BES`S INSTITUTE OF MANAGEMENT

STUDIES AND RESEARCH

NAME: AFROZ ABDUL WAHAB MALIK
ROLL NO. 58
1
ST
YEAR MMS
SUB: PRO1ECT RTEPORT OF MARKETING
SUBMITED TO: PROF. KAZI







DATE SIGNATURE
INTRODUCTION TO MARKETING
Marketing. Several deIinitions have been proposed Ior the term marketing. Each tends to
emphasize diIIerent issues. Memorizing a deIinition is unlikely to be useIul; ultimately, it makes
more sense to thinking oI ways to beneIit Irom creating customer value in the most eIIective
way, subject to ethical and other constraints that one may have. The 2006 and 2007 deIinitions
oIIered by the American Marketing Association are relatively similar, with the 2007 appearing a
bit more concise. Note that the deIinitions make several points:
O A main objective oI marketing is to create customer value.
O Marketing usually involves an exchange between buyers and sellers or between other
parties.
O Marketing has an impact on the Iirm, its suppliers, its customers, and others aIIected by
the Iirm`s choices.
O Marketing Irequently involves enduring relationships between buyers, sellers, and other
parties.
O !rocesses involved include 'creating, communicating, delivering, and exchanging
oIIerings.`

Delivering customer value. The central idea behind marketing is the idea that a Iirm or other
entity will create something oI value to one or more customers who, in turn, are willing to pay
enough (or contribute other Iorms oI value) to make the venture worthwhile considering
opportunity costs. Value can be created in a number oI diIIerent ways. Some Iirms manuIacture
basic products (e.g., bricks) but provide relatively little value above that. Other Iirms make
products whose tangible value is supplemented by services (e.g., a computer manuIacturer
provides a computer loaded with soItware and provides a warranty, technical support, and
soItware updates). It is not necessary Ior a Iirm to physically handle a product to add valuee.g.,
online airline reservation systems add value by (1) compiling inIormation about available Ilight
connections and Iares, (2) allowing the customer to buy a ticket, (3) Iorwarding billing
inIormation to the airline, and (4) Iorwarding reservation inIormation to the customer.
It should be noted that value must be examined Irom the point oI view oI the customer. Some
customer segments value certain product attributes more than others. A very expensive
productrelative to others in the categorymay, in Iact, represent great value to a particular
customer segment because the beneIits received are seen as even greater than the sacriIice made
(usually in terms oI money). Some segments have very unique and speciIic desires, and may
value whatto some individualsmay seem a 'lower quality itemvery highly.
Some forms of customer value. The marketing process involves ways that value can be created
Ior the customer. Form utility involves the idea that the product is made available to the
consumer in some Iorm that is more useIul than any commodities that are used to create it. A
customer buys a chair, Ior example, rather than the wood and other components used to create
the chair. Thus, the customer beneIits Irom the specialization that allows the manuIacturer to
more eIIiciently create a chair than the customer could do himselI or herselI. Place utility reIers
to the idea that a product made available to the customer at a preIerred location is worth more
than one at the place oI manuIacture. It is much more convenient Ior the customer to be able to
buy Iood items in a supermarket in his or her neighborhood than it is to pick up these Irom the
Iarmer. Time utility involves the idea oI having the product made available when needed by the
customer. The customer may buy a turkey a Iew days beIore Thanksgiving without having to
plan to have it available. Intermediaries take care oI the logistics to have the turkeyswhich are
easily perishable and bulky to store in a Ireezeravailable when customers demand them.
Possession utility involves the idea that the consumer can go to one store and obtain a large
assortment oI goods Irom diIIerent manuIacturers during one shopping occasion. Supermarkets
combine Iood and other household items Irom a number oI diIIerent suppliers in one place.
Certain 'superstores such as the European hypermarkets and the Wal-Mart 'super centers
combine even more items into one setting.




