///BUSINESS GOALS OR OBJECTIVES = Convert the mission into tangible actions and results to be achieved by a specified time frame , Are divided into three categories: 1production objectives,=Manufacturing and service capacity n Product and service quality2financial objectives, =Return on investment,Return on sales,Shareholder wealth,Profit,Cash flow/3marketing objectives=Market share,Sales volume,Profit,Marketing productivity,Customer satisfaction,Customer value creation,Customer lifetime value///SWOT analysis is a formal framework for identifying and framing organizational growth opportunities.Questions to ask after a SWOT analysis: Which strengths represent distinctive competencies?, Which weaknesses disqualify the organization from pursuing certain opportunities?, Does a pattern emerge from the SWOT?//FORMULATING PRODUCT-MARKET STRATEGIES=A product-market strategy involves selecting specific markets and profitably reaching them through an integrated program called a marketing mix./Market Penetration Strategy= A market-penetration strategy dictates that an organization seeks to gain greater dominance in a market in which it already has an offering (existing offerings existing markets).Market Penetration Strategy Involves= Increasing present buyers usage or consumption rates of the offering, Attracting buyers of competing offerings, Stimulating product trial among potential ,customers// Market Penetration Strategy Considerations= Examine market growth, Assess competitive reaction, Analyze the capacity of the market to increase usage or consumption rates and the availability of new buyers2Market Development Strategy= A market-development strategy dictates that an organization introduce its existing offerings to markets other than those it is currently serving (existing offerings new markets). Market Development Strategy Involves Adjusting the marketing mix, such as: Modifying the basic product offering, Using different distribution outlets, Changing the sales effort or advertising Analyzing competitors strengths, weaknesses, and potential for retaliation /Identifying the number, motivation, and buying patterns of new buyers3New Offering Development Strategy= A product- (new offering-) development strategy dictates that an organization create new offerings existing markets.It involves Product innovation= Developing totally new offerings/ Product Augmentation=Enhancing the value to customers of existing offerings through bundling or improving functional performance/Product Line Extension= Adding different features, sizes, etc. to broaden the existing lineNew Offering Development Strategy Factors=1The market size and volume needed for profitability 2 The magnitude and timing of competitors responses 3 The impact of the new product on the sales of existing offerings (cannibalism) 4 The capacity of the organization to deliver the offerings to the market(s) 5 The presence of significant points of difference4Diversification Strategy=A diversification strategy involves the development or acquisition of offerings new to the organization and the introduction of those offerings to publics not previously served by the organization(new offerings new markets)./Consideration=1 Many firms have adopted this strategy to take advantage of growth opportunities 2. Is very risky because both the offerings and markets served are new to the organization 3. Can be successful if the organization applies its distinctive competencies to reaching new markets with new offeringsChp2=Variable Costs=Are expenses that are uniform per unit of output within a relevant time period (budget year)/ Fluctuate in direct proportion to the number of units produced /Are divided into two categories: Cost of Goods Sold=Materials, labor, and factory overhead tied directly to production, Other Variable Costs=Variable expenses not tied to production but with volume, such as sales commissions, discounts, etc. Fixed Costs=Are costs that do not fluctuate with output volume within a budget year/ On a per-unit basis, decrease as the number of units over which they are allocated increase/Remain unchanged regardless of the number of units produced Are divided into two categories: /Programmed Costs=Those marketing costs that generate sales, such as advertising, sales promotion, salesforce salaries, etc. /Committed Costs=Those costs that maintain the organization, such as rent, administrative/clerical salaries, etc.Variable/Fixed Costs=Some costs have both a variable and fixed component. Example: Selling Expenses=Fixed component: Salary, Variable component: Commissions or bonus ///Break-Even Analysis=Identifies the unit or dollar sales volume at which an organization neither makes a profit nor incurs a loss /Break-even is shown by this equation: Total Revenue=totl variable cost+total fixed cost /Break-even requires the following info: An estimate of unit variable costs, An estimate of the relevant total dollar fixed costs to produce and market the offering unit, The selling price for each offering unit///Operating leverage refers to the extent to which fixed costs and variable costs are used in the production and marketing of products and services /HighOperatingLeverage=High total fixed costs relative to total variable costs /LowOperatingLeverage=Low total fixed costs relative to total variable costs ...The higher the operating leverage, the faster total profits will rise or fall once sales volume rises or falls below break-even volume//Step 1: Define the Problem=Problem definition framework includes: Objectives, Constraints, Success MeasuresStep 2: 1Enumerate the Decision Factors=Two decision