Question 1

What is the difference between a business firm and a nonprofit organization?

Accepted Answer

A business firm is a privately owned organization that serves its customers to earn a profit so that it can survive. A nonprofit organization is a nongovernmental organization that serves its customers but does not have profit as an organizational goal. Instead, its goals may be operational efficiency or client satisfaction.

Question 2

What are examples of a functional level in an organization?

Accepted Answer

The functional level in an organization is where groups of specialists from the marketing, finance, manufacturing/operations, accounting, information systems, research & development, and/or human resources departments focus on a specific strategic direction to create value for the organization.

Question 3

What is the meaning of an organization\'s mission?

Accepted Answer

A mission is a statement of the organization\'s function in society, often identifying its customers, markets, products, and technologies. It is often used interchangeably with vision.

Question 4

What is the difference between an organization\'s business and its goals?

Accepted Answer

An organization\'s business describes the clear, broad, underlying industry or market sector of an organization\'s offering. An organization\'s goals (or objectives) are statements of an accomplishment of a task to be achieved, often by a specific time. Goals convert an organization\'s mission and business into long- and short-term performance targets to measure how well it is doing.

Question 5

What is the difference between a marketing dashboard and a marketing metric?

Accepted Answer

A marketing dashboard is the visual computer display of the essential information related to achieving a marketing objective. Each variable in a marketing dashboard is a marketing metric, which is a measure of the quantitative value or trend of a marketing activity or result.

Question 6

What is business portfolio analysis?

Accepted Answer

Business portfolio analysis is a technique that managers use to quantify performance measures and growth targets to analyze its clients\' strategic business units (SBUs) as though they were a collection of separate investments.

Question 7

Explain the four market-product strategies in diversification analysis.

Accepted Answer

The four market-product strategies in diversification analysis are (1) Market penetration, which is a marketing strategy to increase sales of current products in current markets. There is no change in either the basic product line or the markets served. Rather, selling more of the product or selling the product at a higher price generates increased sales (2) Market development, which is a marketing strategy to sell current products to new markets. (3) Product development, which is a marketing strategy of selling new products to current markets. (4) Diversification, which is a potentially high-risk marketing strategy of developing new products and selling them in new markets.

Question 8

What are the three steps of the planning phase of the strategic marketing process?

Accepted Answer

The three steps of the planning phase of the strategic marketing process are (1) Situation (SWOT) analysis, which involves taking stock of where the firm or product has been recently, where it is now, and where it is headed in terms of the organization\'s marketing plans and the external forces and trends affecting it. To do this, an organization uses a SWOT analysis, an acronym that describes an organization\'s appraisal of its internal Strengths and Weaknesses and its external Opportunities and Threats. (2) Market-product focus and goal setting,  which determines what products an organization will offer to which customers. This is often based on market segmentationâaggregating prospective buyers into groups or segments that have common needs and will respond similarly to a marketing action. (3) Marketing program, in which an organization develops the marketing mix elements  and budget for each offering.

Question 9

What are points of difference and why are they important?

Accepted Answer

Points of difference are those characteristics of a product that make it superior to competitive substitutesâofferings it faces in the marketplace. They are the single most important factor in the success or failure of a new product.

Question 10

What is the implementation phase of the strategic marketing process?

Accepted Answer

The implementation phase carries out the marketing plan that emerges from the planning phase and consists of (1) obtaining resources; (2) designing the marketing organization; (3) developing planning schedules; and (4) executing the marketing program designed in the planning phase.

Question 11

How do the goals set for a marketing program in the planning phase relate to the evaluation phase of the strategic marketing process?

Accepted Answer

The planning phase objectives are used as the benchmarks with which the actual performance results are compared in the evaluation phase to identify deviations from the written marketing plans and then correct negative ones or exploit positive ones.

Question 12

organization

Accepted Answer

a legal entity that consists of people who share a common mission. Today\'s organizations can be divided into business firms and nonprofit organizations.

Question 13

offerings

Accepted Answer

(products, services, or ideas) that create value for both the organization and its customers by satisfying their needs and wants.

Question 14

business firm

Accepted Answer

a privately owned organization such as Target, Nike, or Volkswagen that serves its customers to earn a profit so that it can survive.

Question 15

Profit

Accepted Answer

the money left after a business firm\'s total expenses are subtracted from its total revenues and is the reward for the risk it undertakes in marketing its offerings.

Question 16

nonprofit organization

Accepted Answer

a nongovernmental organization that serves its customers but does not have profit as an organizational goal. Instead, its goals may be operational efficiency or client satisfaction. Regardless, it also must receive sufficient funds above its expenses to continue operations. Social entrepreneurs, like Teach For America, SightLife, and Hand in Hand International described in the Making Responsible Decisions box, seek to solve the practical needs of society and are usually structured as nonprofit organizations.

