Oral Exam Brief.docx

**What is Marketing?** ***The American Marketing Association (AMA) offers the following formal definition: Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at...

**What is Marketing?** ***The American Marketing Association (AMA) offers the following formal definition: Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.*** Marketing is about identifying and meeting human and social needs. One of the shortest good definitions of marketing is ***"meeting needs profitably."*** ALSO ***Managing profitable customer relationships*** ***Satisfying Customer needs with a profit*** ***All About Needs*** ***The twofold goal of marketing is:*** - ***Attract new customers by promising superior value.*** - ***Keep and grow current customers by delivering satisfaction.*** ***Job of marketer is costumer attraction & costumer retention*** ***Marketing Management as the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.*** Complex Marketing Environment (Superior, Substitute, Inferior). **The Macro Environment consists of 6 different forces.** **DESTEP** model, also called **DEPEST** model Demographic Economic Political Ecological Socio-Cultural Technological ***What is Marketed?*** - - - - - - - - - - - ***Tradition*** +-----------------------------------+-----------------------------------+ | 1. Product | 5. People | | | | | 2. Price | 6. Process | | | | | 3. Place | 7. Physical Evidence | | | | | 4. Promotion | 8. Productivity & Quality | | | | | - Packing | | +-----------------------------------+-----------------------------------+ ***difference between 4Ps & 4CS 4Ps represent the seller\'s view 4Cs represent the buyer\'s view*** ***\ *** **Promotion Mix Tools:** - - - - - - - - ***Personal selling more expensive than Advertising*** ***Different in advertising & sales promotion in sales promotion is for buy now*** ***Main object for Sponsorship is Exposure*** ***\'PR\' Public Relation / Publicity The focus is on the company\'s image*** **Service Characteristics** 1. Intangibility 2. Perishability Some services have short life span such as Air Tickets. 3. Variability Variation 4. Inseparability You can't separate the service from its service provider ***Judgment on service is subjective*** **Awareness Levels** 1. Negative Awareness 2. No Aware 3. Aware 4. Preferred 5. Loyal 6. Adhoc **Product Life Cycle (PLC)** Product development \"awareness\" **introduction growth maturity decline** **STP (Segmentation, Targeting, and Positioning)** **Segmentation** **(Breakdown the market into segments)** **Targeting** **(Select 1 or more segment according opportunities)** **Positioning** (\"**positions in the minds\" How do you want your customer to perceive you)** **perception & Promise** **Product Positioning To-Do List:** - Conduct a market segmentation. - Define your target market. - Identify the product attributes. - Data collection from the target market (customers and potential customers) on the identified product attributes. - Determine the product\'s share of heart and mind (of the total potential mindshare). Being \'first\' in the market usually is a significant benefit in mindshare. - Place your product in the right \'space\' (e.g. luxury market; economy market; high value, low volume; health; snack; etc.). - If position is a graph, determine what your product\'s ideal position on that graph might be (e.g. nutritious, high cost snack). - Determine what you need to do to reach that position in the minds of your market. - Does your positioning strategy focus on, and align with, your product differentiation strategy? - Is your product or service unique, better, economical, profitable (for the market), or - Does it have other distinctive criteria that will differentiate it from the many other products and services available? ***Positioning = Perception.*** ***Captive Products: An example, the printer is cheap while its color cartage is expensive.*** ***Homo: People who looks like each other.*** ***Hetero: People who don't looks like each other.*** **Measure of Market Segment:** - Measurable. - Substantial. - Accessible. - Differentiable. - Actionable. ***MVC most valuables costumer*** **Demand States** 1. Ex: negative attitude toward meat products by vegetarians 2. For example, family planning is a non-existent demand for rural people. They are unaware or uninterested in family planning. Or they know this but are not interested to use. Insurance is another example. Insurance is both negative demand and non-existent demand. **Recycling garbage** (e.g., plastic and metal containers) can be linked to the importance of cleaning up the environment. **Donating old newspapers** to the Boy Scouts instead of throwing them out in the garbage can be linked to the importance of helping this organization to raise money. 3. Ex: ***Creating a cancer-curing drug or a safe cigarette, parking solutions.*** 4.  For example, people in the past used Walkman for listening to songs. Then after introducing the iPod, people move to the iPod. And after introducing headphones, people love it most. Now, Walkman is facing declining demand. 5.  For example, an umbrella. We use an umbrella only in the rainy season but all over the year umbrella faces irregular demand. 