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Comprehensive Marketing-Plan Model
External Audit

2
LongTerm Objectiv es Generat e, Evaluat e, Select Strategi es Implem ent Strategi es: Mgmt Issues

Vision & Mission

1

4
Internal Audit

5

6

3

Strategy Formulation

Strategy Implementation

Strategy 2 Evaluatio

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Strategy Formulation
Vision & Mission External Opportunities & Threats Internal Strengths & Weaknesses Long - Term Objectives Alternative Strategies Strategy Selection

3

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Issues in Strategy Formulation

4

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Strategy Implementation

Annual Objectives Policies Employee Motivation Resource Allocation

5

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Strategy Implementation

6

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Strategy Evaluation

Internal Review External Review Performance Metrics Corrective Actions

7

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Strategy Evaluation

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Strategic Marketing Plan is Gaining and Maintaining Competitive Advantage

“Anything that a firm does especially well compared to rival firms”
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Strategic Marketing - Plan Model Identify Existing 1.
•Vision •Mission •Objectives •Strategies •

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Strategic Marketing - Plan Model
2 . Audit external environment 3 . Audit internal environment 4 . Establish long - term objectives 5 . Generate , evaluate , and select strategies 6 . Implement selected strategies 7 . Measure & evaluate performance

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STRATEGIC MARKETING Chapter 1 ION & VISION STATEM

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What Do We Want to Become? VISION

What Is Our Business? MISSION Importance of Vision and Mission Statements

Components of a Mission Statement

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Vision

“The last thing IBM needs right now is a vision.” (July 1993)
“What IBM needs most right now is a vision.” (March 1996)
– Louis V. Gerstner, Jr., CEO, IBM Corporation
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Vision

“ What do we want to become? ”

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Vision
Clear Business Vision Comprehensive Mission Statement

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Vision Statement Examples
Tyson Foods’ vision is to be the world’s first choice for protein solutions while maximizing shareholder value.

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Vision Statement Examples

General Motors’ vision is to be the world leader in transportation products and related services.

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Vision Statement Examples

PepsiCo’s responsibility is to continually improve all aspects of the world in which we operate – environment, social, economic – creating a better tomorrow than today.

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Vision Statement Examples

Dell’s vision is to create a company culture where environmental excellence is second nature.

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Mission Statements

“ What is our business? ”

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Mission Statements

•Enduring statement of purpose •Distinguishes one firm from another
•Declares the firm’s reason for being

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Mission Statements
Also referred to as :

•Creed statement •Statement of purpose •Statement of philosophy •Statement of business principles

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Mission Statements
Reveal what an organization wants to be and whom it wants to serve.

Essential for effectively establishing objectives and formulating strategies

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Developing Vision & Mission Clear mission is needed before alternative strategies can be formulated and implemented

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1 . Custo mers 2 . Produ cts or Servic es 3 . Marke ts

9 . Emplo yees

Mission Components

4 . Techn ology

8 . Publi c Image

7 . Self Concep t

6 . Philo sophy

5 . Survi val , Growth , Profit s

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Mission Statement Examples
We aspire to make PepsiCo the world’s(3) premier consumer products company, focused on convenient foods and beverages(2). We seek to produce healthy financial rewards for investors(5) as we provide opportunities for growth and enrichment to our employees(9), our business partners and the communities(8) in which we operate. And in everything we do, we strive to act with honesty, openness, fairness and integrity(6).

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Mission Statement Examples
Dell’s mission is to be the most successful computer company(2) in the world(3) at delivering the best customer experience in markets we serve(1). In doing so, Dell will meet consumer expectations of highest quality; leading technology(4); competitive pricing; individual and company accountability(6); best-in-class service and support(7); flexible customization capability(7); superior corporate citizenship(8); financial stability(5).

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Mission Statement Examples
Proctor & Gamble will provide branded products and services of superior quality and value(7) that improve the lives of the world’s(3) consumers. As a result, consumers(1) will reward us with industry leadership in sales, profit(5), and value creation, allowing our people(9), our shareholders, and the communities(8) in which we live and work to prosper.

