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by: Ms. Beulah Walter


Ms. Beulah Walter
GPA 3.64

Carolyn Garrity

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Carolyn Garrity
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This 13 page Class Notes was uploaded by Ms. Beulah Walter on Tuesday October 13, 2015. The Class Notes belongs to MKT 4500 at Louisiana State University taught by Carolyn Garrity in Fall. Since its upload, it has received 7 views. For similar materials see /class/222520/mkt-4500-louisiana-state-university in Marketing at Louisiana State University.

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Date Created: 10/13/15
MKT 4500 FINAL REVIEW Chapter 8 1 Know the four categories of new trends and examples and In Game quot J combines traditional advertising with an entertainment component During the early years major companies relied on product placement in movies or television programs as a rich source of co branding Coca Cola tumblers on the judges table of American Idol Later developments in branded entertainment involved featuring a company s product or brand name in the script of a show or movie Windex being a solution for all kinds of ailments in My Big Fat Greek Wedding Product placement on TV movies and electronic video games is fast being replaced by advertising and product placement in online video games In the video game Second Life digital avatars inhabit a virtual world and retailers such as Nike Reebok and Amazon sell digital as well as real world versions of their products in the game and Nissan allows Second Lifers to drive around in digital versions of the Sentra they can buy from a giant vending machine Emergence of New Media As traditional mass media lose their footing the Internet and new media formats are rising in prominence in the marketer s toolkit New online media forms include chat rooms video games online stores user generated content sites YouTube social networking sites Facebook and community supported information services Wikipedia and Craigslist But new media are not limited on the internet Other new media include video projection billboards and interactive urinal communicators Consumer Generated Media CGM encompasses the millions of consumer generated comments opinions and personal experiences posted in publicly available online sources on a wide range of issues topics products and brands CGM originates from blogs message boards and forums public discussions Usenet newsgroups discussions and forums on large e mail portals Yahoo AOL MSN and online opinionreview sites Search in particular magni es CGM reach by matching those create it speakers with curious information hungry pre shoppers seekers It brings light on the fact that maybe consumers are the marketers of the future The Mobile Marketing EcosystemIt is said that 27 billion people are mobile subscribers have cell phones and that 18 billion of these people are active text messaging users Develops in mobile search and video advertising make marketing through mobile devices even more relevant A good example are phone apps which can be bought or accessed for free and contain 39 39 oo 39 a r 39 39r with MobiTV a mobile broadcast service provider to launch a new mobile advertising alliance 2 Why does word of mouth marketing matter What is your opinion about the future of it and what are some ethical issues Didn t really feel like answering this question because the information in the book is kind of broad but I feel like you could wing this if you had to but if you re curious the book talks about WOM marketing on page 151 Chapter 9 3 Know the six different roles a brand can play Know the relationship to the customer and how can brands create value also asks to give your opinion on the value of a brand As a potential source of value for the company a brand shapes a wealth of perceptions beliefs attitudes and experiences in the consumer s world Brand value is created and appropriated from its various roles some which will brie y be discussed 77Ie Brand as a ProductCompanyldentl39zy39 It is an identi eran ownership symbol of prod ucerseller a seal of authenticity a source of differentiation from competing products a guarantee of quality and a mark of distinction Attributed and anticipated benefits with a brand name become powerful decision making tools for consumers 771e Brand as a TrustmarC The brand can become a symbol of trust It provides the necessary reassurance to alleviate choice fatigue from copious and time consuming evaluation of other brands 77Ie Brand as a Relationship Builder The customer can have a relationship with brand as an object via the productservice or with the company The consumer can participate in a way that is meaningful to him or her in the creation pricing promotions and delivery of the productservice If a customer is involved with the brand in this manner she or he may have a new sense of commitment and loyalty as a stakeholder in the future of the relationship 771e Brand as Experience Customer experiences that transform and rejuvenatre have become the new foundation for competitive differentiation value creation and brand equity The strategic experiential marketing SEM framework consists of five types of customer experiences Sense Feel 77Iin Act and Relate 77Ie Brand as a LovemarC It is a brand that has created loyalty beyond reason whereas trustmarks operate at a brand level lovemarks act at the human level the brand is no longer a part of the products identity but part of the