Multimedia Marketing/Marketing.iso/market/chapter2.1p

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CHAPTER 2  Marketing Strategy

SECTION 2.1  Mission, Objectives, and Goals

INSTRUCTIONS Try to provide a statement of what you believe to be the
primary mission of a company. Then go into this section for further details

EXAMPLE

A HMO organization located in the Southwest has, as its primary
mission, the preservation of healthful human life. All of the
resources of this organization are devoted to this end.

The HMO, like many others, has a set of staff doctors who work with
management to treat illness and injury. Beyond this, the staff is highly
motivated to promote health. The organization conducts seminars, on
a monthly basis, that provide extensive information on topics such
as proper exercise, nutrition, and mental health. Those individuals
who participate in these seminars receive reductions in their monthly
fees.

Doctors receive reimbursement for office calls that exceed the payments
of other HMO's. This is designed to induce them to spend time with
patients, rather than to try to devote themselves to surgery and other
duties. The doctors have training in health and nutrition, as well
as their specialties and they have pledged to engage in preventative
medicine.

This HMO has many clients, as word of mouth publicity has informed
many citizens in the community that the organization has this
devotion to health. Further, the organization has experienced fewer
and less severe illness and injury rates than have most of its
competitors.

DETAILS

At what point does marketing management really begin? How do
marketing managers establish the framework for effectively
achieving company goals? In this section we treat these questions.

A niche in a market is a portion of the market that the company
has carved out to penetrate. It is a part of the market that
management feels the firm can successfully satisfy and defend from
rivals. Without a strong niche, it is difficult for a company to
reach its profit goals.

If a firm hopes to establish a strong niche in the market, it should
effectively differentiate its product offering from those of
competitors. The niche is a "beachhead" or position of strength,
from which to make further penetrations and to resist counterthrusts
by competitors.

The objective of a marketing orientation is not to create differentiated
products for their own sake--it is more self serving. A marketing
orientation helps a company increase its chances for success. The
way for management to bring this about is to identify the company's
market alternatives and then try the most promising of these.

To society, business exists for the express purpose of providing
goods and services to satisfy needs. While there are far too many
needs for any single business to meet, a firm is destined to fail if
it does not provide enough satisfaction to generate sufficient sales
to cover costs and produce a profit. This is the primary purpose
of strategic management: to narrow the field of possible alternatives
until managment finds one or more where the firm has a differential
advantage and there are a sufficient number of prospects having
such needs to sustain required sales and profit levels.

PROBLEM 1

A producer of novelty gift items seeks to establish a niche in the
market. In turn, a niche is:

A. A portion of the market that the company has carved out to penetrate.
B. A portion of the market where competition is not very severe.
C. A portion of the market that is not adequately being served.
D. A portion of the market that is growing rapidly.

WORKED

A producer of novelty gift items seeks to establish a niche in the
market. In turn, a niche is a portion of the market that the company
has carved out to penetrate. It is pointless for a firm to try to
satisfy the entire market. If it tried to satisfy some consumers
(such as the elderly) it probably would alienate others (such as
young people). The gift marketer cannot possibly satisfy everyone.
Instead, management must decide what clusters of consumers it will
target and what needs it will attempt to satisfy. For example, the
company could elect to target upper income consumers with expensive
and rare import gifts.

ANSWER A

INSTRUCTIONS Try to provide a statement of what you believe to be the
primary mission of a company. Then go into this section for further details

EXAMPLE

A HMO organization located in the Southwest has, as its primary
mission, the preservation of healthful human life. All of the
resources of this organization are devoted to this end.

The HMO, like many others, has a set of staff doctors who work with
management to treat illness and injury. Beyond this, the staff is highly
motivated to promote health. The organization conducts seminars, on
a monthly basis, that provide extensive information on topics such
as proper exercise, nutrition, and mental health. Those individuals
who participate in these seminars receive reductions in their monthly
fees.

Doctors receive reimbursement for office calls that exceed the payments
of other HMO's. This is designed to induce them to spend time with
patients, rather than to try to devote themselves to surgery and other
duties. The doctors have training in health and nutrition, as well
as their specialties and they have pledged to engage in preventative
medicine.

This HMO has many clients, as word of mouth publicity has informed
many citizens in the community that the organization has this
devotion to health. Further, the organization has experienced fewer
and less severe illness and injury rates than have most of its
competitors.