Question 17

industry

Accepted Answer

Organizations that develop similar offerings create an industry, such as the computer industry or the automobile industry. As a result, organizations make strategic decisions that reflect the dynamics of the industry to create a compelling and sustainable advantage for their offerings relative to those of competitors to achieve a superior level of performance. The foundation of much of an organization\'s marketing strategy is having a clear understanding of the industry within which it competes.

Question 18

strategy (vs tactics)

Accepted Answer

an organization\'s long-term course of action designed to deliver a unique customer experience while achieving its goals. All organizations set a strategic direction. And marketing helps to both set this direction and move the organization there.  Tactics -- short term plans and courses of action, often \"corrective\"

Question 19

corporate level

Accepted Answer

where top management directs overall strategy for the entire organization. \"Top management\" usually means the board of directors and senior management officers with a variety of skills and experiences that are invaluable in establishing overall strategy. The board of directors oversees the three levels of strategy in organizations: corporate, strategic business unit, and functional.

Question 20

strategic business unit (SBU)

Accepted Answer

a subsidiary, division, or unit of an organization that markets a set of related offerings to a clearly defined group of customers. ex: Some multimarket, multiproduct firms, such as General Electric and Johnson & Johnson, manage a portfolio or group of businesses and each is a SBU.

Question 21

strategic business unit level

Accepted Answer

at the strategic business unit level, managers set a more specific strategic direction for their businesses to exploit value-creating opportunities. For less complex firms with a single business focus, such as Ben & Jerry\'s, the corporate and business unit levels may merge.

Question 22

functional level

Accepted Answer

Each strategic business unit has a functional level, where groups of specialists actually create value for the organization. The term department generally refers to these specialized functions such as marketing, finance, information systems, research & development, manufacturing, human resources. At the functional level, the organization\'s strategic direction becomes its most specific and focused. Just as there is a hierarchy of levels within an organization, there is a hierarchy of strategic directions set by managers at each level. A key role of the marketing department is to look outward, keeping the organization focused on creating value both for it and for customers. This is accomplished by listening to customers, developing and producing offerings, and implementing marketing program activities.

Question 23

cross-functional teams

Accepted Answer

When developing marketing programs for new offerings or for improving existing ones, an organization\'s senior management may form cross-functional teams. These 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. Sometimes these teams will have representatives from outside the organization, such as suppliers or customers, to assist them.

Question 24

Today\'s visionary organization uses key elements to?

Accepted Answer

(1 ) establish a foundation and (2) set a direction using (3) strategies that enable it to develop and market its offerings successfully.

Question 25

Organizational foundation (why)

Accepted Answer

â¢ Core values â¢ Mission (vision) â¢ Organizational culture

Question 26

Organizational direction (what)

Accepted Answer

â¢ Business â¢ Goals (objectives)  Long-term  Short-term

Question 27

Organizational strategies (how)

Accepted Answer

â¢ By level: Corporate, SBU, Functional  â¢ By offering: Product, Service, Idea

Question 28

core values

Accepted Answer

An organization\'s core values are the fundamental, passionate, and enduring principles that guide its conduct over time. A firm\'s founders or senior management develop these core values, which are consistent with their essential beliefs and character. They capture the firm\'s heart and soul and serve to inspire and motivate its stakeholdersâemployees, shareholders, board of directors, suppliers, distributors, creditors, unions, government, local communities, and customers. Core values also are timeless and should not change due to short-term financial, operational, or marketing concerns. Finally, core values guide the organization\'s conduct. To be effective, an organization\'s core values must be communicated to and supported by its top management and employees; if not, they are just hollow words.

Question 29

mission

Accepted Answer

By understanding its core values, an organization can take steps to define its mission, a statement of the organization\'s function in society that often identifies its customers, markets, products, and technologies. Often used interchangeably with vision, a mission statement should be clear, concise, meaningful, inspirational, and long-term.

Question 30

organizational culture

Accepted Answer

the set of values, ideas, attitudes, and norms of behavior that is learned and shared among the members of an organization. An organization must connect with all of its stakeholders. Thus, an important corporate-level marketing function is communicating its core values and mission to them

Question 31

Organizational Direction: What Will It Do?

Accepted Answer

the organization\'s foundation enables it to set a direction in terms of (1) the \"business\" it is in and (2) its specific goals.

