Marketing Final

Front 1

Strategy has three levels: corporate, business, and marketing. What is the primary focus of marketing-level strategies? What critical issues do they focus?

Back 1

a. Primary focus: effectively allocate and coordinate marketing resources and activities to accomplish the firm’s objectives within a specific product-market

b. Critical Issues: specifying the target market(s) for a particular product or product line

Front 2

What is a marketing plan? Explain its importance.

Back 2

Written document detailing the current situation and provides guidelines for objectives, marketing actions, and resource allocations for either an existing/proposed product or service.

i. Provides history of a product’s strategies and performance
ii. Provides basis to persuade investors about the strategy
iii. Provides guidelines for implementation and control
iv. Good source of communication

Front 3

Why are some firms not focused on their consumers or competitors but rather have a production or selling orientation? Relate your response in three areas: early entrants in newly emerging industries, growth industries, mature industries.

Back 3

Production: view customers taste and demand as similar rather than diverse.
i. Demand for products exceeds the supply side, which is often seen in underdeveloped countries or early entrants in newly emerging industries.

Selling: supply exceed demand
i. Mature industries, which require companies to put forwards sales effort to stimulate demand.

Front 4

Describe the difference between a goal and an objective, and list the four components of an objective.

Back 4

Goals: direction of the plan (long-term, broad)
Objectives specificy the destination we want to reach (specific steps, detailed).

i. Performance dimension or attribute sought
ii. A measure or index for evaluating progress
iii. A target or hurdle level to be achievedA time frame within which the target is to be accomplished

Front 5

Using Exhibit 2.5 (page 42 in the text), the Alternative Corporate Growth Strategies (also known as Ansoff’s Product Market Growth Matrix), list the characteristics of each cell.

Back 5

a. Market penetration strategies: Use current products to serve current market and increase market share. Increase product usage by increase frequency of use, quantity used and new applications

b. Product development strategies: Develop new products for the same markets with product improvement and product-line extensions.

c. Market development strategies: Expand markets for existing products. Company can target new segments, non-users, or expand into new geographic markets.

d. Diversification strategies: Risky because it involved learning new ability, and using new products to aim at new markets. It could be vertical integration, diversification into related and unrelated businesses.

Front 6

Define and give an example for each cell in the BCG Matrix.

Back 6

Dogs: Low-share business in a low-growth industry. Typically, they generate low profit or loss.
i. Ex: Gas business

Question marks: Low-share business in a high-growth industry. Need investment to catch up with leaders.
i. Ex: Food and Beer.

Star: High-share in a high-growth industry. Still need cash for growing business.
i. Ex: Liquor business

Cash cow: High-share in low-growth industry. Provider of cash.
i. Ex: Bait and video lottery

Front 7

List and describe the sources of synergy for a firm.

Back 7

a. Knowledge-based synergy: know-how, knowledge, competencies, intangible transfer within organization

b. Corporate Identity: enhance effectiveness and efficiency of a firm’s marketing efforts

c. Corporate Brand and labels: helps a firm stand out and give a competitive advantage.

d. Shared resources: increase economies of scale and experience curve, but limit adaptability and flexibility to changing environment.

Front 8

List and describe the four characteristics of strategic business units.

Back 8

a. Homogeneous set of markets to serve with limited number of related technology.

b. Unique set of product-markets, should not duplicate with other business units of the firm and also with other competitors.

c. Control over factors necessary for successful performance.

d. Responsible for their own profitability.

Front 9

Identify and describe the three dimensions that define the scope and mission of individual SBUs in a firm.

Back 9

a. Technical compatibility
b. Similarity in the consumer needs or product benefits sought by customers in the target segments
c. Similarity in the personal characteristics or behavior pattern in the target markets.

These will determine how large the product-markets and target markets that a SBU can cover. Improves efficiency and effectiveness.

Front 10

Michael Porter distinguishes three business-level competitive strategies, (1) overall cost leadership, (2) differentiation, (3) focus. Describe each.

Back 10

a. Overall cost leadership: Business tries to capture the largest market share by offering products with competitive price and decent quality. Business typically to have strong cost-efficiency capability and an excellent operational competency.

b. Differentiation: Business differentiates itself from competitors on many aspects other than price. Building customer perception of superior product quality, design or service.

c. Focus: Business avoids direct confrontation with major competitors by concentrating on narrowly defined market niche.

