Marketing – Ch. 2 (Company and Marketing Strategy: Partnering to Build Customer Relationships)

Strategic planning
is the process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities. Strategic planning sets the stage for the rest of planning in the firm.
Mission Statement
A statement of the organization’s PURPOSE – what it wants to accomplish in the larger environment.
Business Portfolio
the collection of business and products that make up the company. (Ex: ESPN, portfolio includes ESPN Radio,, ESPN The Magazine, and other business entities).
Portfolio Analysis
a major activity in strategic planning whereby management evaluates the products and businesses that make up the company. The company will want to put strong resources into its more profitable businesses and phase down or drop its weaker ones.
Strategic business units
The key businesses that make up the company. (Can be a company division, product line within a division, or sometimes a single product or brand).
Growth- Share Matrix
A portfolio-planning method that evaluates a company’s SBUs in terms of market growth rate and relative market share. (TOP LEFT – BOTTOM RIGHT: Star, Question mark, Cash cow, Dog)
high-growth, high-share businesses or products. They often need heavy investments to finance their rapid growth. Eventually their growth will slow down and they will turn into cash cows.
Question mark
low-share business units in high growth markets. They require a lot of cash to hold their share, let alone increase it. Management has to think hard about which question marks it should try to build into stars and which should be phased out.
Cash cow
low-growth, high-share businesses or products. These established and successful SBUs need less investment to hold their market share. Thus, they produce a lot of the cash that the company uses to pay its bills and support other SBUs that need investment.
low-growth, low-share businesses and products. They may generate enough cash to maintain themselves but do not promise to be large sources of cash.
Product/market expansion grid
Looks at new products, existing products, new markets and existing markets for company growth opportunities. A portfolio-planning tool for identifying company growth opportunities through market penetration, market development, product development, or diversification.
Market penetration
growth by increasing sales to current market segments without changing the product. (e.g. Starbucks adding more US stores)
Market development
growth by identifying and developing new market segments for current products. (e.g. Starbucks encouraging seniors to visit stores for the first time; Starbucks expanding in non-U.S. markets)
Product development
a growth strategy that offers new or modified products to existing market segments. (e.g. Starbucks introducing lighter roast coffee called Blonde)
a growth strategy through starting up or acquiring businesses outside the company’s current products and markets (e.g. Starbucks recently acquired Evolution Fresh, a boutique provider of super-premium fresh-squeezed juices).
prune, harvest or divest businesses that are unprofitable or that no longer fit the strategy.
Value Chain
a series of departments that carry out value-creating activities to design, produce, market, deliver, and support a firm’s products. Each company department can be thought of as a link in the company’s internal value chain.
Value delivery network
is made up of the company, suppliers, distributors, and ultimately customers who partner with each other to improve performance of the entire system (Supply Chain).
Marketing Strategy
The marketing logic by which the company hopes to create customer value and achieve profitable customer relationships.
Market Segmentation
the division of a market into distinct groups of buyers who have different needs, characteristics, or behavior and who might require separate products or marketing mixes.
Market Segment
is a group of consumers who respond in a SIMILAR way to a given set of marketing efforts. (e.g. In the car market, consumers who want the biggest, most comfortable car regardless of price make up one market segment).
Market Targeting
is the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter.
Market Positioning
is the arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of the target consumer. Marketers want to develop unique market positions for their products. If a product is perceived to be exactly like others on the market, consumers would have no reason to buy it.
Actually differentiating the market offering to create superior customer value (e.g. offering greater customer value by either charging lower prices than competitors or offering more benefits to justify higher price).
Marketing Mix
is the set of controllable tactical marketing tools – product, price, place, and promotion – that the firm BLENDS to produce the response it wants in the target market. Consists of everything the firm can do to influence the demand for its product.
the goods-and-services combination the company offers to the target market (Variety, quality, design, features, brand name, packaging, services).
the amount of money customers must pay to obtain the product (List price, discounts, allowances, payment period, credit terms).
includes company activities that make the product available to target consumers (Channels, coverage, locations, inventory, transportation, logistics).
activities that communicate the merits of the product and persuade target customers to buy it (Advertising, personal selling, sales promotion, public relations).
SWOT analysis
an overall evaluation of the company’s strengths (S), weaknesses (W), opportunities (O), and threats (T).
Market implementation
the process that turns marketing PLANS into marketing ACTIONS to accomplish strategic marketing objectives.
Marketing control
evaluating the results of marketing strategies and plans and taking corrective action to ensure that the objectives are attained.
Return on marketing investment (ROI)
the net return from a marketing investment divided by the costs of the marketing investment. Provides a measurement of the profits generated by investments in marketing activities.

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