Question 32

business

Accepted Answer

describes the clear, broad, underlying industry or market sector of an organization\'s offering. To help define its business, an organization looks at the set of organizations that sell similar offeringsâthose that are in direct competition with each otherâsuch as \"the ice cream business.\" The organization can then begin to answer the questions, \"What do we do?\" or \"What business are we in?\"

Question 33

business model

Accepted Answer

the strategies an organization develops to provide value to the customers it serves. Technological innovation is often the trigger for this business model change. With today\'s increased global competition, many organizations are rethinking their business model. Key question: Whether by us or a competitor, how else can the same or greater value be provided to our customers? Consider textbook authors

Question 34

Goals or objectives

Accepted Answer

Goals or objectives (terms used interchangeably in this book) are statements of an accomplishment of a task to be achieved, often by a specific time. For example, Netflix might set a goal of being the top provider of online movies by 2012. Goals convert an organization\'s mission and business into long- and short-term performance targets. Business firms can pursue several different types of goals: profit, sales, market share, quality, customer satisfaction, employee welfare, social responsibility  S.M.A.R.T. Specific, Measurable, Attainable, Relevant, Time-Based  Nonprofit organizations (such as museums and hospitals) also have goals, such as to serve consumers as efficiently as possible. Similarly, government agencies set goals that seek to serve the public good.

Question 35

Profit

Accepted Answer

Most firms seek to maximize profitsâto get as high a financial return on their investments (ROI) as possible.

Question 36

Sales (dollars or units)

Accepted Answer

If profits are acceptable, a firm may elect to maintain or increase its sales even though profits may not be maximized.

Question 37

Market share

Accepted Answer

the ratio of sales revenue of the firm to the total sales revenue of all firms in the industry, including the firm itself.

Question 38

Quality

Accepted Answer

A firm may offer the highest quality, as Medtronic does with its implantable medical devices.

Question 39

Customer satisfaction

Accepted Answer

Customers are the reason the organization exists, so their perceptions and actions are of vital importance. Satisfaction can be measured with surveys or by the number of customer complaints an organization receives.

Question 40

Employee welfare

Accepted Answer

A firm may recognize the critical importance of its employees by stating its goal of providing them with good employment opportunities and working conditions.

Question 41

Social responsibility

Accepted Answer

Firms may seek to balance the conflicting goals of stakeholders to promote their overall welfare, even at the expense of profits.

Question 42

organizational strategies vary in at least two ways:

Accepted Answer

depending on (1) a strategy\'s level in the organization and (2) the offerings an organization provides to its customers.

Question 43

Variation by Level

Accepted Answer

Moving down an organization involves creating increasingly specific, detailed strategies and plans. For example, at the corporate level, top managers may struggle with writing a meaningful mission statement; while at the functional level, the issue is whether Joan or Adam makes tomorrow\'s sales call.

Question 44

Variation by Offering

Accepted Answer

Organizational strategies also vary by the organization\'s offering. The strategy will be far different when marketing a very tangible physical product (a Medtronic heart pacemaker), a service (a Southwest Airlines flight), or an idea (a donation to the American Red Cross).

Question 45

Although marketing managers can set strategic directions for their organizations, how do they know if they are making progress in getting there?

Accepted Answer

One answer is to measure performance by using marketing dashboards.

Question 46

marketing dashboard

Accepted Answer

the visual computer display of the essential information related to achieving a marketing objective. Often, active hyperlinks provide further detail. An example is when a chief marketing officer (CMO) wants to see daily what the effect of a new TV advertising campaign is on a product\'s sales. The idea of a marketing dashboard really comes from the display of information found on a car\'s dashboard. On a car\'s dashboard we glance at the fuel gauge and take action when our gas is getting low. With a marketing dashboard, a marketing manager glances at a graph or table and makes a decision whether to take action or to analyze the problem further. An effective marketing dashboard helps managers assess a business situation at a glance.

Question 47

marketing metric

Accepted Answer

Each display in a marketing dashboard shows a marketing metric, which is a measure of the quantitative value or trend of a marketing activity or result. 2 8 The choice of which marketing metrics to display is critical for a busy marketing manager, who can be overwhelmed with irrelevant data.

Question 48

data visualization

Accepted Answer

Today\'s marketers use data visualization, which presents information about an organization\'s marketing metrics graphically so marketers can quickly (1) spot deviations from plans and (2) take corrective actions. ex: The Sonatica marketing dashboard in Figure 2-3 uses data visualization tools like graphs and a map to provide a snapshot of how parts of its business are performing as of December 2011

Question 49

marketing plan

Accepted Answer

Most organizations tie the marketing metrics they track in their marketing dashboards to the quantitative objectives established in their marketing plan, which is a road map for the marketing activities of an organization for a specified future time period, such as one year or five years. The planning phase of the strategic marketing process (discussed later in this chapter) usually results in a marketing plan that sets the direction for the marketing activities of an organization.

