MKT 3401 MIDTERM STUDY GUIDE PROFESSOR FENNELL FALL 2015 The goal of marketing is facilitating exchange between buyer and seller at some point in the future The four marketing management philosophies are product orientation sales orientation market orientation and societal orientation 1 Product 2 Sales 3 Market 4 Societal Production orientation Sellers market After WWII there was a sellers market people were very willing to buy and they had to go to the producer Companies became very product focused cheaper faster better Henry Ford s approach was to maximize pro t and minimize production cost sellers had all the power very inward focused In a sellers market there s going to be a huge focus on how to make the product Product Research Product Testing Product Focus Sales Orientation Disregards market needs and consumer demand Despite the quality of sales force often cannot convince people to buy what isn t better so lots of tests and research focus on the features desired Market Orientation 3 Market Orientation Much more outward focused what does the customer want Starbucks logo evolution Evolved to focus less on coffee so they could emphasize pastries and teas Strategic signal to set the tone like Apple Computer Apple Inc Market Research Market testing Customer focus Ch 2 Strategic planning is the managerial process of creating and maintaining a t between the organization s objective and resources and the evolving market opportunities 1 It s the t between your objectives resources and external environment The 2 questions strategic planning addresses are 1 What is the organization s main activity at a particular time 2 How will the organization reach its goal A SBU or Strategic Business Unit is a subgroup of a single business or collection of related businesses within the larger organization An SBU should have A distinct mission and speci c target market Control over its resources Its own competitors A single business or a collection of related businesses Plans independent of the other SBUs in the total organization Examples include Samsung General Electric P G Ansoff s Opportunity Matrix is one of the tools that a company or SBU can use to manage the strategic direction of its portfolio of businesses It matches products with markets Present Market Present Product Market Penetration Increase market share among existing customers Starbucks sells more coffee to customers who register their reloadable Starbucks card New Product Product Development Create new products for present markets Starbucks develops powdered instant coffee called Via New Market Market Development Attract new customers to existing products Starbucks opens stores in Brazil and Chile Diversi cation Introduce new products into new markets Starbucks launches Hear Music and buys Ethos Water 2 The Boston Consulting Group s Portfolio Matrix classi es each SBU by its present or forecast growth and market share The underlying assumptions is that market share and pro tability are strongly linked High MSD Low MSD A star is a fast growing market leader Star SBUs usually have large pro ts but need lots of cash to nance rapid growth Best market tactic is to protect existing market share by reinvesting earnings in product improvement better distribution more promotion and production ef ciency A dog has low growth potential and a small market share Most dogs eventually leave the marketplace Examples BlackBerry s smartphone line started out as a star moved to the cash cow then to the question mark but has now moved to other markets to sell its device High MGR Low MGR A problem child or question mark shows rapid growth but poor pro t margins It hs a low market share in a high growth industry Problem children require a lot of cash Without cash suport they eventually become dogs Strategy options are to invest heavily to gain a better market share acquire competitors o get the necessary market share or drop the SBU A cash cow is an SBU that generates more cash than it needs to maintain its market share It s in a low growth market but the product has a dominant market share Basic strategy for a cash cow is to maintain market dominance by being the price leader and making technological improvements to the product High MGR Low MGR High MSD Low MSD 3 The three Portfolio Matrix Strategies used after classifying the company s SBUs in the matrix are building holding harvesting and divesting Build If a company is trying to make a star SBU probably from a problem child Give up short term pro ts and use nancial resources to achieve goal Ex Apple postponed work on iPad to pursue iPhone Hold If an SBU is a very successful cash cow Preserve market share so the organization can take advantage of the positive cash ow Ex Spinoffs of successful TV shows Harvest Appropriate for all SBUs except stars Increase the short term cash return without too much concern for the long run Worthwhile when more cash is needed from a cash cow with long run prospects that impact are unfavorable because of a low market growth rate Ex Lever Brothers has been harvesting Lifebuoy soap for years with little promotional backing Divest Problem children and dogs Get rid of SBUs with low shares of low growth markets Ex P G dropped its entire snack food division The ve elements of a marketing plan 1 Business mission statement 2 SWOT analysis 3 Objectives 4 Marketing Strategy 1 Target Market Strategy 2 Marketing Mix Product Place Promotion Price Implementation Evaluation Control 5 MS OMIEC Mission SWOT Objectives Marketing Strategy Implementation Evaluation Control 4 The Mission answers the question What business are we in The business mission profoundly affects the rm s long run resource allocation Avoid marketing myopia De ning a business in terms of goods and services rather Railroad industry was so preoccupied with one another that they were outsourced by tan in terms of the bene ts customers seek pro tability and survival cars and airplanes Mission Statement What should we do How do we do it Whom do we do it for What value are we bringing SWOT Internal Strengths Weaknesses Production costs expertise capabilities Marketing skills P G owning many multimillion dollar brands Financial resources Company image Employee capabilities Technology Social Demographic Economic Technological Political Legal Competitive External Opportunities Threats A competitive advantage is a set of unique features of a company and its products that are perceived by the target market as signi cant and