What is the difference between a business firm and a nonprofit organization?
A business firm is a privately owned organization that serves its customers to earn a profit so that it can survive. A nonprofit organization is a nongovernmental organization that serves its customers but does not have profit as an organizational goal. I
What are examples of a functional level in an organization?
The functional level in an organization is where groups of specialists from the marketing, finance, manufacturing/operations, accounting, information systems, research & development, and/or human resources departments focus on a specific strategic directi
What is the meaning of an organization's mission?
A mission is a statement of the organization's function in society, often identifying its customers, markets, products, and technologies. It is often used interchangeably with vision.
What is the difference between an organization's business and its goals?
An organization's business describes the clear, broad, underlying industry or market sector of an organization's offering. An organization's goals (or objectives) are statements of an accomplishment of a task to be achieved, often by a specific time. Goal
What is the difference between a marketing dashboard and a marketing metric?
A marketing dashboard is the visual computer display of the essential information related to achieving a marketing objective. Each variable in a marketing dashboard is a marketing metric, which is a measure of the quantitative value or trend of a marketin
What is business portfolio analysis?
Business portfolio analysis is a technique that managers use to quantify performance measures and growth targets to analyze its clients' strategic business units (SBUs) as though they were a collection of separate investments.
Explain the four market-product strategies in diversification analysis.
The four market-product strategies in diversification analysis are (1) Market penetration, which is a marketing strategy to increase sales of current products in current markets. There is no change in either the basic product line or the markets served. R
What are the three steps of the planning phase of the strategic marketing process?
The three steps of the planning phase of the strategic marketing process are (1) Situation (SWOT) analysis, which involves taking stock of where the firm or product has been recently, where it is now, and where it is headed in terms of the organization's
What are points of difference and why are they important?
Points of difference are those characteristics of a product that make it superior to competitive substitutes�offerings it faces in the marketplace. They are the single most important factor in the success or failure of a new product.
What is the implementation phase of the strategic marketing process?
The implementation phase carries out the marketing plan that emerges from the planning phase and consists of (1) obtaining resources; (2) designing the marketing organization; (3) developing planning schedules; and (4) executing the marketing program desi
How do the goals set for a marketing program in the planning phase relate to the evaluation phase of the strategic marketing process?
The planning phase objectives are used as the benchmarks with which the actual performance results are compared in the evaluation phase to identify deviations from the written marketing plans and then correct negative ones or exploit positive ones.
organization
a legal entity that consists of people who share a common mission. Today's organizations can be divided into business firms and nonprofit organizations.
offerings
(products, services, or ideas) that create value for both the organization and its customers by satisfying their needs and wants.
business firm
a privately owned organization such as Target, Nike, or Volkswagen that serves its customers to earn a profit so that it can survive.
Profit
the money left after a business firm's total expenses are subtracted from its total revenues and is the reward for the risk it undertakes in marketing its offerings.
nonprofit organization
a nongovernmental organization that serves its customers but does not have profit as an organizational goal. Instead, its goals may be operational efficiency or client satisfaction. Regardless, it also must receive sufficient funds above its expenses to c
industry
Organizations that develop similar offerings create an industry, such as the computer industry or the automobile industry. As a result, organizations make strategic decisions that reflect the dynamics of the industry to create a compelling and sustainable
strategy (vs tactics)
an organization's long-term course of action designed to deliver a unique customer experience while achieving its goals. All organizations set a strategic direction. And marketing helps to both set this direction and move the organization there.
Tactics -
corporate level
where top management directs overall strategy for the entire organization. "Top management" usually means the board of directors and senior management officers with a variety of skills and experiences that are invaluable in establishing overall strategy.
strategic business unit (SBU)
a subsidiary, division, or unit of an organization that markets a set of related offerings to a clearly defined group of customers. ex: Some multimarket, multiproduct firms, such as General Electric and Johnson & Johnson, manage a portfolio or group of bu
strategic business unit level
at the strategic business unit level, managers set a more specific strategic direction for their businesses to exploit value-creating opportunities. For less complex firms with a single business focus, such as Ben & Jerry's, the corporate and business uni
functional level
Each strategic business unit has a functional level, where groups of specialists actually create value for the organization. The term department generally refers to these specialized functions such as marketing, finance, information systems, research & de
cross-functional teams
When developing marketing programs for new offerings or for improving existing ones, an organization's senior management may form cross-functional teams. These consist of a small number of people from different departments who are mutually accountable to
Today's visionary organization uses key elements to?
