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Chapter 2: Developing Marketing Strategies and a Marketing Plan

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Define a marketing strategy.
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A marketing strategy identifies (1) a firm’s target market(s), (2) a related marketing mix (four P’s), and (3) the bases on which the firm plans to build a sustainable competitive advantage. firms use four macro strategies to build their sustainable competitive advantage. Customer excellence focuses on retaining loyal customers and excellent customer service. Operational excellence is achieved through efficient operations and excellent supply chain and human resource management. Product excellence entails having products with high perceived value and effective branding and positioning. Finally, locational excellence entails having a good physical location and Internet presence.
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marketing strategy
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A firm’s target market, marketing mix, and method of obtaining a sustainable competitive advantage.
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sustainable competitive advantage
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Something the firm can persistently do better than its competitors, includes customer, operational, product, and/or location excellence.
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What are the various components of a marketing strategy?
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Identifies a firm’s target market, related marketing mix (their four P’s), and the bases upon which the firm plans to build a sustainable competitive advantage.
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List the four macro strategies that can help a firm develop a sustainable competitive advantage.
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Customer excellence, Operational excellence, Product excellence, and Locational excellence
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Describe the elements of a marketing plan.
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A marketing plan is composed of an analysis of the current marketing situation, its objectives, the strategy for the four P’s, and appropriate financial statements. A marketing plan represents the output of a three-phase process: planning, implementation, and control. the planning phase requires managers to define the firm’s mission and vision and assess their firm’s current situation. It helps answer the questions, “What business are we in now, and what do we intend to be in the future?” In the second phase, implementation, the firm specifies, in more operational terms, how it plans to implement its mission and vision. Specifically, to which customer groups does it wish to direct its marketing efforts, and how does it use its marketing ix to provide good value? Finally, in the control phase, the firm must evaluate its performance using appropriate metrics to determine what worked, what didn’t, and how performance can be improved in the future.
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marketing plan
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A written document composed of an analysis of the current marketing situation, opportunities and threats for the firm, marketing objectives and strategy specified in terms of the four P’s, action programs, and projected or pro forma income (and other financial) statements.
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planning phase
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The part of the strategic marketing planning process when marketing executives, in conjunction with other top manager, (1) define the mission or vision of the business and (2) evaluate the situation by assessing how various players, both in and outside of the organization, affect the firm’s potential for success.
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implementation phase
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The part of the strategic marketing planning process when marketing managers (1) identify and evaluate different opportunities by engaging in segmentation, targeting, and positioning (STP) and (2) implement the marketing mix using the four P’s.
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control phase
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The part of the strategic marketing planning process when managers evaluate the performance of the marketing strategy and take any necessary corrective actions.
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Analyze a marketing situation using SWOT analysis.
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SWOT stands for strengths, weaknesses, opportunities, and threats. A SWOT analysis occurs during the second step in the strategic planning process, the situation analysis. By analyzing what the firm is good at (its strengths), where it could improve (its weaknesses), where in the marketplace it might excel (its opportunities), and what is happening in the marketplace that could harm the firm (its threats), managers can assess their firm’s situation accurately and plan its strategy accordingly.
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situation analysis
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Second step in a marketing plan; uses a SWOT analysis that assesses both the internal environment with regard to its Strengths, Weaknesses and the external environment in terms of Opportunities and Threats.
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Describe how a firm chooses which consumer group(s) to pursue with its marketing efforts.
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Once a firm identifies different marketing opportunities, it must determine which are the best to pursue. To accomplish this task, marketers go through a segmentation, targeting, and positioning (STP) process. Firms segment various markets by dividing the total market into those groups of customers with different needs, wants, or characteristics who therefore might appreciate products or services geared especially toward them. After identifying the different segments, the firm goes after, or targets, certain groups on the basis of the firm’s perceived ability to satisfy the needs of those groups better than competitors and do so profitably. to complete the STP process, firms position their products or services according to the marketing mix variables so that target customers have a clear, distinctive, and desirable understanding of what the product or service does or represents relative to competing products or services.
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STP
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The process of segmentation, targeting, and positioning that firm’s use to identify and evaluate opportunities for increasing sales and profits.
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market segment
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A group of consumers who respond similarly to a firm’s marketing efforts.