individual s identity 771e Brand as a Character in a Stayin a competitive product saturated market a product needs something beyond the brand an added value an idea mythic images a story that is real and enticing about the origin history or potential use of the item Marketers use the informational and transformational abilities of advertising to create a compelling image identity and personality that give the brand its meaning and appeal 4 What is marketing juju Marketing juju is the holy grail of marketing the elusive and much sought after elixir that promises the brand everlasting vitality It protects the brand against the marketing vampire that wants to suck the life out of it on behalf of the competitor It does not cost a lot of money all you need is plenty of creative mojo It is derived from a brand that has a radiant sense motivational qualities and deeply mythic allure that touches human spirit The not so good news is that there is no secret formula there is no pixie dust or magic wand for getting the special marketing juju associated with the world s most enduring brands Value is uniquely co created by people based on personal meaning derived from the experience of the brand Basically marketing juju is using advertising efforts that touch people in a sense that they feel a connection and loyalty to the brand and create ideas that stick and reinforce the brand s present and past meaning while realizing its future potential Chapter 10 5 Understand and explain the Red Queen effect and what are the 5 strategies for escaping this effect The Red Queen effect is named after a character a life sized chess piece in the sequel to Alice in Wonderland who relentlessly runs faster and faster never stopping It symbolizes that everyone in the Red Queen s domain continues to be perpetually running and yet the faster she runs the more she tends to stay in the same place relative to other fast moving and uncertain activities in her environment This relates to marketing in the sense that even though sometimes we feel we are making improvements and strengthening marketing strategies others are simultaneously doing the same thing causing one to gain no ground on their competitors as a result of faster cycles of innovation and competition Some implications of the Red Queen effect for the marketing world are margins are shrinking competition is becoming more erce more nimble competitors are entering the market the nature of competition keeps changing new technologies are appearing unabatedly and new business models are emerging mutating and becoming dominant Falling behind means you have to adapt in creative ways to keep up with the fast runners who shape your world 5 lessons to escape the Red Queen effect Evey battle is won before it is ever fought Guerilla warfare marketing outsmarting the competitor by carefully formulated strategies the aim is not to conquer but to outlast attack when they least expect it and use the element of surpirse Step backward to go forward uses speed as a strategy quick response making decisions faster to get the rig ht product to the right customer with the rig ht price at the right place and time ReadyAiml Firel improvisational mode where strategists try out several things and keep what works enlightened experimentation they try out new behaviors retrospectively choose behavior and store behaviors that seem desirable It takes two to pass one Sometimes the only way to pass up a competitor is to join forces with someone else in your competitive environment the example used is race car drivers using drafting to pass up other drivers Don t play hardball throwa curvebal Moving away from typical low cost and differentiation strategies and replace it with value innovation which integrates the two while also challenging the industry s logic and taken for granted assumptions moving away from red oceans violent bloody competiton and into blue oceans unchartered territory filled with untapped market potential 6 Competitive advantages What are the criteria What factors help maintain it Traditional strategies vs entrepreneurial strategies differences The criteria for a sustainable competitive advantage are that your resources must be valuable rare inimitable and organized for exploitation It must be a unique rare difficult to copy value creating strategy It is sustainable when the advantage resists erosion by a competitor who is unable to duplicate the bene ts of the strategy Some differences between the traditional strategies for obtaining a competitive advantage versus entrepreneurial ways to obtain a sustainable competitive advantages Traditional strategies continued innovation lowest cost producer best made product operational excellence excellent customer service enhanced performance convenient locations most reliabledurable products product leadershi Entrepreneurial strategies relentless innovation flexibilityadaptabilityspeed revolution renewal and resilience market ownership customer value co creation entrepreneurial mindset and action opportunity obsession and foresight and topsight Chapter 11 7 Be able to explain if price should reflect the value of a firm s costs know the 5 characteristics of price What is an entrepreneurial pricing strategy Understand how ecommerce and technology affect pricing What are the 5 key areas of price Historically entrepreneurs and managers in general have taken price for granted concluding its principal function is to cover costs and generate a reasonable rate of return However a more