Front 11

Robert Miles and Charles Snow classify business units into four strategic types: (1) prospectors, (2) defenders, (3) analyzers, and (4) reactors. Briefly describe each.

Back 11

a. Prospectors: units concerned with attaining growth through aggressive pursuit of new product-market opportunities.

b. Defenders: Concentrate on maintaining their strong position in product markets while paying less attention to new product development

c. Analyzers: fall in between prospectors and defenders

d. Reactors: have no clearly defined strategy, very passive.

Front 12

Explain the appropriate conditions for a prospector strategy.

Back 12

a. Unstable, rapidly changing environments resulting from new technology, shifting consumer needs, or both

b. Firms devote the most resources to functional areas that identify new technology and convert it into innovative products and functions necessary for identification and development of new market opportunities.

c. SBU has strong R&D, product engineering, marketing research and marketing capacities.

Front 13

Business strategies differ in scope. First, define strategic scope, and second describe the strategic scope for defenders, prospectors and analyzers.

Back 13

a. Strategic scope: Breath and stability of a business’s domain

i. Defenders operate in relatively well-defined, narrow, and stable domains where both the product technology and the customer segments are mature.

ii. Prospector businesses usually operate in broad and rapidly changing domains where neither the technology nor customer segments are well established.
1. Prospectors are organized around either a core technology or many different technologies.

iii. Analyzer businesses fall somewhere in between the two extremes. They primarily focus on their main business’ domain; however, pay some attention to new product development and technology.

Front 14

Business strategies differ in synergy. First, define strategic synergy, and second describe the strategic synergy for defenders, prospectors and analyzers.

Back 14

a. Strategic synergy: source of synergy business seek to facilitate its strategy, and avoid ones that impede strategy

i. Prospectors and analyzers: sharing of operating facilities and program maybe an inappropriate approach because (1) This can reduce SBU ability to adapt quickly to changing market demand or competitive threats (2) They should build synergy through sharing expertise that can improve the success rate of their products development efforts.

ii. Low-cost defenders should seek operating synergies that will make them more efficient. This is usually gained through sharing of resources, facilities and functional activities across product-market entries.

Front 15

There are three criteria to measure goals and objectives: (1) effectiveness, (2) efficiency, and (3) adaptability. Define each and indicate which criteria defenders are superior, and which criteria prospectors are superior.

Back 15

a. Effectiveness: the success of a business’ products and programs relative to those of its competitors in the market

b. Efficiency: the outcomes of a business’s programs relative to the resources used in implementing them

c. Adaptability: The business success in responding over time to changing conditions and opportunities in the environment.

i. Prospectors often outperform defenders on Effectiveness and Adaptability.
ii. Defenders are superior in term of efficiency (return on investment).

Front 16

Define market and industry, and describe why it is important for decision makers to understand the difference between the two.

Back 16

a. Market: comprised of buyers
i. Individuals and organizations buying for benefit

b. Industry: comprised of seller.
i. Group of firms selling close substitutes

c. Knowing the difference between the two will give marketers a grasp of the environment where the business operates.

Front 17

Describe the purpose of Porter’s Five Competitive Forces model, and identify what the model does (or explains) for managers.

Back 17

a. Purpose: to judge the attractiveness of the industry.
b. Provides the basis for analyzing each forces and the extent to which those forces have an impact on company.

Front 18

Porter’s Five Forces model suggests that industries with high rivalry are less attractive than industries with low rivalry. First, indicate why this thesis is valid, and second, list the conditions that influence rivalry.

Back 18

a. From a firm’s perspective, high rivalry means that there are close substitutes that will directly compete against its products and appeal customers away.

i. High investment intensity.
ii. Many small firms and no dominant firm exist.
iii. Little product differentiation
iv. Easy for customers to switch seller’s products (switching costs)

Front 19

Part of our understanding markets at the micro level suggests that there ought to be a clearly identified source of customer pain. What does that mean?

Back 19

Customer’s needs are numerous and various, and not all of them are well served. There are substantial opportunities for firm to explore these needs, which offerings resolve. Thus, customer need is established. This suggests that company looks at a customer individually and see if there are many unresolved needs attached to the person, hence reveal the attractiveness of the market at the micro level.

