MARK Chapter 2 Notes
MARK Chapter 2 Notes MARK 3001
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This 12 page Class Notes was uploaded by Kyla Brinkley on Tuesday November 24, 2015. The Class Notes belongs to MARK 3001 at University of Georgia taught by Kimberly Grantham in Summer 2015. Since its upload, it has received 53 views. For similar materials see Principles of Marketing in Marketing at University of Georgia.
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Date Created: 11/24/15
Kyla Brinkley MARK 3001 Notes Fall 2015 l Chapter 2 Developing Marketing Strategies and a Marketing Plan a What is Marketing Strategy i Marketing strategy a firm s target market marketing mix product price place promotion and method of obtaining a sustainable competitive advantage ii Sustainable competitive advantage something the firm can persistently do better than its competitors 1 Not easily copied 2 Can be maintained over long period of time 3 Key to long term financial performance 4 Competitors will try to break through to customers 5 Ex Nike s strong brand creates loyal customer base iii 4 strategies 1 Customer excellence focuses on retaining loyal customers amp excellent customer service 2 Operational excellence achieved thru efficient operations amp excellent supply chain and human resource management 3 Product excellence having products w high perceived value amp effective branding amp positioning 4 Locational excellence having good physical location amp internet presence iv Customer Excellence involves a focus on retaining loyal customers amp excellent customer service 1 Retaining Loyal Customers a Sometimes methods used by firm to maintain competitive advantage help attractmaintain loyal customers i Strong brand ii Unique merch iii Superior customer service b Having loyal customers is an important way to sustain advantage over competitors c Loyalty customers are reluctant to patronize competitive firms d Methods to build customer loyalty i Develop clear amp precise positioning strategy ii Creating emotional attachment through loyalty programs 1 Helps determine which types of merch certain groups are buying to tailor their offering to meet needs of loyal customers 2 Customer Service a Marketers also may build competitive advantage w excellent customer service b Consistency is difficult since customer service is provided by employees c Firms must instill importance of good customer service in employees over long period of time d Hard for competitors to build up same reputation v Operational excellence involves a firm s focus on efficient operations and excellent supply chain management 1 By striving for efficient operations to get customers what they want when they want it and in the required quantities and at lower delivered cost marketers a Ensure good value to customers b Earn profitability for themselves c Satisfy their customers needs 2 Efficient operations let firms provide lower priced merch or use extra margin they earn to attract customers by offering better service merch assortments or visual presentations than competitors 3 Firms achieve efficiencies by developing sophisticated distribution amp information systems and strong relationships with vendors a Vendor relations must be developed over long term and can t be offset by competitor b Firms with strong relationships may get exclusive rights to vi vii viii i Sell merch in a particular region ii Obtain special terms of purchase that aren t available to competitors iii Receive popular merch that may be in short supply Product excellence involves a focus on achieving high quality products effective branding and positioning is key 1 some firms find it hard to get a competitive advantage if competitors can deliver similar products easily 2 some firms have been able to maintain their sustainable competitive advantage by a investing in their brand itself b positioning using clear distinctive brand image c constantly reinforcing image thru merch service promotion Locational Excellence 1 Location a method of achieving excellence by having a strong physical location andor internet presence 2 Important for retailersservice providers 3 A competitive advantage based on location is sustainable because it s not easily duplicated Multiple Sources of Advantage 1 Usually a single strategy isn t enough to build a sustainable competitive advantage b The Marketing Plan Marketing plan a written document composed of an analysis of the current marketing situation opportunities amp threats for the firm marketing objectives and strategy specified in terms of the 4P s action programs and projected or proforma income and other financial statements 1 Reference point for evaluating whether firm has met its objectives 2 used by stakeholders like investorspotential investors 39 planning phase the part of the strategic marketing planning process when marketing executives in conjunction with other top managers define the mission or vision of the business and evaluate the situation by assessing how various players both in and outside the organization affect the firm s potential for success iii implementation phase the part of the strategic marketing planning process when marketing managers identify and