fundamental explanation for price avoidance pricing historically being one of the least emphasized of strategic issues and one that people in business are hesitant to critique or discuss is the fact that many business leaders do not really understand how to price and are insecure about the adequacy of the pricing approach they employ As a result they rely on overly simplistic rules of thumb and place an exaggerated emphasis on cost based formulas There is evidence to suggest this state of affairs is changing as firms begin to adopt more sophisticated and creative approaches to price management and begin to appreciate the strategic importance of the price variable Firms are now developing more complex price structures initiating more frequent price changes and customizing their prices to individual market segments 5 characterStics of price Price is value the price a customer is willing to pay is a statement of the amount of value they perceive in the product or service Price is variable what any one customer actually spends to acquire a given product or service can be varied or manipulated in many ways Price is varietyfirms typically sell multiple products and services and they may be attempting to use price to accomplish different things for different items Price is ViSIIJe Customers see and are aware of the prices of most things they buy prices sends signals to the customer about value image product availability demand conditions exclusivity etc and Price is Viltuaan items price is arguably the quickest and easiest to change in response to market conditions especially in the electronic age Entrepreneurial pricing is a rm s pricing strategy that is market based risk assumptive proactive and exible It goes from cost based to market based cost based just wants to cover costs whereas market based focuses on the customer and the value they perceive to be getting risk aversive to risk assumptive risk aversive is conservative where as risk assumptive are untested pricing schemes that have the possibility of failure reactive to proactive reactive mimics others while proactive is being the rst to introduce it and standardization to flexibility standardization charges universal prices regardless of the user or environment whereas exibility varies prices dependent on the market segment E commerce and technology affect pricing by creating new opportunities and challenges for the entrepreneur Opportunities differentiated pricing by time of day week month or type of customer using customer data to optimize pricing nding customers willing to pay higher prices than expected establishing electronic exchanges maximizing revenue and price Challenges technology facilitates rapid customer search for competitive options customers make rather than take prices customers have more control over transactions marketers must invest more time and effort in price setting 5 keKareas of Price Price objectives what is the firm trying to accomplish with current prices Price strategy theme or direction of rm s pricing efforts Price structure architecture around the firm s mix of prices Price levels establishment of actual prices for individual products and services and Price promotions situational employment of various types of promotions and discounts two for one coupons rebates etc Chapter 12 8 What technological changes are having effect on distribution What are the main functions of distribution Understand the changes The main functions of distribution channels are to act as an intermediary between producers who supply large quantities of a relatively small assortment of products or services and customers who require relatively small quantities of a large assortment of products and services They also routinize transactions so that the cost of distribution can be minimized and transactions don t need to be bargained on an individual basis Finally they facilitate the searching processes of both producers and customers by structuring the information essential to both parties They match sellers with buyers Technology has had three major effects on distribution they have killed distance homogenized time and made location largely irrelevant in the case of a significant number of industries markets products and services Distance no longer determines the costs of communicating electronically and for the distribution of many products that can be digitized such as pictures videos words and sound distance will have no effect on costs In the physical market time and season predominate trading and distribution in the form of hours of operation The virtual marketplace is always open 247 Any screen based activity can be operated any place on earth so sellers can be matched with buyers all over the world Chapter 1 3 9 What are the six elements of an entrepreneurial sales organization and what are some ways it can be successful How can a sales for be more entrepreneurial Creativity Sales Force Creativity must be the soul of the sales organization It s about destruction and construction the abandonment of certain assumptions the rejection of accepted precepts and the willingness to challenge established methods Sales managers must emphasize practices that result in employees being challenged provide them with freedom and give them access to resources Expeditionary Innovating Sales Force Innovation must be a core competency in sales This consists of an ability to come up with meaningful innovations and then champion them to the point they are adopted by senior management Expeditionary