6. A cigarette is the best example of it. 7. For example, medicines are always have full demand. Whatever the doctor suggests, customers buy this. But if pharmaceutical companies reduce or discount the price of medicine, customers aren't ready to pay for this. 8. For example: at the time of Eid, the price of train and bus tickets increased because of artificial stock created by the sellers. **\ ** **Key Customer Markets \"Type of market\"** - Consumer markets B2C - Business markets B2B - Global markets G2B - Nonprofit/Government markets ***G2B They face different requirements for buying and disposing of property; cultural, language, legal and political differences; and currency fluctuations.*** **Marketing Steps** **In the marketing process, companies work to understand consumers, create customer value, and build strong customer relationships. The steps are:** *In the final step, companies harvest the rewards of capturing value from consumers in the form of sales, profits, & long-term customer equity.* **Needs, Wants, and Demands** **Needs** Are states of felt deprivation. They include physical, social, and individual needs. **These needs are not created by marketers**; they are a basic part of the human makeup. **Wants** Are the form needs take as they are shaped by culture and individual personality. An American needs food but wants a Big Mac. When backed by buying power, wants become **Demands**. The best marketing companies go to great lengths to learn and understand their customers' needs, wants, and demands. *(Southwest Airlines top management)* **Types of** **Needs** 1. **Stated needs** (A customer wants an inexpensive car.) 2. **Real needs** (The customer wants a car whose operating cost, not initial price, is low.) 3. **Unstated needs** (The customer expects good service from the dealer.) 4. **Delight needs** (The customer would like the dealer to include an onboard GPS navigation system.) 5. **Secret needs** (The customer wants friends to see him or her as a savvy consumer.) **Value** The key to building lasting customer relationships is to create: *superior customer value* and satisfaction. **Customer Value:** the customer's evaluation of the difference between *all the benefits and all the costs* of a market offering relative to those of competing offers. Customers often do not judge values and costs "accurately" or "objectively." **Customer Satisfaction** Customer satisfaction depends on the product's perceived performance relative to a buyer's expectations. If the product's performance falls short of expectations, the customer is ***dissatisfied***. If performance matches expectations, the customer is ***satisfied***. If performance exceeds expectations, the customer is highly satisfied or ***delighted***. ***Central marketing concept**, is primarily a combination of **quality**, **service**, & **price** (**QSP**),* called the **customer value harmony**. Value perceptions **increase** with QUALITY AND SEREVICES but **decrease** with PRICE. **QSCV** Quality, Service, Cleanliness & Value *(McDonald\'s restaurants)* ***Promise what you can deliver, then deliver more than your promise*** **Marketing Channels** - Communication - Distribution - Service ***Bottom of the Pyramid (BOP)*** What is the concept of bottom of the pyramid? **Bottom of the pyramid** (BOP), also called **base of the pyramid**, **term** in economics that refers to the poorest two- thirds of the economic human **pyramid**, a group of more than four billion people living in abject poverty. What is bottom of pyramid in marketing? \'**Bottom** of the **pyramid**\' is the term used to describe people living in absolute poverty who, despite economic limitations, can be \'resilient entrepreneurs\' and co-creators of new **market** opportunities that result in win-win situations for companies and consumers. What is bottom of pyramid opportunities? As the term suggests, the "**bottom** of the **pyramid**" is used to describe the large group of consumers living at the **bottom** of the global economic or wealth **pyramid**. What is BOP consumer? Abstract. The \'Bottom of the Pyramid\' (**BOP**) is a concept popularized by C. K. Prahalad. It is an action-oriented mod el that helps companies to operate successfully in currently underdeveloped and underserved markets at the **BOP**. This also opens opportunities for reduction of poverty. ***six pocket syndrome \"spoiled\"*** **Advertising Objectives** - **Informative Advertising** - **Persuasive Advertising** - **Reminder Advertising** **Advertising Objectives** Informative, Reminder, Comparative **Advertising** has **three** primary **objectives**: to **inform**, to **persuade**, and to **remind**. - **Informative Advertising** creates awareness of brands, products, services, and ideas. It announces new products and programs and can educate people about the attributes and benefits of new or established products. - **Persuasive Advertising** tries to convince customers that a company's services or products are the best, and it works to alter perceptions and enhance the image of a company or product. Its goal is to influence consumers to take action and switch brands, try a new product, or remain loyal to a current brand. - **Reminder Advertising** reminds people about the need for a product or service, or the features and benefits it will provide when they purchase promptly. **Marketing Environment** **The task environment** The task environment includes the actors engaged in