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Marketing- Chapter 2
Terms in this set (45)
Value creation and delivery sequence three phases.
choosing the value
providing the value
communicating the value
value chain as a tool for identifying ways to create more customer value.
Value Chain Primary Activities
(1) inbound logistics, or bringing materials into the business; (2) opera- tions, or converting materials into final products; (3) outbound logistics, or shipping out final products; (4) marketing, which includes sales; and (5) service.
Value Chain Support Activities
(1) procurement, (2) technology development, (3) human resource management, and (4) firm infrastructure. (Infrastructure covers the costs of general management, planning, finance, accounting, legal, and government affairs.)
core business processes.
• The market-sensing process. All the activities in gathering and acting upon information about the market
• The new-offering realization process. All the activities in researching, developing, and launching new high-quality offerings quickly and within budget
• The customer acquisition process. All the activities in defining target markets and prospecting for new customers
• The customer relationship management process. All the activities in building deeper understanding, relationships, and offerings to individual customers
• The fulfillment management process. All the activities in receiving and approving orders, shipping the goods on time, and collecting payment
value delivery network,
also called a supply chain.
(1) It is a source of competitive advantage and makes a significant contribution to perceived customer benefits.
(2) It has applications in a wide variety of markets.
(3) It is difficult for competitors to imitate.
Holistic marketers address three key management questions:
1. Value exploration—How a company identifies new value opportunities
2. Value creation—How a company efficiently creates more promising new value offerings
3. Value delivery—How a company uses its capabilities and infrastructure to deliver the new
value offerings more efficiently
marketers must give priority to strategic planning in three key areas:
(1) managing a company's businesses as an investment portfolio,
(2) assessing each business's strength by considering the market's growth rate and the company's position and fit in that market, and
(3) establishing a strategy. The company must develop a game plan for achieving each business's long-run objectives.
Most large companies consist of four organizational levels:
(1) corporate, (2) division, (3) business unit, and (4) product.
central instrument for directing and coordinating the marketing effort.
strategic marketing plan
lays out the target markets and the firm's value proposition, based on an analysis of the best market opportunities.
tactical marketing plan
specifies the marketing tactics, including product features, promotion, merchandising, pricing, sales channels, and service.
All corporate headquarters undertake four planning activities:
Defining the corporate mission
Establishing strategic business units
Assigning resources to each strategic business unit
Assessing growth opportunities
A clear, thoughtful mission statement provides a shared sense of purpose, direction, and opportunity.
Mission statements are at their best when they reflect a vision, an almost "impossible dream" that provides direction for the next 10 to 20 years.
Good mission statements have five major characteristics.
They focus on a limited number of goals.
They stress the company's major policies and values.
They define the major competitive spheres within which the company will operate.
They take a long-term view.
They are as short, memorable, and meaningful as possible.
strategic business units (SBUs)
1. It is a single business, or a collection of related businesses, that can be planned separately from the rest of the company.
2. It has its own set of competitors.
3. It has a manager responsible for strategic planning and profit performance, who controls most
of the factors affecting profit.
The company first considers whether it could gain more market share with its current products in their current markets, using a market-penetration strategy. Next it considers whether it can find or develop new markets for its current products, in a market-development strategy. Then it considers whether it can develop new products of potential interest to its current markets with a product-development strategy. Later the firm will also review opportunities to develop new products for new markets in a diversification strategy.
How might Musicale achieve integrative growth? The company might acquire one or more of its suppliers, such as plastic material producers, to gain more control or generate more profit through backward integration. It might acquire some wholesalers or retailers, especially if they are highly profitable, in forward integration. Finally, Musicale might acquire one or more competitors, provided the government does not bar this horizontal integration. However, these new sources may still not deliver the desired sales volume. In that case, the company must consider diversification.
First, the company could choose a concentric strategy and seek new products that have technological or marketing synergies with existing product lines, though appealing to a different group of customers.
DOWNSIZING AND DIVESTING OLDER BUSINESSES
Companies must care- fully prune, harvest, or divest tired old businesses to release needed resources for other uses and reduce costs.
consists of its structures, policies, and corporate culture, all of which can become dysfunctional in a rapidly changing business environment.