MEANING OF MARKETING
Marketing is the process used to determine what products or services may be oI interest to
customers, and the strategy to use in sales, communications and business development.It
generates the strategy that underlies sales techniques, business communication, and business
developments.
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It is an integrated process through which companies build strong customer
relationships and create value Ior their customers and Ior themselves.
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Marketing is used to identiIy the customer, satisIy the customer, and keep the customer. With the
customer as the Iocus oI its activities, marketing management is one oI the major components oI
business management. Marketing evolved to meet the stasis in developing new markets caused
by mature markets and overcapacities in the last 2-3 centuries. The adoption oI marketing
strategies requires businesses to shiIt their Iocus Irom production to the perceived needs and
wants oI their customers as the means oI staying proIitable.
|citation needed|

The term marketing concept holds that achieving organizational goals depends on knowing the
needs and wants oI target markets and delivering the desired satisIactions.
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It proposes that in
order to satisIy its organizational objectives, an organization should anticipate the needs and
wants oI consumers and satisIy these more eIIectively than competitors.

Marketing Definitions
To start, here are explanations Irom the American Marketing Association (AMA), marketing`s
proIessional organization, and Dr. !hilip Kotler, the author oI business school marketing
classics. They`re Iollowed by the other deIinitions in alphabetical order by author`s last name.
deIines marketing as 'the science and art oI exploring, creating, and delivering value to satisIy
the needs oI a target market at a proIit. Marketing identiIies unIulIilled needs and desires. It
deIines, measures and quantiIies the size oI the identiIied market and the proIit potential. It
pinpoints which segments the company is capable oI serving best and it designs and promotes
the appropriate products and services.
The marketing vs. the selling concept. Two approaches to marketing exist. The traditional
selling concept emphasizes selling existing products. The philosophy here is that iI a product is
not selling, more aggressive measures must be taken to sell ite.g., cutting price, advertising
more, or hiring more aggressive (and obnoxious) sales-people. When the railroads started to lose
business due to the advent oI more eIIective trucks that could deliver goods right to the
customer`s door, the railroads cut prices instead oI recognizing that the customers ultimately
wanted transportation oI goods, not necessarily railroad transportation. Smith Corona, a
manuIacturer oI typewriters, was too slow to realize that consumers wanted the ability to process
documents and not typewriters per se. The marketing concept, in contrast, Iocuses on getting
consumers what they seek, regardless of whether this entails coming up with entirely new
products.
The 4 Psproduct, place (distribution), promotion, and pricerepresent the variables that are
within the control oI the Iirm (at least in the medium to long run). In contrast, the Iirm is Iaced
with uncertainty Irom the environment.
The Marketing Environment
Elements of the environment. The marketing environment involves Iactors that, Ior the most
part, are beyond the control oI the company. Thus, the company must adapt to these Iactors. It is
important to observe how the environment changes so that a Iirm can adapt its strategies
appropriately. Consider these environmental Iorces.
Competition: Competitors oIten 'creep in and threaten to take away markets Irom Iirms. For
example, Japanese auto manuIacturers became a serious threat to American car makers in the
late 1970s and early 1980s. Similarly, the Lotus Corporation, maker oI one oI the Iirst
commercially successIul spreadsheets, soon Iaced competition Irom other soItware Iirms. Note
that while competition may be Irustrating Ior the Iirm, it is good Ior consumers. (In Iact, we will
come back to this point when we consider the legal environment).Note that competition today is
increasingly global in scope. It is important to recognize that competition can happen at diIIerent
'levels. At the brand level, two Iirms compete in providing a very similar product or service.
Coca Cola and !epsi,
Economics
Two economic Iorces strongly aIIect Iirms and their customers:
Economic Cycles. Some Iirms in particular are extremely vulnerable to changes in the economy.
Consumers tend to put oII buying a new car, going out to eat, or building new homes in bad
times. In contrast, in good times, Iirms serving those needs may have diIIiculty keeping up with
demand. One important point to realize is that diIIerent industries are aIIected to diIIerent
degrees by changes in the economy. Although Iamilies can cut down on the quality oI the Iood
they buygoing with lower priced brands, Ior examplethere are limits to the savings that can
be made without greatly aIIecting the living standard oI the Iamily. On the other hand, it is oIten
much easier to put oII the purchase oI a new car Ior a year or hold oII on remodeling the Iamily
home.
nflation. Over time, most economies experience some level oI inIlation. ThereIore, it is useIul
to explicitly state whether a reIerence to money over time involves the actual dollar (or other
currency) amount exchanged at any point (e.g., one dollar spent in 1960 and one dollar in 2007)
or an 'inIlation adjusted Iigure that 'anchors a given amount oI money to the value oI that
money at some point in time. Suppose, Ior example, that cumulative inIlation between 1960 and
2007 has been 1,000--that is, on the average, it costs ten times as much to buy the same thing
in 2007 as it did 47 years earlier. II the cumulative inIlation between 1960 and 1984 had been
500, we could talk about one 1984 dollar being worth IiIty 1960 cents or two 2007 dollars. It is
important to note that inIlation is uneven. Some goods and servicessuch as health care and
college tuitionare currently increasing in cost much higher than the average rate oI inIlation.
!rices oI computers, actually decline both in absolute numbers.
!olitical. Businesses are very vulnerable to changes in the political situation. For example,
because consumer groups lobbied Congress, more stringent rules were made on the terms oI car
leases. The tobacco industry is currently the target oI much negative attention Irom government
and public interest groups.

