MBA 2 Accounting and Marketing Strategies Discussion

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MBA 2

Jawaharlal Nehru Technological University

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Hello , Answer below 2 questions in a separate WORD doc

1)ACCOUNTING FOR LEADERS –

Now that we are almost halfway through the course and you are working on the first graded problem set this week I would like you to reflect back on what you have learned over the last six weeks. In your post please share a topic we have studied that you feel will be beneficial in your career. Explain why you feel that is the case.

Week 1:

difference between financial and managerial accounting. Are there any regulations/rules that need to be followed under either method? If so, what are they?

Week 2:

What is Certified Public Accountant (CPA) and Certified Management Accountant (CMA) certification. What is the difference between the two? Which one is more applicable to Managerial Accounting? Which one is more applicable to Financial Accounting?

Week 3:

What is that we learnt about activity-based costing?

Week 4:

What we learnt about process costing or job order costing. Why you should care about these 2 types of costing? (****we have chosen coca cola company. Please write few lines of what we learnt about process costing or job order costing with respect to coca cola company****)

Week 5:

Summarize what we understood by types of cost behavior (fixed cost, variable cost and mixed cost are 3 types of costs). Why should we really care about these types of costs?

PLEASE PUT YOUR RESPONSE UNDER EACH SECTION (EACH WEEK ABOVE). MAKE SURE THE WORD IS 250 EXCLUDING THE ABOVE TEXT. MEANING, WHAT EVER YOU WRITE SHOULD BE 250 WORDS OR MORE IN LENGTH.

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2)MARKETING STRATEGIES:

in 250 words, What is idea generating? How does it help us in our new product development process? After reviewing this week’s resources and your research, in your own words how would you explain idea generation and the role it plays in the new product development process? Share one method of idea generation and apply it to a product you personally use. Remember that all new products are not truly new, but can be modified based on consumer feedback and/or moving towards a new market segment.

REQUIRED READING FOR ABOVE DISCUSSION:

A Preface to Marketing Management (textbook) by Peter and Donnelly

Chapter 7: "New Product Planning and Development"