producing, distributing, and promoting the offering. Company Dealers Customers Competitors Distributers Suppliers ***Those forces are very close to the company that can affect and be affect by*** ***Task environment = Internal environment = Micro*** ***environment =*** ***controllable environment*** **The broad environment** Marketers must pay close attention to the trends and developments in these and adjust their marketing strategies as needed. PESTEL Demographic Economic Social-cultural Natural Technological Political-legal ***The broad environment = External environment = macro environment = uncontrollable environment*** ***In task environment we act in the board environment we react*** **Retaliation** is an act of revenge. the act of hurting someone or doing something harmful to someone because they have done or said something harmful to you **Marketing Management Orientations:** 1. **Production Concept:** [Consumers] will favor **products that are available and affordable**, [Management] should **focus on improving production and distribution efficiency**. ***Availability & affordability*** 2. **Product Concept:** [Consumers] will favor **products that offer the most in quality, performance, and innovative features**, Under this concept, marketing strategy **focuses on making *Continuous product improvements***. ***Marketing myopia occurs when a company becomes so focused on their own products that they lose sight of underlying customer needs.*** 3. **Selling Concept**: [Consumers] will not buy enough without a **large scale selling and promotion effort.** The concept is typically practiced with unsought goods and services---those that buyers do not normally think of buying, such as insurance or blood donations, encyclopedia. **These industries must be good at tracking down prospects and selling them on product benefits.** ***Make and sell*** 4. **Marketing Concept:** Under the marketing concept, [customer] **focus & value are the paths to sales & profits**. Instead of a product centered "make and sell" philosophy, the marketing concept is a customer -- centered "Sense and respond" philosophy. *The job is not to find the right customers for your product BUT to find the right products for your customers.* **Customer-driven marketing is about understanding customer needs and creating products and services that meet both existing and hidden needs.** ***Sense and respond Sensing the customer\'s need and response with product*** fig01\_03.jpg 5. **Societal Marketing Concept**: The societal marketing concept questions whether the pure marketing concept overlooks possible conflicts between consumer short-run wants and consumer long-run welfare. The societal marketing concept holds that marketing strategy should **deliver value to customers in a way that maintains or improves both the consumer's and the society's well-being.** Fast food restaurants 6. **Holistic Marketing** Holistic marketing concept is based on development, design, and implementation of marketing programs, processes, and activities that recognize their breadth and interdependencies. Holistic marketing recognizes that ***\"everything matters\"*** with marketing. **Internal marketing** is the task of hiring, training, and motivating able employees who want to serve customers well. ** Integrated Marketing** Integrated marketing creates a seamless experience for the consumer to interact with the brand by integrating various communication channels (sales promotion, public relations, advertising, direct marketing, [digital marketing](https://www.simplilearn.com/the-scope-of-digital-marketing-article), etc). This ensures that the communication is in sync and projects a strong and focused brand image. **Performance marketing** - Financial Accountability - Social Responsibility Marketing. **Non-financial** requires understanding the financial and nonfinancial returns to business and society from marketing activities and programs. Top marketers are increasingly going beyond sales revenue to examine the marketing scorecard *(How well is your marketing working for you?)* and interpret what is happening to: 1. Market share, 2. Customer loss rate, 3. Customer satisfaction, 4. Product quality, and other measures. They are also considering the legal, ethical, social, and environmental effects of marketing activities and programs. ***Eclipsing: When Celebrities Overshadow the Brand*** **Relationship Levels** **Basic Relationships**: are often used by a company with many **low-margin** customers. For example, Procter & Gamble does not phone or call on all of its Tide consumers to get to know them personally. Instead, P&G creates relationships through **brand-building advertising**, sales promotions, and its Web site. **Full Partnerships:** are used in markets with few customers and **high margins**, sellers want to create full partnerships with key customers. For example, P&G customer teams work closely with Wal-Mart, Carrefour, Safeway, and other large retailers. **[Partner Relationship Management]** Partner relationship management involves working closely with partners in other company departments and outside the company to jointly bring greater value to customers. (Coca Cola/ MacDonald\'s). **Partners Inside the Company:** Today, firms are linking all departments in the cause of creating customer value. Rather than assigning only sales and marketing people to customers, they are forming cross- functional customer teams. **Marketing Partners Outside the Firm:** Marketing channels consist of *distributors, retailers,* and others who connect the company to its buyers. The **supply chain** describes a longer channel, stretching from raw materials to components to final products that are carried to final buyers. Through supply chain management, many companies today are strengthening their connections with partners all along the supply chain. CRM Customer relationship management *\"brand-building advertising\"* **Holistic marketers address 3 key management questions:** 1. ### Value exploration - How a company identifies new value opportunities? 