Midterm on Chapters 1,2,3,4,5 Flashcards
(169 cards)
1
Q
Markets
A
comprised of individuals/organizations- willing to buy a good or service to obtain benefits
2
Q
industry
A
comprised of a group of firms that offer a product or class of products - the sellers are similar or close substitutes for one another
3
Q
4 c’s
A
company, context, competitors, customers
4
Q
4cs- company
A
internal resources, capabilities and strategies
5
Q
what is the point of the 4cs
A
help us understand potential market opportunities
6
Q
4cs context
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environmental, social, economic, and technology trends (of thsoe that the firm has to compete with)
7
Q
4cs competitors
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relative strengths and weaknesses of competitors
8
Q
4cs customers
A
needs, wants, and characteristics of current and potential customers
9
Q
what three questions does management ask when doing a market opportunity analysis?
A
How attractive is the market we serve or propose to serve?
How attractive is the industry in which we would compete?
Are the right resources—in terms of people and their capabilities and connections—in place to effectively pursue the opportunity at hand?
10
Q
macro level analysis vs micro level analysis
A
in macro we look at the environmental conditions of both the market and the industry while in micro we look at the individuals that comprise the market or industry. in micro we target specfici customers and companies.
11
Q
what goes first, macro level analysis or micro level analysis?
A
macro
12
Q
seven domains of attractive opportunities is
A
a framework that looks at market attractiveness from both he macro and micro perspectives. it takes into account the competencies, capabilities and resources that a firm can use to exploit these opportunities
13
Q
what do you need to look at to make an assessment of the market environment?
A
demographic environment (aids, population growth, aging), socio cultural environment (trends with values, attitudes, behavior and culture), economic environment (recession, gdp, employment,), technological environment (innovation in tech, telecommunication infrastructure) and natural environment (earth’s resources and global warming)
14
Q
what do you need to look at to figure out industry attractiveness?
A
porter’s 5 competitive forces
15
Q
porter’s 5 forces
A
threat of new entrants, rivalry among existing industry firms, bargaining power of buyers, bargaining power of suppliers, threat of substitute products
16
Q
analsys of 5 forces on worldwide cell phone industry in early 2004
A
Rivalry is high leading to high customer churn: unfavorable, Threat of new entrants is low: moderately favorable (purchasing bandwith costs billions of dollars), Supplier power is high: moderately unfavorable (govts raise the price of additional bandwith with auctions), Buyer power is low: very favorable (customers don’t have power to set prices), Threat of substitutes is high: moderately unfavorable (pdas or multimedia devices could replace cell phones).
overall conclusion: since 2/5 forces are favorable, the cell phone industry is not particularly attractive at this time
17
Q
how do you understand markets on a micro level
A
- Is there a known customer ‘pain’ for the target customers
- does the Offering provides customer benefits that other solutions do not offer
- is the Target segment likely to grow
- are the Other segments for which the currently targeted segment providing a springboard for subsequent entry
18
Q
what are the 3 questions that will be key to pursuing attractive opportunitities?
A
- does the opportunity fit what we want to do?
- do we have the people that can execute this successfully?
- do we have the right connections?
19
Q
what else are the ‘team domains’ that are key to the pursuit of attractive opportunities
A
Mission, Aspirations and Risk Propensity.
Ability to Execute the Industry’s Critical Success Factors (CSFs)
20
Q
how should you look at market potential?
A
market potential is typically bigger than industry sales. it is an estimate that is a starting point for preparing a sales forecast. it’s important to know the size.
21
Q
african communications group
A
Use of Porter’s Five Forces gave the (2) entrepreneurs insights into: industry conditions overall were attractive, there were no substitutes other than cellular service (which was extremely expensive), the local Tanzania Telecommunications Company Limited (TTCL) did not seem likely to be a very vigorous competitor
Opportunity – new licenses were likely to be issued– (2) entrepreneurs hoped to be among those who would win these licenses
Next Steps – execute on what was a “good” business idea
22
Q
market potential
A
identifying the market segments that offer the most potential for a new product/service
23
Q
how do you calculate the target market
A
the penetrated market + market potential
24
Q
forecasting
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predicting sales revenue for a product/service
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marketing research
gathering and reporting data relevant to marketing decision making
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six steps in marketing research
(1) identify managerial problem/objectives (2) determine type of data sources—primary/secondary (3) design research (4) collect data (5) analyze data (6) report results to decision
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two types of forecasting
top down and bottom up
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top down
- a central person/persons takes full responsibility for forecasting and preparing an overall forecast
- usually aggregates economic data and current sales trends
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bottom up
- common in decentralized firms.
