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Chapter 19

MCS 1000 Chapter 19: Chapter 19 Putting it all Together

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Marketing and Consumer Studies
MCS 1000
Sergio Meza

MCS 1000 Chapter 19 Notes Chapter 19: Putting it All Together The Marketing Strategy Marketing Basics: Doing what Works and Allocating Resources Involves: 1. Finding and using what works for the organization and industry given both the organization situation and industry situation 2. Allocating resources effectively to exploit those situations Research suggests most organizations are not doing a good job at strategy formation and implementation Finding and Using What Really Works 4 basic business practices 1. Strategy: o Devise and maintain a clearly stated, focused strategy 2. Execution o Develop and maintain flawless operational execution 3. Culture o Develop and maintain a performance oriented culture 4. Structure o Build and maintain a fast, flexible, flat organization Allocating Marketing Resources Using Sales Response Functions Sales response function: relates the expense of the marketing effort to the marketing results obtained Concept can be applied to sales revenue, profit, units sold, level of awareness Maximising Incremental Revenue Minus Incremental Cost o Economists say to allocate the firms marketing, production, and financial resources to the markets and products where the excess of incremental revenues over incremental costs is greatest o Can plot the sales and advertising expenses (xaxis) against the resulting annual sales revenue (yaxis) on a graph to see the relationship o The example shows an Sshaped graph A Numerical Example of Resource Allocation o The example used was a new General Mills cereal called Fruity Cheerios targeted at healthconscious consumers o Can use the graph to estimate how much advertising expenses are needed to get a desired amount of sales revenue (assume the sales function does not change through time as a result of changing consumer tastes and incomes) Allocating Marketing Resources in Practice o Share points: percentage points of market share; often used as the common basis of comparison to allocate marketing resources effectively for different product lines within the same firm o Seek answers to the question How much is it worth it to us to try to increase our market share by another 1 (or 2, or 5, or 10) percentage point? The Vital Importance of Metrics in Marketing Planning Measuring the effectiveness of marketing activities has become a central focus in many organizations Marketing metrics is used to measure the actual performance
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