2. ### Value creation - How a company efficiently creates more promising new value offerings? 3. ### Value delivery - How a company uses its capabilities and infrastructure to deliver the new value offerings more efficiently? To ensure they select and execute the right activities, marketers must give priority to strategic planning in three key areas: 1. Managing a company's businesses as an investment portfolio, 2. Assessing each business's strength by considering the market's growth rate and the company's 3. Establishing a strategy. The company must develop a game plan for achieving each business's **The Ten Deadly Sins of Marketing** **The Ten Commandments of marketing** **Marketing Budget** **Types of Corporate Social Initiatives** **Corporate Social Responsibility \"CSR\"** 1\. Corporate community involvement 2\. Corporate social marketing 3\. Cause-related marketing 4\. Corporate philanthropy 5\. Socially responsible business practices 6\. Cause marketing **Marketing Management Tasks**  Develop market strategies and plans  Capture marketing insights  Connect with customers  Build strong brands  Shape market offerings  Deliver value  Communicate value  Create long-term growth **Strategic Planning** Strategic planning is the process of developing and maintaining a fit between the organization's goals and capabilities and its changing marketing opportunities. **Phases of Value Creation and Delivery** - Choose the value ~\"product\ \"~ - Provide the value ~\"place\"~ - Communicate the value ~\"promotion\"~ **We can divide the value creation and delivery sequence into three phases.** [First], **choosing the value** represents the "homework" marketing must do before any product exists. Marketers must segment the market, select the appropriate target, and develop the offering's value positioning. The formula "segmentation, targeting, and positioning (STP)" is the essence of strategic marketing. The [second] phase is **providing the value**. Marketing must determine specific product features, prices, and distribution. The task in the [third] phase is **communicating the value** by utilizing the sales force, Internet, advertising, and any other communication tools to announce and promote the product. The value delivery process begins before there is a product and continues through development and after launch. **Value Chain** The value chain is a tool for identifying ways to create more customer value because every firm is a blend of primary and support activities performed to design, produce, market, deliver, and support its product. The value chain identifies nine strategically relevant activities---five primary and four support activities---that create value and cost in a specific business. **The Primary Activities are:** 1. Inbound logistics, or bringing materials into the business; 2. Operations, or converting materials into final products; 3. Outbound logistics, or shipping out final products; 4. Marketing, which includes sales; and 5. Servicing. **Specialized departments handle the support activities** 1. Procurement, 2. Technology Development, 3. Human Resource Management, and 4. Firm Infrastructure. (Infrastructure covers the costs of general management, planning, finance, accounting, legal, and government affairs.) The firm's success depends not only on how well each department performs its work, but also on how well the company **coordinates departmental activities** to conduct core business processes. **These processes include:** - **The market-sensing process** which refers to all the activities in gathering and acting upon information about the market. - **The new-offering realization process** which is all the activities in researching, developing, and launching new high-quality offerings quickly and within budget. - **The customer acquisition process** which entails all the activities in defining target markets and prospecting for new customers. - **The customer relationship management process** which entails all the activities in building deeper understanding, relationships, and offerings to individual customers. **The fulfillment management process** which includes all the activities in receiving and approving orders, shipping the goods on time, and collecting payment. **Core Competencies** **what are you good at?** A core competency can take various forms, including: - Technical/subject matter - Know-how, - A reliable process and/or - Close relationships with customers and suppliers. It may also include: - Product development or - Culture, such as employee dedication, - Best Human Resource Management (HRM), - Good market coverage etc. The key, then, is to own and care for the resources and competencies that make up the essence of the business. Many textile, chemical, and computer/electronic product firms do not manufacture their own products because ***offshore manufacturers*** are more competent in this task. *(**outsourcing less critical resources).