(1 ) establish a foundation and (2) set a direction using (3) strategies that enable it to develop and market its offerings successfully.
Organizational foundation (why)
� Core values
� Mission (vision)
� Organizational culture
Organizational direction (what)
� Business
� Goals (objectives)
Long-term
Short-term
Organizational strategies (how)
� By level: Corporate, SBU, Functional
� By offering: Product, Service, Idea
core values
An organization's core values are the fundamental, passionate, and enduring principles that guide its conduct over time. A firm's founders or senior management develop these core values, which are consistent with their essential beliefs and character. The
mission
By understanding its core values, an organization can take steps to define its mission, a statement of the organization's function in society that often identifies its customers, markets, products, and technologies. Often used interchangeably with vision,
organizational culture
the set of values, ideas, attitudes, and norms of behavior that is learned and shared among the members of an organization. An organization must connect with all of its stakeholders. Thus, an important corporate-level marketing function is communicating i
Organizational Direction: What Will It Do?
the organization's foundation enables it to set a direction in terms of (1) the "business" it is in and (2) its specific goals.
business
describes the clear, broad, underlying industry or market sector of an organization's offering. To help define its business, an organization looks at the set of organizations that sell similar offerings�those that are in direct competition with each other
business model
the strategies an organization develops to provide value to the customers it serves. Technological innovation is often the trigger for this business model change. With today's increased global competition, many organizations are rethinking their business
Goals or objectives
Goals or objectives (terms used interchangeably in this book) are statements of an accomplishment of a task to be achieved, often by a specific time. For example, Netflix might set a goal of being the top provider of online movies by 2012. Goals convert a
Profit
Most firms seek to maximize profits�to get as high a financial return on their investments (ROI) as possible.
Sales (dollars or units)
If profits are acceptable, a firm may elect to maintain or increase its sales even though profits may not be maximized.
Market share
the ratio of sales revenue of the firm to the total sales revenue of all firms in the industry, including the firm itself.
Quality
A firm may offer the highest quality, as Medtronic does with its implantable medical devices.
Customer satisfaction
Customers are the reason the organization exists, so their perceptions and actions are of vital importance. Satisfaction can be measured with surveys or by the number of customer complaints an organization receives.
Employee welfare
A firm may recognize the critical importance of its employees by stating its goal of providing them with good employment opportunities and working conditions.
Social responsibility
Firms may seek to balance the conflicting goals of stakeholders to promote their overall welfare, even at the expense of profits.
organizational strategies vary in at least two ways:
depending on (1) a strategy's level in the organization and (2) the offerings an organization provides to its customers.
Variation by Level
Moving down an organization involves creating increasingly specific, detailed strategies and plans. For example, at the corporate level, top managers may struggle with writing a meaningful mission statement; while at the functional level, the issue is whe
Variation by Offering
Organizational strategies also vary by the organization's offering. The strategy will be far different when marketing a very tangible physical product (a Medtronic heart pacemaker), a service (a Southwest Airlines flight), or an idea (a donation to the Am
Although marketing managers can set strategic directions for their organizations, how do they know if they are making progress in getting there?
One answer is to measure performance by using marketing dashboards.
marketing dashboard
the visual computer display of the essential information related to achieving a marketing objective. Often, active hyperlinks provide further detail. An example is when a chief marketing officer (CMO) wants to see daily what the effect of a new TV adverti
marketing metric
Each display in a marketing dashboard shows a marketing metric, which is a measure of the quantitative value or trend of a marketing activity or result. 2 8 The choice of which marketing metrics to display is critical for a busy marketing manager, who can
data visualization
Today's marketers use data visualization, which presents information about an organization's marketing metrics graphically so marketers can quickly (1) spot deviations from plans and (2) take corrective actions. ex: The Sonatica marketing dashboard in Fig
marketing plan
Most organizations tie the marketing metrics they track in their marketing dashboards to the quantitative objectives established in their marketing plan, which is a road map for the marketing activities of an organization for a specified future time perio
To set a strategic direction, an organization needs to answer two difficult questions:
(1) Where are we now? and (2) Where do we want to go?
