Strategy 2 Flashcards
What does marketing strategy involve
- Analysis = market research using desk or field research
- Segmentation = identify which customers to supply
- Implementation = develop an appropriate marketing mix
What things would you do for market research
Want to identify and anticipate customers needs
Stability if buying cycles
Product life cycles
Homogeneity of consumers
Technological infrastructure
What ways can the market be segmented
Industrial = selling to other businesses
- geographic
- company size and type
- purchasing characteristics
Consumer segmentation = selling to end consumer
- geographies
- demographic
- purchasing characteristics
- purchasing motivation
What is the marketing mix
Controlling variables that can be adapted for the market
For a product (4Ps)
- Product = brand, quality, USP
- Promotion = advertising, sales promotion
- Place = distribution; direct or indirect
- Price = different pricing strategies
For a service industry (3Ps)
- People = attitude, professionalism and knowledge
- Process = efficiency of service
- Physical evidence = tangible aspects of the service
What are different pricing strategies
Price skimming = high prices to initially skim off customers willing to get product sooner
Penetration = low price initially to increase market share
Price discrimination = different prices charged for the same product to different customer groups
Perceived quality = price reflects perceived value placed by customers on product
Going rate = match competition to meet market conditions
Cost plus pricing = adding a mark up to the cost of a product
What is Handy’s Shamrock - Organisation structure
Business should be flexible with staffing to cut costs and increase efficiency
Should have core of vital payment staff with support from part time and outsourced staff
Professional core = permanently employed key staff
Customers = may perform some tasks themselves
Flexible labour force = temporary and part time staff used to cover peak demand
Contractual fringe = outsourced staff performing non- core services which are cheaper
What is organisational structure Mintzberg
Operating core = basic work of organisation
Middle line = managers linking operating core and strategic apex
Strategic apex = higher management, overall long term planning and control
Support staff = provision of services to organisations which support operations and production
Ideology = organisations values and beliefs
Factors influencing span of control
Complexity of work
Degree of change
Managements ability
Assistance recieved by managers
Amount of non- supervisory work
Level of knowledge and experience of staff
Level of cost
Level of danger
Physical proximity of subordinates
IT
Divisional performance measurement
ROI = (controllable profit / divisional capital employed) * 100
- relative measure
RI = controllable profit - (divisional capital income * cost of capital)
- absolute measure
Both of these increase with the age of the assets
Risk using TARA
Transfer risk to third party
Avoid risk
Reduction of risk
Acceptance = tolerate the losses
Quantitative analysis to analyse risks
Break even = level of production required for business to make neither a profit nor a loss
- total profit = total contribution - total fixed costs
- break even is where total contribution = total fixed costs
Sensitivity analysis
Expected value
Decision tree
Statistical analysis
Acquisition vs organic growth
Acquisition
- quicker
- avoid barriers to entry
- one less competitor
- synergies
Organic
- entry cost may be too high
- clash of cultures
- easier to control growth
- reputation of target company
Synergies
Benefits from two or more businesses combined which wouldn’t be avaliable to each independently
Market power = especially if company buys a competitor
Economies of scale = bulk discount for combined buying quantities
Rationalisation of shared activities = shared research and development
Surplus assets = don’t need two head offices/ sets of central warehouses
Synergies of vertical integration = can control supply/distribution chains
Diversification of risk
Additional finance options = may be large enough to consider floatation
Advantages/disadvantages of franchising and licensing
Advantages
- increases number of distribution outlets without extensive capital investment
- local expertise and access to enthusiastic entrepreneurs
- economies of scale (marketing)
- rapid expansion
- risk sharing with franchisee
Disadvantages
- shared profits
- successful franchises may set up their own indirect competition
- quality control
How to measure short term liquidity
Current ratio = current assets/ current liabilities
Quick ratio = current assets excluding inventory / current liabilities