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STRATEGIC MARKETING Chapter 2 EXTERNAL ANALYSIS

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External Assessment
“It is not the strongest of the species

that survive, nor the most intelligent, but the one most responsive to change.” – Charles Darwin

Purpose of External Audit
–Identify
•Opportunities •Threats

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Purpose of External Audit
–Identify
•Opportunities •Threats

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External Audit – Sources of Information
•Internet •Libraries •Suppliers •Distributors •Salespersons •Customers •Competition

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Performing External Audit – Variables
•Market share •Breadth of competing products •World economies •Foreign affiliates •Proprietary account advantages

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Performing External Audit – Variables
•Price competitiveness •Technological advancements •Interest rates •Pollution abatement

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Performing External Audit
Long - term Orientation Measurable Applicable to Competing Firms Hierarchical

External Factors

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Industrial Organization ( I / O ) View – Industry factors more important than internal factors
nPerformance

forces

determined by industry

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I / O Perspective Firm Performance
Industry Properties
Economies of Scale Barriers to Market Entry Product Differentiation Level of Competitiveness

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Social , Cultural , Demographic , and Environmental Forces
Major Impact –

•Products •Services •Markets •Customers

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Social , Cultural , Demographic , and Environmental Forces
Facts

•World population approaching 7 billion •World population = 8 billion by 2028 •World population = 9 billion by 2054 •U.S. population < 300 million

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Social, Cultural, Demographic, and Environmental Forces •Trends
–More American households with people living alone –Aging Americans – affects all organizations –Population shift to the south and west –Decimation and degradation of the natural environment

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Social , Cultural , Demographic , and Environmental Forces
Global trends

•China’s labor rates less than Mexico •China provides more site location incentives than Mexico

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Social , Cultural , Demographic , and Environmental Forces

•More educated consumers •Aging population •Minorities more influential •Local rather than federal solutions

21 st Century Trends

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Key Social , Cultural , Demographic , and Environmental Variables

Childbearing rates Number of special interest groups Number of marriages & divorces Number of births & deaths Immigration & emigration rates

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Social , Cultural , Demographic , and Environmental Forces
Actuarial Rates

Monitor Key Variables

Per Capita Income Attitudes Toward Business Avg . Disposable Income

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Social , Cultural , Demographic , and Environmental Forces
Consumer Behavior

Monitor Key Variables

Ethical Concerns Attitudes Toward Saving Racial Equality

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Social , Cultural , Demographic , and Environmental Forces
Avg . Educational Level

Monitor Key Variables

Governmental Regulation Attitudes Toward Customer Service Attitudes Toward Quality

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Social , Cultural , Demographic , and Environmental Forces
Waste Management

Monitor Key Variables

Air & Water Pollution Ozone Depletion Endangered Species

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Political , Governmental , and Legal Forces Government Regulation
Key opportunities & threats
nAntitrust nTax

legislation

rates nLobbying efforts nPatent laws

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Key Political , Governmental , and Legal Variables

Regulation/deregulati on Tax law changes Special tariffs Voter participation rates

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Key Political , Governmental , and Legal Variables ( cont ’ d )

Number of patents Changes in patent laws Environmental protection laws Equal employment legislation Government subsidies

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Key Political , Governmental , and Legal Variables ( cont ’ d )

Anti-trust enforcement Global relationships Import/export regulations Political conditions Location and severity of terrorist activity

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Technological Forces
Major Impact –

•Internet •Communication

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Competitive Forces
Collection & evaluation of data on competitors is essential for successful strategy formulation

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Competitive Forces
Identifying Rival Firms
•Strengths •Weaknesses •Capabilities •Opportunities •Threats •Objectives •Strategies

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Key Questions Concerning Competitors

Their strengths Their weaknesses Their objectives and strategies Their responses to external variables

heir vulnerability to our alternative strategies

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Key Questions Concerning Competitors ( cont ’ d )

ur vulnerability to strategic counterattack Our product/service positioning

ntry and exit of firms in the industry

ey factors for our current position in industry

Sales/profit rankings of competitors over time

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Key Questions Concerning Competitors ( cont ’ d )

ature of supplier & distributor relationships

The threat of substitute products/services Should we keep our strategies secret from employees and stakeholders?
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Competitive Forces
7 Characteristics of Most Competitive U . S . Firms :
1 . Market share matters 2 . Understand what business you are in 3 . Broke or not , fix it 4 . Innovate or evaporate