competencies
What do we do best? The answer involves an assessment of the organization's core competencies, which are its special capabilities�the skills, technologies, and resources�that distinguish it from other organizations and provide customer value. Exploiting t
competitive advantage
What do we do better than others? Competencies should be distinctive enough to provide a competitive advantage, a unique strength relative to competitors that provides superior returns, often based on quality, time, cost, or innovation.
Competitors
In today's global marketplace, the distinctions among competitors are increasingly blurred.
Growth Strategies: Where Do We Want to Go?
Knowing where the organization is at the present time enables managers to set a direction for the firm and allocate resources to move in that direction. Two techniques to aid managers with these decisions are (1) business portfolio analysis and (2) divers
business portfolio analysis
The Boston Consulting Group (BCG), a nationally known management consulting firm, has developed business portfolio analysis. It is a technique that managers use to quantify performance measures and growth targets to analyze their firms' strategic business
market growth rate
the annual rate of growth of the SBU's industry.
relative market share
defined as the sales of the SBU divided by the sales of the largest firm in the industry. A relative market share of 10 X (at the left end of the scale) means that the SBU has 10 times the share of its largest competitor, whereas a share of 0.1 X (at the
Cash cows
SBUs that generate large amounts of cash, far more than they can invest profitably in themselves. They have dominant shares of slow-growth markets and provide cash to cover the organization's overhead and to invest in other SBUs.
Stars
Les Mis Song performed by Javert
Question marks
SBUs with a low share of high-growth markets. They require large injections of cash just to maintain their market share, much less increase it. The name implies management's dilemma for these SBUs: choosing the right ones to invest in and phasing out the
Dogs
SBUs with low shares of slow-growth markets. Although they may generate enough cash to sustain themselves, they do not hold the promise of ever becoming real winners for the organization. Dropping SBUs that are dogs may be required, except when relationsh
strengths and weaknesses of portfolio analysis?
The primary strength of business portfolio analysis lies in forcing a firm to place each of its SBUs in the growth-share matrix, which in turn suggests which SBUs will be cash producers and cash users in the future. Weaknesses of this analysis arise from
Diversification analysis
a technique that helps a firm search for growth opportunities from among current and new markets as well as current and new products. For any market, there is both a current product (what the firm now sells) and a new product (what the firm might sell in
Market penetration
a marketing strategy to increase sales of current products in current markets, such as selling more Ben & Jerry's Bonnaroo Buzz Fair Trade-sourced ice cream to U.S. consumers. There is no change in either the basic product line or the markets served. Incr
Market development
a marketing strategy to sell current products to new markets. For Ben & Jerry's, Brazil is an attractive new market. There is good news and bad news for this strategy: As household incomes of Brazilians increase, consumers can buy more ice cream; however,
Product development
a marketing strategy of selling new products to current markets. Ben & Jerry's could leverage its brand by selling children's clothing in the United States. This strategy is risky because Americans may not see the company's expertise in ice cream as exten
Diversification
a marketing strategy of developing new products and selling them in new markets. This is a potentially high-risk strategy for Ben & Jerry's if it decides to try to sell Ben & Jerry's branded clothing in Brazil. Why? Because the firm has neither previous p
strategic marketing process
organization uses strategic marketing process, whereby an organization allocates its marketing mix resources to reach its target markets (This process is divided into three phases: planning, implementation, and evaluation), to answer 3 questions: 1. How d
three steps in the planning phase of the strategic marketing process:
(1) situation (SWOT) analysis, (2) market-product focus and goal setting, and (3) the marketing program.