Question 50

To set a strategic direction, an organization needs to answer two difficult questions:

Accepted Answer

(1) Where are we now? and (2) Where do we want to go?

Question 51

competencies

Accepted Answer

What do we do best? The answer involves an assessment of the organization\'s core competencies, which are its special capabilitiesâthe skills, technologies, and resourcesâthat distinguish it from other organizations and provide customer value. Exploiting these competencies can lead to success.

Question 52

competitive advantage

Accepted Answer

What do we do better than others? Competencies should be distinctive enough to provide a competitive advantage, a unique strength relative to competitors that provides superior returns, often based on quality, time, cost, or innovation.

Question 53

Competitors

Accepted Answer

In today\'s global marketplace, the distinctions among competitors are increasingly blurred.

Question 54

Growth Strategies: Where Do We Want to Go?

Accepted Answer

Knowing where the organization is at the present time enables managers to set a direction for the firm and allocate resources to move in that direction. Two techniques to aid managers with these decisions are (1) business portfolio analysis and (2) diversification analysis.

Question 55

business portfolio analysis

Accepted Answer

The Boston Consulting Group (BCG), a nationally known management consulting firm, has developed business portfolio analysis. It is a technique that managers use to quantify performance measures and growth targets to analyze their firms\' strategic business units (SBUs) as though they were a collection of separate investments. The purpose of the tool is to determine the appeal of each SBU or offering and then determine the amount of cash each should receive. More than 75 percent of the largest U.S. firms have used this analytical tool. More than 75 percent of the largest U.S. firms have used this analytical tool.  The BCG business portfolio analysis requires an organization to locate the position of each of its SBUs on a growth-share matrix. The vertical axis is the market growth rate, The horizontal axis is the relative market share The BCG has given specific names and descriptions to the four resulting quadrants in its growth-share matrix based on the amount of cash they generate for or require from the organization: Cash cows, stars, question marks, dogs.  An organization\'s SBUs often start as question marks and go counterclockwise around to become stars, then cash cows, and finally dogs.  Because an organization has limited influence on the market growth rate, its main alternative is to try to change its relative market share. To do this, management decides what future role each SBU should have and either injects or removes cash from it.

Question 56

market growth rate

Accepted Answer

the annual rate of growth of the SBU\'s industry.

Question 57

relative market share

Accepted Answer

defined as the sales of the SBU divided by the sales of the largest firm in the industry. A relative market share of 10 X (at the left end of the scale) means that the SBU has 10 times the share of its largest competitor, whereas a share of 0.1 X (at the right end of the scale) means it has only 10 percent of the share of its largest competitor.

Question 58

Cash cows

Accepted Answer

SBUs that generate large amounts of cash, far more than they can invest profitably in themselves. They have dominant shares of slow-growth markets and provide cash to cover the organization\'s overhead and to invest in other SBUs.

Question 59

Stars

Accepted Answer

Les Mis Song performed by Javert

Question 60

Question marks

Accepted Answer

SBUs with a low share of high-growth markets. They require large injections of cash just to maintain their market share, much less increase it. The name implies management\'s dilemma for these SBUs: choosing the right ones to invest in and phasing out the rest.

Question 61

Dogs

Accepted Answer

SBUs with low shares of slow-growth markets. Although they may generate enough cash to sustain themselves, they do not hold the promise of ever becoming real winners for the organization. Dropping SBUs that are dogs may be required, except when relationships with other SBUs, competitive considerations, or potential strategic alliances exist

Question 62

strengths and weaknesses of portfolio analysis?

Accepted Answer

The primary strength of business portfolio analysis lies in forcing a firm to place each of its SBUs in the growth-share matrix, which in turn suggests which SBUs will be cash producers and cash users in the future. Weaknesses of this analysis arise from the difficulty in (1) getting the needed information and (2) incorporating competitive data into business portfolio analysis.

Question 63

Diversification analysis

Accepted Answer

a technique that helps a firm search for growth opportunities from among current and new markets as well as current and new products. For any market, there is both a current product (what the firm now sells) and a new product (what the firm might sell in the future). And for any product there is both a current market (the firm\'s existing customers) and a new market (the firm\'s potential customers).

Question 64

Market penetration

Accepted Answer

a marketing strategy to increase sales of current products in current markets, such as selling more Ben & Jerry\'s Bonnaroo Buzz Fair Trade-sourced ice cream to U.S. consumers. There is no change in either the basic product line or the markets served. Increased sales are generated by selling either more ice cream (through better promotion or distribution) or the same amount of ice cream at a higher price to its current customers.

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