Chapter 2 ∙ Marketing Strategy- Identifies a firm’s target markets, its 4 ps, and the bases on which the firm plans to build a sustainable competitive advantage ∙ Sustainable Competitive Advantage-an advantage over the competition that is not easily copied and cWe also discuss several other topics like mypsychlab login
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an be maintained over a long period of time o Like a wall of advantage that keeps competitors out and away from another companies core customers ∙ 4 Macro Strategies that help achieve a sustainable competitive advantage-focus on the marketing mix and create Customer Value o 1) Customer Excellence-Retaining loyal customers and excellent customer service Strong brand, unique merchandise, and superior customer service Loyalty-Means being reluctant to buying competitor One way to build loyalty is provide something unique o 2) Operational Excellence- Efficient operations and excellent supply chain and human resource management Like Customer relationships, vendor relationships must be developed over the long term and cannot be offset by the competitor o 3) Product Excellence-Products with high perceived value and effective branding o 4) Locational Excellence- Having a good physical location and internet presence A competitive advantage based on location is SUSTAINABLE because it is not easily duplicated McDonalds has developed a competitive advantage because it has a high density of stores which make it hard for a competitor to enter the market and find good locations o A single strategy such as low prices or excellent service is not sufficient to build a competitive advantage o Firms require multiple approaches to build a wall around their position that stands very high ∙ Marketing Plan-Is a written document composed of an analysis of the current marketing situation, opportunities and threats for the firm, marketing objectives and strategy specified in terms of the four P’s, action programs, and projected or pro forma income statements o A written marketing plan provides a reference point for evaluating whether or not the firm has met its objectives∙ 5 Steps of a Marketing Plan o 1) Phanning Phase-Marketing executives and top managers define the mission and or vision of the business o 2) Evaluate the situation by assessing how various players inside and outside the organization affect the firms potential success o 3) Implementation Phase-Marketing managers identify and evaluate different opportunities by engaging in a process known as segmentation, targeting and positioning o 4) Then they must implement the 4 P’s o 5) Control Phase-evaluation of the performance of the marketing strategy using marketing metrics and taking any necessary corrective actions ∙ Mission Statement- Attempts to answer…What type of business are we? And What do we need to do to accomplish our goals? o These must be answered before marketing executives get involved ∙ SWOT Analysis-assesses both the internal environment with regard to its Strengths and Weaknesses, and the external environment in terms of its Opportunities and Threats o Nike SWOT Analysis o Internally- its strengths would include its great brand recognition (More people are likely to try out their products), and the visibility of the celebrities who wear its products. Its weaknesses include the fact that they rely very heavily on their athletic show lines. Another negative is that it aligns itself with multiple “Heroes” who some have made complete fools of themselves and damaged the brands image o Externally- It has opportunities with dominance in other niche sport markets. Also launched a “Play Russian” campaign in the Russian Olympics. Also the opportunity for growth in global markets. Its threats include the fact that it must constantly be on the defensive because it holds market dominance which makes it target for all competitors. It also experiences threats from imitation products. ∙ Market Segment- Consists of consumers who respond similarly to a firm’s marketing efforts How does a firm choose consumer groups to pursue with its marketing efforts? ∙ Market segmentation-The process of dividing the market into groups of customers with different, needs, wants or characteristics who therefore might appreciate products geared especially for them o One group for Adrenaline junkies-Faster cars, one group for green people-Hybrid cars ∙ Target Marketing (Targeting)-After a firm has identified various market segments that it might pursue, it evaluates each segments attractiveness and decides which to pursue ∙ Marketing Positioning-he process of defining the marketing mix variables so that target customers have a clear, distinctive, and desirable understanding of what the product does or represents in comparison with competing products o To segment the coffee drinking market, Starbucks also finds locations where caffeine is needed (College campuses vs. shopping districts) ∙ Firms are most successful when they focus on opportunities that build on their strengths relative to those of their competition ∙ Portfolio Analysis: In portfolio analysis, management evaluates the firm’s various products and businesses (Its portfolio)- and allocates resources according to which products are expected to be the most profitable for the firm in the future o Performed at the Strategic Business Unit or (Product line) level of the firm o SBU-Is a division of the firm itself that can be managed and operated somewhat independently from other divisions and may have a different mission or objectives Goodyear has its 4 SBUS as 1) North American, 2) Europe, Middle East, African 3) Latin American 4) Asia Pacific The point of an SBU is to be agile and be able to respond quickly to changing economic or market situations ∙ How it is used to evaluate market performance? o Use of a two by two matrix o Stars-High growth markets and high market shares. Rapid growth, requires lots of materials. After their market growth slows they will migrate from being heavy users of resources to heavy generators of resources and will become cash cows o Cash cows- low growth, but high market share. o Question Marks-Appear in high-growth markets but have relatively low market shares. They often require lots of resources to maintain and increase their market share o Dogs-Low growth markets and relatively low market shares How do firms grow their businesses? ∙ Market Penetration Strategy: employs the existing marketing mix and focuses the firm’s efforts on existing customerso Encouraging more customers to patronize the firm more often, or to buy more stuff on each visit o Often requires greater marketing efforts like increased advertising and additional sales and promotions ∙ Market Development Strategy: employs the exisiting marketing offering to reach new market segments, domestically or internationally o MTV pursues a market development strategy by targeting older customers who were MTV viewers in their youth and are now reminiscent of their teenage years o International expansion is riskier than domestic because firms must deal with differences in regulations, language etc ∙ Product Development Strategy: introducing a new product or service to a firm’s current target market o This can increase the amount of time viewers will continue to watch this TV channel ∙ Diversification Strategy: Introducing a new product or service to a market segment that currently is not served, either related or unrelated o Related diversification-The current target market shares something in common with the new opportunity o Unrelated diversification- the new business lacks any common elements with the present business Point of Difference ∙ Something that makes you different from your competitors (But it has to be something that your customer actually wants) o Example: Why choose this Mexican Restaurant? Salsa is better Queso is better Prices are better Its more authentic Points of Parity ∙ A point of difference that a competitor has over you that you need to counteract ∙ In most cases you wont even be able to compete in the market unless you can invalidate this advantage that your competitor has Criteria for Identifying a Competitor∙ Anyone who competes for customers, resources, revenues, and or futures opportunities with you is a competitor Reasons for marketing Collaborations ∙ Co-Marketing Alliances- (J Crew and Ray Ban/Timex) ∙ Product Development alliances- (Medicine companies collaborating to create a cure for tough diseases) ∙ Global Distribution Alliances- McDonalds all over the world ∙ Product Development & Foreign Market Access-GE Sharing technology with wind turbines and also crack into new foreign markets Characteristics of a strong objective ∙ S-Specific ∙ M-easurable ∙ A-chievable ∙ R-elevant ∙ T-imely Market Share & Market penetration ∙ Unit share = Product unit sales / Market unit sales ∙ Demand Share = Product demand in # customers / market demand in # customers ∙ Dollar share = product dollar sales / market dollar sales Market Penetration ∙ Market Penetration Index* = Market Demand / # consumers in potential market o BUYING ANY PRODUCT ∙ Product penetration Index = Product demand / # consumers in target market o BUYING A PARTICULAR PRODUCT