Step 1: Situation (SWOT) Analysis:
The essence of situation analysis is taking stock of where the firm or product has been recently, where it is now, and where it is headed in terms of the organization's marketing plans and the external forces and trends affecting it. An effective summary
goal of SWOT analysis
The task is to translate the results of the SWOT analysis into specific actions that will help the firm grow. The ultimate goal is to identify the critical strategy-related factors that impact the firm and then build on vital strengths, correct glaring we
Step 2: Market-Product Focus and Goal Setting:
Determining which products will be directed toward which customers (step 2 of the planning phase) is essential for developing an effective marketing program (step 3). This decision is often based on market segmentation, Points of Difference
Example: Medtr
market segmentation
involves aggregating prospective buyers into groups, or segments, that (1) have common needs and (2) will respond similarly to a marketing action. This enables an organization to identify the segments on which it will focus its efforts�its target market s
Step 3: Marketing Program:
Activities in step 2 tell the marketing manager which customers to target and which customer needs the firm's product offerings can satisfy�the who and what aspects of the strategic marketing process. The how aspect�step 3 in the planning phase�involves d
Product: elements
Features
Brand name
Packaging
Service
Warranty
Price: elements
List price
Discounts
Allowances
Credit terms
Payment period
Promotion: elements
Advertising
Personal selling
Public relations
Sales promotion
Direct marketing
Place: elements
Outlets
Channels
Coverage
Transportation
Stock level
The Implementation Phase of the Strategic Marketing Process:
the result of the tens or hundreds of hours spent in the planning phase of the strategic marketing process is the firm's marketing plan. Implementation, the second phase of the strategic marketing process, involves carrying out the marketing plan that eme
Designing the Marketing Organization:
A marketing program needs a marketing organization to implement it.
typical manufacturing firm marketing department's structure. Four managers of marketing activities are shown to report to the vice president of marketing or chief marketing officer. Sever
Executing the Marketing Program:
Marketing plans are meaningless pieces of paper without effective execution of those plans. Effective execution requires attention to detail for both marketing strategies and marketing tactics.
marketing strategy
the means by which a marketing goal is to be achieved, usually characterized by a specified target market and a marketing program to reach it. The term implies both the end sought (target market) and the means to achieve it (marketing program).
marketing tactics
To implement a marketing program successfully, hundreds of detailed decisions are often required. These decisions, called marketing tactics, are detailed day-to-day operational decisions essential to the overall success of marketing strategies.
The evaluation phase of the strategic marketing process
seeks to keep the marketing program moving in the direction set for it. Accomplishing this requires the marketing manager to (1) compare the results of the marketing program with the goals in the written plans to identify deviations and (2) act on these d
planning gap
Planners call this the planning gap: (a wedge-shaped shaded gap in the figure) the difference between the projection of the path to reach a new goal (line BD) and the projection of the path of the results of a plan already in place (line BC). The ultimate
Acting on Deviations:
When evaluation shows that actual performance has failed to meet expectations, managers need to take corrective actions. In response to the negative and positive deviations from targets, task force might consider the following:
? Exploiting a positive dev
Describe how core values, mission, organizational culture, business, and goals are important to organizations.
Organizations exist to accomplish something for someone. To give organizations direction and focus, they continuously assess their core values, mission, organizational culture, business, and goals. Today's organizations specify their foundation, set a dir
Explain why managers use marketing dashboards and marketing metrics.
Marketing managers use marketing dashboards to visually display on a single computer screen the essential information required to make a decision to take an action or further analyze a problem. This information consists of key performance measures of a pr
Discuss how an organization assesses where it is now and where it seeks to be.
Managers of an organization ask two key questions to set a strategic direction. The first question, "Where are we now?" requires an organization to (a) reevaluate its competencies to ensure that its special capabilities still provide a competitive advanta
Explain the three steps of the planning phase of the strategic marketing process.
An organization uses the strategic marketing process to allocate its marketing mix resources to reach its target markets. This process is divided into three phases: planning, implementation, and evaluation. The planning phase consists of (a) a situation (
Describe the elements of the implementation and evaluation phases of the strategic marketing process.
The implementation phase of the strategic marketing process carries out the marketing plan that emerges from the planning phase. It has four key elements: (a) obtaining resources; (b) designing the marketing organization to perform product management, mar
What are the two main themes of Chapter 2?
1. The structure of business organizations and marketing's place in the organization
2.The Strategic Marketing Process
Most organizations think strategically. If they don't...