- each firm prepares its own sales forecast and then all parts are aggregated to create the forecast for the firm as a whole.
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top down vs bottom up
- Each process typically has access to different information, and will likely result in different forecasts
- if both methods produce similar results Using both methods concurrently adds confidence to the forecast,
- If the results of the two approaches differ, useful discussions of the underlying assumptions will be surfaced
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what are the 2 keys to good forecasting
- stating assumptions rather than stating opinions
- using multiple methods of forecasting. this helps minimize bias based on past performance and minimizes the potential to inflate or deflate forecasts (sandbagging)
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what are the 6 major evidence based methods for estimating market potential and forecasting sales
statistical methods, observation, surveys/focus groups, analogy, judgment, market tests-experimental tests
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what are the two math approaches for market research
chain ratio method and brand development indices
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brand development indices
compare sales for a given brand to population
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category development indices
report on consumption in a certain category to population in defined geographical area.
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Analogy
when Neither statistical methods/observations are possible the Product is compared with similar products for which historical data are available
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judgment
market research Forecasts are made on the basis of experience / intuition
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Rate of Diffusion of Innovations
How quickly the target market is likely to adopt the new product/innovation (important to understand prior to investment in the development of the new product)
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diffusion of innovation
a theory that seeks to explain the adoption of an innovative product among a group of potential buyers
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consumer adoption process
the attitudinal changes experienced by individuals from the time they hear about a new product, service until they adopt it.
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parts of the consumer adoption process
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Awareness
Interest
Evaluation
Trial
Adoption
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Rate of Adoption
rate as a result of a function of the actions taken by the product’s marketers.
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what does the rate of adoption help do
help move the rate of adoption. eg apple had a target of selling 1 million iphones by sept 30 2007 and by early september they reached this goal.
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what improves the rate of adoption
favorable reputations and marketing to build awareness and r&d, and strong competition among competitors
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what percent of consumers are innovators
2.5%
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what percent of consumers are early adopters
13.5%
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what percent of consumers are early majority?
34%
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what percent of consumers are late majority?
34%
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what percent of consumers are laggards and non adopters?
16%
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Diffusion of innovation factors, in order of importance (Rogers 1983):
(6)
(1) risk
(2) relative advantage
(3) relative simplicity
(4) compatibility with current behavior
(5) ease of small-scale trial
(6) ease of communication of benefits.
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What are the implications of diffusion theory for forecasting new product market penetration?
Diffusion theory suggests that high penetration levels are rare at the outset. Typically, first-year penetration levels include some but not all of the innovators, i.e., less than 2½ percent will likely adopt in year one.
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five adopter categories
(1) innovators (2) early adopters (3) early majority (4) late majority (5) laggards
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why do we have to understand the 5 adopter categories
helps identify different market segments and thereby help in creating different strategic marketing programs for the different adopter categories
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Four key kinds of systematic market knowledge systems
Internal records, Marketing databases: , Competitive intelligence systems: , Client contact systems:
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intuition vs acquiring data
market knowledge is incomplete and ill informed without data
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importance of internal records systems
they are tracking system - let you know whats selling whats hot and whats not moving
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what do competitive intelligence systems do?
help you understand the competitive landscape macro environment
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what do client contact/salesforce automation systems do
help disseminate real time product information to salespeople and helps them respond more productively to customer needs. this captures sales intelligence from salespeople.
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what kind of questions should informed users of marketing research ask before approving a study?
- What are the research objectives? Will the proposed study meet them?
- Are the data sources appropriate? Secondary or primary? Qualitative or quantitative?
- Is the research itself well designed?
- Are the planned analyses appropriate?
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primary demand and secondary demand
primary demand - people buy early
| secondary demand- why didn't they buy early
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what kind of growth strategies do larger companies with multiple strategic business units use?
Those that are independent of each other.
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What determines the different competitive strategies?
differences in customer needs and life cycle stages eg some SBUs require more advertising and promotion than others, some require more personal selling and building relationships with partners more)
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How should Strategic Business Units be designed?
