Marketing 240 – Chapter 2

Strategic planning
the process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities
Mission statement
A statement of the organizations purpose – what it wants to accomplish in the larger environment
Business portfolio
The collection of business and products that make up the company.
This best one is that best fits the companys strengths and weaknesses to opportunities in the environment.
Portfolio analysis
The process by which management evaluates the products and businesses that make up the company.
Strategic Business Units (SBU)
Management’s first step is to identify the key businesses that make up the company called these
when doing a portfolio analysis
Growth Share Matrix
a portfolio planning method that evaluates a company’s strategic business units (SBUs) in terms of its market growth rate and relative market share
Boston Consulting Group (BCG) approach
A company classifies all its SBUs according to the growth matrix ( the portfolio planning method)
Market Growth Rate
provides a measure of market attractiveness which is on the vertical axis of growth share matrix
Relative market share
serves as a measure of company strength in the market it is on the horizontal axis of the growth share matrix
The growth share matrix defines 4 types of SBUs
1. Stars
2. Cash cows
3. Question marks
4. Dogs
Stars – GSM
High growth, high share business or products. Often need heavy investments to finance rapid growth. Eventually their growth will slow down and they will turn into cash cows
Cash cows – GSM
Low growth, high share businesses or products. These are established and successful SBUs and need less investment to hold their market share. So they produce a lot of cash that the company uses to pay bills and support other SBUs
Question Marks – GSM
Low share business units in high growth markets. they require a lot of cash to hold their share, let alone increase it. Managament has to think about which question mark it should try to build into stars
Dogs – GSM
Low growth, low share businesses or products. they may generate enough cash to maintain themselves but do not promise to be large source of cash.
Issues with BCG and other formal methods revolutionized strategic planning
They can be difficult, time consuming, and costly to implement. These approaches focus on classifying current business but provide little advice for future planning
Product/market expansion grid
A portfolio planning tool for identifying company growth opportunities through market penetration, market development, product development, or diversification.
Market penetration
Company growth by increasing sales of current products to current market segments without changing the product
Market development
company growth by identifying and developing new market segments for current company products
Product development
company growth by offering modified or new products to current market segments
Diversification
Company growth through starting up or acquiring businesses outside the company’s current products and markets
Value chain
the series of internal departments that carry out value creating activities to design, produce, market, deliver, and support a firm’s products
Value delivery network
the network made up the company, its suppliers, its distributors, and, ultimately, its customers who partner with each other to improve the performance of the entire system
Marketing Strategy
the marketing logic by which the company hopes to create customer value and achieve profitable customer relationships
Marketing mix in relation to marketing strategy
guided by the marketing strategy the company designs and integrated one of these made up of factors under its control – product, price, place, and promotion (four Ps).
How to find best marketing strategy and mix
the company engages in marketing analysis planning implementing and control
Market segmentation
dividing the market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs
Market segment
A group of consumers who respond in a similar way to a given set of marketing efforts
Market targeting
The process of evaluating each market segments attractiveness and selecting one or more segments to enter
Positioning
Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers
Differentiation
Actually differentiating the market offering to create superior customer value
Marketing mix
The set of tactical marketing tools, product, price, place and promotion (Four Ps) that the firm blends to produce the response it wants in the target market
Four Ps
Product, price, place, and promoiton
Product
means the goods and services combination the company offers to the target market
Price
is the amount of money customers must pay to obtain the product
Place
includes company activities that make the product available to target consumers
Promotion
refers to activities that communicate the merits of the product and persuade target customers to buy it.
Four Cs
Customer solution
Customer cost
Convenience
Communication
Managing the marketing process
requires the four marketing management functions, analysis, planning, implementation, and control
SWOT analysis
an overall evaluation of the company’s strengths (S), weaknesses (W), opportunities (O), and Threats (T)
Marketing implementation
turning marketing strategies and plans into marketing actions to accomplish strategic marketing objectives
Marketing control
measuring and evaluating the results of marketing strategies and plans and taking corrective action to ensure that the objectives are achieved
Return on Marketing Investment or marketing ROI
the net return from a marketing investment divided by the costs of the marketing investment