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Chapter 2- Developing Marketing Strategies and a Marketing Plan

by: Priscilla Muiuane

Chapter 2- Developing Marketing Strategies and a Marketing Plan MKT 3013

Marketplace > University of Oklahoma > Business > MKT 3013 > Chapter 2 Developing Marketing Strategies and a Marketing Plan
Priscilla Muiuane
Intro to Marketing

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Hello all! I have carefully created awesome study notes to help you guys study for the midterms. This is a condensed yet detailed set of notes that points out the important information from the cha...
Intro to Marketing
Class Notes
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This 9 page Class Notes was uploaded by Priscilla Muiuane on Sunday September 20, 2015. The Class Notes belongs to MKT 3013 at University of Oklahoma taught by Kasulis in Fall 2015. Since its upload, it has received 124 views. For similar materials see Intro to Marketing in Business at University of Oklahoma.


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Date Created: 09/20/15
NB Notes created by student Chapter 2 Developing Marketing strategies and a Marketing plan Marketing strategy identifies 1 a firm s target market s 2 a related marketing mix the four Ps 3 the basis 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 thus can be maintained over a long period of time Acts like a wall that the firm has built around its position in a market makes it hard for outside competitors to contact customers inside Although competitors will attempt to break down the wall overtime advantages will erode because of these competitive forces but by building high thick walls marketers can sustain their advantage minimize competitive pressure and boost profits for a longer time 4 Macro overarching strategies that focus on aspects of the marketing mix to create and deliver value and develop sustainable competitive advantage 1 Customer excellence focuses on retaining loyal customers and excellent customer service 2 Operational excellence achieved through efficient operations and excellent supply chain and human resource management 3 Product excellence having products with high perceived value and effective branding and positioning 4 Locational excellence having a good physical location and Internet presence Retaining loyal Customers Viewing customers with a lifetime value perspective rather than on a transactionbytransaction basis Developing a clear and precise positioning strategy Create emotional attachment through loyalty programs eg loyalty card membership information in airlines hotels movie theatres etc Customer service Firms that offer god customer service instill the importance of consisting over a long period of time so it becomes part of the organizational culture Operational Excellencemethod of achieving a sustainable competitive advantage through efficient operations excellent supply chain management and many relationships with their suppliers Can ensure good value to their customers earn profitability for themselves and satisfy their customers needs NB Notes created by student Enable firms either to provide their consumers with lower priced merchandise or even if their prices are not lower than those of the competition to use the additional margin they earn to attract customers away from competitors by offering even better service merchandise assortments or visual presentations Firms achieve efficiencies by developing sophisticated distribution and information system as well as strong relationships with vendors Firms with strong relationships may gain exclusive rights to 1 Sell merchandise in a particular region 2 Obtain special terms of purchase that are not available to competitors 3 Receive popular merchandise that may be in short supply Product Excellence occurs by providing products with high perceived value and effective branding and positioning Locational Excellence Location not easily duplicated thus competitive advantage Marketing plan 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 Ps action programs and projected or pro forma income and other financial statements NB Notes created by student Phases of the marketing plan 1 planning 2 implementation 3 control Step 1 Business mission and objectives Planning Phase Step 2 Situation Analysis SWOT I I I I I I I I I I I I I I I I I I I I l IF I I I I I I I I I I I I I I I I I I I Step 3 Identify opportunities T 139 I I I I I I I I Implement I Segmentation Targeting Positioning I I ation I I Phase I I l I I I I I I I Step 4 Implement Marketing I 39 Mix I I I I l I i I I I I I Control Step 5 Evaluate performance using Phase marketing metrics NB firms do not necessarily go through every step or in the same order Planning Phase Markting executives in conjunction with other top managers define the mission and or vision of the business Firms evaluate the situation by assessing how various players both inside and outside the organization affect the firm s potential for success Step2 Implementation phase Marketing managers identify and evaluate different opportunities by engaging in the process of segmentation targeting and positioning STP step 3 NB Notes created by student Implementation of the marketing mix using the 4 Ps Step 4 Control Phase Entails evaluating the performance of the marketing strategy using marketing metrics and taking any necessary corrective action Step 1 Define the Business Mission Mission statement a broad description of a firm s objectives and the scope of activities it plans to undertake Step 2 Conduct a Situation Analysis SWOT Strengths and Weaknesses and the external environment in terms of its Opportunities and Threats CDSTEP Cultural Demographic Social Technological Economic Political forces Step 3 Identifying amp Evaluating Opportunities Using STP Identify and evaluate opportunities for increasing sales and profits using STP With STP the firm divides the marketplace intro subgroups or segments determines which of these segments it should pursue or target and finally decides how it should position its products and services to meet the needs of those chosen targets best Market Segment A group of consumers who respond similarly to a firm s marketing efforts Market Segmentation The process of dividing the market into groups of customers with different needs wants or characteristics who therefore appreciate products or services geared especially for them Target marketing targeting The process of evaluating the attractiveness of various segments and then deciding which to pursue as a market Market positioning involves the process of defining the marketing mix variables so that target customers have a clear distinctive desirable understanding of what the product does or represents in comparison with competing products After identifying its target segments a firm must evaluate each of its strategic opportunities Firms are typically most successful when they focus on opportunities that build on their strengths relative to those of their competition Step 4 Implement Marketing Mix amp Allocate Resources Implement the marketing mix price product promotion and place for each product and service based on what they believe their target markets will value NB Notes created by student At the same time marketers make important decisions about how they will allocate their scarce resources to their various products and services Product and value Creation Products Anything that is of value to a consumer and can be offered through a voluntary marketing exchange Price and Value Capture As