- as a set of homogenous markets eg packaged goods, technology companies, small medium business enterprises
- as a unique set of product markets that compete for the same customers (that way they have to focus on maximizing economies of scale)
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how are objectives set and what are they called, for SBUs?
they are set as corporate objectives get turned into subobjectives
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how should resources be allocated to SBUs?
- use tools like portfolio analysis and value based planning tools
- the sbu level managers determine it by first determining the attractiveness of individual target markets
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two competitve typologies on how sbus compete and grow
- michael proter's 3 strategies/competitive positions
| - robert miles and charles snow
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what are michael porter's 3 strategies/competitive positions
patterns of purpose, practice, performance
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what is robert miles and charles snow position and what are the 4 strategic types
- emphasize new product development and penetration into new markets.
- the 4 strategic types are prospector, defender, analyzer, reactor
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What are the 4 elements that, in combination, dictate how SBUs compete?
Scope, objectives, resource deployments, synergy
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What are the 3 compeitive strategies that michael porter identifies as ways that businesses compete with each other?
overall cost leadership, differentiation, and focus
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miles and snow: prospector
prospector- operates within a broad product market, values being 'first mover', responds rapidly to early signals of opportunity
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miles and snow: defender
defender- attempts to maintain a secure position in stable market
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miles and snow: analyzer
an intermediate type, makes fewer and slower product market changes than prospector, attempt to maintain a stable, limited line of products or services but carefully follows a selected set of promising new developments in its industry
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miles and snow: reactor
reactor- lacks any well defined competitive strategy. does not have a consistent product market orientation as its competitors
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How Do Competitive Strategies Differ from one Another
- Differences in Scope
- Differences in Goals and Objectives
- Differences in Resource Deployments
- Differences in Sources of Synergy
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what kind of strategy is good for those that 'are opportunity seekers and riskier takers in broad market'
prospector strategy. note: will need resources to maintain position
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what kind of strategy is good for those that are 'looking for areas of growht with current or new markets, maintain core competencies in quality and service
analyzer strategy. note: needs a strong share position
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what kind of strategy is good for 'when a business has something worth defending, its a profitable SBU with one or more segments in a relatively mature stable industry'
defender strategy. eg pillsbury's product generate substaintial profits and the basic technology remains the same
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how do you descibe 'differentiated defenders'
perceived competitive advantage based on superior product quality or perhaps production/engineering
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how do you describe 'low cost defenders'
more efficient than its competitors
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t or f each SBU has the same business strategy
f. each sbu typically has a different business strategy
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The role of the marketing management team is to
look at marketing policies and programs (4 P’s) using tools to assess the prospector, differentiated defender and low-cost defender strategy in their product-markets within the SBU.
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What if the Best Marketing Program for a Product Does not Fit
Be prepared to change direction and react to changing competitive pressures and shifting industry circumstances.
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t or f: the 4 cs are your macro trends
t
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strategy and being
recognizing that in order to claim value, firms must first create value
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USP stands for
unique selling proposition
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how do you explain 'unique selling proposition'
something a firm creates that is new or different or better than what others are providing
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how did ryan air differentiate itself from its competitors
more advertising and promotion, low cost competitve strategy,
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what is the bottom line for successful corporate strategy
understanding target customers, understanding potential competitors, understanding the market environment and avoiding strategic inertia
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corporate scope: market influences
the strategy should fit its internal characteristics (mission and goals) and fit the external enviornemnt (opportunities and threats)
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corporate scope: criteria for defining the corporate mission
firms develop their mission statements defining their social and ethical boundaries and the ethical principles they will follow
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corporate scope: social values and ethical principles
use physical terms like focusing on products or services or the technology used
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corporate scope: why are ethics important
customers and suppliers want to do business with firms that practice ethical behavior and have practices that demonstrate ethical behavior
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what is the ultimate objective for employees?
want competitive wages
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what is the ultimate objective for customers?
want high qualtiy at competitive price
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what is the ultimate objective for suppliers and debt holders
want to be satisfied with cash when financial claims are due
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what is the ultimate objective for stockholders
cash dividends and positive stock market price
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what are the marketing implications for corporate objectives
profitiability, growth and increased market share.