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A Preface to Marketing Management This page intentionally left blank A Preface to Marketing Management Fourteenth Edition J. Paul Peter University of Wisconsin–Madison James H. Donnelly Jr. Gatton College of Business and Economics University of Kentucky A PREFACE TO MARKETING MANAGEMENT, FOURTEENTH EDITION Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2015 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous editions © 2013, 2011, and 2008. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 0 DOW/DOW 1 0 9 8 7 6 5 4 ISBN 978-0-07-786106-3 MHID 0-07-786106-X Senior Vice President, Products & Markets: Kurt L. Strand Vice President, General Manager, Products & Markets: Michael Ryan Vice President, Content Production & Technology Services: Kimberly Meriwether David Brand Manager: Sankha Basu Editorial Coordinator: Heather Darr Marketing Manager: Donielle Xu Director, Content Production: Terri Schiesl Lead Content Project Manager: Jane Mohr Buyer: Laura Fuller Cover Designer: Studio Montage, St. Louis, MO. Cover Image: © John Shaw/Getty Images Media Project Manager: Shawn Coenen Compositor: Laserwords Private Limited Typeface: 10/12 Times LT Std. Printer: R. R. Donnelley All credits appearing on page or at the end of the book are considered to be an extension of the copyright page. Library of Congress Cataloging-in-Publication Data Peter, J. Paul. A preface to marketing management / J. Paul Peter, University of Wisconsin-Madison, James H. Donnelly, Jr., Gatton College of Business and Economics, University of Kentucky.–Fourteenth edition. pages cm ISBN 978-0-07-786106-3 (alk. paper) 1. Marketing–Management. I. Donnelly, James H. II. Title. HF5415.13.P388 2013 658.8–dc23 2013046644 The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the accuracy of the information presented at these sites. www.mhhe.com To Rose and Angie J. Paul Peter To Gayla Jim Donnelly About the Authors J. Paul Peter has been a faculty member at the University of Wisconsin since 1981. He was a member of the faculty at Indiana State, Ohio State, and Washington University before joining the Wisconsin faculty. While at Ohio State, he was named Outstanding Marketing Professor by the students and has won the John R. Larson Teaching Award at Wisconsin. He has taught a variety of courses including Marketing Management, Marketing Strategy, Consumer Behavior, Marketing Research, and Marketing Theory, among others. Professor Peter’s research has appeared in the Journal of Marketing, the Journal of Marketing Research, the Journal of Consumer Research, the Journal of Retailing, and the Academy of Management Journal, among others. His article on construct validity won the prestigious William O’Dell Award from the Journal of Marketing Research, and he was a finalist for this award on two other occasions. Recently, he was the recipient of the Churchill Award for Lifetime Achievement in Marketing Research, given by the American Marketing Association and the Gaumnitz Distinguished Faculty Award from the School of Business, University of Wisconsin–Madison. He is an author or editor of over 30 books, including A Preface to Marketing Management, Fourteenth edition; Marketing Management: Knowledge and Skills, ninth edition; Consumer Behavior and Marketing Strategy, ninth edition; Strategic Management: Concepts and Applications, third edition; and Marketing: Creating Value for Customers, second edition. He is one of the most cited authors in the marketing literature. Professor Peter has served on the review boards of the Journal of Marketing, Journal of Marketing Research, Journal of Consumer Research, and Journal of Business Research and was measurement editor for JMR and professional publications editor for the American Marketing Association. He has taught in a variety of executive programs and consulted for several corporations as well as the Federal Trade Commission. James H. Donnelly Jr. has spent his academic career in the Gatton College of Business and Economics at the University of Kentucky. In 1990 he received the first Chancellor’s Award for Outstanding Teaching given at the university. Previously, he had twice received the UK Alumni Association’s Great Teacher Award, an award one can only be eligible to receive every 10 years. He has also received two Outstanding Teacher awards from Beta Gamma Sigma, national business honorary. In 1992 he received an Acorn Award recognizing “those who shape the future” from the Kentucky Advocates for Higher Education. In 2001 and 2002 he was selected as “Best University of Kentucky Professor.” In 1995 he became one of six charter members elected to the American Bankers Association’s Bank Marketing Hall of Fame. He has also received a “Distinguished Doctoral Graduate Award” from the University of Maryland. During his career he has published in the Journal of Marketing Research, Journal of Marketing, Journal of Retailing, Administrative Science Quarterly, Academy of Management Journal, Journal of Applied Psychology, Personnel Psychology, Journal of Business Research, and Operations Research among others. He has served on the editorial review board of the Journal of Marketing. He is the author of more than a dozen books, which include widely adopted academic texts as well as professional books. Professor Donnelly is very active in the banking industry where he has served on the board of directors of the Institute of Certified Bankers and the ABA’s Marketing Network. He has also served as academic dean of the ABA’s School of Bank Marketing and Management. vi Preface We are proud to introduce the fourteenth edition of A Preface to Marketing Management. Our plan has always been to deliver a clear and concise presentation of the basic principles of marketing in such a way that the core concepts and ideas are covered in sufficient depth to ensure in-depth understanding. By offering an engaging, clear, and conceptually sound text, our book has been able to maintain its position as a leading marketing management text. Throughout the history of the book, feedback from both students and instructors has suggested that our plan is a good one. Our book has been used in a wide variety of settings and is the best-selling book of its kind. We introduce the fourteenth edition knowing that our book and its eight foreign translations have been used around the world whenever courses require an overview of the critical aspects of marketing management. With this edition, we seek to more effectively implement our plan by building on a strong foundation, maintaining the attributes and elements of the book that make it a very teachable text, updating existing content, adding new content, and focusing the presentation. We seek to emphasize quality content and examples and avoid excess verbiage, pictures, and description. As usual, each time we revise the book there is an emphasis on responding to feedback from students and instructors. These two constituencies plus our own intuitions drive each revision. Marketing is an exciting and dynamic field of study. We want to capture the sense of excitement and at the same time respect its history. Our book has become known simply as the Preface. We want to believe a major reason it has endured is that because marketing is figuring out how to do a superior job of satisfying customers, we simply try to practice what we preach. Welcome to the Preface. THE PRESENT EDITION Every element of content in our book is designed with one thought in mind: to assist students in analyzing marketing problems and cases and developing and writing marketing plans. Section I of the book consists of 13 concise chapters that cover the essentials of marketing management. We think of it as the “must know” content of the field. It is divided into four parts that focus on strategic planning and marketing planning, understanding target markets, the marketing mix, and marketing in special fields. These 13 chapters should provide students a clear understanding of the terminology, techniques, tools, and strategies for effective marketing management and marketing strategy development. In addition to revising and updating the text chapters, this edition contains new content as well. There are discussions of internal and external secondary data sources, the use of social media monitoring, alternative search in consumer behavior, key characteristics of organizational buyers, e-procurement, global virtual teams, brand equity, using distinctive competencies in new product development, consumer databases, business-to-business databases, mobile marketing, online retailing and multichannel marketing, franchising, the effects of the Internet on pricing, global account managers, and learning about different cultures. In the twelfth edition, we altered two of the text elements. The changes have been well received by instructors and students. First, “Marketing Insights” are included to assist students as they solve marketing problems, analyze marketing cases, and develop marketing plans. Second, we know that our book is often used with case problems, writing assignments, and constructing marketing plans. Accordingly, there is an “Additional Resources” section vii viii Preface at the end of each chapter. Our purpose is to highlight current resources that students can use in writing assignments and oral presentations. The resources have been selected with students in mind. They include resources accessible to students at various stages of marketing education given the wide spectrum of courses in which the book is utilized. NEW FEATURES AND CONTENT CHANGES Chapter 1: Strategic Planning and The Marketing Management Process • Revised basic questions that must be asked when developing a mission statement. • Marketing Insight 1-3 now contains five actual mission statements for firms of varying sizes and industries. It provides students with a better mix of alternatives when completing the exercise in Marketing Insight 1-4. • Updated additional resources. Chapter 2: Marketing Research: Process and Systems for Decision Making • Revised section on secondary data to include both internal and external sources • Added new figure “Common Types of Information Available in a Secondary Data Search” • Added a new Marketing Insight, “Social Media Monitoring for Marketing Insights” • Updated additional resources Chapter 3: Consumer Behavior • Updated discussion of consumer and marketer reactions to recession • Revised and updated discussion of Alternative Search • Updated additional resources Chapter 4: Business, Government, and Institutional Buying • • • • Revised Marketing Insight on “Key Characteristics of Organizational Buying Behavior” New Marketing Insight, “Organizational Buying on the Internet: E-Procurement” Revised Discussion of “Organizational Needs” Updated additional resources Chapter 5: Market Segmentation • New Marketing Insight, “Segmenting the Mobile Phone Market” • Revised and updated discussion of VALS Chapter 6: Product and Brand Strategy • Marketing Insight 6-3 now contains the latest information on the value of the top twenty brands in the world • Contains a new section on branding and brand equity • Revised and updated Marketing Insight 6-6 • Added a new section on global virtual teams • New key terms and concepts • Updated additional resources Preface ix Chapter 7: New Product Planning and Development • New Marketing Insight 7-4 which focuses on utilizing corporate strengths in the new product development process. It includes eight firms with strengths in either technology or markets • Updated additional resources Chapter 8: Integrated Marketing Communications • Revised Marketing Insight 8-1 which presents up-to-date information on the top ten websites in Brazil, Portugal and South Korea • Revised section on direct marketing as part of the promotion mix • Revised Marketing Insight 8-6 • New section on direct marketing • New Marketing Insight 8-7 on the contents of a comprehensive database included are both consumer and business-to-business databases • Added new Key Terms and Concepts • Updated additional resources Chapter 9: Personal Selling, Relationship Building, and Sales Management • New Marketing Insight 9-1 which focuses on what a salesperson actually does • A new discussion of an increasingly important customer organization structure, the global account manager • Added new Key Terms and Concepts • Updated additional resources Chapter 10: Distribution Strategy • • • • Added New Marketing Insight, “Advantages and Disadvantages of Franchising” New section on “Online and Mobile Retailing” Updated additional resources New “Key Terms and Concepts”: online retailing, mobile retailing, multichannel marketing Chapter 11: Pricing Strategy • Added a new discussion of the Internet as an external influence on pricing decisions • A new Marketing Insight, “Ten Tips for Managing Pricing Strategy” Chapter 12: The Marketing of Services • The chapter has been significantly revised and has been shortened for this edition • A new section on the importance of all the elements of the marketing mix in the marketing of services has been added • Updated additional resources Chapter 13: Global Marketing • Marketing Insight 13-1 has been updated with the latest data on selected U.S. companies and their international sales • The section on cultural misunderstanding as a problem in foreign markets has been replaced with an entirely new section x Preface • Marketing Insight 13-3 has been replaced with a new Marketing Insight which focuses on ways to learn about new cultures • Updated additional resources Section II: Analyzing Marketing Problems and Cases • New Marketing Insight, “Objectives of Case Analysis” • Revised and updated discussion of SWOT analysis • Updated additional resources Section III: Financial Analysis for Marketing Decisions • Updated dates and additional resources Section IV: Developing Marketing Plans • Updated dates and additional resources STUDENT SUPPORT Knowing that our book is used for a variety of course levels, programs, and students, we have assembled several elements that we believe will support students for whatever purpose they use our book. Key Terms and Concepts New to the previous edition, we decided to add a section of key terms and concepts at the conclusion of each chapter. There was much debate as to where they should be placed in the book. We decided to place them at the end of the chapter in which they appear. In this way, they are more visible to students than as an appendix at the end of the book. More than a glossary, it also presents key concepts covered in the chapter. Analyzing Marketing Problems and Cases Section II presents a very practical and comprehensive framework for analyzing, preparing, and presenting case analyses. It includes discussions of what a case is, preparing for the class discussion and written analysis, pitfalls to avoid in case analysis, and preparing to do an oral presentation. It has been praised by both instructors and students. For courses utilizing marketing problems and cases, we encourage students to read this guide before discussing a problem or case. Thus, it could have been placed at the beginning of the book, but because it is often referred to throughout the semester, we have placed it after the text chapters. And for those courses that do not utilize cases, the book may be used without reference to this section. Financial Analysis for Marketing Decisions It is absolutely critical for marketing students to understand and appreciate the fact that the ultimate objectives of marketing are usually expressed in financial terms. Section III enables students to assess a company’s financial position. It presents important financial calculations that are useful in evaluating the financial position of a firm and the financial impact of various decisions and strategies. Included are discussions of breakeven analysis, net present value, and ratio analysis. Developing Marketing Plans Given the purpose of this book and the needs of users, Section IV enables students to develop practical planning skills so they are able to construct a quality marketing plan for Preface xi any product or service. It provides a complete format for structuring and presenting one, including specific questions