1 Chapter 14 Exam 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 2

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 3

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 4

A Look Around: Where are we Now?  Answer involves ID of  Customers – strategic directions must be customer-focussed and provide genuine value and benefits  Competencies – what does the organization do best? Special capabilities, skills, resources, technology  Competitors – know who they are 5

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 investments  Position your firm’s SBU on a “growth Share” matrix  Verticle axis – market growth rate  Horizontal axis – relative market share  eg largest competitor 50% of market  your brand 25% of market  Your brand RMS = 25%/50% = 50% 6

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Cash Cows  Generate lots of cash  Have dominant market share of slow growth market Stars  High share of high-growth markets  May need extra cash to fuel growth 8

Question Marks/problem children  Low share of high growth markets  Require lots of cash to maintain market share Dogs  Low share of low growth markets  Generate enough cash to sustain 9

1. Situation Analysis ◦ SW/OT – Next Slide ◦ Porter 5 forces  Industry (Rivalry)  Supplier -strength  Customer analysis (Buyer -strength)  Competitor (Substitutes)  New Companies (Entry Exit) 10

Before marketing activities are defined, marketers must understand the current and potential environment internally and externally Internal: organizational resources  Strengths  Weakens eg. Costs, skills budget External: environmental scanning  Opportunity  Threats eg. Social, demographic, technological 11

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 12

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” 13

 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 14

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 15

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 16

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 17

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 18

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 19

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 20

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 competitors eg. Serve only certain age group, geographical area 21

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 22

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 23

 Marketing Mix:  Product – package, warranty, after sales support, image  Place/distribution – making products available when and where customers want them 24

 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 25

4. Implementation: turns marketing plan into action to accomplish plan’s objectives (goals) -involves: -detailed job assignments -timelines -budgets 26

5. Evaluation: gauging the extent to which marketing objectives have been achieved Common reasons for failing to achieve objectives/goals: 1. Unrealistic objectives 2. Inappropriate marketing strategies 3. Poor implementation 4. Changes in the environment 27

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 28

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 29