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Competitive Forces
7 Characteristics of Most Competitive U . S . Firms :
5 . Acquisition is essential to growth 6 . People make a difference 7 . No substitute for quality

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

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The Five-Forces Model of Competition

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The Five - Forces Model

Rivalry Among Competing Firms
nMost

powerful of the five forces nFocus on competitive advantage of strategies

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The Five - Forces Model

Potential Entry of New Competitors
nBarriers

to entry are important nQuality, pricing, and marketing can overcome barriers

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The Five - Forces Model Potential Development of Substitute Products
nPressures

increase when consumers’ switching costs decrease nFirm’s plans for increased capacity & market penetration

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The Five - Forces Model Bargaining Power of Suppliers
nLarge

number of suppliers & few substitutes affects intensity of competition nBackward integration can gain control or ownership of suppliers

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The Five - Forces Model Bargaining Power of Consumers
nCustomers

concentrated or buying in volume affects intensity of competition nConsumer power is higher where products are standard or undifferentiated

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Conditions Where Consumers Gain Bargaining Power •If they can inexpensively switch •If they are particularly important •If sellers are struggling in the face of falling consumer demand •If they are informed about sellers’ products, prices, and costs •If they have discretion in whether and when they purchase the product

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Industry Analysis : The External Factor Evaluation ( EFE ) Matrix Summarize & Evaluate

Economic Social Cultural

Demographic Environmental Political

Governmental Technological Competitive

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HOW TO DEVELOP AN EFE MATRIX
1 . Identify a list of KEY external factors ( critical success factors ). 2 . Assign a weight to each factor , ranging from 0 ( not important ) to 1 . 0 ( very important ). 3 . Assign a 1 - 4 rating to each critical success factor to indicate how effectively the firm ’ s current strategies respond to the factor . ( 1 = response is poor , 4 = response is extremely good ) 4 . Multiply each factor ’ s weight by its rating to determine a weighted score . 5 . Sum the weighted scores .

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Industry Analysis EFE Total weighted score of 4.0
•Organization response is outstanding to threats and weaknesses

Total weighted score of 1.0
nFirm’s

strategies not capitalizing on opportunities or avoiding threats

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Industry Analysis EFE

Important –

Understanding the factors used in the EFE Matrix is more important than the actual weights and ratings assigned.

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Industry Analysis : Competitive Profile Matrix ( CPM )

Identifies firm’s major competitors and their strengths & weaknesses in relation to a sample firm’s strategic positions

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CPM
•Competitive profile matrix is an essential strategic management tool to compare the firm with the major players of the industry . •Competitive profile matrix show the clear picture to the firm about their strong points and weak points relative to their competitors . •The CPM score is measured on basis of critical success factors , each factor is measured in same scale mean the weight remain same for every firm only rating varies . The best thing about CPM that it

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CPM ( Conti …)
Critical Success Factors Critical success factors  are extracted after deep analysis of external and internal environment of the firm. Obviously there are some good and some bad for the company in the external environment and internal environment.The higher rating show that firm strategy is doing well to support this critical success factors and lower rating means firm strategy is lacking to support the factor. Rating Rating in CPM represent the response of firm toward the critical success factors. Highest the rating better the response of the firm towards the critical success factor ,rating range from 1.0 to 4.0 and can be applied to any factor. There are some important point related to rating in CPM. Rating is applied to each factor. •The response is poor represented by 1 . 0 •The response is average is represented by 2 . 0 •The response is above average represented by 3 . 0 •The response is superior represented by 4 . 0

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CPM ( Conti …)
Weight Weight attribute in CPM indicates the relative importance of factor to being successful in the firm’s industry. The weight range from 0.0 means not important and 1.0 means important, sum of all assigned weight to factors must be equal to 1.0 otherwise the calculation would not be consider correct. Weighted Score Weighted score value is the result achieved after multiplying each factor rating with the weight. Total Weighted Score The sum of all weighted score is equal to the total weighted score, final value of total weighted score should be between range 1.0 (low) to 4.0(high). The average weighted score for CPM matrix is 2.5 any company total weighted score fall below 2.5 consider as weak. The company total weighted score higher then 2.5 is consider as strong in position.The other dimension of CPM is the firm with higher total weighted score considered as the winner among the competitors

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Industry Analysis CPM

Important –

Just because one firm receives a 3.2 rating and another receives a 2.8 rating, it does not follow that the first firm is 20 percent better than the second.

