BUS M 300 1nd Edition Lecture 6 Outline of Last Lecture I Why Segment Markets II Steps in Segmenting and Targeting Markets A 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 Markets D 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 Organizations III Setting Strategic Directions IV The Strategic Marketing Process Current Lecture I 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 II 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 marketing 1 Corporate Level where top management directs overall strategy for the entire organization o Top managers are the board of directors and senior management including the CEO and president 2 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 of an organization that markets a set of related offspring to a clearly defined group of customers 3 Functional Level where groups of specialists actually create value for the organization o 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 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 pursue 1 Profit 2 Sales 3 Market Share III 4 Quality 5 Customer satisfaction 6 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 ways 1 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 information on 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 organization for a specified future time period 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 quantify performance measures and growth targets of their firms strategic business units o 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 industry IV o Relative market share the sales of the SBU divided by the sales of the largest firm in the industry o 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 share o 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 strategies 1 Market penetration marketing strategy to increase sales of current products in current markets 2 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 The Strategic Marketing Process After an organization assesses where it is and where it wants to go follow up question 1 How do we allocate our resources to get where we want to go 2 How do we convert our plans into actions 3 How do our results compare with our plans and do deviations require new plans Strategic marketing process an approach whereby an organization allocates