Some define it as "the shared experiences, stories, beliefs, and norms that characterize an organization." Walk into any company and the first thing that strikes you is the corporate culture—the way people dress, talk to one another, and greet customers.
which develops plausible representa- tions of a firm's possible future using assumptions about forces driving the market and different uncertainties.
EXTERNAL ENVIRONMENT (OPPORTUNITY AND THREAT)
A busi- ness unit must monitor key macroenvironment forces and significant microenvironment factors that affect its ability to earn profits.
is an area of buyer need and interest that a company has a high probabil- ity of profitably satisfying.
market opportunity analysis (MOA)
1. Can we articulate the benefits convincingly to a defined target market(s)?
2. Can we locate the target market(s) and reach them with cost-effective media and trade channels?
3. Does our company possess or have access to the critical capabilities and resources we need to
deliver the customer benefits?
4. Can we deliver the benefits better than any actual or potential competitors?
5. Will the financial rate of return meet or exceed our required threshold for investment?
is a challenge posed by an unfavorable trend or development that, in the absence of defensive marketing action, would lead to lower sales or profit
INTERNAL ENVIRONMENT (STRENGTHS AND WEAKNESSES
It's one thing to find attractive opportunities, and another to be able to take advantage of them. Each busi- ness needs to evaluate its internal strengths and weaknesses.
develop- ing specific goals for the planning period.
manages by objectives (MBO)
1. They must be arranged hierarchically, from most to least important. The business unit's key objective for the period may be to increase the rate of return on investment. Managers can increase profit by increasing revenue and reducing expenses. They can grow revenue, in turn, by increasing market share and prices.
2. Objectives should be quantitative whenever possible. The objective "to increase the return on investment (ROI)" is better stated as the goal "to increase ROI to 15 percent within two years."
3. Goals should be realistic. Goals should arise from an analysis of the business unit's opportuni-
ties and strengths, not from wishful thinking.
4. Objectives must be consistent. It's not possible to maximize sales and profits simultaneously.
is a game plan for getting there. Every business must design a strategy for achieving its goals, consisting of a marketing strategy and a compatible technology strategy and sourcing strategy.
PORTER'S GENERIC STRATEGIES
verall cost leadership.
Overall cost leadership
Firms work to achieve the lowest production and distribution costs so they can underprice competitors and win market share. They need less skill in marketing. The problem is that other firms will usually compete with still-lower costs and hurt the firm that rested its whole future on cost.
The business concentrates on achieving superior performance in an important customer benefit area valued by a large part of the market. The firm seeking quality leader- ship, for example, must make products with the best components, put them together expertly, inspect them carefully, and effectively communicate their quality.
The business focuses on one or more narrow market segments, gets to know them intimately, and pursues either cost leadership or differentiation within the target segment.
Firms directing the same strategy to the same target market
Product or service alliances
partner relationship management (PRM)
organizational structures to support them, and many have come to view the ability to form and manage partnerships as core skills
A dynamic relationship connects the stakeholder groups
A smart company creates a high level of employee satisfaction, which leads to higher effort, which leads to higher-quality products and services, which creates higher customer satisfaction, which leads to more repeat business, which leads to higher growth and profits, which leads to high stockholder satisfaction, which leads to more investment, and so on.
a written document that summarizes what the marketer has learned about the marketplace and indicates how the firm plans to reach its marketing objectives.
Marketing plans are becoming more customer- and competitor-oriented, better reasoned, and more realistic. They draw more inputs from all the functional areas and are team-developed.
A marketing plan usually contains the following sections.
Executive summary and table of contents.
The Role of Research
To develop innovative products, successful strategies, and action programs, marketers need up-to-date information about the environment, the competition, and the selected market segments.
The Role of Relationships
Although the marketing plan shows how the company will establish and maintain profitable customer relationships, it also affects both internal and external relationships.
From Marketing Plan to Marketing Action
The marketing plan should define how progress toward objectives will be measured. Managers typically use budgets, schedules, and marketing metrics for monitoring and evaluating results.
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