Mktg Exam Review
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What is Strategic Planning?
Strategic Planning is the managerial process of creating and maintaining a fit between the organization's objectives and resources and the evolving market opportunities.
What is the Marketing Environment?
Customers, Competitors & Society
Outline 6 purposes of the Marketing Plan.
- Explains the present situation of the firm.
- Specifies the Objectives.
- Outlines the marketing strategy necessary to achieve the objectives.
- Describes the specific marketing tactics to achieve objectives.
- Identifies resources necessary for implementation.
- Outlines steps to monitor and measure results.
List the Elements of the Marketing Plan.
- Business Mission Statement
- Situation or SWOT Analysis (SWOT=Strengths/Weaknesses/Opportunities(external)/Threats)
- Marketing Strategy
- Implementation/Evaluation Control
What are the three questions/focuses answered in the Mission Statement?
- What business should we be in?
- Should focus on market(s) the company will serve and benefits that will be offered.
- Needs to be "just right"- Too narrow: marketing myopia - Too broad: no guidance.
What is Marketing Planning?
It involves designing activities relating to marketing objectives and the changing marketing environment. It is the basis for all marketing strategies and decisions.
What is an SBU, and what 3 properties of a company's SBU are necessary?
- A Strategic Business Unit is when large companies that market many types of products may need to plan differently for different parts of the company.
- (ex) Unilever has SBU for Food and one for Personal Products.
- Have a distinct mission
- Have Control over its resources
- Plan independently of other parts of the company
What Purpose do Marketing Plan Objectives serve?
- Objectives give direction for the strategic plan and provide a yardstick for follow-up.
- "Where are we going, and how do we know when we get there?"
What are the requirements for a Good Objective?
- Time Specific
- Consistent with the organization's overall goals & priorities
What does a Situation (SWOT) Analysis consist of?
What does a SWOT analysis help a company better understand?
- It's Competitive Advantage. "How can we be perceived as better than the competition?"
- Three sources of competitive advantage: Cost, Differentiation & Niche Strategy.
What does it mean to have a cost competitive advantage?
It means being the low-cost competitor in an industry while maintaining satisfactory profit margins. ex: Walmart - how? has strong buying power due to strong relationship with suppliers (part due to company's size).
What are some ways in which Costs can be reduced to develop a Cost Competitive Advantage?
- Experience Curves: allow mgmnt to forecast costs and set prices based on anticipated costs as opposed to current costs.
- Efficient Labor: Offshore cheaper manufacturing costs or outsourcing specific activities of US companies such as data entry.
- No-frills Goods & Services: ex) Southwest Airlines-Do not charge for bags but no seat assignments or meals.
- Government Subsidies: Govs may provide grants and interest-free loans to target industries.
- Product Design: Cutting edge design technology, Reverse engineering a low-cost competitor's product
- Reengineering: Rethinking & Redesign of business processes to achieve dramatic improvements
- Production Innovations: New technology & simplified production techniques help lower the average cost of production.
- New methods of Service Delivery: ex) Delta has lowered reservation costs by encouraging online booking.
What is a Product/Service Differentiation Advantage? An Example?
- This advantage exists when a firm provides something that is unique and valuable to buyers beyond simply offering a lower price than the competition's.
- ex) NIKE- advantage through constant product innovation - Nike Air, Nike Swift, Nike Shox.
What is a Niche Competitive Advantage? An Example?
- This seeks to target and effectively serve a single segment of the market.
- ex) Title Nine - Older Athletic Women
What are the four options for Strategic Alternatives? (Categories within the Strategic Opportunity Matrix)
- Market Penetration
- Market Development
- Product Development
What is the Market Penetration strategy? An Example?
- A firm using this alternative would try to increase market share among existing customers.
- ex) Sales, Promotions, Loyalty Programs
What is the Market Development strategy? An Example?
- To attract new customers to existing products.
- ex) Open new stores not only statewide but internationally
What is the Product Development strategy? An Example?
- This strategy entails the creation of new products for present markets
- ex) Starbuck's instant coffee, McDonald's yogurt parfaits
What is the Diversification strategy? An Example?
- This is a strategy of increasing sales by introducing new products into new markets. (Least used strategy)
- ex) Ralph Lauren developed new brand called Rugby to appeal to ages 14-29.
What is the overall purpose of putting together a Strategic Opportunity Matrix?
To identify growth opportunities.
What is the purpose of the BCG (Boston Consulting Group) Portfolio Matrix?
To analyze the performance of a company's business units (BUs) and to determine which BUs to invest more/less in.
What are the categories used in the BCG Analysis Matrix?
- Stars: A Large Player in a Rapidly Expanding Market
- Cash Cows: A Large Player in a Mature Market (ex. Heinz has 2 cash cows - Ketchup & Weight Watchers frozen dinners)
- Problem Child/Question Mark: Small Player in a Rapidly Expanding Market (ex. 3-D TVs)
- Dogs: Not enough money and/or resources for success or profit (ex. mainframe computers)
After classifying the company's SBUs in the matrix, the next step is to allocate future resources for each. What are those four basic strategies?
- Build: If the firm has an SBU that it believes has the potential to be a star, they may decide to give up short-term profits and use its financial resources to build that product.
- Hold: If an SBU has a very successful cash cow, a key goal would be to hold market share to take advantage of a very positive cash flow.
- Harvest: Basic goal is to increase the short-term cash return without too much concern for the long-run impact
- Divest: Getting rid of SBUs with low shares aka Problem Childs & Dogs.
What is environmental scanning? It's Goal?
Continually collecting and evaluating information from the external environment with the goal to identify future market opportunities & threats.
What are the 7 factors within the external environment that are most important to marketing managers?
What are some Social Factors now influencing the products people buy, the prices paid for products, the effectiveness of specific promotions & how, where and when people expect to purchase products?
- American Values
- The Growth of Component Lifestyles
- The Changing Role of Families & Working Women
What are some Demographic Factors influencing the products people buy, the prices paid for products, the effectiveness of specific promotions & how, where and when people expect to purchase products?
- Tweens (ages 8 - 14), Generation Y/X, Baby Boomers
- Americans on the Move (Average US citizen moves every 6 years)
- Growing Ethnic Markets
What are some Economic Factors influencing the products people buy, the prices paid for products, the effectiveness of specific promotions & how, where and when people expect to purchase products?
- Consumers' Purchasing Power
What is Purchasing Power?
- Income - Cost of Living = Disposable Income
- The more disposable income, the more consumers have to spend on wants rather than needs...in some cases more expensive items/luxuries
What is Inflation?
Inflation is a measure of the decrease in the value of money, generally expresssed as the percentage reduction in value since the previous year. It pressures consumers to make more economical purchases and still maintain their standard of living.
What is a Recession?
It is a period of economic activity characterized by negative growth.
How do Technological Factors effect a company's external environment?
- With new technology, the firm may be able to operate more efficiently & create a better product.
- It also could render existing products obsolete (ex. film cameras replaced by digital)
Basic Research & Applied Research along with Blogging help us stay adept to change.
What are 2 Political & Legal Factors?
- Federal Regulatory Agencies (FDA, CPSC, FTC)
- State Laws (ex. NYC ban on trans fats)
What should an analysis of Competitive Factors include?
- Both direct competitors as well as indirect/substitute products.
- Analyze competitors from the consumer viewpoint.
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