sales forces move quickly in recognizing opportunity and acting on it one that is continually discovering realms of new possibilities Empowered Sales Force Employees should be given more responsibility and authority in performing their jobs One approach is to set high sales standards and let employees take the necessary means it takes to meet them It does not mean anything goes but it allows employees to be conscientious creative and hard working and gain control Strategic Sales Force Linking the sales department to the overall strategies and goals of the entire rm Sales must be integrated with production marketing logistics and other core functions and units within a company to meet these strategic goals Technological Sales Force Technology is transforming the capabilities of the company s sales force Failure to embrace this undermines the firm s ability to compete Technology is helping salespeople sell smarter technology empowers the salesperson to do more with less and to do things they were not able to do previously Collaborative Sales Force Collaboration is a prime requirement with the modern sales organization it is vital for encouraging individuals to work together in coming up with inventive solutions enhancing the speed of the organization and for supporting the growing emphasis on team selling A sales force can become more entrepreneurial if it exercises the three main components of entrepreneurship innovativeness seeking creative and unusual solutions to problems and needs risk taking willingness of managers to commit resources to opportunities having reasonable chance of costly failure and proactiveness implementation and making events happen through whatever means necessary The combination and frequency of these components appearing in a sales force is referred to as the entrepreneurial intensity Chapter 14 10 Understand what a killer app is and be able to explain and give examples Killer apps are merely an innovation that improves the way something is done or even something that changes a market or industry rather a killer app is one that changes the way society itself works and functions The automobile was a killer app because it didn t simply replace horse drawn carriages or alter the way people travel it transformed the way we live shop work and spend our leisure time In the past 10 15 years killer apps arise at the rate of more than one a year and this frequency is increasing in exponential fashion at the moment due to spreading technologies like the Internet Thus a strategy that attempts to plan 5 years ahead is befuddled by the fact that society and the way the world works may indeed change at a rate of one or two killer apps a year 11 Understand the five new forces meanings implications etc Moore s Law Gordon Moore noted that the transistors on a computer chip doubled roughly every 18 to 24 months A corollary to Moore s law is that the speed of microprocessors at a constant cost also doubles every 18 to 24 months The implications of Moore s law are that computing power becomes ever faster ever cheaper This means not only that just about everyone can therefore have affordable access to powerful computing but also that the power of computers can be built into devices other than computers themselves Metcalfe s Law New technologies are valuable only if many people use them The usefulness utility of the network equals the square of the number of users This function is known as Metcalfe s law The more people that use something whether it s a game software network or even a language such as English the more valuable it becomes and the more new users it will attract Coasian Economics Ronald Coase introduced the notion of transaction costs a set of inefficiencies in the market that add or should be added to the price of a good or service to measure the performance of the market relative to nonmarket behavior in firms They include the costs of searching contracting and enforcing Transaction cost economics gives us a way of explaining which activities a firm will choose to perform within its own hierarchy and which it will rely on the market to perform for it outsourcing New communication technologies permit transaction costs to be lowered promoting growth due to more internal capabilities The FlockofBird Phenomenon A feature of many new communication technologies has been the fact that in most cases they do not belong to any one institution nor does any particular authority control them the Internet This is referred to flock of birds phenomenon because when you observe a flock of birds ying in formation you assume there is a head bird or bird in charge but naturalist explain that flocking is natural phenomenon and there is no bird in charge The effect of this phenomenon is that access is equalized unlike what occurs in traditional media The Fish Tank Phenomenon Refers to the ability anyone can set up a website and theoretically at least be seen by the world such as in the early days where people would set up web sites that had a camera of their tropical sh tank So even though the majority of stuff on the internet may be useless to most every now and then some individual is going to produce something so revolutionary that it will change our world For strategists this means many firms may find themselves threatened by small start ups that were previously unable to get access to the market Chapter 1 5 12 Describe and explain relationship marketing Understand the components of creating a relationship management program What