It's better to do so using formal planning
What is the difference between a business firm and a nonprofit organization?
A business firm is a privately owned organization that serves its customers to earn a profit so that it can survive. A nonprofit organization is a nongovernmental organization that serves its customers but does not have profit as an organizational goal. I
What are examples of a functional level in an organization?
The functional level in an organization is where groups of specialists from the marketing, finance, manufacturing/operations, accounting, information systems, research & development, and/or human resources departments focus on a specific strategic directi
What is the meaning of an organization's mission?
A mission is a statement of the organization's function in society, often identifying its customers, markets, products, and technologies. It is often used interchangeably with vision.
What is the difference between an organization's business and its goals?
An organization's business describes the clear, broad, underlying industry or market sector of an organization's offering. An organization's goals (or objectives) are statements of an accomplishment of a task to be achieved, often by a specific time. Goal
What is the difference between a marketing dashboard and a marketing metric?
A marketing dashboard is the visual computer display of the essential information related to achieving a marketing objective. Each variable in a marketing dashboard is a marketing metric, which is a measure of the quantitative value or trend of a marketin
What is business portfolio analysis?
Business portfolio analysis is a technique that managers use to quantify performance measures and growth targets to analyze its clients' strategic business units (SBUs) as though they were a collection of separate investments.
Explain the four market-product strategies in diversification analysis.
The four market-product strategies in diversification analysis are (1) Market penetration, which is a marketing strategy to increase sales of current products in current markets. There is no change in either the basic product line or the markets served. R
What are the three steps of the planning phase of the strategic marketing process?
The three steps of the planning phase of the strategic marketing process are (1) Situation (SWOT) analysis, which involves taking stock of where the firm or product has been recently, where it is now, and where it is headed in terms of the organization's
What are points of difference and why are they important?
Points of difference are those characteristics of a product that make it superior to competitive substitutes�offerings it faces in the marketplace. They are the single most important factor in the success or failure of a new product.
What is the implementation phase of the strategic marketing process?
The implementation phase carries out the marketing plan that emerges from the planning phase and consists of (1) obtaining resources; (2) designing the marketing organization; (3) developing planning schedules; and (4) executing the marketing program desi
How do the goals set for a marketing program in the planning phase relate to the evaluation phase of the strategic marketing process?
The planning phase objectives are used as the benchmarks with which the actual performance results are compared in the evaluation phase to identify deviations from the written marketing plans and then correct negative ones or exploit positive ones.
organization
a legal entity that consists of people who share a common mission. Today's organizations can be divided into business firms and nonprofit organizations.
offerings
(products, services, or ideas) that create value for both the organization and its customers by satisfying their needs and wants.
business firm
a privately owned organization such as Target, Nike, or Volkswagen that serves its customers to earn a profit so that it can survive.
Profit
the money left after a business firm's total expenses are subtracted from its total revenues and is the reward for the risk it undertakes in marketing its offerings.
nonprofit organization
a nongovernmental organization that serves its customers but does not have profit as an organizational goal. Instead, its goals may be operational efficiency or client satisfaction. Regardless, it also must receive sufficient funds above its expenses to c
industry
Organizations that develop similar offerings create an industry, such as the computer industry or the automobile industry. As a result, organizations make strategic decisions that reflect the dynamics of the industry to create a compelling and sustainable
strategy (vs tactics)
an organization's long-term course of action designed to deliver a unique customer experience while achieving its goals. All organizations set a strategic direction. And marketing helps to both set this direction and move the organization there.
Tactics -
corporate level
where top management directs overall strategy for the entire organization. "Top management" usually means the board of directors and senior management officers with a variety of skills and experiences that are invaluable in establishing overall strategy.
strategic business unit (SBU)
a subsidiary, division, or unit of an organization that markets a set of related offerings to a clearly defined group of customers. ex: Some multimarket, multiproduct firms, such as General Electric and Johnson & Johnson, manage a portfolio or group of bu
strategic business unit level
at the strategic business unit level, managers set a more specific strategic direction for their businesses to exploit value-creating opportunities. For less complex firms with a single business focus, such as Ben & Jerry's, the corporate and business uni
functional level
Each strategic business unit has a functional level, where groups of specialists actually create value for the organization. The term department generally refers to these specialized functions such as marketing, finance, information systems, research & de
cross-functional teams
When developing marketing programs for new offerings or for improving existing ones, an organization's senior management may form cross-functional teams. These consist of a small number of people from different departments who are mutually accountable to
Today's visionary organization uses key elements to?