Front 20

What does it mean that entering a market without a source of sustainable competitive advantage is a trap? Indicate the three questions that test whether a firm has a competitive advantage.

Back 20

a. Without a sustainable competitive advantage, a company will quickly lose its initial competitive position. As a result, they may be stuck in a rigorous price war. Even worse, some competitors who may come up with an innovation or new technology could leapfrog them.

i. Does the company possess something proprietary that other companies cannot easily duplicate or imitate?
ii. Can the business develop superior organizational processes, capabilities, or resources that others would find it difficult to imitate or duplicate?
iii. Is the company’s business model economically viable?

Front 21

What is a critical success factor (CSF)? Give two examples of CSFs.

Back 21

a. CSFs are factors that separate the winners from the also-rans.

i. Starbuck’s success as a favorite coffee shop is majorly attributed to its careful choice on location.
ii. Amazon, eBay make a huge investment over a long period to build its reputation for reliability.

Front 22

Define the marketing research task.

Back 22

The process of design, collection, analysis and reporting of research intended to gather data pertinent to a particular marketing challenge or situation. Marketing research is intended to address carefully defined marketing problems or opportunities.

Front 23

How is marketing research conducted?

Back 23

a. Identify problem and establish objectives
b. Determine data sources and type of data and research approaches required
c. Design research
d. Collect data
e. Analyze data
f. Report results

Front 24

Outline the diffusion of innovation process and identify the two adopter groups who will pay the highest prices for an innovation.

Back 24

a. Diffusion process explains the adoption of innovative products or service overtime among potential buyers.
b. Two groups of adopter would pay the highest prices for an innovation are innovators and early adopters.

Front 25

What is an evidence based forecast?

Back 25

Evidence based forecast are supported by evidence rather than using wild guess. Evidence will bring out a more accurate forecast number; hence improve management decisions. Evidence-based forecast also aid measurement and contingency plan.

Front 26

Define and describe the difference between top-down and bottom-up forecasting.

Back 26

a. Top-down forecasting: an approach in which a central person takes responsibility for forecasting and prepares an overall forecast.

b. Bottom-up approach: involves each part of the firm prepare its own sale forecast, and the parts are aggregated to create the forecast for the firm as a whole.

i. Top-down forecasting is generated at headquarter of a firm, while bottom-up are conducted at each parts of the firm.
ii. Top-down forecast is made at the highest level or created by a centralized position, while bottom-up involves many departments and functions at the lower levels of organizational structure.

Front 27

Describe the analogy research technique, and list its advantages and disadvantages.

Back 27

a. Analogy compares old product and a new product and its customers, hence making analogy prediction about buying and sales pattern.

b. Advantage:
i. Used for new product forecasting where neither statistical or observation methods are useful. Used for new to the world high technology products.

c. Disadvantages:
i. The new product and its pricing are never like that to which the analogy is drawn
ii. Market and competitive conditions may vary from when the analogous products were launched

Front 28

Explain Step 5 of constructing a market-attractiveness/competitive-position matrix for evaluating potential target markets.

Back 28

a. Step 5 of constructing a market-attractiveness/competitive-position matrix is choosing segments to target and allocate resources

b. Consider a market segment to be a desirable target only if it is strongly positive on at least one dimension of market attractiveness and potential competitive position and at least moderately positive on the other.
c. The matrix offers guidance for the strategic objectives and allocation of resources for segments currently targeted and suggests which new segments to enter.

Front 29

Explain the niche-market targeting strategy.

Back 29

Niche-market targeting strategy serves segments that consist of a sufficient number of customers seeking somewhat-specialized benefits from a good or service. The firm with niche-market targeting strategy creates a new game and new rule in the segment they capture and enhance their strong position within.

Front 30

Explain the growth-market targeting strategy.

Back 30

Growth-market targeting strategy targets fast growth segments. It is a strategy often favored by smaller companies to avoid direct confrontations with larger firms while building share and volume. If the strategy looks potential, it will easily attract investment from investors who require high return on investment.

Front 31

Outline and describe the three important steps in the market segmentation process.

Back 31

a. Identify a homogeneous segment that different from other segments (identifying). This step helps avoid duplication among segments.

b. Specify criteria that define the segment (defining). Using criteria can help marketer understand the segment better, such as, choice criteria, characteristics. This process improves the quality of segmentation.

c. Determine segment size and potential (evaluating). Together with evaluating a firm’s resource and competencies, this step facilitates target market selection.

