Marketing Risks – 7 – Flashcards
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Marketing management Supply chain management Market situation and outlook Marketing tools
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Components of a marketing risk management plan
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Develop marketing strategies and plans Capture market insights Connect with customers Build strong brands Shape market offerings Deliver value Communicate value Create long-term growth
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Marketing management tasks
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Key role in allocating resources among alternative uses Signal what is relatively scarce/relatively abundant Provide info to individuals and businesses
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Role of prices
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Choosing the value--segment the market, select the appropriate target, develop offerings value proposition Providing the value--select specific product features, prices, and distribution Communicate the value--accomplished through the use of sales force, internet, advertising, other communication methods to announce and promote product
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How marketing affects customer value
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Overall strategic plan--lays out broad strategies for entire business on 3-5 year planning horizon Business plan--outlines organization's overall financial objectives and explains overall strategy for achieving these objectives; usually 1-year plan Marketing plan--created at lower level of business plan, more detail about coming year's marketing strategy and implementation
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Strategic planning focus
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Value exploration--how firm identifies new value opportunities Value creation--how efficiently firm creates more promising new value offerings Value delivery--how a firm uses its capabilities and infrastructure to deliver the new value offering more efficiently
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Key management questions related to strategic planning
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What is our mission? Who is our customer? What does the customer value? What are our results? What is our plan?
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5 questions for a mission statement
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Focus on limited number of goals Stress major policies it values Define major competitive environment Take a longterm view Short, memorable, meaningful
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Characteristics of a good mission statement
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Cost leadership--seek to achieve lowest production and distribution costs to underprice competitors and gain market share Differentiation strategy--focus on achieving better performance on an important customer benefit (such as quality or speed) Focus approach--concentrate on narrow market segment, gaining as much insight about segment as possible, then pursue either a cost leadership or differentiation strategy
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Strategies to focus strategic thinking
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Situation analysis--gather marketing info Determine your marketing objectives--S.M.A.R.T. Select marketing strategies to accomplish your objectives (differentiate product or markets, new products, diversification, business positioning) Implementation: who is responsible for what tasks; timeline for task completion Monitor, evaluate, modify the marketing plans
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What a marketing plan includes
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Explore who the customers are Research industry increase the environment Assess strengths and weaknesses Investigate current and potential competition Develop product or service ideas Determine your target market Test the market potential
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Components of situation analysis
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Internal Strength Weakness External Opportunity Threat
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SWOT
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Provide value Build relationships Make a difference
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Purposes of a marketing plan
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Suppliers: raw materials suppliers, parts/components suppliers, suppliers of products for resale Channel members: wholesalers, retailers, agents/brokers, transportation firms, storage firms Customers and community: consumers, business
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4 guiding principles for effective marketing
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Provides structured understanding of external and internal environments for strategic plan: conduct for both your own firm and for key competitors
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Purpose of a SWOT analysis
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To discover the nature of the alliances between various players along food supply chain
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Why we study supply chain management
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Mutual trust among supply chain members Effective communication Access to data (inventory, shipping, delivery time, etc.) Ability to detect, manage, and correct unplanned events Need to measure performance metrics, related to quality, delivery times, inventory turnovers
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Successful Supply Chain Management (SCM) requires:
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Agribusiness--2.4 Farm production--9.7 Food processing--15.8 Transportation--3.3 Wholesale trade--9.3 Retail trade--13 Food services--31.1 Energy--5.6 Finance & insurance--3.3 Other--3.8
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Breakdown of the food dollar (according to the notes... which are wrong, just saying)
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Information technology Globalization Consumer information Increased competition
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Major societal forces
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Differentiate goods Collect information Communicate with customer
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New company capabilities
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Name your own price Instant price comparisons Get something for free
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Buyers
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Negotiate prices Engage in selective pricing Monitor customers
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Sellers
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***See page 2 of notes
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Trends in food at home
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--move toward differentiation as marketing strategy --simultaneous shift towards vertical integration between food suppliers and buyers
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Major trends in retail food marketing
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-Helps retailers tell customers origin of food and production methods -Enables retailers to differentiate themselves from competition, as with locally graded products and exclusive private label items -Appeals to growing consumer demand for quality, variety, innovation -Addresses emerging needs of Asian, Hispanic, African American consumers
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As result of changes in retail food marketing, suppliers must focus on merchandise that:
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-Same-company: brands owned by same company are used together (General Mills launched Trix branded Yoplait yogurt) -Joint venture co-branding: brands owned by different companies are combined (American Airlines and Citibank launching Citibank AAdvantage credit card) -Multi-sponsor: alliance between three or more partners -Retail co-branding: two establishments use same location to optimize space and profits (Pizza Hut/Taco Bell/KFC)
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Ways to market stuff