to ask in competitive analysis, the development of well-stated objectives, analyzing customers, and implementation and control. As with Section II, we know that this section has become a valuable take-away resource for many students long after their course has been completed. A Value-Added Website We encourage students to view the student section of the Online Learning Center (OLC) at website www.mhhe.com/peterdonnelly14e, which contains a number of useful aids for facilitating learning and supporting student achievement. We believe you will find it a useful resource. INSTRUCTOR SUPPORT The Preface has been used as a resource in college courses and professional development programs that require an overview of the critical “need-to-know” aspects of marketing management and marketing strategy development. It has been used: • As the primary introductory text at the undergraduate level. • At both the undergraduate and MBA level, where several AACSB core curriculum courses are team-taught as one multidisciplinary 9- to 12-hour course. • At the advanced undergraduate and MBA level where it is used as the content foundation in courses that utilize marketing cases. • In short courses and executive development programs. The instructor section of www.mhhe.com/peterdonnelly14e includes an instructor’s manual and other support material. It includes two expanded supplements. They were developed in response to instructors’ requests. We offer a test bank of nearly 1,300 multiple-choice, true-false, and brief essay questions. It is available in both print and EZ Test Online. We also offer Power Point slides that highlight key text material. Your McGraw-Hill representative can also assist in the delivery of any additional instructor support material. Acknowledgments Our book is based on the works of many academic researchers and marketing practitioners. We want to thank those individuals who contributed their ideas to develop the field of marketing throughout the years. Indeed, our book would not be possible without their contributions. We would also like to thank our teachers, colleagues, and students for their many contributions to our education. We would also like to publicly acknowledge those individuals who served as reviewers of this and previous editions. We appreciate their advice and counsel and have done our best to reflect their insightful comments. xii Roger D. Absmire Sam Houston State University Anna Andriasova University of Maryland University College Catherine Axinn Syracuse University Mike Ballif University of Utah Andrew Bergstein Pennsylvania State University Edward Bond Bradley University Donald Brady Millersville University Tim Carlson Judson University Glenn Chappell Meridith College Newell Chiesl Indiana State University Reid P. Claxton East Carolina University Larry Crowson University of Central Florida Mike Dailey University of Texas, Arlington Linda M. Delene Western Michigan University Gerard DiBartolo Salisbury University Casey Donoho Northern Arizona University James A. Eckert Western Michigan University Matthew Elbeck Troy University Dothan Karen A. Evans Herkimer County Community College R. E. Evans University of Oklahoma Lawrence Feick University of Pittsburgh Robert Finney California State University, Hayward Stephen Goldberg Fordham University David Good Grand Valley State University David Griffith University of Oklahoma Perry Haan Tiffin University Lawrence Hamer DePaul University Harry Harmon Central Missouri Jack Healey Golden State University Betty Jean Hebel Madonna University Catherine Holderness University of North Carolina–Greensboro JoAnne S. Hooper Western Carolina University David Horne Wayne State University Nasim Z. Hosein Northwood University Nicole Howatt UCF Fred Hughes Faulkner University Anupam Jaju GMU Chris Joiner George Mason University Benoy Joseph Cleveland State University Sol Klein Northeastern University Robert Brock Lawes Chaminade University of Honolulu Eunkyu Lee Syracuse University Tina Lowrey University of Texas at San Antonio Franklyn Manu Morgan State University Edward J. Mayo Western Michigan University Edward M. Mazze University of Rhode Island Donald J. Messmer College of William & Mary Albert Milhomme Texas State University Chip Miller Drake University David L. Moore LeMoyne College Johannah Jones Nolan University of Alabama, Birmingham R. Stephen Parker Southwest Missouri State University Joan Phillips University of Notre Dame Thomas Powers University of Alabama at Birmingham Debu Purohit Duke University John Rayburn University of Tennessee Martha Reeves Duke Gary K. Rhoads Brigham Young University Lee Richardson University of Baltimore Henry Rodkin DePaul University Ritesh Saini George Mason University Matthew H. Sauber Eastern Michigan University Alan Sawyer University of Florida Ronald L. Schill Brigham Young University Mark Spriggs University of St. Thomas Vernon R. Stauble California State Polytechnic University David X. Swenson College of St. Scholastica Ann Marie Thompson Northern Illinois University John R. Thompson Memphis State University Gordon Urquhart Cornell College Sean Valentine University of Wyoming Ana Valenzuela Baruch College, CUNY Stacy Vollmers University of St. Thomas Jacquelyn Warwick Andrews University Kevin Webb Drexel University Kathleen R. Whitney Central Michigan University J. B. Wilkinson University of Akron Dale Wilson Michigan State University It is always easy to work with professionals. That is why working with the professionals at McGraw-Hill is always enjoyable for us. Sankha Basu, publisher, and Jane Mohr, project manager, support what we do and we are very grateful. Thank you Heather Darr, development editor, and welcome to our team. We also wish to acknowledge Francois Ortalo-Magne, dean of the School of Business at the University of Wisconsin, and David Blackwell, dean of the Gatton College of Business and Economics at the University of Kentucky, who support what we do. J. Paul Peter James H. Donnelly, Jr. Contents SECTION I Preparation of the Research Report 40 Limitations of the Research Process 40 ESSENTIALS OF MARKETING MANAGEMENT 1 Marketing Information Systems Summary 43 PART A INTRODUCTION Chapter 3 Consumer Behavior 3 Chapter 1 Strategic Planning and the Marketing Management Process 4 The Marketing Concept 4 What Is Marketing? 5 What Is Strategic Planning? 6 Social Influences on Consumer Decision Making 46 Culture and Subculture 46 Social Class 47 Reference Groups and Families 16 20 The Strategic Plan, the Marketing Plan, and Other Functional Area Plans 21 Marketing’s Role in Cross-Functional Strategic Planning 21 Summary 22 Appendix Portfolio Models 27 Situational Influences on Consumer Decision Making 51 Psychological Influences on Consumer Decision Making 51 Product Knowledge 51 Product Involvement 52 Consumer Decision Making PART B MARKETING INFORMATION, RESEARCH, AND UNDERSTANDING THE TARGET MARKET 31 Chapter 2 Marketing Research: Process and Systems for Decision Making 32 xiv 52 Need Recognition 53 Alternative Search 54 Alternative Evaluation 55 Purchase Decision 55 Postpurchase Evaluation 56 Summary Purpose of the Research 33 Plan of the Research 34 Performance of the Research 37 Processing of Research Data 39 48 Product Influences 48 Price Influences 48 Promotion Influences 49 Place Influences 49 6 Situation Analysis 16 Marketing Planning 19 Implementation and Control of the Marketing Plan Marketing Information Systems and Marketing Research 21 The Role of Marketing Research 32 The Marketing Research Process 33 45 Marketing Influences on Consumer Decision Making 48 Strategic Planning and Marketing Management The Strategic Planning Process 7 The Complete Strategic Plan 16 The Marketing Management Process 42 58 Chapter 4 Business, Government, and Institutional Buying 60 Categories of Organizational Buyers 60 Producers 60 Intermediaries 61 Government Agencies 61 Other Institutions 61 The Organizational Buying Process 61 Purchase-Type Influences on Organizational Buying 62 Straight Rebuy 62 Modified Rebuy 62 New Task Purchase 62 Contents Structural Influences on Organizational Buying 63 Purchasing Roles 63 Organization-Specific Factors 64 Purchasing Policies and Procedures 65 Behavioral Influences on Organizational Buying Personal Motivations 65 Role Perceptions 66 Chapter 7 New Product Planning and Development 105 New Product Strategy 106 New Product Planning and Development Process 108 Idea Generation 108 Idea Screening 110 Project Planning 111 Product Development 112 Test Marketing 112 Commercialization 113 The Importance of Time 113 Stages in the Organizational Buying Process 68 Organizational Need 68 Vendor Analysis 68 Purchase Activities 69 Postpurchase Evaluation 70 Summary 65 xv 70 Some Important New Product Decisions 114 Chapter 5 Market Segmentation 72 Delineate the Firm’s Current Situation 72 Determine Consumer Needs and Wants 73 Divide Markets on Relevant Dimensions A Priori versus Post Hoc Segmentation 74 Relevance of Segmentation Dimensions 75 Bases for Segmentation 75 Develop Product Positioning 81 Decide Segmentation Strategy 82 Design Marketing Mix Strategy 84 Summary 84 THE MARKETING MIX Basic Issues in Product Management 86 86 Product Definition 86 Product Classification 87 Product Quality and Value 88 Product Mix and Product Line 89 Branding and Brand Equity 90 Packaging 96 The Product Audit Chapter 8 Integrated Marketing Communications 120 121 The Promotion Mix 121 Integrated Marketing Communications 122 Advertising: Planning and Strategy 124 Objectives of Advertising Advertising Decisions 124 126 132 Push versus Pull Marketing 132 Trade Sales Promotions 133 Consumer Promotions 133 What Sales Promotion Can and Can’t Do 134 99 101 Organizing for Product Management Summary 103 73 Sales Promotion 100 Deletions 100 Product Improvement 117 The Expenditure Question 126 The Allocation Question 127 97 Product Adoption and Diffusion Need for Research 118 Summary Create Awareness 120 Build Positive Images 120 Identify Prospects 120 Build Channel Relationships Retain Customers 121 85 Chapter 6 Product and Brand Strategy Causes of New Product Failure 116 Strategic Goals of Marketing Communication 120 PART C Product Life Cycle Quality Level 114 Product Features 115 Product Design 116 Product Safety 116 101 Public Relations 135 Direct Marketing 136 Summary 137 Appendix Major Federal Agencies Involved in Control of Advertising 139 xvi Contents Chapter 9 Personal Selling, Relationship Building, and Sales Management 140 Importance of Personal Selling The Sales Process 141 140 Objectives of the Sales Force 141 The Sales Relationship-Building Process 142 People Who Support the Sales Force 146 Managing the Sales and Relationship-Building Process 147 The Sales Management Task 148 Controlling the Sales Force 149 Motivating and Compensating Performance 152 156 The Need for Marketing Intermediaries 156 Classification of Marketing Intermediaries and Functions 156 Channels of Distribution 158 Selecting Channels of Distribution 159 181 PART D Chapter 12 The Marketing of Services 184 Relationship Marketing in Channels Vertical Marketing Systems 162 Wholesaling 164 Store and Nonstore Retailing 162 190 Limited View of Marketing 194 Limited Competition 194 Noncreative Management 195 No Obsolescence 195 165 Store Retailing 166 Nonstore Retailing 167 Implications for Service Marketers Summary 197 Summary 170 Chapter 13 Global Marketing 172 172 Demographic Factors 172 Psychological Factors 172 Price Elasticity 174 Supply Influences on Pricing Decisions Pricing Objectives 174 Cost Considerations in Pricing 174 Product Considerations in Pricing 176 Environmental Influences on Pricing Decisions 177 178 188 Overcoming the Obstacles in Service Marketing 194 162 Demand Influences on Pricing Decisions 186 Intangibility 186 Inseparability 187 Perishability and Fluctuating Demand Client Relationship 188 Customer Effort 189 Uniformity 190 Providing Quality Services 183 Customer Satisfaction Measurement 192 The Importance of Internal Marketing 192 159 Managing a Channel of Distribution The Internet 177 Competition 177 Government Regulations Summary Important Characteristics of Services Chapter 10 Distribution Strategy Chapter 11 Pricing Strategy 178 Set Pricing Objectives 179 Evaluate Product–Price Relationships 179 Estimate Costs and Other Price Limitations 180 Analyze Profit Potential 181 Set Initial Price Structure 181 Change Price as Needed 181 MARKETING IN SPECIAL FIELDS Summary 154 Specific Considerations A General Pricing Model 196 199 The Competitive Advantage of Nations 200 Organizing for Global Marketing 201 Problems with Entering Foreign Markets 201 Organizing the Multinational Company 204 174 Programming for Global Marketing 206 Global Marketing Research 206 Global Product Strategy 209 Global Distribution Strategy 209 Global Pricing Strategy 210 Global Advertising and Sales Promotion Strategy 210 Entry and Growth Strategies for Global Marketing 211 Summary 214 Contents xvii SECTION II SECTION IV ANALYZING MARKETING PROBLEMS AND CASES 215 DEVELOPING MARKETING PLANS 239 A Case Analysis Framework 216 1. Analyze and Record the Current Situation 217 2. Analyze and Record Problems and Their Core Elements 221 3. Formulate, Evaluate, and Record Alternative Courses of Action 222 4. Select and Record the Chosen Alternative and Implementation Details 223 Pitfalls to Avoid in Case Analysis 223 Communicating Case Analyses 226 228 Index FINANCIAL ANALYSIS FOR MARKETING DECISIONS 229 Financial Analysis 230 Breakeven Analysis 230 Net Present Value Analysis Ratio Analysis 234 Summary 238 249 Chapter Notes SECTION III 232 240 Title Page 241 Executive Summary 241 Table of Contents 242 Introduction 242 Situational Analysis 242 Marketing Planning 242 Implementation and Control of the Marketing Plan 244 Summary 246 Appendix—Financial Analysis 246 References 249 Summary The Written Report 226 The Oral Presentation 228 Summary A Marketing Plan Framework 256 251 This page intentionally left blank Essentials of Marketing Management Essentials of Marketing Management Section I Section I This page intentionally left blank A Part Introduction Essentials of Marketing Management Strategic Planning and the Marketing Management Process Section I 1 Chapter 1 Strategic Planning and the Marketing Management Process The purpose of this introductory chapter is to present the marketing management process and outline what marketing managers must manage if they are to be effective. In doing so, it will also present a framework around which the remaining chapters are organized. Our first task is to review the organizational philosophy known as the marketing concept, since it underlies much of the thinking presented in this book. The remainder of this chapter will focus on the process of strategic planning and its relationship to the process of marketing planning. THE MARKETING CONCEPT Part A Simply stated, the marketing concept means that an organization should seek to make a profit by serving the needs of customer groups. The concept is very straightforward and has a great deal of commonsense validity. Perhaps this is why it is often misunderstood, forgotten, or overlooked. The purpose of the marketing concept is to rivet the attention of marketing managers on serving broad classes of customer needs (customer orientation), rather than on the firm’s current products (production orientation) or on devising methods to attract customers to current products (selling orientation). Thus, effective marketing starts with the recognition of customer needs and then works backward to devise products and services to satisfy these needs. In this way, marketing managers can satisfy customers more efficiently in the present and anticipate changes in customer needs more accurately in the future. This means that organizations should focus on building long-term customer relationships in which the initial sale is viewed as a beginning step in the process, not as an end goal. As a result, the customer will be more satisfied and the firm will be more profitable. The principal task of the marketing function operating under the marketing concept is not to manipulate customers to do .what suits the interests of the firm, but rather to find effective and efficient means of making the business do what suits the interests of customers. This is not to say that all firms practice marketing in this way. Clearly, many firms still emphasize only production and sales. However, effective marketing, as defined in this text, requires that consumer needs come first in organizational decision making. Introduction 4 MARKETING INSIGHT Some Guidelines for Implementing the Marketing Concept 1–1 1. Create customer focus throughout the business. 