*** Instead, they focus on product design and development and marketing, their core competencies. **Characteristics of Core Competencies** **A core competency has 3 characteristics:** 1. It is a source of competitive advantage and makes a significant contribution to perceived customer benefits. (Nike manufacture its shoes in Asia because Asian manufacturer are more competent in this task) 2. It has applications in a wide variety of markets. 3. It is difficult for competitors to imitate. **Organizational Levels** Most large companies consist of four organizational levels 1. 2. Each **Division** establishes a plan covering the allocation of funds to each business unit within the division. 3. Each **Business unit** develops a strategic plan to carry that business unit into a profitable future. 4. **Marketing Plan** A marketing plan is the central instrument for directing and coordinating the marketing effort. It operates at a strategic and tactical level. The **STRATEGIC MARKETING PLAN** lays out the target markets and the firm's value proposition, based on an analysis of the best market opportunities. The **TACTICAL MARKETING PLAN** specifies the marketing tactics, including product features, promotion, pricing, sales channels, and service. **Marketing Plan Contents** - Executive Summary - Table of Contents - Situation Analysis - Marketing Strategy - Financial Projections - Implementation Controls Although the exact length and layout varies from company to company, most marketing plans cover one year in anywhere from 5 to 50 pages. Smaller businesses may create shorter or less formal marketing plans, whereas corporations generally require highly structured documents. **Evaluating a Marketing Plan** - Is the plan simple? - Is the plan specific? - Is the plan realistic? - Is the plan complete? **Value proposition** ***The value proposition consists of the whole* cluster of benefits *the company promises to deliver; it is more than the core positioning of the offering.*** *For example, Volvo's core positioning has been "safety," but the buyer is promised more than just a safe car; other benefits include good performance, design, and safety for the environment.* The value proposition is thus a **promise** about the experience customers can expect from the company's market offering and their relationship with the supplier. ***Value proposition is the full mix of benefits upon which a brand is positioned*** - Whether the promise is kept depends on the company's ability to manage its value delivery system. - Which includes all the experiences the customer will have on the way to obtaining and using the offering. - At the heart of a good value delivery system is a set of core business processes that help deliver distinctive consumer value. **Corporate Headquarters' Planning Activities** - Define the corporate mission. - Establish strategic business units (SBUs). - Assign resources to each SBU. - Assess growth opportunities. - Some corporations give their business units freedom to set their own sales and profit goals and strategies. - Others set goals for their business units but let them develop their own strategies. - Still others set the goals and participate in developing individual business unit strategies. **Good Mission Statements** - Focus on a limited number of goals - Stress major policies and values - Define major competitive spheres - Take a long-term view - Short, memorable, meaningful To define its mission, a company should address Peter Drucker's classic questions: - What is our business? - Who is the customer? - What is of value to the customer? - What will our business be? - What should our business be? These simple-sounding questions are among the most difficult a company will ever have to answer. - Successful companies continuously raise and answer them. - Organizations develop mission statements to share with managers, employees, and (in many cases) customers. - A clear, thoughtful mission statement provides a shared sense of purpose, direction, and opportunity. Some companies define their missions myopically in product or technology terms - Companies often define themselves in terms of products: They are in the "auto business" or the "clothing business." - Market definitions of a business, however, describe the business as a customer satisfying process. **Product Orientation vs. Market Orientation** Transportation is a need: automobile, railroad, airline, ship & truck are products that meet that need. Viewing businesses in terms of customer needs can suggest additional growth opportunities. This table lists companies that have moved from a product to a market definition of their business. **BCG Matrix** **Limitations:** It takes time - effort - money - two parameter -- snapshot ### The Boston Consulting Group (BCG) Approach defines four types of SBUs: 1. Stars are high-growth, high-share businesses or products requiring [heavy investment to finance] [rapid growth]. They will eventually turn into cash cows. \"introduction\" \"high cost\" 2. Cash