factors to be enumerated and related to each other: Alternative Courses of Action which Controllable by the decision maker such as the marketing mix 2Uncertainties which Uncontrollable factors that the manager cannot influence Step 3: Consider Relevant Information=Relevant information consists of information that relates to the alternatives identified by the manager as being likely to affect future events. Includes characteristics of the following: industry, competitors, consumer, Organization (competitive strengths and position), alternatives //Identifying relevant information is difficult:1There is often too much info and viewpoints2Determining what does and does not matter is a skill learned through experience3Dont consider everything as factual info4Sometimes relevant info must be created/A manager has performed a situation analysis when steps 1 through 3 are completed//Step 4: Identify the Best Alternative=Decision analysis:1Matches each alternative with the uncertainties in the environment, Assigns a quantitative value to the outcome associated with each match/Uses a decision tree and a payoff table to show the relationship among alternatives, uncertainties, and potential outcomes /A payoff table: Displays the alternatives, uncertainties, and outcomes facing a firm/Includes managements determination of the probability of an uncertaintys occurrence Decision analysis is important because it: Is a fundamental tool for consideringwhat if situations/Forces the manager to quantify outcomes associated with specific actions/Is useful in a variety of settings/Can be used in determining the value of perfect information//Step 5: Develop a Plan for Implementing=the Chosen Alternative: An implementation plan involves:1Allocating marketing, financial, and manufacturing resources2The time needed to develop a marketing plan//Step 6: Evaluate the Decision and the Decision Process: With respect to the decision itself, ask:1Was a decision made?2Was the decision proper given the situation?= Insufficient information present? Failure to consider and interpret relevant information? Logical assumptions made regarding data gaps? Ask 5 questions of the decision-making process:1Was the problem defined adequately?2Were all the pertinent alternatives and uncertainties identified? Were the assumptions realistic?3Was all the relevant information considered?4Was an appropriate course of action recommended? Was the logic consistent? Was any important piece of information overlooked?5How can the recommendation be implemented?///Class Discussion=Case preparation requires 4-5 hours=Bring notes to class=Carefully listen to the viewpoints of other students during the discussion of the case=Prepare a short summary of the case after discussing it in class//Written Report=Be carefully organized and grammatically correct=Has three major sections:Strategic problem and issue identification,Analysis and evaluation,/Recommendations=Opportunity analysis consists of three interrelated activities: Opportunity Identification,Opportunities arise from:,Identifying new types of buyers,Uncovering unsatisfied needs of buyers,Creating new ways or means for satisfying buyer needs/Opportunity analysis focuses on finding markets that an organization can profitably serve/Opportunity-Organization Matching=Determines whether an identified market opportunity is consistent with the definition of the firms business, mission statement, and distinctive competenciesAssesses strengths and weaknesses via a SWOTIdentifies the success requirements=Rejects those that do not conform to a firms character even if they offer sizable sales and profit=Opportunity Evaluation=Qualitative=Matches the attractiveness of an opportunity with the potential for uncovering a market niche, which depends on:Competitive activity,Buyer requirements,Market demand,Supplier sources,Environmental forces,Organizational capabilitiesQuantitative Consists of:Market sales potential estimates.Sales forecasts.BudgetsMarket Segmentation= A technique that involves breaking down or building up of potential buyers into groups, which are called market segments=Each segment possesses a homogeneous characteristicthat relates to its purchasing behavior and response to a marketing program Cannot be all things to all people/Information technology and flexible manufacturing and service delivery systems can create segments of one//Requirements for Effective Market Segmentation=Need to answer six buyer-related questions:Who are they?What do they to buy?How do they want to buy?When do they want to buy?Where do they want to buy?Why do they want to buy?/Variables: measureable, differentiable, accessible, substantialMARKET TARGETING=Where to Compete?= 1Question focuses on which market segments should be chosen for marketing efforts 2Market targeting (or target marketing) is the specification of the segment(s) the organization wishes to pursue/How to Compete?=1Question focuses on how many market segments the organization will pursue and the marketing strategies to employ. Two market targeting approaches are: Differentiated/Marketing n Concentrated Marketing=Differentiated Marketing=Simultaneously pursues several different market segments with a unique marketing strategy for each segment. Managers multiple products across multiple market segments, which increases marketing-related expenditures=Concentrated Marketing= Focuses on a single market segment, sometimes marketing one product to one segment, More commonly, offers one or more product linesto a single market segment, Provides operating economies, Limits growth opportunities if the segment size declines