2. Listen to the customer. 3. Define and nurture your distinctive competence, that is, what your organization does well, better than competitors. 4. Define marketing as market intelligence. 5. Target customers precisely. 6. Manage for profitability, not sales volume. 7. Make customer value the guiding star. 8. Let customers define quality. 9. Measure and manage customer expectations. 10. Build customer relationships and loyalty. 11. Define the business as a service business. 12. Commit to continuous improvement and innovation. 13. Manage the culture of your organization along with strategy and structure. 14. Grow with strategic partners and alliances. 15. Destroy marketing bureaucracy. Source: For a very early discussion of the marketing concept, see Robert L. King, “The Marketing Concept: Fact or Intelligent Platitude,” The Marketing Concept in Action, Proceedings of the 47th National Conference (Chicago: American Marketing Association, 1964), p. 657. Also see Frederick E. Webster Jr., “Defining the New Marketing Concept,” Marketing Management 2, no. 4 (1994) pp. 22–31; William O. Bearden, Thomas N. Ingram, and Raymond W. LaForge, Marketing: Principles and Perspectives, 5th ed. (Burr Ridge, IL: McGraw-Hill/Irwin, 2007), p. 9; and William D. Perreault Jr., Joseph P. Cannon, and E. Jerome McCarthey, Basic Marketing: A Managerial Approach, 19th ed. (Burr Ridge, IL: McGraw-Hill Education, 2014), pp. 19–26. One qualification to this statement deals with the question of a conflict between consumer wants and societal needs and wants. For example, if society deems clean air and water as necessary for survival, this need may well take precedence over a consumer’s want for goods and services that pollute the environment. WHAT IS MARKETING? Everyone reading this book has been a customer for most of his or her life. Last evening you stopped at a local supermarket to graze at the salad bar, pick up some bottled water and a bag of Fritos corn chips. While you were there, you snapped a $1.00 coupon for a new flavor salad dressing out of a dispenser and tasted some new breakfast potatoes being cooked in the back of the store. As you sat down at home to eat your salad, you answered the phone and someone suggested that you need to have your carpets cleaned. Later on in the evening you saw TV commercials for tires, soft drinks, athletic shoes, and the dangers of smoking and drinking during pregnancy. Today when you enrolled in a marketing course, you found that the instructor has decided that you must purchase this book. A friend has already purchased the book on the Internet. All of these activities involve marketing. And each of us knows something about marketing because it has been a part of our life since we had our first dollar to spend. Since we are all involved in marketing, it may seem strange that one of the persistent problems in the field has been its definition. The American Marketing Association defines marketing as “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.”1 This definition takes into account all parties involved in the marketing effort: members of the producing organization, resellers of goods and services, and customers or clients. While the broadness of the definition allows the inclusion of nonbusiness 5 6 Part A Introduction FIGURE 1.1 Major Types of Marketing Type Description Example Product Marketing designed to create exchange for tangible products. Marketing designed to create exchanges for intangible products. Marketing designed to create favorable actions toward persons. Marketing designed to attract people to places. Strategies to sell Gateway computers. Strategies by Allstate to sell insurance. Strategies to elect a political candidate. Strategies to get people to vacation in national or state parks. Strategies to get pregnant women not to drink alcohol. Service Person Place Cause Organization Marketing designed to create support for ideas, causes, or issues or to get people to change undesirable behaviors. Marketing designed to attract donors, members, participants, or volunteers. Strategies designed to attract blood donors. exchange processes, the primary emphasis in this text is on marketing in the business environment. However, this emphasis is not meant to imply that marketing concepts, principles, and techniques cannot be fruitfully employed in other areas of exchange as is clearly illustrated in Figure 1.1. WHAT IS STRATEGIC PLANNING? Before a production manager, marketing manager, and personnel manager can develop plans for their individual departments, some larger plan or blueprint for the entire organization should exist. Otherwise, on what would the individual departmental plans be based? In other words, there is a larger context for planning activities. Let us assume that we are dealing with a large business organization that has several business divisions and several product lines within each division (e.g., General Electric, Altria). Before individual divisions or departments can implement any marketing planning, a plan has to be developed for the entire organization.2 This means that senior managers must look toward the future and evaluate their ability to shape their organization’s destiny in the years and decades to come. The output of this process is objectives and strategies designed to give the organization a chance to compete effectively in the future. The objectives and strategies established at the top level provide the context for planning in each of the divisions and departments by divisional and departmental managers. Strategic Planning and Marketing Management Some of the most successful business organizations are here today because many years ago they offered the right product at the right time to a rapidly growing market. The same can also be said for nonprofit and governmental organizations. Many of the critical decisions of the past were made without the benefit of strategic thinking or planning. Whether these decisions were based on wisdom or were just luck is not important; they worked for these organizations. However, a worse fate befell countless other organizations. More than three-quarters of the 100 largest U.S. corporations of 70 years ago have fallen from the list. These corporations at one time dominated their markets, controlled vast resources, and had the best-trained workers. In the end, they all made the same critical mistake. Their managements failed to recognize that business strategies need to reflect MARKETING INSIGHT 1. 2. 3. 4. 5. 6. The Long-Term Value of Loyal Customers 1–2 It costs a great deal more to acquire a new customer than to keep an old one. Loyal customers buy more from your firm over time. The longer you keep a customer, the more profitable they become over time. It costs less to service loyal customers than new customers. Loyal customers are often excellent referrals for new business. Loyal customers are often willing to pay more for the quality and value they desire. Source: One of the earliest works on the value of the loyal customer was Frederick F. Reichheld, The Loyalty Effect, BOSTON: HBS Press, 1996. Also see Roland T. Rust, Katherine N. Lemon, and Valerie A. Zeithaml, “Return on Marketing: Using Customer Equity to Focus Marketing Strategies,“ Journal of Marketing, January 2004, pp. 76–89; William O. Bearden, Thomas N. Ingram, and Raymond W. LaForge, Marketing: Principles and Perspectives, 5th ed. (Burr Ridge, IL: McGraw-Hill/Irwin, 2007), p. 8; and W. D. Perreault Jr., J. P. Cannon, and E. Jerome McCarthy, Basic Marketing: A Marketing Strategy Planning Approach, 19th ed. (Burr Ridge, IL: McGraw-Hill/Irwin, 2013), pp. 42–43. changing environments and emphasis must be placed on developing business systems that allow for continuous improvement. Instead, they attempted to carry on business as usual. Present-day managers are increasingly recognizing that wisdom and innovation alone are no longer sufficient to guide the destinies of organizations, both large and small. These same managers also realize that the true mission of the organization is to provide value for three key constituencies: customers, employees, and investors. Without this type of outlook, no one, including shareholders, will profit in the long run. Strategic planning includes all the activities that lead to the development of a clear organizational mission, organizational objectives, and appropriate strategies to achieve the objectives for the entire organization. The form of the process itself has come under criticism in some quarters for being too structured; however, strategic planning, if performed successfully, plays a key role in achieving an equilibrium between the short and the long term by balancing acceptable financial performance with preparation for inevitable changes in markets, technology, and competition, as well as in economic and political arenas. Managing principally for current cash flows, market share gains, and earnings trends can mortgage the firm’s future. An intense focus on the near term can produce an aversion to risk that dooms a business to stagnation. Conversely, an overemphasis on the long run is just as inappropriate. Companies that overextend themselves betting on the future may penalize short-term profitability and other operating results to such an extent that the company is vulnerable to takeover and other threatening actions. The strategic planning process is depicted in Figure 1.2. In the strategic planning process, the organization gathers information about the changing elements of its environment. Managers from all functional areas in the organization assist in this information-gathering process. This information is useful in aiding the organization to adapt better to these changes through the process of strategic planning. The strategic plan(s)3 and supporting plan are then implemented in the environment. The end results of this implementation are fed back as new information so that continuous adaptation and improvement can take place. The Strategic Planning Process The output of the strategic planning process is the development of a strategic plan. Figure 1.2 indicates four components of a strategic plan: mission, objectives, strategies, and portfolio plan. Let us carefully examine each one. Organizational Mission The organization’s environment provides the resources that sustain the organization, whether it is a business, a college or university, or a government agency. In exchange 7 8 Part A Introduction FIGURE 1.2 The Strategic Planning Process The environment Cooperative Competitive Economic Social Political Legal The organization's strategic plan Information Organizational mission Organizational objectives Organizational strategies Organizational portfolio plan Implementation for these resources, the organization must supply the environment with quality goods and services at an acceptable price. In other words, every organization exists to accomplish something in the larger environment and that purpose, vision, or mission usually is clear at the organization’s inception. As time passes, however, the organization expands, and the environment and managerial personnel change. As a result, one or more things are likely to occur. First, the organization’s original purpose may become irrelevant as the organization expands into new products, new markets, and even new industries. For example, Levi Strauss began as a manufacturer of work clothes. Second, the original mission may remain relevant, but managers begin to lose interest in it. Finally, changes in the environment may make the original mission inappropriate, as occurred with the March of Dimes when a cure was found for polio. The result of any or all three of these conditions is a “drifting” organization, without a clear mission, vision, or purpose to guide critical decisions. When this occurs, management must search for a purpose or emphatically restate and reinforce the original purpose. The mission statement, or purpose, of an organization is the description of its reason for existence. It is the long-run vision of what the organization strives to be, the unique aim that differentiates the organization from similar ones and the means by which this differentiation will take place. In essence, the mission statement defines the direction in which the organization is heading and how it will succeed in reaching its desired goal. While some argue that vision and mission statements differ in their purpose, the perspective we will take is that both reflect the organization’s attempt to guide behavior, create a culture, and inspire commitment. However, it is more important that the mission statement comes from the heart and is practical, easy to identify with, and easy to remember so that it will provide direction and significance to all members of the organization regardless of their organizational level. The basic questions that must be answered when an organization decides to examine and restate its mission are, What is our business? Who are our customers? What do customers value? and What is our business? The answers are, in a sense, the assumptions on which the MARKETING INSIGHT Some Actual Mission Statements Organization Large pharmaceutical firm Community bank Skin care products Hotel chain Mid-size bank 1–3 Mission We will become the world’s most valued company to patients, customers, colleagues, investors, business partners, and the communities where we work and live. To help citizens successfully achieve and celebrate important life events with education, information, products, and services. We will provide luxury skin-care products with therapeutic qualities that make them worth their premium price. Grow a worldwide lodging business using total-quality-management (TQM) principles to continuously improve preference and profitability. Our commitment is that every guest leaves satisfied. We will become the best bank in the state for medium-size businesses by 2017. organization is being run and from which future decisions will evolve. While such questions may seem simplistic, they are such difficult and critical ones that the major responsibility for answering them must lie with top management. In fact, the mission statement remains the most widely used management tool in business today. In developing a statement of mission, management must take into account three key elements: the organization’s history, its distinctive competencies, and its environment.4 1. The organization’s history. Every organization—large or small, profit or nonprofit— has a history of objectives, accomplishments, mistakes, and policies. In formulating a mission, the critical characteristics and events of the past must be considered. 2. The organization’s distinctive competencies. While there are many things an organization may be able to do, it should seek to do what it can do best. Distinctive competencies are things that an organization does well—so well in fact that they give it an advantage over similar organizations. For Honeywell, it’s their ability to design, manufacture, and distribute a superior line of thermostats. Similarly, Procter & Gamble’s distinctive competency is its knowledge of the market for low-priced, repetitively purchased consumer products. No matter how appealing an opportunity may be, to gain advantage over competitors, the organization must formulate strategy based on distinctive competencies. 