are the 7 myths of relationship marketing Explain customer equity and customer lifetime value Relationship marketing is defined as the establishment of strong lasting ties with individual customers for the purpose of mutual benefit and ongoing value creation They depend on a high level of personal interaction trust and the need to meet mutual expectations It s a mindset that prizes innovative ways to discover new sources of value hand in hand WITH customers not just for customers The seller s goal is to delight the customer on an ongoing basis 7 MYTHS OF RELATIONSHIP MARKETING Trying to lock the customer InFalng to formalize MaIng only nonfinancia in vestmentsPursuing unilateral e ots A voiding dependency A voiding di icut choicesBeie Ving one size fits all Customer lifetime value refers to the total amount a customer will spend on a given product category over a strategically meaningful time period Customer equity refers to the proportion of the customer s total expenditures or lifetime value that the marketer seeks to capture By placing value on customer equity the marketer knows what the customer is worth and correspondingly how much the firm can invest in marketing efforts directed at the customer Chapter 1 6 13 Know the 6 pillars of the marketing code of ethics Honesty don t deceive cheat or steal be reliable and do what you say you will do Responsibility Consider consequences sell products and services that are bene cial Caring Don t take advantage of others and don t charge in ated prices Respect follow the Golden Rule and heed labor relations Fairness be open and share hard facts don t sugarcoat and strive for a fair profit Citizenship cooperate show you care stay informed and help others in need MKT 4500 Test 1 Review 1 Know the difference between Angel investors and VC investors The common feature of VC investments is that they provide business nance in relatively high risk situations where other forms of nance such as bank loans or lines of credit are not available Venture Capital is the most formalised form of private equity investment Unlike most Angel investments where the Angel takes a personal role in deal due diligence and management Venture Capital provides a channel whereby high networth investors can participate in higher risk ventures without having to personally undertake the burden of venture evaluation and management Whereas most Angels invest in their own right VC investment is through a fund Angel investors often simply referred to as Business Angels or Angels are high networth noninstitutional private equity investors who have the desire and suf ciently high net worth to enable them to invest part of their assets in highrisk highretum entrepreneurial ventures in return for a share of voting income and ultimately capital gain Source of Funds Angel investors acting alone or in organized groups are usually wealthy individuals often with a successful entrepreneurial record who invest their own money Venture capital funds are corporate entities that pool money from a range of institutional and individual investors Deal Size The range of angel investor transactions is typically US25000 to US100000 for an individual and up to US1 million or more when acting in a group The range of venture capital transactions is large from around US500000 to US10 million or above Venture capital may provide second round nancing after angel investors Stage of Development The focus of angel investors is typically earlier stage businesses Different venture capital rms focus on different stages of business development but the unifying criteria is that they seek high growth companies capable of achieving exit strategies that meet the fund s return criteria within a speci ed time frame Industry and Geographic Focus There is no set of industry or geographic markets that dominate in terms of attracting funding However venture capital providers frequently concentrate on high growth sectors often associated with technology or innovation Angel investors may allocate funds to a range of ventures frequently tied with their areas of expertise In both cases they often prefer to invest within the Vicinity of their of ces to add management value and monitor portfolio companies Ease of Obtaining Financing Through local resources networking intemet searches and references from existing contacts angel investors may be relatively easy to identify The dif culty may arise at the negotiation stage if the business requires funding from several investors who demand different terms Obtaining venture capital funding is a highly rigorous process and a rm must rst meet all the investment criteria of a rm before consideration A rm must then be prepared for a lengthy due diligence valuation and negotiation process Cost Earlystage and growth businesses generally involve higher levels of risk and investors will seek a commensurate return The cost of capital for private equity is high translating into a high level of equity required in return for the invested funds There is no consensus difference between angel investors and venture capital although stereotypically a venture capital provider may have higher return expectations and more de ned criteria Due Diligence Venture capitalists have their own investors to satisfy so usually the operation will require a very rigorous investigation of the fundamentals of any company applying for cashMost angel investors do not have the same sort of structures set up to put a company through its paces so the hurdles to