Front 32

What is segmentation, and describe why it is necessary.

Back 32

a. Segmentation is a process to analyze the divergence of a market. Market segmentation is divided into distinct subsets of customers with similar needs and characteristics that lead them to respond in similar ways to a particular product offerings or marketing program.

i. Most market is heterogeneous
ii. Customers have diverse needs, wants and benefits sought.
iii. Population growth has slowed, and more product-markets are maturing
iv. Consumer become sophisticated with high educational level, and awareness of the world
v. Emergence of microsegmentation tools
vi. More microsegmentation media.

Front 33

What are positioning statements and value propositions? Briefly explain their features.

Back 33

a. A position statement is a succinct statement that identifies the target market for which the product is intended and the product category in which it competes and states the unique benefits the product offers.

b. A value proposition is similarly explicit about what the product does for the customers and typically also includes information about pricing relative to competitors

c. They provide direction for R&D, branding, typically not written in catchy consumer language.

Front 34

Define position and positioning. Describe the difference between the two.

Back 34

a. Position is a place or a point (noun). In verb form, position means an act of placing an object somewhere.

b. Positioning is more abstract. It refers to a process intended to create a position of firm’s brands, labels, products in customers’ mind. Positioning is very critical to the success of a firm; it provides the basic for positioning statements and direction for marketing mix.

i. Positioning involves more efforts and more information as input from other marketing tasks: External and internal environment analysis, segmentation, sale forecast.

Front 35

Define physical and perceptual positioning. Describe the difference between the two.

Back 35

a. Physical Positioning: the assessment of the current position of a brand relative to competitors on the basis of how various brands compare on some set of objective physical characteristics.

b. Perceptual Positioning: the assessment of the current position of a brand relative to competitors in customer’s mind in regards to some important dimensions

i. Technical orientation vs consumer orientation, objective measure vs perceptual measure, large number of dimensions vs limited number of dimensions, data readily available vs need for marketing research, Direct R&D implications vs R&D implications need to be interpreted.

Front 36

What is price skimming? What conditions are appropriate for a price skimming tactic?

Back 36

a. Price skimming is a price strategy that set very high price on new product to obtain as much margin per unit as enabling the firm to recover its new product investment quickly.

i. Niche market where consumers are less sensitive to price.
ii. Products represent a cutting edge technology and it takes a long time for competitors to catch up with.
iii. High adoption rate is present.

Front 37

Under what conditions do pioneer strategies each have the greatest probability of long-term success?

Back 37

a. The new product-market is insulated from entry of competitors. In this sense, pioneers must have strong product engineering capabilities and R&D competencies to continuously improve product quality, provide more features and benefits. This constant innovation makes it difficult for followers to catch up with.
b. The firm has sufficient size, resources and competencies to move forwards in the face of growing market demand and potential competition.

Front 38

Under what conditions do follower strategies each have the greatest probability of long-term success?

Back 38

a. Ability to take advantage of the…

i. Pioneer’s positioning market
ii. Pioneer’s product mistakes
iii. Pioneer’s marketing mistakes
iv. Latest technology
v. Pioneer’s limited resources

Front 39

Define primary and secondary demand. What is the difference between the two?

Back 39

a. Primary demand: demand for product class or product type

b. Secondary demand (selective demand): demand for a specific product made by a firm.

i. Primary demand is very common and it is aggregated by all of company in industry. Secondary demand, on the other hand, is very specific. Primary demand often come before secondary demand.

Front 40

Discuss the features of the shakeout stage of the product life cycle. Include facets of the market and competition as well as the marketing mix.

Back 40

a. The shakeout stage is the turbulence stage at which growth rate in market demand is minimized to zero. The supply appears to exceed the demand.

i. Many firms are force to exit the industry or sell out. This will lead to major changes in competitive structure.
ii. The firm must cut price to maintain market share, rationalize its product line by eliminating weaker items, emphasize creative promotional pricing, and strengthen its channel relationships.

Front 41

Explain how share gains are worth more in a growth market than in a mature market.