evaluate different opportunities by engaging in segmentation marketing and positioning and implement the marketing mix using the 4Ps iv control phase the part of the strategic marketing planning process when managers evaluate the performance of the marketing strategy and take any necessary corrective actions v not always necessary to go through the entire process for every evaluation vi Step 1 Define the Business Mission 1 Mission statement a broad description of a firm s objectives and the scope of activities it plans to undertake attempts to answer 2 main questions what type of business is it What does it need to do to accomplish its goals and objectives a These questions should be answered at highest corporate level before marketing executives can get involved 2 Another key goal or objective is often imbedded in a mission statement to relate to how the firm is building its sustainable competitive advantage 3 Smaller firms may have objectives like achieving a specific level of income and avoiding risks vii Step 2 Conduct a Situation Analysis 1 Situation analysis second step in a marketing plan uses a SWOT analysis that assesses both the internal environment with regard to its Strengths and Weaknesses and the external environment in terms of its Opportunities and Threats a Also assesses opportunities amp uncertainties in the marketplace due to changes in these CDSTEP forces i Cultural ii Demographic iii Social iv Technological v Economic vi Political b Strengths are positive internal attributes of the firm c Weaknesses are negative attributes of the firm d Opportunities pertain to positive aspects of the external environment e Threats represent the negative aspects of the company s external environment viii Step 3 Identifying and Evaluating Opportunities Using STP Segmentation Targeting Positioning 1 STP the processes of segmentation targeting and positioning that firms use to identify and evaluate opportunities for increasing sales and profits a Next step after completing situation audit 2 Segmentation a Many types of customers appear in any market but most firms can t satisfy everyone s needs b Market segment a group of consumers who respond similarly to a firm s marketing efforts c Market segmentation the process of dividing the market into groups of customers with different needs wants or characteristics who therefore might appreciate products or services geared especially for them 3 Targeting a Target marketingtargeting the process of evaluating the attractiveness of various segments and then deciding which to pursue as a market 4 Positioning a 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 5 After identifying its target segments a firm must evaluate each of its strategic opportunities 6 Firms are usually most successful when they focus on opportunities that build on their strengths relative to those of their competition ix Step 4 Implement Marketing Mix and Allocate Resources 1 Product and Value Creation a Products anything that is of value to a consumer and can be offered through a voluntary marketing exchange b Key to success of any marketing program is creation of value so firms attempt to develop products that customers see as valuable enough to buy 2 Price and Value Capture a Valuebased marketing requires firms to charge a price that customers perceive as giving them a good value for the product they receive b Important for firm to have clear focus on what products to sell where to sell them and what methods to use in selling them c Pricing is the only activity that actually brings in money i Price too high not much volume ii Price too low low margins and profits d Price should be based on the value the customer perceives 3 Place and Value Delivery a Firm must be able to make the product accessible when amp where the customer wants it 4 Promotion and Value Communication a Marketers communicate value proposition through variety of media b New promotion channel daily deal websites i Groupon ii Get word out iii Smaller companies get name recognition x Step 5 Evaluate Performance Using Marketing Metrics 1 Metric a measuring system that quantifies a trend dynamic or characteristic a Used to explain why things happened and to project the future b Compare results across regions strategic business units SBUs product lines and time penods 2 Understanding causes of performance lets firms make appropriate adjustments 3 Usually begin by reviewing the implementation programs a Analysis may indicate that strategy or even mission statement need to be reconsidered 4 Problems can arise from successfully implementing poor strategies and poorly implementing good strategies 5 Who Is Accountable for Performance a At each level of an org the business unit and its manager should be held accountable only for the revenues expenses and profits that they can control b Expenses that affect several levels of the org laborcapital expenses from operating corporate hq shouldn t be arbitrarily assigned to lower levels c Performance evaluations are used to pinpoint problem areas d Reasons performance may be above or below planned levels must be examined i Ex manager should only be held accountable in the case of the inadequate sales force job or setting