3. The organization’s environment. The organization’s environment dictates the opportunities, constraints, and threats that must be identified before a mission statement is developed. For example, managers in any industry that is affected by Internet technology breakthroughs should continually be asking, How will the changes in technology affect my customers’ behavior and the means by which we need to conduct our business? However, it is extremely difficult to write a useful and effective mission statement. It is not uncommon for an organization to spend one or two years developing a useful mission statement. When completed, an effective mission statement will be focused on markets rather than products, achievable, motivating, and specific.5 Focused on Markets Rather Than Products The customers or clients of an organization are critical in determining its mission. Traditionally, many organizations defined their business in terms of what they made (“our business is glass”), and in many cases they named the organization for the product or service (e.g., American Tobacco, Hormel Meats, National Cash Register, Harbor View Savings and Loan Association). Many of these organizations have found that, when products and technologies become obsolete, their mission is no longer relevant and the name of the organization may no longer describe what it does. Thus, a more enduring way of defining the mission is needed. In recent years, 9 MARKETING INSIGHT Common Shortcomings in Mission Statements 1–4 1. Incomplete—not specific as to where the company is headed and what kind of company management is trying to create. 2. Vague—does not provide direction to decision makers when faced with product/market choices. 3. Not motivational—does not provide a sense of purpose or commitment to something bigger than the numbers. 4. Not distinctive—not specific to our company. 5. Too reliant on superlatives—too many superlatives such as #1, recognized leader, most successful. 6. Too generic—does not specify the business or industry to which it applies. 7. Too broad—does not rule out any opportunity management might wish to pursue. Source: Adapted from Arthur A. Thompson Jr. Margaret A. Peteraf, John E. Gamble, and A. J. Strickland III, Crafting and Executing Strategy, 19th ed. (Burr Ridge, IL: McGraw-Hill/Irwin, 2014), p. 22. Examine the mission statements in Marketing Insight 1–3. Do any of these shortcomings apply to them? therefore, a key feature of mission statements has been an external rather than internal focus. In other words, the mission statement should focus on the broad class of needs that the organization is seeking to satisfy (external focus), not on the physical product or service that the organization is offering at present (internal focus). These market-driven firms stand out in their ability to continuously anticipate market opportunities and respond before their competitors. Peter Drucker has clearly stated this principle: A business is not defined by the company’s name, statutes, or articles of incorporation. It is defined by the want the customer satisfies when he buys a product or service. To satisfy the customer is the mission and purpose of every business. The question “What is our business?” can, therefore, be answered only by looking at the business from the outside, from the point of view of customer and market.6 While Drucker was referring to business organizations, the same necessity exists for both nonprofit and governmental organizations. That necessity is to state the mission in terms of serving a particular group of clients or customers and meeting a particular class of need. Achievable While the mission statement should stretch the organization toward more effective performance, it should, at the same time, be realistic and achievable. In other words, it should open a vision of new opportunities but should not lead the organization into unrealistic ventures far beyond its competencies. Motivational One of the side (but very important) benefits of a well-defined mission is the guidance it provides employees and managers working in geographically dispersed units and on independent tasks. It provides a shared sense of purpose outside the various activities taking place within the organization. Therefore, such end results as sales, patients cared for, students graduated, and reduction in violent crimes can then be viewed as the result of careful pursuit and accomplishment of the mission and not as the mission itself. Specific As we mentioned earlier, public relations should not be the primary purpose of a statement of mission. It must be specific to provide direction and guidelines to management when they are choosing between alternative courses of action. In other words, “to produce the highest-quality products at the lowest possible cost” sounds very good, but it does not provide direction for management. 10 MARKETING INSIGHT Potential Sources of Cross-Functional 1–5 Conflict for Marketers Functions Research and development Production/operations Finance Accounting Human resources What They May Want to Deliver What Marketers May Want Them to Deliver Basic research projects Product features Few projects Long production runs Standardized products No model changes Long lead times Standard orders No new products Rigid budgets Budgets based on return on investment Low sales commissions Standardized billing Strict payment terms Strict credit standards Trainable employees Low salaries Products that deliver customer value Customer benefits Many new products Short production runs Customized products Frequent model changes Short lead times Customer orders Many new products Flexible budgets Budgets based on need to increase sales High sales commissions Custom billing Flexible payment terms Flexible credit standards Skilled employees High salaries Organizational Objectives Organizational objectives are the end points of an organization’s mission and are what it seeks through the ongoing, long-run operations of the organization. The organizational mission is distilled into a finer set of specific and achievable organizational objectives. These objectives must be specific, measurable, action commitments by which the mission of the organization is to be achieved. As with the statement of mission, organizational objectives are more than good intentions. In fact, if formulated properly, they can accomplish the following: 1. They can be converted into specific action. 2. They will provide direction. That is, they can serve as a starting point for more specific and detailed objectives at lower levels in the organization. Each manager will then know how his or her objectives relate to those at higher levels. 3. They can establish long-run priorities for the organization. 4. They can facilitate management control because they serve as standards against which overall organizational performance can be evaluated. Organizational objectives are necessary in all areas that may influence the performance and long-run survival of the organization. As shown in Figure 1.3, objectives can be established in and across many areas of the organization. The list provided in Figure 1.3 is by no means exhaustive. For example, some organizations are specifying the primary objective as the attainment of a specific level of quality, either in the marketing of a product or the providing of a service. These organizations believe that objectives should reflect an organization’s commitment to the customer rather than its own finances. Obviously, during the strategic planning process conflicts are likely to occur between various functional departments in the organization. The important point is that management must translate the 11 12 Part A Introduction FIGURE 1.3 Sample Organizational Objectives (manufacturing firm) Area of Performance Possible Objective 1. Market standing 2. Innovations 3. Productivity 4. Physical and financial resources 5. Profitability 6. Manager performance and responsibility 7. Worker performance and attitude 8. Social responsibility To make our brands number one in their field in terms of market share. To be a leader in introducing new products by spending no less than 7 percent of sales for research and development. To manufacture all products efficiently as measured by the productivity of the workforce. To protect and maintain all resources—equipment, buildings, inventory, and funds. To achieve an annual rate of return on investment of at least 15 percent. To identify critical areas of management depth and succession. To maintain levels of employee satisfaction consistent with our own and similar industries. To respond appropriately whenever possible to societal expectations and environmental needs. organizational mission into specific objectives that support the realization of the mission. The objectives may flow directly from the mission or be considered subordinate necessities for carrying out the mission. As discussed earlier, the objectives are specific, measurable, action commitments on the part of the organization. Organizational Strategies Hopefully, when an organization has formulated its mission and developed its objectives, it knows where it wants to go. The next managerial task is to develop a “grand design” to get there. This grand design constitutes the organizational strategies. Strategy involves the choice of major directions the organization will take in pursuing its objectives. Toward this end, it is critical that strategies are consistent with goals and objectives and that top management ensures strategies are implemented effectively. As many as 70 percent of strategic plans fail because the strategies in them are not well defined and, thus, cannot be implemented effectively. What follows is a discussion of various strategies organizations can pursue. We discuss three approaches: (1) strategies based on products and markets, (2) strategies based on competitive advantage, and (3) strategies based on value. Organizational Strategies Based on Products and Markets One means to developing organizational strategies is to focus on the directions the organization can take in order to grow. Figure 1.4, which presents the available strategic choices, is a product–market matrix.7 It indicates that an organization can grow by better managing what it is FIGURE 1.4 Organizational Growth Strategies Products Present Products New Products Present customers Market penetration Product development New customers Market development Diversification Markets MARKETING INSIGHT Three Tests for Organizational Strategies 1–6 1. The Fit Test: How well does the strategy fit the company’s situation? A strategy must have good external fit, which means it will be well matched to industry and competitive conditions, the company’s best market opportunities, and other relevant aspects of its business environment. It also must have a good internal fit, which means it is tailored to the company’s resources and distinctive competencies and be supported by a complementary set of functional capabilities (sales and marketing, production, etc.). 2. The Competitive Advantage Test: Can the strategy help the company achieve a sustainable competitive advantage? Strategies that fail this test are unlikely to produce superior performance for more than a brief period of time. A good strategy should enable the organization to achieve a long-term competitive advantage. 3. The Performance Test: Is the strategy producing good company performance? Critical performance indicators are (a) profitability and financial strength and (b) competitive strength and market standing. Above average performance in these two areas is an indicator of a winning strategy. Source: Adapted from Arthur A. Thompson Jr. Margaret A. Peteraf, John E. Gamble, and A. J. Strickland III, Crafting and Executing Strategy, 19th ed. (Burr Ridge, IL: McGraw-Hill/Irwin, 2014), p. 12. presently doing or by finding new things to do. In choosing one or both of these paths, it must also decide whether to concentrate on present customers or to seek new ones. Thus, according to Figure 1.4, there are only four paths an organization can take in order to grow. Market Penetration Strategies These strategies focus primarily on increasing the sale of present products to present customers. For example: • Encouraging present customers to use more of the product: “Orange Juice Isn’t Just for Breakfast Anymore.” • Encouraging present customers to purchase more of the product: multiple packages of Pringles, instant winner sweepstakes at a fast-food restaurant. • Directing programs at current participants: A university directs a fund-raising program at those graduates who already give the most money. Tactics used to implement a market penetration strategy might include price reductions, advertising that stresses the many benefits of the product (e.g., “Milk Is a Natural”), packaging the product in different-sized packages, or making it available at more locations. Other functional areas of the business could also be involved in implementing the strategy in addition to marketing. A production plan might be developed to produce the product more efficiently. This plan might include increased production runs, the substitution of preassembled components for individual product parts, or the automation of a process that previously was performed manually. Market Development Strategies Pursuing growth through market development, an organization would seek to find new customers for its present products. For example: • Arm & Hammer continues to seek new uses for its baking soda. • McDonald’s continually seeks expansion into overseas markets. • As the consumption of salt declined, the book 101 Things You Can Do with Salt Besides Eat It appeared. 13 14 Part A Introduction Market development strategies involve much, much more than simply getting the product to a new market. Before deciding on marketing techniques such as advertising and packaging, companies often find they must establish a clear position in the market, sometimes spending large sums of money simply to educate consumers as to why they should consider buying the product. Product Development Strategies Selecting one of the remaining two strategies means the organization will seek new things to do. With this particular strategy, the new products developed would be directed primarily to present customers. For example: • Offering a different version of an existing product: mini-Oreos, Ritz with cheese. • Offering a new and improved version of their product: Gillette’s latest improvement in shaving technology. • Offering a new way to use an existing product: Vaseline’s Lip Therapy. Diversification This strategy can lead the organization into entirely new and even unrelated businesses. It involves seeking new products (often through acquisitions) for customers not currently being served. For example: • Altria, originally a manufacturer of cigarettes, is widely diversified in financial services, Post cereals, Sealtest dairy, and Kraft cheese, among others. • Brown Foreman Distillers acquired Hartmann Luggage, and Sara Lee acquired Coach Leather Products. • Some universities are establishing corporations to find commercial uses for faculty research. Organizational Strategies Based on Competitive Advantage Michael Porter developed a model for formulating organizational strategy that is applicable across a wide variety of industries.8 The focus of the model is on devising means to gain competitive advantage. Competitive advantage is an ability to outperform competitors in providing something that the market values. Porter suggests that firms should first analyze their industry and then develop either a cost leadership strategy or a strategy based on differentiation. These general strategies can be used on marketwide bases or in a niche (segment) within the total market. Using a cost leadership strategy, a firm would focus on being the low-cost company in its industry. They would stress efficiency and offer a standard, no-frills product. They could achieve this through efficiencies in production, product design, manufacturing, distribution, technology, or some other means. The important point is that to succeed, the organization must continually strive to be the cost leader in the industry or market segment it competes in. It must also offer products or services that are acceptable to customers when compared to the competition. Walmart, Southwest Airlines, and Timex Group Ltd. are companies that have succeeded in using a cost leadership strategy. Using a strategy based on differentiation, a firm seeks to be unique in its industry or market segment along particular dimensions that the customers value. These dimensions might pertain to design, quality, service, variety of offerings, brand name, or some other factor. The