Marketing Chapter 2 January14.docx

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MARK 1028

Marketing Chapter 2 January14,2012 Strategic planning  Process of developing and maintaining a strategic fit  Fit between organizations goals and capabilities and its changing marketing opportunities  Planning  Goals In getting to an end means  Break down into small goals Strategic Planning  Defining the company  Setting company objectives and goals  Designing the business portfolio  Planning marketing and other functional strategies  Developing and maintaining a strategic fit between organizations goals and changing marketing opportunities Corporate Level  Company starts the strategic planning process  Defines overall purpose and mission  Transforms mission into detailed supporting objectives  What portfolio of businesses and products are best for company Market Oriented Mission Managements search for purpose of business  What is our business?  Who are our consumers?  What do they value?  What should our business be?  Company must answer these questions  Mission statement is the organizations purpose  What it wants to accomplish  Defines business in terms of satisfying basic customer needs  Invisible hand which guides people in the organization  Mission gets people excited Example: we help you organize the world’s information and make it universally accessible and useful. Takes product oriented definition and turns into market-oriented definition (handout) Market oriented Mission statement  Defined in terms of consumer needs  Basic needs may last forever  Defines business in terms of satisfying basic customer needs  Should fit the market environment  Realistic, specific  Distinctive competency base  Motivating *Employees need to feel that their work makes a difference in peoples lives, not only compensation. Company Objectives and goals  Mission needs to be turned into detailed supporting objectives for management  Managers should have objectives they are responsible for Improving profits  Increasing sales or reducing costs  Improving share of market  Enter foreign markets  Increase availability and promotion  Entering new markets may require price cuts Virtuous Circle- continuous growth along with change Business objectives  Build profitable customer relationships  Invest in research  Improve profits Marketing Objectives  Increase market share  Create local partnerships  Increase promotion  Expand globally Designing Business Portfolio (Pg 43) The Business Portfolio  Collection of businesses and products that make up the company  Best fits the companies strengths and weaknesses while exploiting opportunities  Analyze portfolio to decide which businesses should receive more, less, or no investment  Shape for future growth and downsizing Portfolio Analysis  Management evaluates the products and businesses that make up the company  Evaluate profitable and non profitable businesses  Identify key businesses  Use strengths to take advantage of attractive opportunities Best Business Portfolio  Best fits the companies strengths and weaknesses  Compared to opportunities in the environment Strategic Business Unit (SBU)  Can be featured or most profitable  Unit of company which has a separate mission and objectives from other company businesses  Other business units have separate missions  Planned independently from other businesses  Division, product within division or single product  Apple- Mobile, Desktop computer, laptops, Personal music players.. Analyzing the current business portfolio  Identify key businesses that make up the company  Access the attractiveness of its various SBU’s  Decide how much support each SBU deserves Analysis (matrix) Growth Share Matrix  Evaluates companies strategic business units in terms of its market growth rate and relative market share.  Boston consulting group Approach How you look at business Star  High growth  High share businesses or products  Heavy investment to finance rapid growth  Turn into cash cows Question mark  Low share business units in high growth markets  Require cash to hold share, let alone increase it  Build into stars which are eventually phased out Cash cow  Low growth, high share businesses  Need less investment to hold market share  Produce cash used for bills and investment  Help finance other businesses Dog  Low growth, low share businesses and products  Generate enough to maintain themselves Circles in the matrix represent SBU dollar sales Company can  Invest more in unit to build share  Invest enough to hold current position  Harvest to milk short term cash  Divest Problems with Matrix  All units begin as question marks and end as dogs  Matrix focuses on the short term with little future planning  Companies are quick to milk and sell profitable businesses Diversification  Narrow focus and get back to the basics of serving one or a few industries they know best. Problems with matrix approaches  Difficulty in defining SBU’s and measuring market share and growth  Time consuming  Expensive  Focus on current business  Does not plan for the future Cross-functional team  Consists of managers who are close to the market  Include customers and suppliers Product life-cycle  Continue to innovate in order to stay in business and profit Product market expansions grid strategies Identify company growth opportunities through market penetration, market development, product development, or diversification. Market penetration  Growth strategy increasing sales of current products to current market segments  Product remains unchanged  Increased awareness and building of strong brand equity Market development  Identifies and develops new market segments for current products  New demographic markets  New geographic markets Product development  Offers new modified products to existing market segments Diversification  Growth strategy through starting up or acquiring businesses outside current product lines and markets  Different products from current  Compliment current offerings with new ones  Diversifying too broadly into unfamiliar products or industries can lose their market focus Downsizing  Distribution network may be an obstacle when introducing new product Downsizing  Reduction of the business portfolio  Eliminating products or business units that are not profitable  No longer fit companies overall strategy  Market environment may have changed, some lines less profitable  Products not offering superior customer value Reasons cont’d  Market may have changed  Grown too fast with lack of experience  Products/businesses age and fade out  Over diversification, may be too many products *Focus on growth opportunities Marketing Concept  Company strategy should revolve around building profitable relationships with important consumer groups Partner Relationship Management  Work closely with partners in other company departments to form effective value chain that serves the customer  Partner with other companies to form competitive value delivery network Value Chain  Carry out value-creating activities (each department)  Design
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