You track sales and profits, and discover that pants are selling better than shirts, apparently because the shirts are too expensive. You will look for a lower-cost supplier for shirts, or consider dropping your prices if you can afford to do so.
2. You realize that your experience as skaters is a plus; however, your lack of experience in selling clothing could hurt you. You find out that a skateboard shop in town wants to branch out into inline skating; however, you also find out that Nike is thinking about expanding its product line to include special inline skating clothes.
3. You decide that you will target college students who enjoy inline skating, and will aim to establish yourself as a company that offers trendy clothes for the student budget.
4. You decide that your business focus will be to offer fashionable yet durable clothing for inline skaters, with built-in protection for knees and elbows.
5. You offer clothing that college students would want to wear, price it for a student budget, sell it online and in sports stores near college campuses, and promote your products on Facebook.
8. As the text explains, Nike, the prominent athletic shoe manufacturer, relies heavily on athlete sponsorships to build demand for its products. Spectators at major sporting events–both those attending in person and those watching at home–frequently see the Nike “swoosh” logo worn by elite athletes. Given the vast worldwide audience for Olympics broadcasts, an Olympic year gives Nike increased exposure. On a Nike situation analysis in an Olympic year, would you consider this exposure to be a strength or an opportunity? Explain your reasoning; be specific.
Nike, the prominent athletic shoe manufacturer, acquired Cole-Haan, a manufacturer of dress and casual street shoes, in 1988. Depending on your interpretation of the products and markets involved, you might be able to argue that this acquisition represented any of the four major growth strategies. For EACH of the four growth strategies, offer a justification that the Cole-Haan acquisition represented that particular strategy. Don’t just define what the growth strategy means; apply the definition to this specific example. Once you have offered a justification for each of the four growth strategies, choose the one you think the Cole-Haan acquisition best represents, and explain why.
Subway is a large chain of franchise sandwich shops. Marcia owns three Subway stores in a large city. At the end of the year, she notes that sales rose from two to five percent over last year’s sales at Stores 1 and 2, but fell two percent at Store 3. Marcia decides to give large bonuses to the managers of Stores 1 and 2, and to put Store 3’s manager on probation. Critique Marcia’s evaluation of her stores’ performance. What would you have done differently? Be specific.
Question marks: low market share/high growth rate. Candidates for strategic marketing planning, assessing potential for growth. 2. Dogs: low market share/low growth rate. Candidates to be phased out unless they are needed to complement or boost sales of other products. 3. Cash cows: high market share/low growth rate. Sources of funding for other parts of the firm. They typically require modest promotional and production support. 4. Stars: high market share/high growth rate. Usually require continued promotion efforts and expansion of production capacity. 136. The two bases of classification are relative market share (high-low) and market growth rate (high-low). This leads to four quadrants labeled stars, cash cows, dogs, and question marks.
137. Your sales manager wants you to stop selling those products that are in slow growth markets and which the company has a small relative market share. The manager also wants you to spend more time and effort selling products that are in high growth markets and which the company has a high market share. Finally, you should continue to sell but not put additional effort into high relative market share, low market growth products, referred to as cash cows.
If Ryan pursues a market development strategy, he will attempt to serve new market segments. Since his product is a restaurant, market development would likely include opening additional locations in other areas, offering the same menu. 138. If Ryan pursues a market penetration strategy, he will likely expand advertising and promotion, maybe adding billboards, promoting specials, adding hours and likely expanding the restaurant to serve more customers.
If they pursue a diversification strategy, they would market new products or services to a market segment they are not currently serving. Targeting landscape design or maintenance services for commercial customers would be one type of diversification. 139. If they pursue a product development strategy, they will offer new products or services to the firm’s current target market. A nursery could logically provide a landscape design consulting service, landscape maintenance service, soil and pest testing service or add additional products such as indigenous plants.
140. Many elements might be included, but it is important for students to demonstrate they understand the importance of allocating resources, leveraging competencies, capitalizing on strengths and minimizing weaknesses, coordinating efforts and decisions, and facilitating smooth operations for the firm.
141. Firms operate in a complex environment, and it is easy to overlook critical issues in the overwhelming possibilities. A structured approach will minimize the possibility that important items will be overlooked. It is also a way to ensure the transparency for the rest of the organization who depend on marketing for leadership.
142. Operational excellence, because it focuses on efficiency in its supply chain.
143. Creating and developing customer value.
144. Summer–planning; Fall–implementation; Spring–control.
145. SWOT analyses help a firm evaluate the current situation, both the internal environment and external environment.
146. Opportunities that build on a firm’s strengths relative to those of their competitors.
147. Market penetration, because the companies are trying to sell additional products (marked down) to current customers.
148. Product development, because the CD is a new product (just recorded) and it’s being sold to current customers. Some students might say that it is a market development strategy. For this to be correct, they would have to argue that a different market segment that currently doesn’t drink orange juice is being targeted. 149. The best answer is that this is a market penetration strategy. The slogan seeks to increase sales of a current product (orange juice), which reduces the options to market penetration or market development. “It isn’t just for breakfast anymore” sounds like the Growers Association wants those who drink orange juice at breakfast time to consider it at other times of the day too. In other words, it focuses on increasing usage among current customers, which is market penetration.