(1 ) establish a foundation and (2) set a direction using (3) strategies that enable it to develop and market its offerings successfully.
Organizational foundation (why)
� Core values
� Mission (vision)
� Organizational culture
Organizational direction (what)
� Business
� Goals (objectives)
Long-term
Short-term
Organizational strategies (how)
� By level: Corporate, SBU, Functional
� By offering: Product, Service, Idea
core values
An organization's core values are the fundamental, passionate, and enduring principles that guide its conduct over time. A firm's founders or senior management develop these core values, which are consistent with their essential beliefs and character. The
mission
By understanding its core values, an organization can take steps to define its mission, a statement of the organization's function in society that often identifies its customers, markets, products, and technologies. Often used interchangeably with vision,
organizational culture
the set of values, ideas, attitudes, and norms of behavior that is learned and shared among the members of an organization. An organization must connect with all of its stakeholders. Thus, an important corporate-level marketing function is communicating i
Organizational Direction: What Will It Do?
the organization's foundation enables it to set a direction in terms of (1) the "business" it is in and (2) its specific goals.
business
describes the clear, broad, underlying industry or market sector of an organization's offering. To help define its business, an organization looks at the set of organizations that sell similar offerings�those that are in direct competition with each other
business model
the strategies an organization develops to provide value to the customers it serves. Technological innovation is often the trigger for this business model change. With today's increased global competition, many organizations are rethinking their business
Goals or objectives
Goals or objectives (terms used interchangeably in this book) are statements of an accomplishment of a task to be achieved, often by a specific time. For example, Netflix might set a goal of being the top provider of online movies by 2012. Goals convert a
Profit
Most firms seek to maximize profits�to get as high a financial return on their investments (ROI) as possible.
Sales (dollars or units)
If profits are acceptable, a firm may elect to maintain or increase its sales even though profits may not be maximized.
Market share
the ratio of sales revenue of the firm to the total sales revenue of all firms in the industry, including the firm itself.
Quality
A firm may offer the highest quality, as Medtronic does with its implantable medical devices.
Customer satisfaction
Customers are the reason the organization exists, so their perceptions and actions are of vital importance. Satisfaction can be measured with surveys or by the number of customer complaints an organization receives.
Employee welfare
A firm may recognize the critical importance of its employees by stating its goal of providing them with good employment opportunities and working conditions.
Social responsibility
Firms may seek to balance the conflicting goals of stakeholders to promote their overall welfare, even at the expense of profits.
organizational strategies vary in at least two ways:
depending on (1) a strategy's level in the organization and (2) the offerings an organization provides to its customers.
Variation by Level
Moving down an organization involves creating increasingly specific, detailed strategies and plans. For example, at the corporate level, top managers may struggle with writing a meaningful mission statement; while at the functional level, the issue is whe
Variation by Offering
Organizational strategies also vary by the organization's offering. The strategy will be far different when marketing a very tangible physical product (a Medtronic heart pacemaker), a service (a Southwest Airlines flight), or an idea (a donation to the Am
Although marketing managers can set strategic directions for their organizations, how do they know if they are making progress in getting there?
One answer is to measure performance by using marketing dashboards.
marketing dashboard
the visual computer display of the essential information related to achieving a marketing objective. Often, active hyperlinks provide further detail. An example is when a chief marketing officer (CMO) wants to see daily what the effect of a new TV adverti
marketing metric
Each display in a marketing dashboard shows a marketing metric, which is a measure of the quantitative value or trend of a marketing activity or result. 2 8 The choice of which marketing metrics to display is critical for a busy marketing manager, who can
data visualization
Today's marketers use data visualization, which presents information about an organization's marketing metrics graphically so marketers can quickly (1) spot deviations from plans and (2) take corrective actions. ex: The Sonatica marketing dashboard in Fig
marketing plan
Most organizations tie the marketing metrics they track in their marketing dashboards to the quantitative objectives established in their marketing plan, which is a road map for the marketing activities of an organization for a specified future time perio
To set a strategic direction, an organization needs to answer two difficult questions:
(1) Where are we now? and (2) Where do we want to go?