DETAILS

The first strategic marketing decision step is to establish a
firm's overall direction. An old saying cites: "If you do not know
where you want to go, any road will take you there." Experience
proves that management cannot expect effective results from its
actions without first determining what end is desired. "Why not
spend two million dollars on advertising?" "How about adding
wholesalers to the channel of distribution?" Managers cannot
intelligently answer these and similar questions about each marketing
decision without the help of a realistic mission and  set of goals
and objectives as a guide.

The company's "mission" establishes the general direction it intends
to take in the marketplace. A mission statement answers the question:
What is our business?" and "What ought it to be?"

. A small retail grocer's mission is to furnish food and related
  items to neighborhood customers.
. An oil producer's mission is to satisfy energy needs.
. An auto producer's mission is to provide vehicles to satisfy
  surface transportation needs.

A company's mission should be neither too narrow nor too broad. Too
narrow a definition unduly restricts action and results in lost
opportunities. If an oil produer, for instance, defined its mission
as only supplying petroleum products, management would likely
overlook key alternative energy opportunities. On the other hand,
too broad a mission fails to furnish much direction to management
in decision making. If the oil company defined its mission as
providing combustable items to society, the mission would not provide
a strong focus for management.

A company's mission should also focus on long-run opportunities.
Sustained success does not come from frequently changed missions.
A sufficient time span should be devoted to the firm's mission to
enable it to develop expertise and create a niche in the market.
However, management should also continually monitor environmental
shifts to assure that the mission is not outdated. Impending petroleum
shortages, for instance, suggest that recreational vehicle
manufacturers consider redefining their missions toward oil-efficient
products  at some time in the future.


PROBLEM 2

A health insurance company is in the process of formulating a
mission. A good choice would be:

A. To pay the bills of persons who are injured or suffer from disease.
B. To collect premiums and to disburse funds to those who make
   claims for insurance.
C. To provide a mechanism for paying hospital and doctor bills.
D. To protect the health of the public.

WORKED

A health insurance company is in the process of formulating
a mission. A good choice would be to protect the health of the
public. This is, after all, why the company exists. The firm
does not exist just to collect money and to pay bills. These
targets are unduly restrictive and do not give management the
flexibility it needs, in the long run, to react to changes in
the environment. Insurance companies are engaged in many
activities beyond collecting money and paying bills. They
engage in activities including underwriting research on health
matters and educating the public on health. These would be
included in a broad mission.

ANSWER  D

INSTRUCTIONS Try to provide a statement of what you believe to be the
primary mission of a company. Then go into this section for further details

EXAMPLE

A HMO organization located in the Southwest has, as its primary
mission, the preservation of healthful human life. All of the
resources of this organization are devoted to this end.

The HMO, like many others, has a set of staff doctors who work with
management to treat illness and injury. Beyond this, the staff is highly
motivated to promote health. The organization conducts seminars, on
a monthly basis, that provide extensive information on topics such
as proper exercise, nutrition, and mental health. Those individuals
who participate in these seminars receive reductions in their monthly
fees.

Doctors receive reimbursement for office calls that exceed the payments
of other HMO's. This is designed to induce them to spend time with
patients, rather than to try to devote themselves to surgery and other
duties. The doctors have training in health and nutrition, as well
as their specialties and they have pledged to engage in preventative
medicine.

This HMO has many clients, as word of mouth publicity has informed
many citizens in the community that the organization has this
devotion to health. Further, the organization has experienced fewer
and less severe illness and injury rates than have most of its
competitors.

DETAILS

Management should establish objectives and goals, within the general
framework of the company mission, that relate to where the company
wants to be at the end of a particular time period, in concrete and
measurable terms, and should not be in conflict with one another.

"Objectives" are broadly defined statements of the company's intended
status, usually within a long-range time span. Profitability, for
instance, is usually one of a company's objectives. "Goals" are
generally more concretely defined and measurable targets, and
they typically span a shorter time period. A ten percent return on
investment next year, for instance, is a possible goal.

Regardless, goals and objectives serve four specific functions for
managment; they define the organization in its environment, they
establish a means of coordinating company actions, they provide
standards for measuring results, and they communicate to employees
what the company strives to accomplish.