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STRATEGIC MARKETING Chapter 3 INTERNAL ANALYSIS

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Chapter Outline
The Nature of an Internal Audit

The Resource-Based View (RBV)

Integrating Strategy & Culture

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Chapter Outline (cont’d)
Management

Marketing

Opportunity Analysis

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Chapter Outline (cont’d)
Finance/Accounting

Production/Operations

Research & Development

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Chapter Outline (cont’d)
Management Information Systems

The Internal Factor Evaluation (IFE) Matrix

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Key Internal Forces Distinctive Competencies :
§Firm’s strengths that cannot be easily matched or imitated by competitors

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Key Internal Forces Distinctive Competencies :
§Strategies designed to improve on a firm’s weaknesses and turn to strengths

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Internal Audit
Parallels process of external audit
•Management •Marketing •Finance / accounting •Production / operations •Research & development •Management information systems

•Information from:

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Internal Audit
Key to Organizational Success Coordination & understanding among managers from all functional areas

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Resource Based View ( RBV )
Three All-Encompassing Categories

1.Physical resources 2.Human resources 3.Organizational resources

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U.S. Versus Foreign Cultures

To successfully compete in world markets, U.S. managers must obtain a better knowledge of historical, cultural, and religious forces that motivate and drive people in other countries.

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Management
Functions of Management

1.Planning 2.Organizing 3.Motivating 4.Staffing 5.Controlling

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Management
Function Planning Organizin g Motivatin g Staffing Controlli ng Stage When Most Important
Strategy Formulation

Strategy Implementation

Strategy Implementation

Strategy Implementation Strategy Evaluation

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Management
Planning

§Beginning of management process §Bridge between present & future §Improves likelihood of attaining desired results

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Management

Forecasting Establishing objectives Planning Devising strategies Developing policies Setting goals

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Management
Organizing

§Achieves coordinated effort §Defines task & authority relationships §Departmentalization §Delegation of authority

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Management

Organizing

Organizational design Job specialization Job descriptions Job specifications Span of control Unity of command Coordination Job design Job analysis

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Management
Motivating

§Influencing to accomplish specific objectives §Communication – major component

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Management

Motivating

Leadership Communication Work groups Job enrichment Job satisfaction Needs fulfillment Organizational change Morale

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Management
Staffing

§Personnel management §Human resource management

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Management

Staffing

Wage & salary admin. Employee benefits Interviewing Hiring Discharging Training Management development Affirmative action Labor relations

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Management
Controlling

§Establishing performance standards §Ensure actual operations conform to planned operations §Taking corrective actions

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Management

Controlling

Quality Financial Sales Inventory Expense Rewards Sanctions

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Marketing
Customer Needs/Wants for Products/Services

1.Defining 2.Anticipating 3.Creating 4.Fulfilling

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Marketing
Marketing Functions
1 . Customer analysis 2 . Selling products / services 3 . Product & service planning 4 . Pricing 5 . Distribution 6 . Marketing research 7 . Opportunity analysis

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Marketing

Customer surveys Consumer information Customer Analysis Market positioning strategies Customer profiles Market segmentation strategies

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Marketing

Selling Products / Services

Advertising Sales Promotion Publicity Sales force management Customer relations Dealer relations

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Marketing

Planning Product / Service

Test marketing Brand positioning Devising warrantees Packaging Product features/options Product style Quality

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Marketing

Pricing

Forward integration Discounts Credit terms Costs

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Marketing

Distribution

Warehousing Channels Coverage Retail site locations Sales territories Inventory levels Transportation

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Marketing

Marketing Research

Data collection Data input Data analysis

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Marketing

Assessing costs Assessing benefits
Opportunity Analysis

Assessing risks Cost/benefit/risk analysis

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Marketing
Opportunity Analysis
1 . Are markets segmented effectively? 2 . Is the organization positioned well among competitors? 3 . Has the firm ’ s market share been increasing? 4 . Are the distribution channels reliable & cost effective? 5 . Is the sales force effective?

