Principle of Marketing: Chapter 2

Strategic Planning
Process of establishing an organizational mission and formulating goals, corporate strategy, marketing objectives, marketing strategy, and a marketing plan

Figure 2.1/2.3

Marketing Strategy
A plan of action for identifying and analyzing a target market and developing a marketing mix to meet the needs of that market
How Marketing Strategy best formulated?
When it reflects the overall direction of the organization and is coordinated with all company’s functional areas
Marketing Plan
A written document that specifies the activities to be performed to implement and control the organizations marketing activities
Core Competencies
Things a company does extremely well, which sometimes give it an advantage over its competition
Ex: Reputation, well-known brand names such as rolex
Marketing Opportunity
A combination of circumstances and timing that permits an organization to take action to reach a particular target market
Ex: Consumers began to perceive bottled water as having a negative impact on the environment, SIGG USA recognized a market opportunity for reusable aluminum
Strategic Windows
Temporary periods of optimal fit between the key requirements of a market and the particular capabilities of a company competing in that market
Competitive advantage
The result of a company matching a core competency to opportunities it has discovered in the marketplace
SWOT analysis
Assessment of an organizations strengths, weaknesses, opportunities, and threats
Strengths: Core Competencies that help meet target market
Weaknesses: Refer to any limitations a company faces in developing or implementing a marketing strategy.
Opportunities: Favorable conditions in the environment that could produce rewards for the organization if acted properly.
Threats: Conditions or barriers that may prevent the company from reaching its objectives
How should SWOT be planned?
Weaknesses should be converted to strengths, strengths match opportunity, threat convert opportunity.
Mission Statement
A long term view, or vision, of what the organization wants to become.
What two questions does a mission statement answer?
Who are our customers? What is our core competency?
Companies try to develop ______ to support all corporate activities, including marketing
Personal Identity
Marketing Objectives
Statement of what is to be accomplished through marketing activities
Marketing Objectives should be based on a careful study of _______
SWOT analysis
Marketing Objectives should possess certain characteristics:
1. Expressed in clear, simple terms
2. Objective should be written so it can be measured accurately
3. Marketing objective should specify a time frame for its accomplishments
Corporate Strategy
A strategy that determines the means for utilizing resources in the various functional areas to reach the organizations goals. Top-level strategy
Strategic Business Unit (SBU)
Division, product line, or other profit center within the parent company
Ex: Proctor and gamble in 22 different industries
Market
A group of individuals and/or organizations that have needs for products in a product class and have the ability, willingness, and authority to purchase those products
Market Share
Percentage of a market that actually buys a specific product from a particular company
Market growth/market share matrix
The Boston Consulting Group (BCG) Helpful business tool, based on the philosophy that a products market growth rate and its market share are important considerations in determining its marketing strategy.
What does the matrix predict?
future cash contributions and future cash requirements
the four basic types of growth share, developed by BCG?
-Stars: Products with dominant share of the market and good prospects for growth. Use more cash than they generate to finance growth, add capacity and increase market share
-Cash Cows: Dominant share of the market but low prospects for growth; typically they generate more cash than is required to maintain market share
-Dogs: Subordinate share of the market and low prospects of growth.
-Question Marks: “Problem Child” small share of a growing market and generally require a large amount of cash to build market share.
Based on the four growth share variables, what judges the overall health of a company?
Size and vulnerability of cash cows, prospects of the stars, and the number of question marks and cows.
Marketing Strategy
Corporate strategy and marketing strategy must coordinate the organizations mission and goals with stakeholder relationships. Marketing must deliver value and be responsible in facilitating effective relationships with all relevant stakeholders
Marketing strategy is designed around two components:
Selection of a target market and the creation of a marketing mix (considered marketings tactical variables or action elements) that will satisfy the needs of the chosen target market.
Target Market Selection
Most important decision a company makes in the strategic planning process. Must be chosen before the organization can adapt its marketing mix to meet the customers needs and preferences
Creating the Marketing Mix
All based on the target market, must learn the demographic information, customer needs, preferences, and behaviors with respect to product design, pricing, distribution, and promotion.
Sustainable competitive advantage
An advantage that the competition cannot copy
Marketing planning
The systematic process of assessing marketing opportunities and resources, determining marketing objectives, defining marketing strategies, and establishing guidelines for implementation and control of the marketing program
Table 2.1
Marketing implementation
Process of putting marketing strategies into action
Intended strategy
the strategy the organization decides on during the planning phase and wants to use
Realized strategy
The strategy that actually takes place
Three ways of marketing implementation
CRM, internal marketing, and total quality management.
80/20 rules
80% of business profits comes from 20% of customers. Goal is to assess the worth of individual customers and thus estimate their lifetime value to the company.
Customer lifetime value (CLV)
not only does it include individual propensity, but also the customers word of mouth capabilities
External Customers
Individuals who patronize the company, normal definition of customer
Internal Customer
The companies employees
Internal Marketing
A management philosophy that coordinates internal exchanges between the organization and its employees to achieve successful external exchanges between the organization and its customers.
Total Quality Management (TQM)
A philosophy that uniform commitment to quality in all areas of the organization will promote a culture that meets customers perceptions of quality
Benchmarking
Comparing the quality of the companies goods, services, or processes with that of its best-performing competitors
Empowerment
Giving customer-contact employees authority and responsibility to make marketing decisions without seeking approval of their supervisors
Centralized organization
A structure in which top-level managers delegate little authority to low levels
Decentralized organization
Structure in which decision-making is delegated as far down the chain of command as possible
Marketing Control Process
Establishing performance standards evaluating actual performance by comparing it with established standards, and reducing the difference between desired and actual performance
Performance Standard
An expected level of performance against which actual performance can be compared