CLEP Principles of Marketing Study Notes

Environment for opportunities and using that

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environment for opportunities, and using that information to select a target market and develop a marketing mix to target that group of people. Basically, a marketing strategy articulates a plan for the best use of the organization's resources to meet its objectives, and this plan involves a marketing mix for a target market. Product/Market Opportunity Matrix - identifies the 4 fundamental marketing strategies available to a company: 1. Market Penetration - involves increasing sales of existing products in its current market, whether it be through better use of distribution, promotion, pricing, etc.. Involves current products in a current market. 2. Market Development - involves introducing existing products into new markets. This one deals with present products in new markets. 3. Product Development - involves developing new products and offering them to the company's current markets. New product in one of the company's present (existing) markets. 4. Diversification - involves offering/selling new products to new markets. Market Power - If an organization's product is of critical importance to customers, and it would be expensive for them to switch to another company's product. Has greater influence over the intermediaries in its distributing channel. Boston Consulting Group Matrix - defines 4 classes a company's product can fall into, as a function of high and low market share relative to the competition versus high and low market growth rate:
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1. Star - generates large profits, but it is in a high growth market, and requires substantial resources to maintain its growth. Has a big share of the market in a high growth market--it generates a lot of profit, but it costs a lot to keep up with the rapidly growing market 2. Problem child (aka: “question mark”)- product that does not provide much profit, but requires substantial resources as it is in a high-growth market. Has a low share of a high-growth market--they consume resources but generate little in return. 3. Cash Cow - generates large profits, but is in a low-growth market and requires little investment. They have a large market share in a slow-growth market, and they generate much more than is invested in them. 4. Dog - Products with low profitability in a slow-growth market. Product that has a small share of a slow-growth market; not much needs to be invested in them, but they often generate little, if any profit for the company. Differential Advantage - where customers prefer one product over another because the obvious differences in that product encourage customer purchase. Customers recognize the unique qualities of a product and they prefer that product over a competing product. Product differentiation - involves knowing that there's a difference between products, not attaching any loyalty or preference to that difference.
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