obtaining money from them might not be as high 2 Know the difference between nancial ventures and strategic ventures Financial ventures create value on exit via a nancial trade sale or anIPO by assigning a value to the future pro t generating power of the entity beingsold Alternatively a strategic venture creates exit value not on the basis of whatpro t it could inherently generate but on the basis of what future pro t couldbe generated by the buyer exploiting the underlying assets or capabilities of theentity being acquired 0 Financial buyers create value by recognizing pro tability risk minimization and growth potential Strategic buyers create value by eliminating a potential threat and or recognizing revenue potential in the combination of the two businesses 0 Financial buyers range from individuals to private equity rms to corporations undertaking a rollup or consolidation strategy Strategic buyers are always large corporations which can exploit the strategic assets andor capabilities in a large customer base 0 Financial buyers are looking to increase pro tability to add more value to the company when its sold Strategic buyers increased pro tability may be irrelevant Pro ts are only needed to ensure survival prior to a sale 0 Financial buyers must be willing to take over company if senior management leaves but strategic buyers need to retain key managers and employees to exploit the opportunity 3 Demonstrate that you understand what makes an investment opportunity interesting from the investor s side They want to be convinced that their investment funds will be used to create a successful exit event so that they achieve a great return on their investment Their interest starts and ends with how the entrepreneur is going to make them money not produce the world s best widget Also the following things an identi able target market grth potential a wellde ned customer and mediums to reach those customers and full market anaylsis barriers to entry competitive analysis etc 4 Understand the Janice trends Whats causing the changes and What it means for marketing Growth anal prosperity versus poverty anal despair The world is wealthier now than it has been in any other time in history but the gap between the rich and the poor is the largest its ever been and is increasing Free markets versus growing protectionism Worldwide there has been a trend of the freeing up of markets but nations are now starting to become more protectionist and making it harder for international trade Population growth versus population shortages Population has doubled over the past forty years and continues to grow but many countries are undergoing population shortages Canada had to close a McDonald s due to not being able to nd enough workers Those are just some others listed in Chapter 1 Managers need to routinely monitor changes in the business global environment Marketers have to achieve a strategic balance and evolve making relatively slow changes to what they do and how they do it 5 Know the Four Cs that replace the four Ps Product 9 Cocreated solutions engage the customer as to what their preferences are Promotion 9 Communication within communities want to interact with people who think like you not just information Price 9 Customizable personal value The customer should be able to tailor the product to where it gives him or her the highest possible level of personal value Place 9 Choice and convienience make the product fully available to the customer to where if he or she wants it they have access to it 6 Know the difference between market driving and market driven Market driven 7 centers on following customers and keeping abreast of competitors not very entrepreneurial It 139 perceptions 1 139 1111 involves learning and r to and behaviors within a given market they develop skills at market sensing and adapting intemal capabilities to meet customer demands They reinforce brand loyalty and use the customer as an external source of feedback Market driving 7 fums that shape the structure preferences and behaviors of all market stakeholders They create entirely new markets produces discontinuous leaps in customer value designs unique business systems and change the rules of the competitive game very entrepreneurial They redefine customer needs and allow the customer to be a coactive partner in the marketing decision process 7 What are the tradeoffs of marketing research and why would a company conduct marketing research Tradeoffs are made between how much information is collected from which sources collected in what manner at what cost and completed by what date The tradeoffs have to be made at how important the information being collected is at the expense of what money and time constraints It is important for a company to conduct marketing research so they don t set the wrong prices target the wrong customer or waste money on advertisements on the wrong medium 8 Know some of the 11 inexpensive marketing research and ideas and be able to explain Observe customers in action create webbased surveys use focus groups form consumer panels large number of buyers of a particular product category who agree to participate in a research project talk to lead users people who have needs for which no solution exists and have ideas for effective products that have yet to be A 39 I J build 39 quot ask 39 J in an organization to give you four names of somebody who would have a vested interest in a particular product in that organization those four people are asked to give