors / sectors / industry (national or international) e.g. Coke vs Pepsi
Activity (best in class) - against company with best practice in same activity (any industry)
Generi - against conceptually similar but not identical process
Porter’s 5 Forces
Useful model to determine the level of competition and therefore profitability of the industry.
Threat of new entrants - industry growth, profit margin, competitors. consumer switching, EoS, brand loyalty, capital requirements, distribution, patents, gov. subsidies
Power of suppliers - few large suppliers, product differentiation, other buyers
Power of consumers - smaller no of large customers, competitors, product differentiation, switching costs, price transparency
Threat of substitutes - availability, likelihood (price, performance)
Competitive rivalry - no. of firms, Fixed costs, exit barriers, strategic importance, industry growth, switching costs
Try to conclude on the extent of the threat of each
Marketing Strategy for new markets
3 Key steps:
Segmentation, Targeting, Positioning
1) Segmentation: divides the market into sub-units to help targeting
2) Targeting: involves evaluating the attractiveness of each segment and selecting consumers to target
3) Positing: Requires a detailed marketing mix to be developed
Balanced Scorecard (KPIs)
Ensures that a mixture of financial & non-financial perspectives are considered when selecting KPIs
Financial perspective
Internal business perspective
Innovation and learning perspective
Customer perspective
Strategy Evaluation
SFA - Suitability / Feasibility / Acceptability
S: Is it consistent (both internally and externally)
F: Firm has appropriate resources and capabilities
A: Appropriate risk & return for key stakeholders
Big Data (4V’s)
Volume - enough resources / appropriate IT to manage data
Velocity - Systems able to capture and process date in ‘real time’?
Veracity - Reliability of data - is it fully representative?
Variety - Systems capable of accepting formats? Legal ownership over data.
Cyber Security
Protection of systems, networks and data from cyber risks (financial loss / disruption or damage to reputation of firm)
Human threats - hacking to steal data / damage system
Fraud - e.g. theft of funds
Deliberate sabotage - malicious damage, espionage etc
Viruses / corruptions in network
DoS - attempt to overload system and prevent legitimate use
Cyber risk management
Think about IT controls
3rd party pen tests
Data back-ups to cloud/physical servers
Appropriate system development and maintenance occurs
Access controls / data encrypting / firewalls
Quality controls - e.g. over sharing of information
Hire specialist individuals
BCP
Cyber security training for all staff
Types of transfer pricing
Cost plus (e.g. VC + 25%)
Market price less discount (fair value exchange as no selling costs required for an internal sale)
2 part - VC pu + cost to cover FC
Dual pricing - internal suspense account for the difference between manufacturing revenue and sales expense
Identifying risks
Consider PESTEL
Porter’s five forces
Focus on the scenario!!!
Mitigating factor links to each risk - make sure they are appropriate and relate to organsiation
JV’s & Strategic alliances
- Joint Ventures – contractual agreement between companies, often setting up another
- Strategic Alliances – looser agreement to share knowledge, tech, or opportunities
Pros / cons of JV’s / strategic alliance
Advantages
o Access to local resources/expertise/brands
o Shared risks and finances
o Attractive to smaller/risk-averse companies – may be able to share risk
o Benefit from economies of scope and economies of scale (sharing fixed costs)
Disadvantages
- Shared profits
- Disagreement over decision making
- High exit costs / uncertainty over viability if one party wishes to terminate agreement
- May have to share trade secrets
- Governance may be contractual / through JV entity – impact on risk sharing, exist costs, control and cost sharing. This must be clearly defined
- If one party is larger than the other – gains may benefit one company more
Franchising / Licensing
- Licensing – right to exploit an invention/resource in return for a share of profit
- Franchising – right to exploit a business brand in return for capital
Pros & cons of franchising / licensing
Advantages
o Increases the number of distribution outlets without capital investment
o Local expertise and access to enthusiastic entrepreneurs
o Rapid expansion
Disadvantages
- Share profit
- Successful franchisees may set up on their own
- Conflicts over operating decisions
Organic growth Pros & cons
Advantages
o Acquisition costs might be too high
o Costs/risks can be spread over time
o Control over change management
o Control over which products develop
o Easier to finance
o Maintain reputation
Disadvantages
- May be too slow
- No access to proprietary knowledge, brands, customer base, dist channels
- Risk of failure
- May intensify competition