part of the exchange process the firm provides a product or service and in turn gets money Valuebased marketing requires firms to charge a price that customers perceive as giving them a good value for the product they receive Only activity that in uences revenues if a price is set too high it will not generate much volume If it is set too low may result in lowerthanoptimal margins and profits Therefore price is based on the value the customer perceives Place and Value Delivery Make the product or service readily accessible when and where the customer wants it Promotion and Value Communication Value of offering proposition through a variety of media eg television radio magazines sales forces and the Internet Smaller companies find that these sites give them greater name recognition than they ever could have achieved on their own if a wellknown company uses these sites the effect is even more remarkable Step 5 Evaluate Performance Using Marketing Metrics Evaluating the results of the strategy and implementation program using marketing metrics Metric A measuring system that quantifies a trend dynamic or characteristic Used to explain why things happen and also to project the future Makes it possible to compare results across regions strategic business units SBU s product lines and time periods Using metrics understanding the causes of the performance enables firms to make appropriate adjustments Who is accountable for performance Business unit and manager Performance evaluations are used to pinpoint problem areas NB Notes created by student The manager should only be held accountable in the case of the inadequate sales force or setting inappropriate forecasts When it appears that actual performance is going to be below the plan because of circumstances beyond the manager s control the firm can still take action to minimize the harm eg global recession or a scandal involving a spokesperson Why is it difficult to find a single metric system to evaluate performance Difficult to find a single metric to evaluate performance because many factors contribute to a firm s performance How to properly evaluate performance Compare a firm s performance overtime or to competing firms using common financial metrics such as sales and profits View the firm s products or services as a portfolio Financial Performance Metrics Commonly used metrics revenues sales and profits An attempt to maximize one metric may lower another Therefore it is important for managers to understand how their actions affect multiple performance metrics A firm may wish to measure the relative metric of sales and profits in addition to assessing the absolute level of sales and profits Metrics used to evaluate a firm depend on 1 the level of the organization at which the decision is made and 2 the resources the manager controls 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 Strategic Business Unit SBU A division of the firm itself that can be managed and operated somewhat independently from other divisions and may have a different mission or objective eg Goodyear tire firm is selling its products in 180 countries It s 4 SBU s are organized by geography North America Europe Middle East Africa Latin America and Asia Pacific Product Lines Groups of associated items such as those that consumers ause together or think of as part of a group of similar products eg Product lines for Goodyear might be car van SUV light truck and another line could be racing tires or aviation tires Market share the percentage of a market accounted for by a specific entity and is used to establish the product s strength in a particular market Usually discussed in revenue units or sales NB Notes created by student Relative market share which is a market share metric A measure of the product s strength in a particular market defined as the sales of the focal product divided by the sales achieved by the largest firm in the industry Market growth rate The annual rate of growth of the specific market in which the product competes Measures how attractive a particular market is Boston Consulting Group BCG Matrix Relative Market Share High Cash Generation Low Stars Question Marks c 9 9 Ecru RI c O E 5 9 3 E i lt19 O f V 0 2 5 2 O ft h 1 Cash Cows QuickMBAcom Stars Occur in high growth markets and are high market share products Require a heavy resource investment in such things such as promotions and new production facilities to fuel their rapid growth As their market growth slows they will migrate from heavy users of resources to heavy generators of resources and become cash cows Cash Cows Low growth markets but are high market share products Because these products have already received heavy investments to develop their high market share they have excess resources that can be spun off to those products that need it MARKETS NB Notes created by student Question marks High growth markets but have relatively low market shares Often the most managerially intensive products in that they require significant resources to maintain and potentially increase their market share Managers must decide whether to infuse question marks with resources generated by the cash cows so that they can become stars or withdraw resources and eventually phase out the products Dogs Low growth markets and have relatively low market shares May generate enough resources to sustain themselves dogs are not destined for stardom and should be phased out unless they are needed to complement or boost the sales of another product or for competitive purposes Issues with BCG approach It is difficult to measure both relative market share and industry growth Other measures could easily serve as substitutes to represent a product s competitive position and the market s relative attractiveness Potentially selffulfilling prophecy of placing a product or service into a quadrant Market Product and Services Strategies PRODUCTS amp SERVICES Current New 5 at Market Penetration Product 5 Development 3 Market Diversification 2 Development Growth Strategies 1 Market Penetration Strategy employs the existing marketing mix and focuses the firm s efforts on existing customers Such a growth strategy might be achieved by attracting new consumers to the firm s current target market or encouraging current customers to patronize the firm more often or buy merchandise on each visit NB Notes created by student 2 Market Development strategy employs the existing marketing offering to reach new market segments whether domestic or international International expansion is generally riskier than domestic expansion because firms must deal with differences in government regulations cultural traditions supply chains and languages 3 Product Development Strategy offers a new product or service to a firm s current target market 4 Diversification Strategy introduces a new product or service to a market segment that currently is not served Diversification opportunities may be related or unrelated Related diversification a growth strategy whereby the current target market and or marketing mix shares something in common with the new opportunity The firm may be able to purchase from existing vendors use the same distribution and or management information system or advertise in the same newspapers to target markets that are similar to their current consumers Unrelated diversification the new business lacks any common elements with the present business Unrelated diversifications do not capitalize on either core strengths associated with markets or with products


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