Back 41

a. Share gain is easier during growth market due to emerging demand as long as competitors do not react aggressively to market share erosion.

b. Share gain is worth more because firm can hold on its relative share as market grows pending…
i. The existence of positive network effects
ii. Future change in technology or other CSF
iii. Future fragmentation of the market
iv. Share gain should not rely solely on price, because this practice is short lived when competitors soon offer a competitive price.

Front 42

Explain the four ways a challenger can target competitors established in the market.

Back 42

a. Attack the market share leader within its primary market
b. Attack another followers who has an established position within a major market segment
c. Attack one or more smaller competitors who have only limited resources
d. Avoid direct attack on any established competitor.

Front 43

What are the two basic marketing objectives for share leaders?

Back 43

a. Retain its current customers. Current customers bring more value and cost less money, if the leader can build customer loyalty.
b. Stimulate selective demand among later adopters. The leader attempt to gain more market share from non-user segments.

Front 44

What is a flanker strategy and a flanker brand?

Back 44

a. Flanker strategy is used in conjunction with a position defense strategy.
i. Flanker strategy develops a second brand to compete against a challenger’s offerings and defend an attack directed at weaknesses in its current offerings.

b. Flanker brand is used for flanker strategy to prevent challenger from growing.
i. This strategy is appropriate when company has sufficient resources to support and develop multiple entries and not many challengers. One approach could be trading-up. More often it involves a lower quality with lower price to protect the leader’s primary brand from direct price competition.

Front 45

What are analyzer and defender strategies? How are they similar and dissimilar from each other?

Back 45

a. Analyzer strategy is adopted by analyzers to focus on its strong position in a product-market while seek to have some products innovation.

b. Defender strategy is adopted by defenders who want to consolidate their established position in market. They are different in the extent of emphasis on new product-market growth.

Front 46

List the conditions most appropriate for analyzer and defender strategies.

Back 46

a. Analyzer strategy is most appropriate for developing industry experiencing technological changes and opportunity for continued growth.

b. Defender strategy is most appropriate in industry where basic technology is not complex or unlikely to change dramatically in the short run.

Front 47

What is the profitable survivor strategy? Explain the conditions most appropriate for its use.

Back 47

a. Profitable survivor strategy is an aggressive alternative for a business with a strong share position and sustainable competitive advantage in the decline stage. Strong leaders can improve its share at a low cost

b. Invest enough to increase its share position and establish itself as a the industry leader for the remainder of the decline

c. Encourage other members to leave the market early
i. Explicit about its commitment to become a leading survivor
ii. Offer to purchase competitors operation and improve their efficiency or remove them from the industry.

Front 48

Firms in declining markets have four basic strategies: harvesting, maintenance, profitable survivor, and niche strategy. Describe the objectives and possible marketing actions of the harvesting strategy.

Back 48

a. Objective: Generate cash quickly by maximizing cash flow over short-term

i. Hold business volume and share decline to a slow and steady rate.
ii. Appropriate for firm holding a strong competitive position
iii. Avoid any long-term additional investment in plant, equipment, R&D; cut operating expenses for marketing activities
iv. Improve efficiency of sales and distribution

Front 49

Firms in declining markets have four basic strategies: harvesting, maintenance, profitable survivor, and niche strategy. Describe the objectives and possible marketing actions of the maintenance strategy.

Back 49

a. Objective: Maintain market share in the short term. This strategy is appropriate in market where future volume trends are uncertain, and with a business with leading share.

i. Continue to pursue the strategy that brought it success during the market’s mature stage.
ii. Maintain promotion effort, enhance relationship with distributors, and cut price if necessary.

Front 50

What are some causes for market decline?

Back 50

Products enter decline stage primarily because of technologically superior substitutes (email over letter) or a shift in consumer tastes, values, and beliefs (book and magazine industry decline because people value something that is instant, changing reading habit).

Front 51

The J. B. Kunz Corporation, the leading manufacturer of passbooks and other printed forms for financial institutions, saw its market gradually decline during the 1980s and 1990s because the switch to electronic banking was making its product superfluous. Nevertheless, the firm bought up the assets of a number of smaller competitors, greatly increased its market share within its industry, and managed to earn a very high return on investment. What kind of strategy was the company pursuing? Why do you think the firm was able to achieve a high ROI in the face of industry decline?