Cows are low-growth, high-share businesses or products that are established and successful SBUs requiring [less investment to maintain market share]. \"Growth\" \"low cost\" 3. Question Marks are low-share business units in high-growth markets requiring [a lot of cash to] [hold their share]. \"maturity\" 4. Dogs are low-growth, low-share businesses and products that may generate enough cash to maintain themselves but [do not promise to be large sources of cash]. \"decline\" - Nike is established within its markets, benefiting from economies of scale. - This places them in the Cash Cows category on the Matrix. - Cash cows market growth has slowed, and the products hold a fairly stable market share **The best quadrant is a cash cows because it is a Harvest stage & cash cows low cost than stars** **lack of brand awareness \-\--\> retro branding** **Dimensions Define a Business** - Customer Groups - Customer Needs - Technology A business can define itself in terms of three dimensions: Customer groups, customer needs, and technology. Consider a small company that defines its business as designing glowing lighting systems for television studios. Its customer group is television studios; the customer need is lighting; the technology is incandescent lighting. The company might want to expand to make lighting for homes, factories, and offices, or it could supply other services television studios need, such as heating, ventilation, or air conditioning. **Characteristics of SBUs** - It is a single business or collection of related businesses - It has its own set of competitors - It has a leader responsible for strategic planning and profitability Large companies normally manage quite different businesses, each requiring its own strategy. At one time, **General Electric classified its businesses into 49 strategic business units (SBUs).** **The Strategic Planning Gap** Assessing growth opportunities includes **Planning new businesses, downsizing, and terminating older businesses**. If there is a gap between future desired sales & projected sales, corporate management will need to develop or acquire new businesses to fill it. The following figure illustrates this strategic-planning gap for a major manufacturer of blank compact disks called Musicale (name disguised). The lowest curve projects the expected sales over the next five years from the current business portfolio. The highest describes desired sales over the same period. **How can it fill the strategic-planning gap?** 1. 2. 3. **Integrative Growth** - - **Intensive Growth** **The Product/Market Expansion Matrix** The Product/Market expansion matrix is a tool for identifying company growth opportunities 1. **Market Penetration** -- The concept of increasing sales of *existing *products into an *existing *market 2. **Market Development** -- Focuses on selling *existing* products into *new *markets 3. **Product Development** -- Focuses on introducing *new* products to an *existing* market 4. **Diversification** -- The concept of entering a *new *market with altogether *new *products 1. **Market Penetration** The least risky, in relative terms, is market penetration. When employing a market penetration strategy, management seeks to sell more of its existing products into markets that they're familiar with and where they have existing relationships. Typical execution strategies include: - Increasing marketing efforts or streamlining distribution processes - Decreasing prices to attract new customers within the market segment - Acquiring a competitor in the same market Consider a consumer-packaged goods business that sells into grocery chains. Management may seek greater penetration by amending pricing for a large chain in order to secure incremental shelf space not just for packaged food products but also for several lines of its pet food products, too. 2. **Market Development** A market development strategy is the next least risky because it does not require significant investment in R&D or product development. Rather, it allows a management team to leverage existing products and take them to a different market. Approaches include: - Catering to a different customer segment or target demographic - Entering a new domestic market (regional expansion) - Entering into a foreign market (international expansion) 3. **Product Development** A business that firmly has the ears of a particular market or target audience may look to expand its share of wallet from that customer base. Think of it as a play on brand loyalty, which may be achieved in a variety of ways, including: - Investing in R&D to develop an altogether new product(s). - Acquiring the rights to produce and sell another firm's product(s). - Creating a new offering by branding a white-label product that's actually produced by a third party. 