What is the specific objective of a business? It depends on the
particular company. Traditionally, many scholars have argued that
it is, or should be, maximum profit. However, most modern business
and economics experts cite ample evidence that many other factors
are included as basic objectives of business. Some of the more
important include:

.Survival--to stay in existence over the long run.
.Profit--stated as some return on investment.
.Stock valuation--to obtain some particular price/earnings ratio
.Technical and market leadership--Stated as so many new products
 per year and as a percentage of market share.
.Social responsibility--often stated as the number of dollars committed
 to community developments or to antipollution programs, such as
 product testing.

PROBLEM 3

A producer of ceramic tile is formulating goals. Which of the
following is a well-developed goal?

A. To produce products and services for the U.S. market.
B. To contribute to the price of company stock.
C. To be a socially responsible firm.
D. To earn ten percent on invested capital during the next year.

WORKED

A producer of ceramic tile is formulating goals. A well developed
goal is to earn ten percent on invested capital during the next
year. This statement is specific as to amount and to the time
period to be covered. Statements such as "To contribute to the price
of company stock" "To produce goods and services for the U.S. market"
and "To be a socially responsible firm" are too vague. They do not
state measurable goals nor do they refer to a particular time period
for completion.

ANSWER  D

INSTRUCTIONS Try to provide a statement of what you believe to be the
primary mission of a company. Then go into this section for further details

EXAMPLE

A HMO organization located in the Southwest has, as its primary
mission, the preservation of healthful human life. All of the
resources of this organization are devoted to this end.

The HMO, like many others, has a set of staff doctors who work with
management to treat illness and injury. Beyond this, the staff is highly
motivated to promote health. The organization conducts seminars, on
a monthly basis, that provide extensive information on topics such
as proper exercise, nutrition, and mental health. Those individuals
who participate in these seminars receive reductions in their monthly
fees.

Doctors receive reimbursement for office calls that exceed the payments
of other HMO's. This is designed to induce them to spend time with
patients, rather than to try to devote themselves to surgery and other
duties. The doctors have training in health and nutrition, as well
as their specialties and they have pledged to engage in preventative
medicine.

This HMO has many clients, as word of mouth publicity has informed
many citizens in the community that the organization has this
devotion to health. Further, the organization has experienced fewer
and less severe illness and injury rates than have most of its
competitors.

DETAILS

Goals serve to coordinate  the efforts of all employees toward desirable
standards of behavior.Often, personnel in various functional areas of
a business are at odds with each other. Production managers often
desire to operate at a constant volume, financial managers desire
restrictive credit practices, and sales managers often want just
the opposite.

Effectively communicated goals ands objectives serve to balance
the interest of each of the functional areas in terms of spelling
out what is best for the entire company. Once established, a firm's
goals serve as boundaries to which each of the functional areas
should conform.

A reasonable question is: "Who should set the objectives?" In
large firms an executive committee made up of managers of various
functional areas accomplishes this task. The chief marketing
officer should be one of the key members involved in formuating
the company objectives. Companies simply fail if they do not satisfy
their customers' needs. Because the marketing process ties the firm
to potential customers, the chief marketing executive should play
a key role in setting objectives.

Objectives are useful in yet another respect: they provide measures
which management can use to evaluate performance. If performance is
inadequate, management can take corrective action that may be
necessary before it is too late for remedy. This is related to the
principle of "management by exception" which states that management
should direct its efforts toward those areas that are not meeting
expectations. In turn, objectives serve to establish those expectations.

PROBLEM 4

A manufacturer of cellular telephones is setting corporate objectives.
The chief marketing officer should be on the objective-setting
committee because:

A. The officer is in charge of marketing research, which gives
   the company an edge over competitors.
B. The marketing process ties the firm to potential customers.
C. The marketing process is coordinated with the production process.
D. The officer is in charge of the sales force, which brings in the
   bulk of company revenues.

WORKED

A manufacturer of cellular telephones is setting corporate objectives.
The chief marketing officer should be on the objective-setting
committee because the marketing process ties the firm to potential
customers. Companies simply fail if they do not satisfy their
customers' needs. If competitor cellular telephones are superior in
delivering the utilities that customers want, its efforts will not
be successful. It does not matter how well the production, finance,
accounting, engineering, and personnel departmental objectives are
achieved. If the customer does not purchase the telephones the company
will go out of business.

ANSWER  B