inappropriate forecasts e When 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 i Important questions 1 How quickly were plans adjusted 2 How rapidly and appropriately were pricing and promotional policies modified 3 In short did I react to salvage an adverse situation or did my reactions worsen the situation 6 Performance Objectives amp Metrics a b C Many factors contribute to a firm s overall performance Hard to find single metric to evaluate performance Methods i Compare firm s performance over time ii Compare to competing firms iii View firm s products as a portfolio 7 Financial Performance Metrics a b c Revenues sales i Global measure of firm s activity level Profits Attempt to maximize one metric may lower another i Ex a manager could easily increase sales by lowering prices but the profit would suffer Managers must understand how their actions affect multiple performance metrics i Unwise to use just one metric Can assess absolute or relative level of sales and profits Metrics used to evaluate a firm vary depending on i The level of the organization at which the decision is made ii The resources the manager controls Firms are also starting to report corporate social responsibility CSR metrics in major areas i Impact on environment ii Diversity iii Energy conservation 8 Portfolio Analysis a 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 Portfolio analysis is usually performed at the strategic business unit or product line level of the firm 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 objectives Product lines groups of associated items such as those that consumers use together or think of as part of a group of similar products Goodyear i SBU north America Europe middle east Africa Latin America Asiapacific ii Product line car van SUV or aviation tires Market share percentage of a market accounted for by a specific entity i Used to establish the product s strength in a particular market ii Discussed in units revenue or sales Relative market share 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 i Measures how attractive a particular market is Boston Consulting Group Matrix vi Hard to implement in practice hard to measure both relative market share amp industry growth Dangerous selffulfilling prophecy to place a product into one of these categories Stars 1 Occur in high growth markets 2 High market share products 3 Require heavy resource investment in promotionsnew production facilities to fuel rapid growth 4 Ex iPhone Cash cows 1 Low growth markets 2 High market share products 3 Have excess resources that can be spun off to those products that needit 4 iPod Question marks 1 High growth markets 2 Low market shares 3 Most managerially intensive require significant resources to maintainincrease market share 4 Managers must decide whether to infuse question marks with resources generated by the cash cows so they can become stars or withdraw resourcesphase out the products 5 Ex iPad but could also be considered a star Dogs 1 Low growth market 2 Low market shares 3 Should be phased out unless needed to complement or boost the sales of another product or for competitive purposes 4 Ex iMac xi Strategic Planning Is Not Sequential 1 Actual planning processes can move among the steps given above 2 Ex a situation analysis may uncover a logical alternative that isn t included in the mission statement so the mission statement would have to be revised c Growth Strategies i Market Penetration 1 Market penetration strategy a growth strategy that employs the existing marketing mix and focuses the firm s efforts on existing customers a Requires greater marketing efforts like increased advertising and more salespromotions ii Market Development 1 Market development strategy a growth strategy that employs the existing marketing offering to reach new market segments whether domestic or international 2 International expansion is generally riskier than domestic expansion because firms must deal with differences in gov regulations cultural traditions supply chains and language 3 But many US firms have a competitive advantage in global markets because US culture is widely emulated for consumer products esp for young people iii Product Development 1 Product development strategy a growth strategy that offers a new product or service to a firm s current target market iv Diversification 1 Diversification strategy a growth strategy whereby a firm introduces a new product or service to a market segment that it does not currently serve 2 Related diversification a growth strategy whereby the current target market andor marketing mix shares something in common with the new opponun y a Firm may be able to purchase from existing vendors use the same distribution andor management information system or advertise in the same newspapers to target markets that are similar to their current consumers 3 Unrelated diversification a growth strategy whereby a new business lacks any common elements with the present business a Doesn t capitalize on either core strengths associated with markets or products b Viewed as risky FOR REVIEW Marketing plan phases 1 Planning phase 2 Implementation phase 3 Control phase
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