Back 51

The firm was pursuing the profitable survivor strategy. Because of its aggressive effort on acquisition, it is explicit about its commitment to become leading survivor and encourage other competitors to leave the decline industry. This strategy is effective as the firm successfully acquires other smaller competitors and become dominant in the industry. Since the firm can control the competitive environment and market decline gradually, the firm can make a significant profit for a while before it turns to harvesting strategy.

Front 52

What is syndication of information? List the three types of syndication. Explain how syndication of information helps in the new-economy.

Back 52

a. Syndication involves the sale of the same good- typically informational good – to many customers, who may then combine it with information from other sources and distribute it

i. Types of syndication: RSS, affiliate schemes and aggregators.
1. Because it can deliver informational goods rather than tangible – a company can syndicate the same informational goods or services to an infinite number of customers with little incremental cost
2. The process can be digitized and automated, enabling syndicating networks to be created, expanded, and flexibly adapted more quickly than would be possible in the physical world.

Front 53

Identify and explain the various tools that a savvy web marketer would choose for product promotion and brand building.

Back 53

a. Search: include paid-inclusion model, in which marketers pay to ensure their promotional information come up at the top of search listings and SEO (Search engine Optimization), a techniques that improve website’s ranking on the natural search area of the search engine

b. Internet and mobile advertising tool: email marketing, blogs, banner advertising, promotional sites, social networking, etc.

Front 54

How do new-economy (web-based) applications improve customer service?

Back 54

New web-based applications make customer service more responsive to customer demand. There are some potential uses of web-based application, such as, tracking shipments technology by Walmart and UPS, answering frequently asked questions, building communities among users – using bulletin boards, chat rooms, or other e-techniques. Web-based applications also offer better services and significant cost savings. Web-based customer service also facilitates coproduction, in which companies carefully consider which burdens they can remove from customers, using new economies technology, and which customers can perform, assessing cost and to both parties.

Front 55

As director of marketing of a medium-sized Canadian sporting goods manufacturer that produces helmets for use in sports, such as cycling, skiing, hockey, and football, you have been considering using the Internet as a marketing tool. Although your helmets are sold in retail stores and to schools and athletic programs across Canada, you believe the company could reach a bigger audience and sell more helmets if the company also sold the product online at the company’s Web site. What arguments would you use to convince the CEO that online marketing is a good strategy?

Back 55

There are some reasons for using online marketing strategy… from the market perspective, because company target market segments spread largely across Canada, internet advertising can be more cost efficient as a promotional and informational tool. Furthermore, people who used sporting helmet are active and young, who is likely to be familiar with Internet. Internet could make information regarding Price, Products, Promotion, and even Delivery more available. From the firm’s perspective, firm can manipulate new technology into a wide variety of marketing activities from 4Ps to customer services. The support from new-economy technology not only cut cost but also improves effectiveness of marketing program.

Front 56

Organizational structures can be described by three traits: formalization, centralization, and specialization. Describe each.

Back 56

a. Formalization: the degree to which formal rules and standard policies and procedures govern decisions and working relationship.

b. Centralization: the location of decision authority and control in an organization’s hierarchy

c. Specialization: refers to the division of tasks and activities across positions within the organizational unit. A highly specialized marketing department, for instance, has a large number of specialists, such as market researchers, advertising managers, sales promotion managers.

Front 57

Describe the features of functional organizational design.

Back 57

Functional organizational design is the most centralized and formalized organizational form. This organization structure is the simplest and most bureaucratic design and relies on hierarchical mechanisms to resolve conflicts across functional areas. At each level, top managers coordinate the activities of all the functional areas reporting to him or her.

Front 58

What are the four essential questions in designing marketing metrics?

Back 58

a. Who needs what information?
b. When and how often is the information needed?
c. In what media and in what format or level of aggregation should information be provided?
d. What contingencies should be planned for?

Front 59

What is a balanced scorecard, and why is it important?

Back 59

a. Balanced scorecard is a management system that enables company to set, track, and achieve its key business strategies and objectives.

b. Balanced scorecard comprised of 4 distinct business perspectives:
i. Customer perspective: measure customer satisfaction and their performance requirement.
ii. Financial perspective: track a firm financial requirements and performance.
iii. Internal business process perspective: measure a firm’s critical-to-customer process requirements and measures
iv. Knowledge, education and growth perspective: Focus on how a firm educates employees, how it gains and captures its knowledge and how the firm uses it to maintain competitive edge within its markets.