four names and so on and the names that appear most become the focus of the marketing efforts check the garbage studying the market by examining what it discards sift the archives monitor weblogs due to their growing popularity and subjective material conduct simple experiments ie pointofsale systems that tell how much of a product is being purchased and when so you know where to focus your advertisements and explore other ethnographic approaches ie mystery shoppers field work that captures behavior and reactions as they occur in natural settings 9 Know what creative destruction means and its importance to entrepreneurs Creative destruction is an entrepreneurial activity that replaces the old with the new the change is created by breaking free from existing competitive dynamics to carve out a competitive advantage in a new marketplace It is important to entrepreneurs because creativity produces social change and is the creative stream and energy of a society It is important to continuously create new opportunites that allow for innovation growth and value creation methods 10 Know what the value creation process is and the difference between exploitation and exploration The value creation process has a dual nature It can be separated into two distinct processes that overlap and interact dynamically exploration and exploitation Exploration is the entrepreneurial activity that addresses ambiguity and interpretation asymmetries experimentation search and discovery variation Exploitation is a managerial activity that addresses uncertainty and information asymmetries efficiency refinement selection and implementation Exploration involves identifying opportunities generating ideas forming new opportunities and then evaluating and refining those opportunities Exploitation deals with identifying resource needs acquiring those resources and ongoing coordination of those resources 11 The difference between an idea and an 0pp01tunity and when do they overlap Ideas are free they last forever and don t need customers to survive Opportunities require effort they must be identified evaluated and exploited Ideas relate to problems in search of solutions whereas opportunities attempt to find those solutions by creating markets and products for customers They overlap when an idea is timely determined by the window of opportunity attractive profit making potential durable sustainable over time and anchored in an offering product service or process that creates or increases value for its buyer andor user 12 Competitive advantages What are they Why are they important What are the steps to obtain a competitive advantage A competitive advantage is the ability of a business to derive abnormal profits in a competitive industry based on a valuecreating strategy not simultaneously implemented by an current or future competitor book definition They are important because achievement in the recent past has come from anticipating and creating customer wants There are dwindling opportunities to sustain a competitive advantage by attempts to simply interpret and respond to existing customer wants To obtain a competitive advantage one must develop strategies that target future needs despite the inherent risks involved accepting such risk is central to gaining a competitive advantage 13 What are the different levels of the product core tangible augmented and communicated Core product is de ned in terms of the primary bene t sought by the customer the most basic level Tangible 7 refers to any and all aspects of the product itself at this level products can be distinguished by quality levels features sizes options styling colors and packaging Augmented7 includes a variety of support services such as installation delivery credit warranties advice training and postsale servicing integral part of the total value the customer is purchasing Communicated 7the assignment of a brand name to the product the design of a logo or trademark the manner in which the product is positioned and ways in which the product is bundled with other products or services 14 Know the three different levels of decision making foundation proprietary and rules Foundation 7 very basic or generic decisions regarding what the business is and is not and to ensure such decisions are internally consistent Fundamental decisions are made regarding what is being sold to whom and so forth Proprietary7 the purpose of this level is to innovate it enables the creation of unique combinations among decision variables that result in marketplace advantage and innovations that impose competitive barriers Rules 7delineates guiding principles that govern execution of the decisions made at the foundation and proprietary levels the consistent adherence to basic principles established by the company 15 Know the difference between market oriented and innovation oriented Market orientation 7 contends that identifying needs and wants of the target market and delivering products and services that satisfy those needs is the key to the attainment of organizational goals It is more concerned with matters such as customer service customer satisfaction and customer focus Innovation orientation 7 asserts that customers will prefer those products and services that generate the greatest interest and provide the greatest performance features quality and value for the money 7 in short technological superiority They devote their energy toward inventing and refining superior products


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