Page 73 - Marketing Management

50 PART 1 UNDERSTANDING MARKETING MANAGEMENT

one thing, Loan Bright had to please every one of its big
clients, yet each was becoming tougher to satisfy, eating up
time and resources. The company’s top managers gath-
ered to analyze the market and Loan Bright’s strengths
and weaknesses. They decided that instead of serving a
few choice clients, they would serve many more individ-
ual loan officers who responded to the company’s Google
ads and only wanted to buy a few leads. The switch
required revamping the way Loan Bright salespeople
brought in new business, including using a one-page
contract instead of the old 12-page contract, and creat-
ing a separate customer service department. 32

Businesses can evaluate their own strengths and weak-
nesses by using a form like the one shown in “Marketing
Memo: Checklist for Performing Strengths/Weaknesses
Analysis.”
Clearly, the business doesn’t have to correct all its
On the basis of a SWOT analysis,
weaknesses, nor should it gloat about all its strengths.
online mortgage company Loan
The big question is whether it should limit itself to those opportunities for which it possesses the
Bright changed the focus of their
required strengths, or consider those that might require it to find or develop new strengths.
marketing efforts to target
Managers at Texas Instruments (TI) were split between those who wanted to stick to industrial
individual loan officers.
electronics, where TI has clear strength, and those who wanted to continue introducing consumer
products, where TI lacks some required marketing strengths.
Goal Formulation
Once the company has performed a SWOT analysis, it can proceed to goal formulation, develop-
ing specific goals for the planning period. Goals are objectives that are specific with respect to
magnitude and time.
Most business units pursue a mix of objectives, including profitability, sales growth, market
share improvement, risk containment, innovation, and reputation. The business unit sets these
objectives and then manages by objectives (MBO). For an MBO system to work, the unit’s objec-
tives must meet four criteria:
1. They must be arranged hierarchically, from most to least important. The business unit’s key
objective for the period may be to increase the rate of return on investment. Managers can
increase profit by increasing revenue and reducing expenses. They can grow revenue, in turn,
by increasing market share and prices.
2. Objectives should be quantitative whenever possible. The objective “to increase the return
on investment (ROI)”is better stated as the goal “to increase ROI to 15 percent within two years.”
3. Goals should be realistic. Goals should arise from an analysis of the business unit’s opportuni-
ties and strengths, not from wishful thinking.
4. Objectives must be consistent. It’s not possible to maximize sales and profits simultaneously.
Other important trade-offs include short-term profit versus long-term growth, deep penetra-
tion of existing markets versus development of new markets, profit goals versus nonprofit goals,
and high growth versus low risk. Each choice calls for a different marketing strategy. 33
Many believe adopting the goal of strong market share growth may mean foregoing strong
short-term profits. Volkswagen has 15 times the annual revenue of Porsche—but Porsche’s profit
margins are seven times bigger than Volkswagen’s. Other successful companies such as Google,
Microsoft, and Samsung have maximized profitability and growth.

Strategic Formulation
Goals indicate what a business unit wants to achieve; strategy is a game plan for getting there.
Every business must design a strategy for achieving its goals, consisting of a marketing strategy and
a compatible technology strategy and sourcing strategy.