important point is that because of uniqueness of the product or service along one or more of these dimensions, the firm can charge a premium price. L.L.Bean, Rolex, CocaCola, and Microsoft are companies that have succeeded using a differentiation strategy. Organizational Strategies Based on Value As competition increases, the concept of “customer value” has become critical for marketers as well as customers. It can be thought of as an extension of the marketing concept philosophy that focuses on developing and delivering superior value to customers as a way to achieve organizational objectives. Thus, it focuses not only on customer needs, but also on the question, How can we create value for them and still achieve our objectives? Chapter One Strategic Planning and the Marketing Management Process 15 It has become pretty clear that in today’s competitive environment it is unlikely that a firm will succeed by trying to be all things to all people.9 Thus, to succeed firms must seek to build long-term relationships with their customers by offering a unique value that only they can offer. It seems that many firms have succeeded by choosing to deliver superior customer value using one of three value strategies—best price, best product, or best service. Dell Inc., Costco, and Southwest Airlines are among the success stories in offering customers the best price. Rubbermaid, Nike, Starbucks, and Microsoft believe they offer the best products on the market. Airborne Express, Roadway, Cott Corporation, and Lands’ End provide superior customer value by providing outstanding service. Choosing an Appropriate Strategy On what basis does an organization choose one (or all) of its strategies? Of extreme importance are the directions set by the mission statement. Management should select those strategies consistent with its mission and capitalize on the organization’s distinctive competencies that will lead to a sustainable competitive advantage. A sustainable competitive advantage can be based on either the assets or skills of the organization. Technical superiority, low-cost production, customer service/product support, location, financial resources, continuing product innovation, and overall marketing skills are all examples of distinctive competencies that can lead to a sustainable competitive advantage. For example, Honda is known for providing quality automobiles at a reasonable price. Each succeeding generation of Honda automobiles has shown marked quality improvements over previous generations. Likewise, VF Corporation, manufacturer of Wrangler and Lee jeans, has formed “quick response” partnerships with both discounters and department stores to ensure the efficiency of product flow. The key to sustaining a competitive advantage is to continually focus and build on the assets and skills that will lead to long-term performance gains. Organizational Portfolio Plan The final phase of the strategic planning process is the formulation of the organizational portfolio plan. In reality, most organizations at a particular time are a portfolio of businesses, that is, product lines, divisions, and schools. To illustrate, an appliance manufacturer may have several product lines (e.g., televisions, washers and dryers, refrigerators, stereos) as well as two divisions, consumer appliances and industrial appliances. A college or university will have numerous schools (e.g., education, business, law, architecture) and several programs within each school. Some widely diversified organizations such as Altria are in numerous unrelated businesses, such as cigarettes, food products, land development, and industrial paper products. Managing such groups of businesses is made a little easier if resources are plentiful, cash is plentiful, and each is experiencing growth and profits. Unfortunately, providing larger and larger budgets each year to all businesses is seldom feasible. Many are not experiencing growth, and profits and resources (financial and nonfinancial) are becoming more and more scarce. In such a situation, choices must be made, and some method is necessary to help management make the choices. Management must decide which businesses to build, maintain, or eliminate, or which new businesses to add. Indeed, much of the recent activity in corporate restructuring has centered on decisions relating to which groups of businesses management should focus on. Obviously, the first step in this approach is to identify the various divisions, product lines, and so on that can be considered a “business.” When identified, these are referred to as strategic business units (SBUs) and have the following characteristics: • They have a distinct mission. • They have their own competitors. 16 Part A Introduction • They are a single business or collection of related businesses. • They can be planned independently of the other businesses of the total organization. Thus, depending on the type of organization, an SBU could be a single product, product line, or division; a college of business administration; or a state mental health agency. Once the organization has identified and classified all of its SBUs, some method must be established to determine how resources should be allocated among the various SBUs. These methods are known as portfolio models. For those readers interested, the appendix of this chapter presents two of the most popular portfolio models, the Boston Consulting Group model and the General Electric model. The Complete Strategic Plan Figure 1.2 indicates that at this point the strategic planning process is complete, and the organization has a time-phased blueprint that outlines its mission, objectives, and strategies. Completion of the strategic plan facilitates the development of marketing plans for each product, product line, or division of the organization. The marketing plan serves as a subset of the strategic plan in that it allows for detailed planning at a target market level. This important relationship between strategic planning and marketing planning is the subject of the final section of this chapter. THE MARKETING MANAGEMENT PROCESS Marketing management can be defined as “the process of planning and executing the conception, pricing, promotion, and distribution of goods, services, and ideas to create exchanges with target groups that satisfy customer and organizational objectives.”10 It should be noted that this definition is entirely consistent with the marketing concept, since it emphasizes serving target market needs as the key to achieving organizational objectives. The remainder of this section will be devoted to a discussion of the marketing management process according to the model in Figure 1.5. Situation Analysis With a clear understanding of organizational objectives and mission, the marketing manager must then analyze and monitor the position of the firm and, specifically, the marketing department, in terms of its past, present, and future situation. Of course, the future situation is of primary concern. However, analyses of past trends and the current situation are most useful for predicting the future situation. The situation analysis can be divided into six major areas of concern: (1) the cooperative environment, (2) the competitive environment, (3) the economic environment, (4) the social environment, (5) the political environment, and (6) the legal environment. In analyzing each of these environments, the marketing executive must search both for opportunities and for constraints or threats to achieving objectives. Opportunities for profitable marketing often arise from changes in these environments that bring about new sets of needs to be satisfied. Constraints on marketing activities, such as limited supplies of scarce resources, also arise from these environments. The Cooperative Environment The cooperative environment includes all firms and individuals who have a vested interest in the firm’s accomplishing its objectives. Parties of primary interest to the marketing executive in this environment are (1) suppliers, (2) resellers, (3) other departments in the firm, and (4) subdepartments and employees of the marketing department. Opportunities in this environment are primarily related to methods of increasing efficiency. For example, a company might decide to switch from a competitive bid process of obtaining materials to a single source that is located near the company’s plant. Chapter One FIGURE 1.5 Strategic Planning and Marketing Planning The strategic plan Organizational Organizational Organizational Organizational Strategic Planning and the Marketing Management Process 17 mission objectives strategies portfolio plan Marketing information system and marketing research The marketing plan Situation analysis Marketing objectives Target market selection Marketing mix Product strategy Promotion strategy Pricing strategy Distribution strategy Implementation and control Likewise, members of the marketing, engineering, and manufacturing functions may use a teamwork approach to developing new products versus a sequential approach. Constraints consist of such things as unresolved conflicts and shortages of materials. For example, a company manager may believe that a distributor is doing an insufficient job of promoting and selling the product, or a marketing manager may feel that manufacturing is not taking the steps needed to produce a quality product. The Competitive Environment The competitive environment includes primarily other firms in the industry that rival the organization for both resources and sales. Opportunities in this environment include such things as (1) acquiring competing firms; (2) offering demonstrably better value to consumers and attracting them away from competitors; and (3) in some cases, driving competitors out of the industry. For example, one airline purchases another airline, a bank offers depositors a free checking account with no minimum balance requirements, or a grocery chain engages in an everyday low-price strategy that competitors can’t meet. The primary constraints in these environments are the demand stimulation activities of competing firms and the number of consumers who cannot be lured away from competition. The Economic Environment The state of the macroeconomy and changes in it also bring about marketing opportunities and constraints. For example, such factors as high inflation and unemployment levels can limit the size of the market that can afford to purchase a firm’s top-of-the-line product. At the same time, these factors may offer a profitable opportunity to develop rental services for such products or to develop lessexpensive models of the product. In addition, changes in technology can provide significant threats and opportunities. For example, in the communications industry, when technology was developed to a level where it was possible to provide cable television using phone lines, such a system posed a severe threat to the cable industry. MARKETING INSIGHT Key Issues in the Marketing Planning Process That Need to Be Addressed 1–7 Speed of the Process. There is the problem of either being so slow that the process seems to go on forever or so fast that there is an extreme burst of activity to rush out a plan. Amount of Data Collected. Sufficient data are needed to properly estimate customer needs and competitive trends. However, the law of diminishing returns quickly sets in on the data-collection process. Responsibility for Developing the Plan. If planning is delegated to professional planners, valuable line management input may be ignored. If the process is left to line managers, planning may be relegated to secondary status. Structure. Many executives believe the most important part of planning is not the plan itself but the structure of thought about the strategic issues facing the business. However, the structure should not take precedence over the content so that planning becomes merely filling out forms or crunching numbers. Length of the Plan. The length of a marketing plan must be balanced between being so long that both staff and line managers ignore it and so brief that it ignores key details. Frequency of Planning. Too frequent reevaluation of strategies can lead to erratic firm behavior. However, when plans are not revised frequently enough, the business may not adapt quickly enough to environmental changes and thus suffer a deterioration in its competitive position. Number of Alternative Strategies Considered. Discussing too few alternatives raises the likelihood of failure, whereas discussing too many increases the time and cost of the planning effort. Cross-Functional Acceptance. A common mistake is to view the plan as the proprietary possession of marketing. Successful implementation requires a broad consensus, including other functional areas. Using the Plan as a Sales Document. A major but often overlooked purpose of a plan and its presentation is to generate funds from either internal or external sources. Therefore, the better the plan, the better the chance of gaining desired funding. Senior Management Leadership. Commitment from senior management is essential to the success of a marketing planning effort. Tying Compensation to Successful Planning Efforts. Management compensation should be oriented toward the achievement of objectives stated in the plan. Source: From Donald R. Lehmann and Russell S. Winer, Analysis for Marketing Planning 7E, McGraw-Hill/ Irwin, 2008, Chapter 1. Reprinted with permission of McGraw-Hill Education. The Social Environment This environment includes general cultural and social traditions, norms, and attitudes. While these values change slowly, such changes often bring about the need for new products and services. For example, a change in values concerning the desirability of large families brought about an opportunity to market better methods of birth control. On the other hand, cultural and social values also place constraints on marketing activities. As a rule, business practices that are contrary to social values become political issues, which are often resolved by legal constraints. For example, public demand for a cleaner environment has caused the government to require that automobile manufacturers’ products meet certain average gas mileage and emission standards. The Political Environment The political environment includes the attitudes and reactions of the general public, social and business critics, and other organizations, such as the Better Business Bureau. Dissatisfaction with such business and marketing practices as unsafe products, products that waste resources, and unethical sales procedures can have adverse effects on corporation image and customer loyalty. However, adapting business 18 Chapter One Strategic Planning and the Marketing Management Process 19 and marketing practices to these attitudes can be an opportunity. For example, these attitudes have brought about markets for such products as unbreakable children’s toys, highefficiency air conditioners, and more economical automobiles. The Legal Environment This environment includes a host of federal, state, and local legislation directed at protecting both business competition and consumer rights. In past years, legislation reflected social and political attitudes and has been primarily directed at constraining business practices. Such legislation usually acts as a constraint on business behavior, but again can be viewed as providing opportunities for marketing safer and more efficient products. In recent years, there has been less emphasis on creating new laws for constraining business practices. As an example, deregulation has become more common, as evidenced by events in the airlines, financial services, and telecommunications industries. Marketing Planning The previous sections emphasized that (1) marketing activities must be aligned with organizational objectives and (2) marketing opportunities are often found by systematically analyzing situational environments. Once an opportunity is recognized, the marketing executive must then plan an appropriate strategy for taking advantage of the opportunity. This process can be viewed in terms of three interrelated tasks: (1) establishing marketing objectives, (2) selecting the target market, and (3) developing the marketing mix. Establishing Objectives Marketing objectives usually are derived from organizational objectives; in some cases where the firm is totally marketing oriented, the two are identical. In either case, objectives must be specified and performance in achieving them should be measurable. Marketing objectives are usually stated as standards of performance (e.g., a certain percentage of market share or sales volume) or as tasks to be achieved by given dates. While such objectives are useful, the marketing concept emphasizes that profits rather than sales should be the overriding objective of the firm and marketing department. In any case, these objectives provide the framework for the marketing plan. Selecting the Target Market The success of any marketing plan hinges on how well it can identify customer needs and organize its resources to satisfy them profitably. Thus, a crucial element of the marketing plan is selecting the groups or segments of potential customers the firm is going to serve with each of its products. Four important questions must be answered: 1. 