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market segmentation
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The process of dividing the market into groups of customers with different needs, wants, or characteristics–who therefore might appreciate products or services geared especially for them.
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target marketing/targeting
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The process of evaluating the attractiveness of various segments and then deciding which to pursue as a market.
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market positioning
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Involves the process of defining the marketing mix variables so that target customers have a clear, distinctive, desirable understanding of what the product does or represents in comparison with competing products.
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Outline the implementation of the marketing mix as a means to increase customer value.
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The marketing mix consists of the four P’s–product, price, promotion, and place–and each P contributes to customer value. To provide value, the firm must offer a mix of products and services at prices their target markets will view as indicating good value. Thus, firms make trade-offs between the first two P’s, product and price, to give customers the best value. The third P, promotion, informs customers and helps them form a positive image about the firm and its products and services. The last P, place, adds value by getting the appropriate products and services to customers when they want them and in the quantities they need.
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products
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Anything that is of value to a consumer and can be offered through a voluntary marketing exchange.
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metric
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A measuring system that quantifies a trend, dynamic, or characteristic.
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Summarize portfolio analysis and its use to evaluate marketing performances.
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Portfolio analysis is a management tool used to evaluate the firm’s various products and businesses–its portfolio–and allocated resources according to which products are expected to be the most profitable for the firm in the future. A popular portfolio analysis tool developed by the Boston Consulting Group classifies all products into four categories. The first,stars, are in high-growth markets and have high market share. The second, cash cows, are in low-growth markets but have high market share. These products generate excess resources that can be spun off to products that need them. The third category, question marks, are in high-growth markets but have relatively low market shares. These products often use the excess resources generated by the cash cows. The final category, dogs, are in low-growth markets and have relatively low market shares. These products are often phased out.
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strategic business unit (SBU)
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A division of the firm itself that can be managed and operated somewhat independently from other divisions and may have a different mission or objectives.
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product lines
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Groups of associated items, such as those that consumers use together or think of as part of a group of similar products.
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market share
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Percentage of a market accounted for by the specific entity.
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relative market share
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A measure of the product’s strength in a particular market, defined as the sales of the focal product divided by the sales achieved by the largest firm n the industry.
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market growth rate
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The annual rate of growth of the specific market in which the product competes.
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What are the five steps in creating a marketing plan?
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Business mission and objectives, situation analysis and SWOT, identify opportunities, implement marketing mix, evaluate performance using marketing metrics.
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What tool helps a marketer conduct a situation analysis?
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SWOT analysis (strengths, weaknesses, opportunities, threats).
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What is STP?
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Segmentation, Targeting, Positioning.
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What do the four quadrants of the portfolio analysis represent?
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Stars, Cash Cows, Question Marks, Dogs.
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market development strategy
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A growth strategy that employs the existing marketing offering to reach new market segments, whether domestic or international.
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market penetration strategy
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A growth strategy that employs the existing marketing mix and focuses the firm’s efforts on existing customers.
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Describe how firms grow their business.
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Firms use four basic growth strategies: market penetration, market development, product development, and diversification. A market penetration strategy directs the firm’s efforts toward existing customers and uses the present marketing mix. In other words, it attempts to get current customers to buy more. I a market development strategy, the firm uses its current marketing mix to appeal to new market segments, as might occur in international expansion. A product development growth strategy involves offering a new product or service to the firm’s current target market. Finally, a diversification strategy takes place when a firm introduces a new product or service to a new customer segment. Sometimes a diversification strategy relates to the firm’s current business, such as when a women’s clothing manufacturer starts making and selling men’s clothes, but a more risky strategy is when a firm diversifies into a completely unrelated business.
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product development strategy
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A growth strategy that offers a new product or service to a firm’s current target market.
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diversification strategy
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A growth strategy whereby a firm introduces a new product or service to a market segment that it does not currently serve.
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related diversitfication
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A growth strategy whereby the current target market and/or marketing mix shares something in common with the new opportunity.
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unrelated diversification
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A growth strategy whereby a new business lacks any common elements with the present business.
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What are the four growth strategies?
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Market penetration, Market development, Product development, Diversification.
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What type of strategies grow the business from existing customers?
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Market penetration and Product development.
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Which strategy is the riskiest; the safest?
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Diversification; Market penetration.