MKTG CH 15

business firm

business firm

org that serves its customers in order to earn a profit

diff levels of strat in orgs

1. corp

2. business

3. functional

coroporate level

• top management directs overall strat for entire org

• focuses on interests of the shareholders of the firm

• measured by stock performance and profitability

business level

• business unit managers set direction for individual products and markets

• strategic direction more specific

  • for less complex firms with single business focus, corp and business strat may merge

functional level

• each business unit has marketing and other specialized activities: finance, manufacturing, or HR

• ex: marketing department, info systems department

• strategic direction becomes very specific and focused

org need reason to exist

• marketing plan - helps business develop the right products to address customer needs, establish best way to promote business, determine where product will be distributed.

  • ads and comms important components

often businesses lose sight of goals over time

one guideline: understand the people served by the org and value they receive - emphasizes the critical customer driven focus that successful orgs have

business firms 7 types of goals

1. profit: seek to maximize profits - get as high a financial ROI

2. sales: firm may elect to maintain or increase its sales level even though profitability may not be maximized

3. market share: may choose to maintain/increase market share, sometimes at expense of greater profits if status/prestige is goal - sales revenue : total sales revenue

4. quality

5. customer satisfaction

6. employee welfare

7. social responsibility

Growth share matrix

• top left (high, high): starts

• top right (low, high): question marks

• bottom left (low, high): cash cows

• bottom right (low, low): dogs

Cash cows

• SBUs typically generate large amounts of cash, far more than they can invest profitably in their own product line

  • have dominant share of slow growth market and provide cash to pay large amounts of company overhead and to invest in other SBUs

question marks

low share of high growth markets. require large injections of cash to maintain market share - even more to increase it

dogs

• low share of low growth markets

  • may generate enough cash to sustain - do not hold promise of ever becoming real winners of the firm

SMART - for goals and objectives

• measurable

• Specific

• achievable

• realistic

• time-bound

business portfolio

collection of businesses and products that make up the company

strategic business unit (SBU)

unit of company that has a separate mission and objectives that can be planned separate from other company businesses. A SBU can be:

• company division

• product line within a division

• single product/brand

business plan vs marketing plan

• marketing plan part of business plan

• business plan shapes everything about the way a company works and lays out big picture goals

• the marketing plan paints a more detailed picture of how the company will use marketing to achieve the goals laid out in the business plan

setting strategic directions

• where are we now?

  • customers

  • competencies

  • competitors

  • SWOT

• where do we want to go?

  • 1. analyze current business portfolio and decide which business will get more or less or no investment - growth share matrix

  • 2. developing the future portfolio: develop strategies for growth and downsizing - product market expansion grid

• how will we get there?

  • strategic marketing process

    • org allocates its marketing mix resources to reach its target markets and achieve its goals

    • how to allocate resources

    • how to convert plans into actions

    • how results compare with plans, and whether deviations require new plans