competencies
What do we do best? The answer involves an assessment of the organization's core competencies, which are its special capabilities�the skills, technologies, and resources�that distinguish it from other organizations and provide customer value. Exploiting t
competitive advantage
What do we do better than others? Competencies should be distinctive enough to provide a competitive advantage, a unique strength relative to competitors that provides superior returns, often based on quality, time, cost, or innovation.
Competitors
In today's global marketplace, the distinctions among competitors are increasingly blurred.
Growth Strategies: Where Do We Want to Go?
Knowing where the organization is at the present time enables managers to set a direction for the firm and allocate resources to move in that direction. Two techniques to aid managers with these decisions are (1) business portfolio analysis and (2) divers
business portfolio analysis
The Boston Consulting Group (BCG), a nationally known management consulting firm, has developed business portfolio analysis. It is a technique that managers use to quantify performance measures and growth targets to analyze their firms' strategic business
market growth rate
the annual rate of growth of the SBU's industry.
relative market share
defined as the sales of the SBU divided by the sales of the largest firm in the industry. A relative market share of 10 X (at the left end of the scale) means that the SBU has 10 times the share of its largest competitor, whereas a share of 0.1 X (at the
Cash cows
SBUs that generate large amounts of cash, far more than they can invest profitably in themselves. They have dominant shares of slow-growth markets and provide cash to cover the organization's overhead and to invest in other SBUs.
Stars
Les Mis Song performed by Javert
Question marks
SBUs with a low share of high-growth markets. They require large injections of cash just to maintain their market share, much less increase it. The name implies management's dilemma for these SBUs: choosing the right ones to invest in and phasing out the
Dogs
SBUs with low shares of slow-growth markets. Although they may generate enough cash to sustain themselves, they do not hold the promise of ever becoming real winners for the organization. Dropping SBUs that are dogs may be required, except when relationsh
strengths and weaknesses of portfolio analysis?
The primary strength of business portfolio analysis lies in forcing a firm to place each of its SBUs in the growth-share matrix, which in turn suggests which SBUs will be cash producers and cash users in the future. Weaknesses of this analysis arise from
Diversification analysis
a technique that helps a firm search for growth opportunities from among current and new markets as well as current and new products. For any market, there is both a current product (what the firm now sells) and a new product (what the firm might sell in
Market penetration
a marketing strategy to increase sales of current products in current markets, such as selling more Ben & Jerry's Bonnaroo Buzz Fair Trade-sourced ice cream to U.S. consumers. There is no change in either the basic product line or the markets served. Incr
Market development
a marketing strategy to sell current products to new markets. For Ben & Jerry's, Brazil is an attractive new market. There is good news and bad news for this strategy: As household incomes of Brazilians increase, consumers can buy more ice cream; however,
Product development
a marketing strategy of selling new products to current markets. Ben & Jerry's could leverage its brand by selling children's clothing in the United States. This strategy is risky because Americans may not see the company's expertise in ice cream as exten
Diversification
a marketing strategy of developing new products and selling them in new markets. This is a potentially high-risk strategy for Ben & Jerry's if it decides to try to sell Ben & Jerry's branded clothing in Brazil. Why? Because the firm has neither previous p
strategic marketing process
organization uses strategic marketing process, whereby an organization allocates its marketing mix resources to reach its target markets (This process is divided into three phases: planning, implementation, and evaluation), to answer 3 questions: 1. How d
three steps in the planning phase of the strategic marketing process:
(1) situation (SWOT) analysis, (2) market-product focus and goal setting, and (3) the marketing program.
