BUS-M 300 1nd Edition Lecture 6 Outline of Last Lecture I. Why Segment Markets?II. Steps in Segmenting and Targeting MarketsA. Step One: Group Potential Buyers into Segments B. Step Two: Group Products to Be Sold into Categories C. Step Three: Develop a Market-Product Grid and Estimate the Size of MarketsD. Step Four: Select Target Markets E. Step Five: Take Marketing Actions to Reach Target Markets III. Positioning the Product Outline of Current Lecture I. Today’s Organizations II. Strategy in Visionary OrganizationsIII. Setting Strategic Directions IV. The Strategic Marketing Process Current LectureI. Today’s Organizations - An organization is a legal entity that consists of people who share a common mission- A business firm is a privately owned organization that serves its customers to earn a profit so that it can survive - Profit: the reward to a business firm for the risk it undertakes in marketing its offerings- A non-profit organization is a nongovernmental organization that serves its customers but does not have profit as an organizational goal, it focuses on operational efficiency and client satisfaction- Strategy: an organization’s long-term course of action that delivers a unique customer experience while achieving its goals - The three organizational levels whose strategies are linked to marketing1. Corporate Level—where top management directs overall strategy for the entire organizationo Top managers are the board of directors and senior management, including the CEO and president2. Strategic Business Unit Level—managers set a more specific strategic direction for their business to exploit value-creating opportunities o Strategic business unit (SBU): is a subsidiary, division, or unit ofan organization that markets a set of related offspring to a clearly defined group of customers3. Functional Level –where groups of specialists actually create value for the organizationo Cross-functional teams: consist of a small number of people from different departments who are mutually accountable to accomplish a task or a common set of performance goals II. Strategy in Visionary Organizations- Core values: the fundamental, passionate, and enduring principles that guide an organization, they are timeless and guide the organization’s conduct, must be supported by management - Mission: a statement or vision of an organization’s function in society - Mission statement—should be clear, concise, meaningful, inspirational and long term - Organizational culture: the set of values, ideas, attitudes, and behavioral norms that is learned and shared among the members of an organization- Business: the underlying industry or market sector of an organization’s offering - Business model—strategies an organization develops to provide value to the customers it serves- Goals/Objectives: targets of performance to be achieved, often by a specific time- Goals convert an organization’s mission and business into long and short term performance targets - Market share: ratio of a firm’s sales to the total sales of all firms in the industry - Several different types of goals business firms can pursue1. Profit 2. Sales3. Market Share4. Quality 5. Customer satisfaction6. Employee welfare 7. Social responsibility - The organizational foundation sets the “why” of organizations - Organizational direction sets the “what” - Organizational strategies vary in at least two ways1. Strategy’s level in the organization 2. The offerings an organization provides to its customers- Variation by level—moving down an organization involves creating increasingly specific, detailed strategies and plans- Variation by offering—the strategy will be far different when marketing a very tangible physical product, a service, or an idea- Marketing dashboard: the visual computer display of essential marketing information - The idea of a marketing dashboard comes from the display of informationon a car’s dashboard - Marketing metric: a measure of the value or trend of a marketing activity or result - Data visualization—which presents information about an organization’s marketing metrics graphically so marketers can quickly spot deviations from plans and take corrective actions - Marketing plan: a road map for the marketing activities of an organizationfor a specified future time period III. Setting Strategic Directions - Asking an organization where it is at the present time involves identifying its competencies, customers, and competitors- Competencies—special capabilities, skills, technologies, and resources that distinguish if from other organizations and provide customer value- Competitive advantage—unique strength relative to competitors that provides superior returns, often based on quality, time, cost, or innovation- Two techniques to aid managers with decisions are 1. Business portfolio analysis: a technique that managers use to quantifyperformance measures and growth targets of their firms’ strategic business unitso Determine appeal of each SBU or offering and then determine the amount of cash each should receive o Market growth rate—annual rate of growth of the SBU's industryo Relative market share—the sales of the SBU divided by the sales of the largest firm in the industryo Cash cows—SBUs that generate large amounts of cash, far more than they can use o Stars—SBUs with a high share of high growth markets that may need extra cash to finance their own rapid future growth, likely to become cash cows o Question marks—SBUs with a low share of high growth markets, need large injections of cash just to maintain their market shareo Dogs—SBUs with low shares of slow growth markets, don’t hold promise of ever becoming real winners for the organization 2. Diversification analysis: a technique a firm uses to serach for growth opportunities from among current and new products and markets- Four market product strategies1. Market penetration—marketing strategy to increase sales of current products in current markets2. Market development—marketing strategy to sell current products to new markets 3. Product development—marketing a strategy of selling new products to current markets 4. Diversification—marketing strategy of developing new products and selling them in new markets IV. The Strategic Marketing Process - After an organization assesses where it is and where it wants to go, followup