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Strategic Management: Chapter Eight
Terms in this set (25)
Strategic Marketing Issues
How to make advertisements more interactive to be more effective
How to best take advantage of Facebook and Twitter conservations about the company and industry
To use exclusive dealerships or multiple channels of distribution
To use heavy, light, or no TV advertising versus online advertising
To limit (or not) the share of business done with a single customer
To be a price leader or a price follower
To offer a complete or limited warranty
To reward salespeople based on straight salary, straight commission, or a combination salary/commission
Social Media Marketing
Marketers must get customers involved in the company website and solicit suggestions in terms of product development, customer service, and ideas.
The company should enable customers to interact with the firm on the following social media networks:
The New Principles of Marketing
Do not just talk at consumers- work with them throughout the marketing process
Give consumers a reason to participate
Listen to and join the conversation outside your company's website
Resist the temptation to sell, sell, sell. Instead attract, attract, attract.
Do not control online conversations; let it flow freely
Find a "marketing technologist" a person who has three excellent skill sets (marketing, technology, and social interaction).
Embrace instant messaging and chatting.
subdividing of a market into distinct subsets of customers according to needs and buying habits
widely used in implementing strategies
Strategies such as market development, product development, market penetration, and diversification require increased sales through new markets and products.
Market segmentation allows a firm to operate with limited resources because mass production, mass distribution, and mass advertising are not required.
Market segmentation decisions directly affect the marketing mix variables:
The Marketing Mix Component Variables
Quality, features and options, style, brand name, packaging, product line, warranty, service level, other services
Distribution channels, distribution coverage, outlet location, sales territories, inventory levels and locations, transportation carriers
Advertising, personal selling, sales promotion, publicity
Level, discounts and allowances, payment terms
Tag #1: Is this customer at high risk of canceling the company's service?
Tag #2: Is this customer worth retaining?
Tag #3: What retention tactics should be used to retain this customer?
Alternative Bases for Market Segmentation
Region, country size, city size, density, climate
Age, gender, family size, family life cycle, income, occupation, education, religion, race, nationality
Social class, personality
Use occasion, benefits sought, user status, usage rate, loyalty status, readiness stage, attitude toward product
entails developing schematic representations that reflect how your products or services compare to competitors' on dimensions most important to success in the industry
Also called perceptual mapping
Product Positioning Steps
Select key criteria that effectively differentiate products or services in the industry.
Diagram a two-dimensional product-positioning map with specified criteria on each axis.
Plot major competitors' products or services in the resultant four-quadrant matrix.
Identify areas in the positioning map where the company's products or services could be most competitive in the given target market. Look for vacant areas (niches).
Develop a marketing plan to position the company's products or services appropriately.
Rules for Using Product Positioning as a Strategy-Implementation Tool
Look for the hole or vacant niche.
Don't serve two segments with the same strategy.
Don't position yourself in the middle of the map.
An effective product positioning strategy meets two criteria:
it uniquely distinguishes a company from the competition
it leads customers to expect slightly less service than a company can deliver
To raise capital with short-term debt, long-term debt, preferred stock, or common stock
To lease or buy fixed assets
To determine an appropriate dividend payout ratio
To use LIFO (Last-in, First-out), FIFO (First-in, First-out), or a market-value accounting approach
To extend the time of accounts receivable
To establish a certain percentage discount on accounts within a specified period of time
To determine the amount of cash that should be kept on hand
Acquire needed capital to implement strategies.
Develop projected financial statements to show expected impact of strategies implemented.
Determine the firm's value (corporate valuation) in the event an offer is received.
Decide whether to go public with an Initial Public Offering (IPO).
Decide whether to keep cash offshore that was earned offshore.
Acquiring Capital to Implement Strategies
Successful strategy implementation often requires additional capital.
Besides net profit from operations and the sale of assets, two basic sources of capital for an organization are debt and equity.
Acquiring Capital to Implement Strategies
EPS = Earnings Per Share, which is Net Income divided by # of Shares Outstanding
Another term for Shares Outstanding is Shares Issued
EBIT = Earnings Before Interest and Taxes (also called operating income)
EBT = Earnings Before Tax
EAT = Earnings After Tax
Projected Financial Statements
allows an organization to examine the expected results of various actions and approaches
allows an organization to compute projected financial ratios under various strategy-implementation decisions
Performing Projected Financial Analysis
Prepare the projected income statement before the balance sheet.
Use the percentage-of-sales method to project cost of goods sold (CGS) and the expense items in the income statement.
Calculate the projected net income.
Subtract from the net income any dividends to be paid for that year.
Project the balance sheet items, beginning with retained earnings and then forecasting stockholders' equity, long-term liabilities, current liabilities, total liabilities, total assets, fixed assets, and current assets (in that order).
Use the cash account as the plug figure.
List commentary (remarks) on the projected statements.
The Net Worth Method:
Total Shareholders' Equity (SE) minus (Goodwill + Intangibles)
The Net Income Method:
Net Income x Five
Price-Earnings Ratio Method:
(Stock Price / EPS) x NI
Outstanding Shares Method:
# of Shares Outstanding x Stock Price
IPOs, Cash Management, and Corporate Bonds
Go public with an IPO?
Keep cash offshore if earned offshore?
Issue corporate bonds for what purpose?
Research and Development (R&D) Issues
Emphasize product or process improvements.
Stress basic or applied research.
Be leaders or followers in R&D.
Develop robotics or manual-type processes.
Spend a high, average, or low amount of money on R&D.
Perform R&D within the firm or contract R&D to outside firms.
Use university researchers or private-sector researchers.
R&D Approaches for Implementing Strategies
Be the first firm to market new technological products.
Be an innovative imitator of successful products, thus minimizing the risks and costs of start-up.
Be a low-cost producer by mass-producing products similar to but less expensive than products recently introduced.
Management Information System (MIS) Issues
Having an effective management information system (MIS) may be the most important factor in differentiating successful from unsuccessful firms.
The process of strategic management is facilitated immensely in firms that have an effective information system.
Mobile tracking of employees
Mobile apps for customers
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