1. Locational excellence: In addition to having a top-notch website, try to get your products into as many retail stores as possible, probably focusing on sporting goods stores. 2. Operational excellence: Develop close relationships with suppliers of fabric and other raw materials and with retailers. 3. Customer excellence: Offer outstanding service, perhaps including live chat on the website as well as no-hassle returns if the customer changes his or her mind about a purchase. 4. Product excellence: Focus on continually improving the products and making them the most advanced ones on the market, perhaps using stylish yet durable fabrics that won’t be damaged in a fall. Then work to develop a clear positioning statement for your brand. 150. There are many correct answers; here is a sample. To make this question easier, you could ask the student to provide an idea for just one or two of the macro strategies.
1. Threats-could include the recession, a glut of graduates in the field, or reduced demand for professionals in the field 2. Opportunities-could include expected growth in the field, a new firm starting up in the area that will be hiring, or a shortage of graduates in the field 3. Weaknesses-possibilities include lack of experience, inability to relocate, or a low GPA 4. Strengths-students might mention internship experience, past work experience, classes taken, personal characteristics, or personal contacts Students will come up with a variety of answers depending on their individual situations. They will probably need to do some speculation for Opportunities and Threats. Here is a sample: 151. In order to make sure the students clearly classify the factors, you might want to provide an answer space with four sections; in each one, include a blank line for the name of the section and additional space for the factor.
If you want to make this question more difficult, you can add to the question the following: “What should Microsoft have done before deciding to
discontinue the product?” The answer: Microsoft should have determined the causes for the disappointing sales in order to determine whether or not another action (perhaps a different target market, a price adjustment, or a revised promotion plan) could put sales back on track. Some students might also answer “Control phase.” Strictly speaking, this is a phase and not a step; however, Step 5 is the only step of the process that fits into the Control phase, so you may want to accept both as correct answers. 152. Step 5–Evaluate performance using marketing metrics.
153. A. Evaluate results; B. Situation analysis; C. STP; D. Business mission; E. Implementation
154. A reasonable argument can be made for this being a strength or an opportunity, so this is about the rationale offered. This could be viewed as a strength in that Nike’s logo is ubiquitous and well-recognized, and customers in Nike’s target markets will be reminded of the many sports for which Nike offers shoes and apparel. It could also be viewed as an opportunity to strengthen Nike’s position overseas (due to international viewership) and to increase awareness of the breadth of Nike’s products (due to increased viewership of niche sports that ordinarily don’t get much attention).
This question helps to point out that classifications are rarely black and white–how things are viewed depend on assumptions. Diversification: If you argue that dress/casual street shoes represent a different type of product from athletic shoes, but that different customers would buy Cole-Haan’s dress shoes from those that buy Nike athletic shoes, then the Cole-Haan acquisition enabled Nike to sell new products to new markets. Product development: If you argue that dress/casual street shoes represent a different type of product from athletic shoes, and if you argue that Nike’s customers would also purchase dress/casual street shoes, then the Cole-Haan acquisition enabled Nike to sell new products to its current customers.
Market development: If you argue that shoes represent one type of product regardless of the type of shoe, but that different customers would buy Cole-Haan’s dress shoes from those that buy Nike athletic shoes, then the Cole-Haan acquisition enabled Nike to sell its existing product (shoes) to new markets. 155. Market penetration: If you argue that shoes represent one type of product regardless of the type of shoe, and if you argue that Nike’s customers would also purchase dress and casual street shoes, then the Cole-Haan acquisition enabled Nike to sell more of its existing product (shoes) to its current customers.
156. The major problem with Marcia’s evaluation is that her only point of comparison seems to be last year’s sales figures. She should attempt to obtain information on sales trends at other Subway sandwich shops, and if possible, at competing sandwich shops in her city. For example, perhaps her competitors and/or fellow franchisees saw much larger gains, perhaps due to an improving economy. She should also seek to understand whether or not there might be an explanation for the reduction in sales at the third store. Perhaps it is located in a shopping center that has been losing tenants, which would be beyond the manager’s control and therefore shouldn’t factor into a performance evaluation. ch02 Summary
Category # of Questions
AACSB: Analytic 158
Blooms: Analyze 5
Blooms: Apply 52
Blooms: Evaluate 9
Blooms: Remember 23
Blooms: Understand 69
Difficulty: 1 Easy 23
Difficulty: 2 Medium 82
Difficulty: 3 Hard 53
Grewal – Chapter 02 158
Learning Objective: 02-01 Define a marketing strategy. 40
Learning Objective: 02-02 Describe the elements of a marketing plan. 17 Learning Objective: 02-03 Analyze a marketing situation using SWOT analysis. 14 Learning Objective: 02- 18
04 Describe how a firm chooses which consumer group(s) to pursue with its marketing efforts. Learning Objective: 02-05 Outline the implementation of the marketing mix as a means to increase customer value. 17 Learning Objective: 02-06 Summarize portfolio analysis and its use to evaluate
marketing performance. 27 Learning Objective: 02-07 Describe how firms grow their business. 25 Topic: Evaluating Performance 10
Topic: Growth Strategies 25
Topic: Implementing the Marketing Mix 8
Topic: Marketing Mix 6
Topic: Marketing Plan 6
Topic: Marketing Planning Process 11
Topic: Marketing Strategy 40
Topic: Portfolio Analysis 13
Topic: Step 2: Conduct a Situation Analysis 4
Topic: Step 3: Identifying and Evaluating Opportunities Using STP 1 Topic: Step 4: Implement Marketing Mix and Allocate Resources 2 Topic: Step 5: Evaluate Performance Using Marketing Metrics 4 Topic: STP 17
Topic: SWOT Analysis 10
Topic: What is a Marketing Strategy? 1
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