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Marketing
Opportunity Analysis
6 . Does the firm conduct market research? 7 . Are product quality & customer service good? 8 . Are the firm ’ s products / services priced appropriately? 9 . Does the firm have effective promotion , advertising , and publicity strategies?

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Marketing
Opportunity Analysis

10 . Are the marketing , planning , and budgeting effective? 11 . Do the firm ’ s marketing managers have adequate experience and training?

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Finance / Accounting

§Determining financial strengths & weaknesses key to strategy formation

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Finance / Accounting
Finance/Accounting Functions

1 . Investment decision ( Capital budgeting ) 2 . Financing decision 3 . Dividend decision

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Production / Operations
Production/Operations Functions
§Process §Capacity §Inventory §Workforce §Quality

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Research & Development
Research & Development Functions
§Development of new products before competitors §Improving product quality §Improving manufacturing processes to reduce costs

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Management Information Systems
Purpose
§Improve performance of an enterprise by improving the quality of managerial decisions

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Internal Factor Evaluation (IFE) matrix
It is a strategic management tool for auditing or evaluating major strengths and weaknesses in functional areas of a business. IFE is use for internal audit of functional area of business such as finance, marketing, IT, operations, accounts and others depend upon the nature of business and its size.

Internal Factors
Internal factors are extracted after deep internal analysis of the company. Internal factors are divided into two categories namely strengths and weaknesses. Strengths: Strengths are the strong areas or attribute of the company, which are used to overcome weakness and capitalize to take advantage of the external opportunities available in the industry. Weakness: These are the weak factors which needs to be improved in future otherwise if they exposed to the competitors they can take the advantage of it.

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Rating
The range of rating starts from minimum 1.0 which is worst and maximum 4.0 which is the best factor of the company. Rating is applied to each factor. Major weakness is represented by 1.0 Minor weakness is represented by 2.0 Minor strength represented by 3.0 Major Strength represented by 4.0

Weight
Weight attribute in IFE matrix indicates the relative importance of factor to being successful in the firm’s industry. The weight range from 0.0 means not important and 1.0 means important, sum of all assigned weight to factors must be equal to 1.0 otherwise the calculation would not be consider correct.

Weighted Score
Weighted score value is the result achieved after multiplying each factor rating with the weight.

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Total Weighted Score
The sum of all weighted score is equal to the total weighted score, final value of total weighted score should be between range 1.0 (low) to 4.0(high). The average weighted score for IFE matrix is 2.5, any company total weighted score fall below 2.5 consider as weak. The company total weighted score higher then 2.5 is consider as strong in position.

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Steps to develop IFE Matrix
1.List key internal factors as identified in the internal audit process. Use a total of from ten to twenty internal factors, including both strengths and weaknesses. List strengths first and then weaknesses. Be as specific as possible, using percentages, ratios, and comparative numbers. 2.Assign a weight that ranges from 0.0 (not important) to 1.0 (all important)to each factor. The weight assigned to a given factor indicates the relative importance of the factor to being successful in the firm’s industry. The sum of all weights must equal 1.0. 3.Assign a 1 to 4 rating to each factor to indicate whether that factor represents a major weakness (rating = 1), a minor weakness (rating = 2), a minor strength (rating = 3), or a major strength (rating = 4). Note that strengths must receive a 4 or 3 rating and weaknesses must receive a 1 or 2 rating. Ratings are thus company based, whereas the weights in Step 2 are industry based. 4.Multiply each factor’s weight by its rating to determine a weighted score for each variable. 5. Sum the weighted scores for each variable to determine the total weighted score for the organization.

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There are few examples of internal factors of the company. Strengths
qStrong marketing and promotion qBest product quality qStrong Financial condition qHigh Market Share qHigh value assets

Weakness
qHigh cost operations qManufacturing cost is high qHigh employee turnover rate qExpensive products qLoss in joint venture

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STRATEGIC MARKETING Chapter 4 STRATEGIES IN ACTION

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Types of Strategies
Forward Integration Vertical Integrati on Strategie s

Backward Integration

Horizontal Integration

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Forward Integration Backward Integration Horizontal Integration
Southwest Airlines selling tickets through Galileo

Hilton Hotels could acquire a large furniture manufacturer

Huntington Bancshares and Sky Financial Group merged

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Types of Strategies
Market Penetration