4. **Diversification** In relative terms, a diversification strategy is generally the highest risk endeavor; after all, both product development *and* market development are required. While it is the highest risk strategy, it can reap huge rewards -- either by achieving altogether new revenue opportunities or by reducing a firm's reliance on a single product/market fit (for whatever reason). There are generally two types of diversification strategies that a management team might consider: **Corporate Culture** Corporate culture is the shared experiences, stories, beliefs, and norms that characterize an organization. Walk into any company and the first thing that strikes you is the corporate culture---the way people dress, talk to one another& greet customers. **The Business Unit Strategic Planning Process** - Strategic planning happens within the context of the organization. A company's organization consists of its **structures, policies, and corporate culture**, all of which can become dysfunctional in a rapidly changing business environment. - Whereas managers can change structures and policies (though with difficulty), the company's culture is very hard to change. Yet adapting the culture is often the key to successfully implementing a new strategy. The business unit **strategic-planning process** consists of the steps shown in the following figure. Each business unit needs to define its specific mission within the broader company mission. The overall evaluation of a company's strengths, weaknesses, opportunities, and threats is called SWOT analysis. It's a way of monitoring the external and internal marketing environment. Once the company has performed a SWOT analysis, it can proceed to goal formulation, developing specific goals for the planning period.  **Marketing Analysis**  **SWOT analysis:** a summary of the ideas developed in the situation analysis, which allows managers to focus clearly on the meaningful strengths (S) and weaknesses (W) in the firm's **(internal environment)** and opportunities (O) and threats (T) coming from outside the firm **(the external environment).** **Goal Formulation and MBO** Most business units follow a mix of objectives, including profitability, sales growth, market share improvements, risk containment, innovation, and reputation. The business unit sets these objectives and then manages by objectives (MBO) and for MBO to work, the unit's objectives must meet four criteria: 1. Unit's objectives must be hierarchical. From the most to the least important. 2. Objectives should be quantitative. Whenever possible. 3. Goals should be realistic. From analysis of the business **Not from wishful thinking**. 4. Objectives must be consistent. Not possible to maximize sales and profits all together. Even a great marketing strategy can be damaged by poor implementation. If the unit has decided to attain technological leadership, it - Must strengthen its R&D department, - Gather technological intelligence, - Develop leading-edge products, - Train its technical sales force, and - Communicate its technological leadership. Once they have formulated marketing programs, marketers must estimate their costs. **Market Opportunity Analysis (MOA)** - Can the benefits involved in the opportunity be articulated influentially to a defined target market? - Can the target market be located and reached with cost-effective media and trade channels? - Does the company possess or have access to the critical capabilities and resources needed to deliver the customer benefits? - Can the company deliver the benefits better than any actual or potential competitors? - Will the financial rate of return meet or exceed the company's required entrance for investment? **Opportunity and Threat Matrices** By using the SWOT analysis and market opportunity analysis, we can create opportunity and threat matrices. In the opportunity matrix in the previous figure, the best marketing opportunities facing the TV- lighting-equipment company appear in the upper-left cell (\#1). The opportunities in the lower-right cell (\#4) are too minor to consider. The opportunities in the upper-right cell (\#2) and the lower-left cell (\#3) are worth monitoring in the event that any improve in attractiveness and potential. **Porter's Generic Strategies** Michael porter has proposed three generic strategies that provide a good starting point for strategic thinking: - Overall cost leadership Lowest-fare - Differentiation Travelocity - Focus Last Minute **Branding never ending process** **brand-building advertising\ ** **Alliances** Even giant companies often cannot achieve leadership, either nationally or globally, without forming alliances with domestic or multinational companies that complement or leverage their capabilities and resources. **Many strategic** **alliances take the form of marketing alliances. These fall into four major categories.** ***1. Product or Service Alliances***--- One company license another to produce its product, or two companies jointly market their complementary products or a new product *(Visa and British Airways).* ***2. Promotional Alliances***--- One company agrees to carry a promotion for another company's product or service *(McDonald\'s teamed up with Disney).* ***3. Logistics Alliances***--- One company offers logistical services for another company's product. *(Abbott warehouses deliver 3m's medical products)* **4**. ***Pricing Collaborations***--- One or more companies join in a special pricing collaboration *(hotels and rental car companies offer joint price discount).* **Program Formulation and Implementation** **McKinsey's Elements of Success (7 Ss)** According to McKinsey & Company, strategy is only one of seven elements---all of which start with the letter s---in successful business practice. ***When these elements are present, companies are usually more successful at strategy implementation.***