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Chapter 14Exam Review

Two types:

1. Business firms – serves customers in order to earn a profit (rev > cost)

2. Not-for-profit – serves customers but not have profit as a goal

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Three Level of strategy in an organization:1. Corporate Level – top mgt directs overall

strategy ◦ Mgt focusses on the shareholder happiness and

stock price

Strategic Business Units (SBU): a group of different businesses within one firm

2. Business Unit Level – business unit managers set the direction for products and markets

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Three Levels of strategy in an organization:

3. Functional Level – each business unit has a specialty function like ‘finance’ ◦ Name of a department is usually the specialty function

Strategy Issues in Organizations Orgs need a reason to exist and a direction This is where business, mission and goals converge

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A Look Around: Where are we Now?Answer involves ID of

Customers – strategic directions must be customer-focussed and provide genuine value and benefitsCompetencies – what does the organization do best? Special capabilities, skills, resources, technologyCompetitors – know who they are

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Business Portfolio Analysis uses quantified performance measures and market growth to analyze a firm’s strategic business units as though they were a collection of separate investmentsPosition your firm’s SBU on a “growth Share” matrixVerticle axis – market growth rateHorizontal axis – relative market share eg largest competitor 50% of market your brand 25% of market

Your brand RMS = 25%/50% = 50%

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Cash CowsGenerate lots of cashHave dominant market share of slow growth market

StarsHigh share of high-growth marketsMay need extra cash to fuel growth

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Question Marks/problem childrenLow share of high growth marketsRequire lots of cash to maintain market share

Dogs Low share of low growth marketsGenerate enough cash to sustain

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1. Situation Analysis ◦SW/OT – Next Slide

◦Porter 5 forces Industry (Rivalry) Supplier -strength Customer analysis (Buyer -strength) Competitor (Substitutes) New Companies (Entry Exit)

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Before marketing activities are defined, marketers must understand the current and potential environment internally and externally

Internal: organizational resourcesStrengths Weakenseg. Costs, skills budgetExternal: environmental scanningOpportunityThreatseg. Social, demographic, technological

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2. Market Analysis - product focus and goal setting◦ID target markets through segmentation: grouping consumers into groups or segments eg all students or all girls◦Set marketing and product goals

◦Select Target Markets

◦Determine competitive advantages

◦Position the product

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Marketing Objective: statement of what is to be accomplished through marketing

Should:1. realistic, measurable

2. Time specific

“Achieve 10% increase in market share with in 12 months”

3. Direction

“...and introduce 5 new products in the next year”

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Marketing Strategy involves selecting and describing market segments

Market Segment: group sharing characteristics with similar product needs eg. Students

A target marketing strategy involves using a market opportunity analysis which is the description and estimation of size of market and sales potential, assessment of competitors in segment

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Competitive Advantage: unique features make product superior to competitors

A. Cost Competitive Advantage – getting low cost raw materials, efficiently produce item, having easily manufactured products

Cost Competitive Advantage: being a low cost compeitor in the industry while making a profit leasing to superior customer value

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Cost advantage – getting low cost raw materials, efficiently produce item, having easily manufactured products

Costs reduced through:

1. Experience curves – costs go down as experience with a product increases

-reflect learning by doing, technological advances eg. Salad making

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Cost advantage – getting low cost raw materials, efficiently produce item, having easily manufactured products

Costs reduced through:

2. Efficient Labour – outsourceing

3. No-frills goods and services – eg WestJet no meals

4. Government Subsidies – no interest loans

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Cost advantage – getting low cost raw materials, efficiently produce item, having easily manufactured products

Costs reduced through:

5. Product Design – make product easy to produce

6. Re-engineering – rethink and redesign processes

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Cost advantage – getting low cost raw materials, efficiently produce item, having easily manufactured products

Costs reduced through:

7. Product Innovations – make production easier

8. New Methods of Service Delivery – online ordering

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Competitive Advantage: unique features make product superior to competitors

B. Product /Service Differentiation Competitive Advantage – longer lasting advantage, providing value beyond low price eg. Brand names based on quality

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Competitive Advantage: unique features make product superior to competitors

C. Niche Competitive Advantage – target and serve single market

-usually for smaller companies with limited not able to compete with larger competitorseg. Serve only certain age group, geographical area

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Competitve Advantage: unique features make product superior to competitors

A Sustainable Competitive Advantage – cannot be copied by competitors, consumers have no reason why to patronize competitors eg. Rolex

-created through:1. skills – superior customer service 2. assets – patents, superior

-imitation by competitors indicates lack of competitive advantage

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3. Marketing Programme

Marketing Mix: blend of product, place/distribution, promotion, pricing (four P’s) to bring about maximal value of exchange

-use to gain advantages over competitors

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Marketing Mix:

Product – package, warranty, after sales support, image

Place/distribution – making products available when and where customers want them

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Marketing Mix:

Promotion – advertising, public relations, sales promotion, personal selling

– informing, education and persuading

Pricing – what buyer must give up to get product

- quickest to change

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4. Implementation: turns marketing plan into action to accomplish plan’s objectives (goals)

-involves:-detailed job assignments-timelines-budgets

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5. Evaluation: gauging the extent to which marketing objectives have been achieved

Common reasons for failing to achieve objectives/goals:

1.Unrealistic objectives2.Inappropriate marketing strategies3.Poor implementation4.Changes in the environment

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Control: correcting actions that do not help organization help achieve objectives

done through...Marketing Audit: periodic

evaluation of the objectives and performance of organization

-manage marketing resources

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Marketing Audit characteristics:

a) comprehensive coverage of marketing issues, good and bad

b) Systematic and orderly

c)Independantly conducted to be objective

d)Periodicly carried out on a scheduled timeline not only during crisis

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