2. 3. 4. What do customers want or need? What must be done to satisfy these wants or needs? What is the size of the market? What is its growth profile? Present target markets and potential target markets are then ranked according to (1) profitability; (2) present and future sales volume; and (3) the match between what it takes to appeal successfully to the segment and the organization’s capabilities. Those that appear to offer the greatest potential are selected. One cautionary note on this process involves the importance of not neglecting present customers when developing market share and sales strategies. Chapters 3, 4, and 5 are devoted to discussing consumer behavior, industrial buyers, and market segmentation. Developing the Marketing Mix The marketing mix is the set of controllable variables that must be managed to satisfy the target market and achieve organizational objectives. These controllable variables are usually classified according to four major decision areas: product, price, promotion, and place (or channels of distribution). The importance of MARKETING INSIGHT Examples of Marketing Objectives 1–8 Poorly Stated Objectives Our objective is to be a leader in the industry in terms of new product development. Our objective is to maximize profits. Our objective is to better serve customers. Our objective is to be the best that we can be. Well-Stated Objectives Our objective is to spend 12 percent of sales revenue between 2013 and 2015 on research and development in an effort to introduce at least five new products in 2016. Our objective is to achieve a 10 percent return on investment during 2013, with a payback on new investments of no longer than four years. Our objective is to obtain customer satisfaction ratings of at least 90 percent on the 2013 annual customer satisfaction survey, and to retain at least 85 percent of our 2013 customers as repeat purchasers in 2014. Our objective is to increase market share from 30 percent to 40 percent in 2013 by increasing promotional expenditures by 14 percent. Source: From Donald R. Lehmann and Russell S. Winer, Analysis for Marketing Planning 7E, McGraw-Hill/ Irwin, 2008, Chapter 1. Reprinted with permission of McGraw-Hill Education. these decision areas cannot be overstated, and in fact, the major portion of this text is devoted to analyzing them. Chapters 6 and 7 are devoted to product and new product strategies, Chapters 8 and 9 to promotion strategies in terms of both nonpersonal and personal selling, Chapter 10 to distribution strategies, and Chapter 11 to pricing strategies. In addition, marketing mix variables are the focus of analysis in two chapters on marketing in special fields, that is, the marketing of services (Chapter 12) and global marketing (Chapter 13). Thus, it should be clear that the marketing mix is the core of the marketing management process. The output of the foregoing process is the marketing plan. It is a formal statement of decisions that have been made on marketing activities; it is a blueprint of the objectives, strategies, and tasks to be performed. Implementation and Control of the Marketing Plan Implementing the marketing plan involves putting the plan into action and performing marketing tasks according to the predefined schedule. Even the most carefully developed plans often cannot be executed with perfect timing. Thus, the marketing executive must closely monitor and coordinate implementation of the plan. In some cases, adjustments may have to be made in the basic plan because of changes in any of the situational environments. For example, competitors may introduce a new product. In this event, it may be desirable to speed up or delay implementation of the plan. In almost all cases, some minor adjustments or fine tuning will be necessary in implementation. Controlling the marketing plan involves three basic steps. First, the results of the implemented marketing plan are measured. Second, these results are compared with objectives. Third, decisions are made on whether the plan is achieving objectives. If serious deviations exist between actual and planned results, adjustments may have to be made to redirect the plan toward achieving objectives. 20 Chapter One Strategic Planning and the Marketing Management Process 21 Marketing Information Systems and Marketing Research Throughout the marketing management process, current, reliable, and valid information is needed to make effective marketing decisions. Providing this information is the task of the marketing information system and marketing research. These topics are discussed in detail in Chapter 2. THE STRATEGIC PLAN, THE MARKETING PLAN, AND OTHER FUNCTIONAL AREA PLANS Strategic planning is clearly a top-management responsibility. In recent years, however, there has been an increasing shift toward more active participation by marketing managers in strategic analysis and planning. This is because, in reality, nearly all strategic planning questions have marketing implications. In fact, the two major strategic planning questions— What products should we make? and What markets should we serve?—are clearly marketing questions. Thus, marketing executives are involved in the strategic planning process in at least two important ways: (1) They influence the process by providing important inputs in the form of information and suggestions relating to customers, products, and middlemen; and (2) they must always be aware of what the process of stategic planning involves as well as the results because everything they do—the marketing objectives and strategies they develop—must be derived from the strategic plan. In fact, the planning done in all functional areas of the organization should be derived from the strategic plan. Marketing’s Role in Cross-Functional Strategic Planning More and more organizations are rethinking the traditional role of marketing. Rather than dividing work according to function (e.g., production, finance, technology, human resources), they are bringing managers and employees together to participate in crossfunctional teams. These teams might have responsibility for a particular product, line of products, or group of customers. Because team members are responsible for all activities involving their products and/or customers, they are responsible for strategic planning. This means that all personnel working in a cross-functional team will participate in creating a strategic plan to serve customers. Rather than making decisions independently, marketing managers work closely with team members from production, finance, human resources, and other areas to devise plans that address all concerns. Thus, if a team member from production says, “That product will be too difficult to produce,” or if a team member from finance says, “We’ll never make a profit at that price,” the team members from marketing must help resolve the problems. This approach requires a high degree of skill at problem solving and gaining cooperation. Clearly the greatest advantage of strategic planning with a cross-functional team is the ability of team members to consider a situation from a number of viewpoints. The resulting insights can help the team avoid costly mistakes and poor solutions. Japanese manufacturers are noted for using cross-functional teams to figure out ways to make desirable products at given target costs. In contrast, U.S. manufacturers traditionally have developed products by having one group decide what to make, another calculate production costs, and yet another predict whether enough of the product will sell at a high enough price. Thus, in well-managed organizations, a direct relationship exists between strategic planning and the planning done by managers at all levels. The focus and time perspectives will, of course, differ. Figure 1.6 illustrates the cross-functional perspective of strategic planning. It indicates very clearly that all functional area plans should be derived from the strategic plan while at the same time contributing to the achievement of it. 22 Part A Introduction FIGURE 1.6 The Cross-Functional Perspective in Planning The strategic plan Mission Objectives Strategies Portfolio plan Functional area plans derived from strategic plan Production plan Marketing plan Human resource plan Finance plan Technology plan Objectives Forecast Budgets Strategies and programs Policies Objectives Forecast Budgets Strategies and programs Policies Objectives Forecast Budgets Strategies and programs Policies Objectives Forecast Budgets Strategies and programs Policies Objectives Forecast Budgets Strategies and programs Policies If done properly, strategic planning results in a clearly defined blueprint for management action in all functional areas of the organization. Figure 1.7 clearly illustrates this blueprint using only one organizational objective and two strategies from the strategic plan (above the dotted line) and illustrating how these are translated into elements of the marketing department plan and the production department plan (below the dotted line). Note that in Figure 1.7, all objectives and strategies are related to other objectives and strategies at higher and lower levels in the organization: That is, a hierarchy of objectives and strategies exists. We have illustrated only two possible marketing objectives and two possible production objectives. Obviously, many others could be developed, but our purpose is to illustrate the cross-functional nature of strategic planning and how objectives and strategies from the strategic plan must be translated into objectives and strategies for all functional areas including marketing. SUMMARY This chapter has described the marketing management process in the context of the organization’s overall strategic plan. Clearly, marketers must understand their crossfunctional role in joining the marketing vision for the organization with the financial goals and manufacturing capabilities of the organization. The greater this ability, the better the likelihood is that the organization will be able to achieve and sustain a competitive advantage, the ultimate purpose of the strategic planning process. At this point it would be useful to review Figures 1.5, 1.6, and 1.7 as well as the book’s table of contents. This review will enable you to better relate the content and progression of the material to follow to the marketing management process. Chapter One Strategic Planning and the Marketing Management Process 23 FIGURE 1.7 A Blueprint for Management Action: Relating the Marketing Plan to the Strategic Plan and the Production Plan One organizational objective (the profitability objective) from Figure 1.3 Two possible organizational strategies from the product-market matrix, Figure 1.4 Two possible marketing objectives and two possible production objectives derived from the strategic plan Achieve an annual rate of return on investment of at least 15 percent 1. Market penetration Improve position of present products with present customers 2. Market development Find new customers for present products 1. Marketing department objective 2. Production department objective 3. Marketing department objective 4. Production department objective Increase rate of purchase by existing customers by 10 percent by year-end Design additional features into product that will induce new uses by existing buyers Increase market share by 5 percent by attracting new market segments for existing use by year-end Design additional features into product that will open additional markets with new uses Marketing strategies and programs Production strategies and programs Specific course of action of the marketing and production departments designed to achieve the objective Additional Resources Marketing strategies and programs Production strategies and programs Austin, Robert D., Richard L. Nolan, and Shannon O’Donnell. Harder Than I Thought, Boston: Harvard Business Review Press, 2013. Charan, Ram. Leadership in the Era of Economic Uncertainty. New York: McGraw-Hill, 2009. Christensen, Clayton, M., Scott Cook, and Tandy Hall. “Marketing Malpractice: The Cause and the Cure.” Harvard Business Review, December 2005, pp. 74–75. Dixit, Avinash, K., and Barry J. Noblebuff. The Art of Strategy. New York: W.W. Norton and Co., 2009. Friedman, George. The Next Decade. New York: Doubleday, 2011. Kaplan, Robert S., and David Norton. “How to Implement a New Strategy Without Disrupting Your Organization.” Harvard Business Review, March 2006, pp. 100–109. Levitt, Ted. On Marketing. Boston: HBS Press, 2006. Markower, Jack. Strategies for the Green Economy. New York: McGraw-Hill, 2009. O’Sullivan, Don, and Andrew W. Abdela. “Marketing Performance Measurement Ability and Performance.” Journal of Marketing, April 2007, pp. 79–93. Silverstein, Michael J., Abheek Singhi, Carol Liao, and David Michael. The $10 Trillion Prize: Captivating the Newly Affluent in China and India. Boston: Harvard Business Review Press, 2012. 24 Part A Introduction Key Terms and Concepts Distinctive competencies: Distinctive competencies are things that an organization does so well that they give it an advantage over similar organizations. No matter how appealing an opportunity may be, to gain advantage over competitors, the organization must formulate strategy based on distinctive competencies. Diversification: An organizational strategy that seeks growth through new products (often through acquisitions) for customers not currently being served. Market development: An organizational strategy that seeks growth through seeking new customers for present products. Market penetration: An organizational strategy that seeks growth through increasing the sale of present products to present customers. Marketing: 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 concept: The marketing concept means that an organization should seek to make a profit by serving the needs of customer groups. Its purpose is to rivet the attention of marketing managers on serving broad classes of customer needs (customer orientation), rather than on the firm’s products (production orientation) or on devising methods to attract customers to current products (selling orientation). Marketing information system: Throughout the marketing management process, current, reliable, and valid information is needed to make effective marketing decisions. Providing this information is the task of the marketing information system and marketing research. Marketing management: Marketing management is the process of planning and executing the conception, pricing, promotion, and distribution of goods, services, and ideas to create exchanges with target groups that satisfy customer and organizational objectives. Marketing mix: The marketing mix is the set of controllable variables that must be managed to satisfy the target market and achieve organizational objectives. The controllable variables are usually classified according to four major decision areas: product, price, promotion, and place (or channels of distribution). Marketing planning: The marketing planning process produces three outputs: (1) establishing marketing objectives, (2) selecting the target market, and...
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Running head: ACCOUNTING FOR LEADERS

