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Chapter 8, : : - Coggle Diagram
Chapter 8
Market Segmentation
Subdividing of a market into distinct subsets of customers according to needs and buying habits.
Widely used in implementing strategies.
Strategies such as market development, product development, market penetration, and diversification require increased sales through new markets and products.
Allows a firm to operate with limited resources because mass production and mass advertising are not required.
Advertising Media
Internet advertising: Create a bigger ads
Websites: Allowing ads to run
Blogs: Creating more content
Internet Make Market
Segmentation Easier?
The segments of people whom marketers want to reach online are much more precisely defined than the segments of people reached through traditional forms of media, such as television, radio, and magazines
People in essence segment themselves by nature of the websites that comprise their “favorite places,” and many of these websites sell information regarding their “visitors”
Product positioning
Entails developing schematic representations that reflect how your products or services compare to competitors’ on dimensions most important to success in the industry.
Product Positioning Steps
Select key criteria that effectively differentiate products or services in the industry.
Diagram a two-dimensional product-positioning map with specified criteria on each axis.
Plot major competitors' products or services in the restaurant four-quadrant matrix.
Identify areas in the positioning map where the company's products or services could be most competitive in the given target market. Look for niches area.
Develop a marketing plan to position the company's products or services appropriately.
An effective product positioning strategy
meets two criteria:
it uniquely distinguishes a company from
the competition
it leads customers to expect slightly less
service than a company can deliver
Finance/Accounting Issues
To raise capital with short-term debt, long-term debt, preferred stock, or common stock
To lease or buy fixed assets
To determine an appropriate dividend
payout ratio
To use LIFO (Last-in, First-out), FIFO (First-in, First-out), or a market-value accounting approach.
To extend the time of accounts receivable
To establish a certain percentage discount on accounts within a specified period of time
To determine the amount of cash that
should be kept on hand
Acquiring Capital to
Implement Strategies
Successful strategy implementation often
requires additional capital
Besides net profit from operations and
the sale of assets, two basic sources of capital for an organization are debt and
equity
When using EPS/EBIT analysis, timing in
relation to movements of stock prices, interest rates, and bond prices becomes important
In times of depressed stock prices, debt may prove to be the most suitable alternative
However, when the cost of capital (interest rates) is high, stock issuances become more attractive
Projected Financial Statements
Prepare the projected income statement
before the balance sheet
Use the percentage-of-sales method to
project cost of goods sold (CGS) and the expense items in the income statement
Calculate the projected net income
Subtract from the net income any dividends
to be paid for that year
Project the balance sheet items, beginning
with retained earnings and then forecasting stockholders’ equity, long-term liabilities,
current liabilities, total liabilities, total assets, fixed assets, and current assets (in that order)
List comments (remarks) on the projected
statements
Financial budget
A document that details how funds will be
obtained and spent for a specified period of time
Include cash budgets, operating budgets,
sales budgets, profit budgets, factory budgets, capital budgets, expense budgets,
divisional budgets, variable budgets, flexible budgets, and fixed budgets.
Limitations of Financial Budgets
Budgetary programs can become so detailed that they are cumbersome and overly expensive
Financial budgets can become a substitute for objectives
Budgets can hide inefficiencies if based solely on precedent
Evaluating the Worth of a
Business
Three main approaches:
What a firm owns
What a firm earns
What a firm will bring in the market
The first approach is determining a
firm’s net worth or stockholders’ equity
The second approach is based on the
future benefits a firm’s owners may derive through net profits
The third approach is to divide the
the market price of the firm’s common stock by the annual earnings per share and
multiply this number by the firm’s average net income for the past five
years.
The fourth method is to simply multiply
the number of shares outstanding by the market price per share.
Research and Development
(R&D) Issues
Research and Development
(R&D) Issues
Emphasize product or process improvements
Stress basic or applied research
Be leaders or followers in R&D
Develop robotics or manual-type processes
Spend a high, average, or low amount of money
on R&D
Perform R&D within the firm or contract R&D to
outside firms
Use university researchers or private-sector
researchers 8
R&D Approaches for
Implementing Strategies
Be the first firm to market new technological
products.
Be an innovative imitator of successful
products, thus minimizing the risks and costs of start up.
Be a low-cost producer by mass-producing
products similar to but less expensive than products recently introduced
Management Information
Systems (MIS) Issues
Having an effective management
information system (MIS) may be the most important factor in differentiating
successful from unsuccessful firms.
The process of strategic management is
facilitated immensely in firms that have an effective information system
Business Analytics
a management information system
technique that involves using software to mine huge volumes of data to help
executives make decisions
also called predictive analytics, machine
learning, or data mining
A key distinguishing feature of business
analytics is that it is predictive rather than retrospective, in that it enables a
firm to learn from experience and make current and future decisions based on
prior information
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