Credit Sprint / Study guides / Marketing Unit 2

Credit Sprint's Guide to Marketing Unit 2: The Marketing Concept and Strategy

Great marketing starts with a philosophy: find out what customers need and deliver it at a profit. Strategy turns that philosophy into a plan. This unit covers business orientations, strategic planning at three levels, SWOT, the BCG and Ansoff grids, competitive advantage and the parts of a marketing plan.

What you need to know

• Business orientations: production (make it cheaply and widely), product (make the best quality), selling (push what you made), marketing concept (find a need and fill it), and societal marketing (meet needs while also protecting society's long-run well-being).
• The marketing concept has three pillars: customer orientation, integrated effort across the whole firm, and a goal of long-run profit through customer satisfaction.
• Marketing is a process of creating, communicating and delivering value to customers and building relationships. Value is benefits received compared with cost paid.
• Relationship marketing builds long-term bonds. Customer lifetime value (CLV) is the profit a customer is expected to bring over the whole relationship. Keeping customers usually costs less than winning new ones.
• Strategic planning works at three levels: corporate (mission and portfolio), strategic business unit (SBU) and functional (marketing, finance, operations).
• A mission statement defines the firm's purpose and scope. Objectives should be SMART: specific, measurable, achievable, relevant and time-bound.
• SWOT analysis sorts internal strengths and weaknesses from external opportunities and threats. Strengths and weaknesses are inside the firm; opportunities and threats come from outside it.
• The BCG growth-share matrix classifies SBUs by market growth rate and relative market share: stars (high growth, high share), cash cows (low growth, high share), question marks (high growth, low share) and dogs (low growth, low share).
• Ansoff's product-market grid gives four growth strategies: market penetration (existing product, existing market), market development (existing product, new market), product development (new product, existing market) and diversification (new product, new market).
• Porter's generic strategies: cost leadership, differentiation and focus. A sustainable competitive advantage is hard for rivals to copy.
• A marketing plan includes an executive summary, situation analysis, objectives, strategies and tactics, budget, implementation, and evaluation and control.

Formulas and rules

Exam traps

Key terms

• Marketing concept: A philosophy that the firm should find and fill customer needs, coordinate all effort and earn a long-run profit.
• Production orientation: Focus on making products efficiently and widely available.
• Selling orientation: Focus on pushing what the firm has made through heavy promotion.
• Societal marketing: Meeting customer needs while protecting society's long-run well-being.
• Relationship marketing: Building long-term, mutually beneficial ties with customers and partners.
• Customer lifetime value (CLV): The profit expected from a customer over the whole relationship.
• Mission statement: A statement of the organization's purpose and scope.
• Strategic business unit (SBU): A division or product line treated as a separate business for planning.
• SWOT analysis: Sorting internal strengths and weaknesses and external opportunities and threats.
• BCG matrix: A portfolio grid of market growth rate against relative market share.
• Star: High growth, high share. Needs investment to keep leading.
• Cash cow: Low growth, high share. Produces cash to fund other units.
• Question mark: High growth, low share. Invest or drop.
• Dog: Low growth, low share. Usually harvested or dropped.
• Market penetration: Selling more of existing products in existing markets (Ansoff).
• Market development: Selling existing products in new markets (Ansoff).
• Product development: Selling new products in existing markets (Ansoff).
• Diversification: Selling new products in new markets (Ansoff); the riskiest growth strategy.
• Cost leadership: A generic strategy of having the lowest costs in the industry.
• Differentiation: A generic strategy of offering something unique that buyers value.
• Sustainable competitive advantage: An edge that rivals cannot easily copy.
• Marketing plan: A written document describing the situation, objectives, strategies, tactics, budget and controls.

Practice questions

Five of the 49 Unit 2 questions in Credit Sprint. Every choice is explained in the app.