Accounting for Leaders
Student Name
University Affiliation
Date of Submission

1

ACCOUNTING FOR LEADERS

2
Week 1

Financial accounting refers to the process used to record, summarize, and report the busines
transaction through the use of financial statements. It uses standardize guidelines to ensure that it
records all the transactions, recaps, and presents the financial reports like income statements and
crucial balance sheets. Companies are noted to use financial statements or routine schedules to
accomplish the needs that are used in financial statements. In a company, these statements used in
financial statements are regarded as external statements company as they are given to be people
outside the company. The primary people to receive these statements are said to be the
stakeholders. (Holzer & Schoenfeld, 2019).
On the other hand, managerial accounting refers to a branch of accounting that is featured
with identifying, measuring, analyzing, and interpreting accounting information to help managers
make informed decisions that are vital for the companies. It a branch of accounting that focuses
on the internal operation of the company. It was making the company come up with important
decisions that help the company to operate. Therefore, the company depends on managerial
accounting to develop decisions that will enable it to work according to and beat the competitors
(Holzer & Schoenfeld, 2019). There are different regulations for both accounting. It is notable that
reports that are generated through managerial accounting are only circulated within the
organization. Financial accounting has various rules associated with income statements, cash flow
statements, and balance sheets.
References
Holzer, H. P., & Schoenfeld, H. M. (Eds.). (2019). Managerial accounting and analysis in
multinational enterprises. Walter de Gruyter GmbH & Co KG.

ACCOUNTING FOR LEADERS

3
Week 2

A certified public accountant (CPA) is noted to be a designation given to an individual who
passes the Uniform CPA examination and meets the experience and...


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