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t or f trying to achieve many objectives increases profibilitity
f no because there are trade offs
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t or f As firms emphasize developing and maintaining long-term customer relationships, customer-focused objectives are typically given more importance (customer satisfaction, retention and loyalty
t
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some ways a company can get a competitive advantage
using resources that other firms don't have or take a long time to develop, having brand loyalty
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expansion strategies (4)
- increase penetration of current product markets
- develop new products for current customers
- sell existing products to new segments or countries
- diversify
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ansoff strategies for development growth for: current markets with current products
market penetration strategy
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ansoff strategies for development growth for: current markets with new products
product development strategy
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ansoff strategies for development growth for: new markets and current products
market development strategy
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ansoff strategies for development growth for: new markets and new products
diversification strategy
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what is the riskiest ansoff strategy?
diversification
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what is the safest ansoff strategy?
market penetration
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what ist he difference between product developmetn and market development?
product development is the ability to udnerstand new technology, new processes. market development is the ability to understand new customers and their needs
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describe: market penetration strategies (4)
increase market share,
increase frequiency of product usage, increase quantity of product use,
develop new applications
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describe: product development strategies (3)
product improvements
product line extensions
new products for the same market
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describe: market development strategies (3)
expand markets for existing products
geographic expansion
target new segments
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describe: diversification strategies (3)
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vertical integration (forward/backword integration)
diversiifcaiton into related businesses (concentric diversification)
diversification into unrelated business (conglomerate diversification)
```
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forward/backward integration is also known as
vertical integration
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diversification into related businesses is also known as
concentric diversification
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diversification into unrelated businesses
conglomerate diversificaiton
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what are the two sets of analytical tools used to figure out how to allocate corporate resources
the portfolio models (boston consulitng group: bcg matrix and ge mckinsey matrix)
value based planning
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BCG Analysis: what do you call a product with high industry growth rate and high relative market share?
stars
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BCG Analysis: what do you call a product with low industry growth rate and high relative market share
cash cows
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BCG Analysis: what do you call a product with high industry growth rate and low relative market share
question marks
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BCG Analysis: what do you call a product with low industry growth rate and low relative market share
dogs
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stars
products that generate considerable income
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what is the strategy for stars
invest more funds for future growth
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what is the strategy for question marks
either invest more funds for growth or consider disinvesting
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quesiton marks
products that have potential to become stars or cash cows
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cash cows
generate strong cash flow
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what is the strategy for cash cows
milk profits to finance growht of stars and question marks
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what is the strategy for dogs
consider withdrawing
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dogs
generate little profits
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t or f providing a business with more money guarantees to improve its position within the matrix
f
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t or f the bcg matrix assumes that all business units are independent of each other except for the flow of cash
t. eg harvesting the dog might increase the costs or reduce the effectiveness of other sbus
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how does the GE mckinsey 9 cell matrix work
Managers select factors most appropriate for their firm and weight them according to their relative importance and then rate each business and its industry on the two sets of factors
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value based planning
look at the proposed strategies (in their value creating aspects) measured by the expected cash flows discounted at appropriate rates. compare the economic returns.
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4 sources of synergy
knowledge based synergies
corporate identity and corproate brand as a source of synergy
corporate branding strategy
synergy from shared resources
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describe: knowledge based synergies
transferring competencies across multiple SBUs . these are intangibles like brand name recognition
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describe: corprorate identity and corporate brand as a source of synergy
using strong public relations and coproate image across the company
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descirbe: corporate branding strategy
using the brand name as a driver potentially. sometimes you don't want to do this eg gillete does not always have proctor and gamble as a lead name
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describe: synergy from shared resources
synergy as a result of sharing resources across the firm, achieving economies of scale, taking advantage of external and internal resources
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Corporate Strategy
Coordination of activities of multiple business units, decisions about org. scope and resource deployment across its divisions/Strategic Business Units (SBUs)
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Business-Level Strategy
How a business competes within its industry is the critical focus of business-level strategy—how will their distinctive competencies best match the needs and wants of customers in the business’s target segments
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Marketing Strategy
Allocation and coordination of marketing resources and activities to accomplish the firm’s objectives within a specific product-market. (key: identify target market, and well-integrated marketing mix—the 4 Ps—product, price, place, promotion)
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4 ps
product, price, place, promotion
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What is a strategy?
