Marketing Management Dersi 6. Ünite Sorularla Öğrenelim

Marketing is “a social and managerial process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products of value with others”.

What are the  three critical steps in marketing involve knowledge about?

According to Alexandra Tyler (Vice President of Branded and Social Media Marketing of Citi Global Transaction Services), the critical steps in marketing involve knowledge about the business (e.g. trends, regulations, competitors, etc.), decisions regarding target customers, business objectives, and plans to achieve those objectives.

Strategic thinking is taking a long-term perspective and seeing the big picture, consisting both the organization and its competitive environment, and thinking how these fit together. Thus, there is a positive relationship between strategic thinking and performance.

How important are strategies and strategic management?

Strategies define whether an organization is going to succeed or struggle in the market.

What are seventeen guidelines proposed by previous research for strategic planning to be effective?

What are the three levels of strategy most corporations have?

While corporate level strategy answers the question of what businesses we should be in, business level strategy deals with formulating competitive strategies (e.g. answering the question of how to compete in a given business). Functional level strategies (e.g. strategies developed for production, finance and accounting, and human resources, etc.) aim to maximize resource productivity for supporting business level strategies. The hierarchy of levels of strategy is like a nest in which one strategy covers another.

How does `Corporate Level Strategic Planning` work? 

Strategic planning process starts at the corporate level by describing an overall purpose and mission. After defining specific mission or purpose of the company, managers at the corporate level analyse the company’s business portfolio which means the collection of company’s all businesses and products. The best business portfolio creates a perfect fit with company’s strengths and weaknesses, as well as the opportunities in the environment. Portfolio analysis involves two steps: (1) Analysis of the current business portfolio and (2) Developing strategies for growth.

BCG Growth-Share Matrix is a portfolio planning method evaluating strategic business units of a company in terms of their market growth rate and relative market share.

Stars: As the name applies, stars are likely to have higher market share and are high-growth businesses or products, thus they are likely to be market leaders. However, in order to finance this growth, they also need higher investments. For instance, iPhones and Galaxy Notes are stars for Apple, and Samsung, respectively.

How does The Product/Market Expansion Grid work?

To fully understand competitive position/ strategy of the company, we first need to understand the competition in the market. Competition creates a situation in which two or more companies selling a product are rivals since they are pursuing the same customers. The nature of competition changes according to industry or geography.

In pure competition, the products are homogenous, and there are so many buyers and sellers in the market, thus there is no firm becoming large enough to affect prices (e.g. agricultural products such as cotton).

Monopoly means one company dominates the market and controls market prices. In a free-market economy (in which companies are free to decide what and how to produce, and whom to sell at what prices), monopoly means no competition, thus is often prohibited by law despite some exceptions such as diamond and pharmaceuticals.

Explain `The Threat of New Entrants`.

New businesses enter a market with hopes of gaining market share, and this in turn puts pressure on prices, costs, and investment rate which is necessary to compete, and thus threat of entry limits the profit potential of an industry. The threat of entry depends on the easiness of entering an industry. If it is easy for new entrants to enter an industry, this means your number of competitors will increase quickly and this in turn weakens your competitive position in the market.

What are the five primary activities value chain includes?

Value chain includes five primary activities (inbound logistics, operations, outbound logistics, marketing and sales, after-sale service) and four supporting activities (procurement, technology development, human resource management, firm infrastructure).

The first strategy of Porter’s Generic Strategies is Overall Cost Leadership. What does it mean and how does it work?

The first strategy is Overall Cost Leadership, which highlights efficiency. The objective here is to achieve lowest production and distribution costs to offer lower prices than competitors. For achieving this, company offers standard products which are suitable for majority of customers. As a result, the company could obtain higher market shares. To reach cost advantage, companies may try to reach economies of scale (e.g. product designs aim to reduce manufacturing costs), obtain proprietary technology (e.g. advanced process technologies), or access to diverse and scarce raw materials (e.g. sourcing from most efficient suppliers or from diverse countries with different materials)63. One of the most popular companies using this strategy is Wal-Mart. At the centre of the company’s business model price leadership lies. Thus Wal- Mart provides products at lower prices than its competitors in retailing industry. With a motto of “Everyday Low Prices”, Wal-Mart adapts overall cost leadership strategy and retains its top position in Fortune 500 list for six consecutive years64. With low operational and overhead costs, Wal-Mart achieves reducing costs, therefore prices for customers. Furthermore, in the new fiscal year, by investing in e-commerce for its grocery sales (e.g. see proprietary technology above), the company aims to attract price sensitive customers to purchase more of its lowest priced products anywhere anytime. By providing lowest prices as well as shopping convenience, the company wins market share from its competitors. In Turkey, similar to Wal-Mart, A101 and BIM are following the same competitive strategy.

Functional strategies are organizational strategies that are designed to support business level strategies. These strategies are created by major functional departments such as production and operations: marketing, organization (e.g. human resources), and finance. The aim here is to aid achieving corporate and business unit objectives and strategies by providing maximization of resource productivity. To achieve this, functional strategies try to develop a distinctive competence thus in turn create a competitive advantage for the company as a whole or to the business unit.