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-Strategic buying/selling -Crop/livestock insurance -Government programs -Contracting -Hedging (purchase or sale of commodity futures contract, purchase contracts between season) -Options (purchase right--but not the obligation-- to purchase underlying futures contract, allows them to set minimum price in exchange for paying a set fee or premium) -Direct marketing
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Marketing tool options
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Purchase inputs for future use Store commodities until prices improve Sell via cooperative
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Strategic buying/selling
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Help reduce risk of falling commodity prices, yield variations, farm revenue
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Crop/livestock insurance
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Producer price support programs Disaster assistance Farm revenue support programs
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Government programs
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legal arrangement between buyer and seller that can reduce risk with puts and outputs--growers sign contract with buyer or processor before planting crop so price is known at planting time
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Contracting
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-Obligates producer to buy contract amount of input at expiration date of contract -Before contract expires, producer resells contract and purchases input on cash market -If input prices had risen over contract time period, producer would pay higher price for inputs on cash market but receive higher price on futures contract sale
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Hedging--reducing input risk (producer buys input commodity futures contract
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-Obligates producer to sell contracted amount of output at expiration date of contract -Before contract expires, producer re-buys output futures contract (otherwise would be obligated to deliver commodity) and sells his output on cash market
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Hedging--reducing output risk (produce sells output commodity futures contract)
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-If input prices rise, producer can exercise option and purchase underlying futures contract and then sell that contract at higher price to capture gain -If input prices fall, producer not obligated to purchase contract or bear offsetting loss in futures contract--only cost to producer is option premium
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Options
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Selective targeting Market declassification Personalized message Measure effectiveness
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Direct marketing (producers/processors sell direct to end users of food or food product)
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Product Price Promotion Place
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4 P's of marketing
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-Convenience goods: frequent, immediate, minimal effort -Shopping goods: suitability, quality, price, style; wide assortment; informs and advise advisors -Specialty goods: unique characteristics, brand identification; buyers make special effort -Unsought goods: not normally purchased; require advertising, personal selling
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Consumer goods classification
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-Form: size, shape, color, timeliness -Feature: supplement basic function (need to prioritize how many, how long to introduce, added costs) -Customization: customers know how to express preferences, or, seller provides assistance -Performance quality: level at which product's primary characteristics operate--design at level appropriate to target market and competition, manage over time -Durability: measure of expected life under all conditions -Reliability: measure of probability that product will not malfunction or f ail within specified time -Style: product look and feel; hard to copy
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Branded differentiation
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-Convert potential buyers into profitable orders -Marketing channels must serve and create markets -Channel choices affect all other marketing decisions: --Pricing (depends on whether it uses mass-merchandisers or high-quality boutiques) --Sales force and advertising decisions (depend on how much training and motivation dealers need)
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Purpose of marketing channels
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-Push strategy: use sales force and trade promotion money to induce intermediaries to carry, promote, sell product to end user -Pull strategy: use advertising and promotion to induce consumers to ask intermediaries for product, thus inducing intermediaries to order it
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Two types of marketing strategies
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sets of interdependent organizations (intermediaries) involved in the process of making product/service available for use or consumption
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Definition of marketing channels
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Marketing communications are means by which firms attempt to inform, persuade, remind consumers about products and brands they sell; in sense, represent voice of company and its brand
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Definition of promotion
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-Help firms establish dialogue and build relationships with consumers and strengthen customer loyalty, and thus contribute to customer equity -work for consumers by shooing how and why a product is used, by whom, where, and when
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Purpose of marketing communications
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Advertising Sales promotions Events and experiences Public relations and publicity Direct and indirect marketing Word of mouth Personal selling
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7 major modes of communication that the marketing communications mix includes:
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innovators early adopters early majority late majority laggards
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Business readiness stage:
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Research and development Introduction Growth Maturity Decline
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Product life cycle stages
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Select pricing objective Determine demand Estimate costs Competitor analysis Price method Select final price
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Factors to consider in setting product price
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-maximize current profits (MR>MC) -other objectives: nonprofit and public organizations may have other pricing objectives
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Select pricing objective
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-Consumers are less price sensitive to low-cost items or items they buy infrequently -Few or no substitutes or competitors -They don't really notice the higher price -They slow to change to buying habits -They think higher prices are justified
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Determine demand
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Must take competitors' costs, prices, possible price reactions into account
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Competitor analysis
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Prices fall between price floor (costs) and price ceiling (customer demand based on their assessment of unique features). Price of competitive offerings and substitute goods serve as an orientation point
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Price method
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-Determine variable costs of production -Determine desired gross margin -Selling price = variable costs / (100% - %gross margin desired)
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Select final price