Pattern/timeframe of present and planned objectives, resource deployments, interactions with the org. markets, competitors and other environ. factors
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what are the components of strategy? (5)
scope, goals and objectives, resource deployment, identification of sustainable competitive advantage, synergy
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what does the concept of Market-Oriented Management mean
the marketing concept that the most effective means to attain and sustain a competitive advantage is by satisfying customer needs
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what are the 5 eras of marketing history
product, sales, marketing, relationship social
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marketing history: production
'a good product will sell itself'
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marketing history: sales
'creative advertising and selling will overcome consumers resistance and persuade them to buy'
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marketing history: marketing
'the consumer rules! find a need and fill it'
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marketing history: relationship
'long term relationships with customers and other partners lead to success'
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marketing history: social
'connecting to consumers via internet and social media is an effective tool'
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what are the advantages of market oriented managements
- Promotes listening to the customer
- Happier customers more likely to be more loyal – good for long term profitability
- More customer and competitive information is likely to be obtained and used – good for profitability
- More likely to identify changes in market and competitive conditions – avoid being blindsided
- If the first two steps are done well, the third should take care of itself
- Helps employees focus on profit, not sales volume
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what are the possible drawbacks of market oriented management
- May lead the firm to seek to satisfy all customer groups – a possible prescription for disaster
- Customers may not be able to articulate what they really want and need – and will pay for!
- Current customers may not be the most attractive target – must avoid tyranny of current customers, if others are more attractive
- Implies tailoring products to different needs of different segments – may be costly
- Implies need for research – costs money, may slow reaction to market changes
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Marketing Research 6 steps
1, defining the problem
2. conducting exploratory research
3. formulating a hypothesis
4. creating a research design
5. collecting data a. primary data b. secondary date
6. interpreting and presenting the research information
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michael porter's 5 forces
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potential new entrants,
threat of substitue products,
bargaining power of buyers,
bargaining power of suppliers,
rivalry among competitors
```
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what does the GE mckinsey 9 cell matrix plot
industry attractiveness by entreprise strength
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what does the ge mckinsey 9 cell matrix look like
3 x 3 chart (high, medium, low), industry attractiveness on the y axis and enterprise strenth on the x axis. with things like leader, growth, improve or quit on row one, try harder, proceed with care or phased withdrawl on row 2, and cash generation, phased withdrawl and withdrawl on row 3
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Backward Vertical Integration
Company setups up subsidiaries that produce some of the inputs used in production
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Forward Vertical Integration
Company sets up subsidiaries that distribute or market products to customers or uses the products themselves
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Balanced Vertical Integration
Company sets up subsidiaries that both supply them with inputs and distribute their outputs
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horizontal integration
is a strategy where a company creates or acquires products / units for outputs which are alike - either complementary or competitive.
An example would be when a company acquires competitors in the same industry doing the same stage of production.
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related, concentric (diversification)
Means that there is a technological similarity between the industries, which means that the firm is able to leverage its technical know-how to gain some advantage.
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unrelated, conglomerate (diversification)
The company markets new products or services that have no technological or commercial synergies with current products, but which may appeal to new groups of customers.
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Scope, mission and intent
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What business(es) should the firm be in?
What customer needs, market segments, and/or technologies should be focused on?
What is the firm’s enduring strategic purpose or intent?
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Objectives
What performance dimensions should the firm’s business units and employees focus on?
What is the target level of performance to be achieved on each dimension?
What is the time frame in which each target should be attained?
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Source of competitive advantage
What human, technical, or other resources or competencies available to the firm provide a basis for a sustainable competitive advantage?
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Development strategy
How can the firm achieve a desired level of growth over time?
Can the desired growth be attained by expanding the firm’s current businesses?
Will the company have to diversify into new businesses or product-markets to achieve its future growth objectives?
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Resource allocation
How should the firm’s limited financial resources be allocated across its businesses to produce the highest returns?
Of the alternative strategies that each business might pursue, which will produce the greatest returns for the dollars invested?
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Sources of synergy
What competencies, knowledge, and customer-based intangibles (e.g., brand recognition, reputation) might be developed and shared across the firm’s businesses?
What operational resources, facilities, or functions (e.g., plants, R&D, sales-force) might the firm’s businesses share to increase their efficiency