Intensive Strategie s

Market Development

Product Development

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Market Penetration Market Development Product Development
McDonald’s selling millions of “Shrek the Third” items to a healthier image

Burger King opened its first restaurant in Japan

Google introduced “Google Presents” to compete with PowerPoint

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Types of Strategies
Related Diversificati on Diversifi cation Strategie s Unrelated Diversificati on

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Related Diversification Unrelated Diversification Retrenchment
MGM Mirage is opening its first noncasino luxury hotel

Ford Motor Company entered the industrial bank business

Discovery Channel closed 103 mallbased and stand-alone stores

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Types of Strategies
Retrenchment

Defensive Strategie s

Divestiture

Liquidation

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Divestiture
Whirlpool sold its struggling Hoover floor-care business to Techtronic Industries Follow Me Charters sold all of its assets and ceased doing business

Liquidation

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More Strategies.
There are five significant strategies to consider when planning your marketing approach. Position yourself as a; 1.Market Leader, 2.Challenger, 3.Follower, 4.Niche marketer 5.Form an alliance to attack the market with increased power.

1. Market Leader: Maintain your position as market leader in one of three ways.
First; expand the total market by increasing the total number of users. Second; defend your current share of the market. You can enhance your product offerings, as in as a supermarket adding banking services or video rental. Another option is to reduce weak products or services and build up the strongest ones. Third; expand your market share by aggressively attacking your competitor through a variety of strategies. Offer coupons, promote sales and advertise benefits your competitor doesn't have, such as longer shop hours or more personalized service.

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2. Market Challenger: If you are the challenger in the market, look for a small, unmet need
that your business can fill. (Daihatsu Cuore)

3. Market Follower: As a market follower, capitalize on a market already identified and
researched by your competitors. Watch your competitors for weaknesses, and then provide better solutions such as longer store hours or free training. Good examples include full-service restaurants offering take-out or delivery, interior design service included with furniture purchase.

4. Market Niche: Becoming a niche marketer enables you to research and respond better to a
smaller, fine-tuned segment. This works especially well for small companies who are nimble and able to make quick decisions in reaction to market trends. Serve the demographic of women ages 55 to 70. As a consultant, choose the niche of selling only to engineering consulting firms in the $3 to $5 million revenue range.

5. Alliance Marketing: Strengthen your marketing by partnering with a product, service or
company that is compatible with, but not a competitor of, your business. Your child care center may partner with any number of after-school activities to offer an enriched experience. Talk with karate studios, dance studios and gyms.

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Emphasis on New Product - Market Growth
Heavy Emphasis No Emphasis

Prospector

Analyzer

Defender

Reactor

Units with strong core business, actively seeking Co to expand into st Units primarily related productmpetitLe concerned with markets with ive ad attaining growth differentiated rategyer through aggressive offerings sh pursuit of new ip product-market opportunities

Units primarily concerned with maintaining a differentiated position in mature Units with no markets clearly defined product-market development or competitive strategy

Di ff er en ti at io

Units with strong core business, actively seeking to expand into related productmarkets with low cost offerings

Units primarily concerned with maintaining a low cost position in mature markets

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1.Star: Leader [i.e. high market share] of high growth market is called star. These SBUs are net user of cash, because they always require heavy investment to finance rapid growth and to sustain market share. When the product comes to mature stage, then the growth slow down and they turn to cash cow. 2. Cash Cow: Cash cows are low growth but high market share (Market leader) businesses or products. Their high earnings, coupled with their depreciation, represent high cash inflows and they need very little in the way of reinvestment. And thus, they are the net provider of cash. Surplus cash are used for Research and Development and to support other SBUs that need investment. C. Question mark: Products in a growth market with low market share are categorized as Question Mark. Because of growth, these SBUs require a lot of cash to hold their market share and let alone to increase it. If nothing is done to increase the market share, a Question mark will simply absorb large amount of cash in the short run and later, as growth slow down, become a dog. Thus, unless something is done to change its perspective, it becomes a cash trap. Management has to decide which question marks should try to build into stars and which should be phased out. D. Dog: Dog are low growths, low market share SBUs. They may generate enough cash to

BCG Growth - Share Matrix

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BCG Growth Share Matrix

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STRATEGIC MARKETING

STRATEGIC MARKETING

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