Step 1: Situation (SWOT) Analysis:
The essence of situation analysis is taking stock of where the firm or product has been recently, where it is now, and where it is headed in terms of the organization's marketing plans and the external forces and trends affecting it. An effective summary
goal of SWOT analysis
The task is to translate the results of the SWOT analysis into specific actions that will help the firm grow. The ultimate goal is to identify the critical strategy-related factors that impact the firm and then build on vital strengths, correct glaring we
Step 2: Market-Product Focus and Goal Setting:
Determining which products will be directed toward which customers (step 2 of the planning phase) is essential for developing an effective marketing program (step 3). This decision is often based on market segmentation, Points of Difference
Example: Medtr
market segmentation
involves aggregating prospective buyers into groups, or segments, that (1) have common needs and (2) will respond similarly to a marketing action. This enables an organization to identify the segments on which it will focus its efforts�its target market s
Step 3: Marketing Program:
Activities in step 2 tell the marketing manager which customers to target and which customer needs the firm's product offerings can satisfy�the who and what aspects of the strategic marketing process. The how aspect�step 3 in the planning phase�involves d
Product: elements
Features
Brand name
Packaging
Service
Warranty
Price: elements
List price
Discounts
Allowances
Credit terms
Payment period
Promotion: elements
Advertising
Personal selling
Public relations
Sales promotion
Direct marketing
Place: elements
Outlets
Channels
Coverage
Transportation
Stock level
The Implementation Phase of the Strategic Marketing Process:
the result of the tens or hundreds of hours spent in the planning phase of the strategic marketing process is the firm's marketing plan. Implementation, the second phase of the strategic marketing process, involves carrying out the marketing plan that eme
Designing the Marketing Organization:
A marketing program needs a marketing organization to implement it.
typical manufacturing firm marketing department's structure. Four managers of marketing activities are shown to report to the vice president of marketing or chief marketing officer. Sever
Executing the Marketing Program:
Marketing plans are meaningless pieces of paper without effective execution of those plans. Effective execution requires attention to detail for both marketing strategies and marketing tactics.
marketing strategy
the means by which a marketing goal is to be achieved, usually characterized by a specified target market and a marketing program to reach it. The term implies both the end sought (target market) and the means to achieve it (marketing program).
marketing tactics
To implement a marketing program successfully, hundreds of detailed decisions are often required. These decisions, called marketing tactics, are detailed day-to-day operational decisions essential to the overall success of marketing strategies.
The evaluation phase of the strategic marketing process
seeks to keep the marketing program moving in the direction set for it. Accomplishing this requires the marketing manager to (1) compare the results of the marketing program with the goals in the written plans to identify deviations and (2) act on these d
planning gap
Planners call this the planning gap: (a wedge-shaped shaded gap in the figure) the difference between the projection of the path to reach a new goal (line BD) and the projection of the path of the results of a plan already in place (line BC). The ultimate
Acting on Deviations:
When evaluation shows that actual performance has failed to meet expectations, managers need to take corrective actions. In response to the negative and positive deviations from targets, task force might consider the following:
? Exploiting a positive dev
Describe how core values, mission, organizational culture, business, and goals are important to organizations.
Organizations exist to accomplish something for someone. To give organizations direction and focus, they continuously assess their core values, mission, organizational culture, business, and goals. Today's organizations specify their foundation, set a dir
Explain why managers use marketing dashboards and marketing metrics.
Marketing managers use marketing dashboards to visually display on a single computer screen the essential information required to make a decision to take an action or further analyze a problem. This information consists of key performance measures of a pr
Discuss how an organization assesses where it is now and where it seeks to be.
Managers of an organization ask two key questions to set a strategic direction. The first question, "Where are we now?" requires an organization to (a) reevaluate its competencies to ensure that its special capabilities still provide a competitive advanta
Explain the three steps of the planning phase of the strategic marketing process.
An organization uses the strategic marketing process to allocate its marketing mix resources to reach its target markets. This process is divided into three phases: planning, implementation, and evaluation. The planning phase consists of (a) a situation (
Describe the elements of the implementation and evaluation phases of the strategic marketing process.
The implementation phase of the strategic marketing process carries out the marketing plan that emerges from the planning phase. It has four key elements: (a) obtaining resources; (b) designing the marketing organization to perform product management, mar
What are the two main themes of Chapter 2?
1. The structure of business organizations and marketing's place in the organization
2.The Strategic Marketing Process
Most organizations think strategically. If they don't...
It's better to do so using formal planning