egal. Firms are very vulnerable to changing laws and changing interpretations by the courts.
Firms in the U.S. are very vulnerable to lawsuits. McDonald`s, Ior example, is currently being
sued by people who claim that eating the chain`s hamburgers caused them to get Iat. Firms are
signiIicantly limited in what they can do by various lawssome laws, Ior example, require that
disclosures be made to consumers on the eIIective interest rates they pay on products bought on
installment. A particularly interesting group oI laws relate to antitrust. These laws basically exist
to promote Iair competition among Iirms. We will consider such laws when we cover pricing
later in the term.
%echnological. Changes in technology may signiIicantly inIluence the demand Ior a product. For
example, the advent oI the Iax machine was bad news Ior Federal Express. The Internet is a
major threat to travel agents.
Social. Changes in customs or demographics greatly inIluence Iirms. Fewer babies today are
being born, resulting in a decreased demand Ior baby Ioods. More women work outside the home
today, so there is a greater demand Ior prepared Ioods. There are more unmarried singles today.
This provides opportunities Ior some Iirms (e.g., Iast Iood restaurants) but creates problems Ior
others (e.g., manuIacturers oI high quality Iurniture that many people put oII buying until
marriage). Today, there are more 'blended Iamilies that result as parents remarry aIter divorce.
These Iamilies are oIten strapped Ior money but may require 'duplicate items Ior children at
each parent`s residence
Strategic Planning
Plans and planning. !lans are needed to clariIy what kinds oI strategic objectives an
organization would like to achieve and how this is to be done. Such plans must consider the
amount oI resources available. One critical resource is capital. MicrosoIt keeps a great deal oI
cash on hand to be able to 'jump on opportunities that come about. Small startup soItware
Iirms, on the other hand, may have limited cash on hand. This means that they may have to
Iorego what would have been a good investment because they do not have the cash to invest and
cannot Iind a way to raise the capital. Other resources that aIIect what a Iirm may be able to
achieve include Iactors such as:
O Trademarks/brand names: It would be very diIIicult to compete against Coke and !epsi
in the cola market.
O Patents: It would be diIIicult to compete against Intel and AMD in the microprocessor
market since both these Iirms have a number oI patents that it is diIIicult to get around.
O People: Even with all oI MicrosoIt`s money available, it could not immediately hire the
people needed to manuIacture computer chips.
O istribution: Stores have space Ior only a Iraction oI the products they are oIIered, so
they must turn many away. A Iirm that does not have an established relationship with
stores will be at a disadvantage in trying to introduce a new product.
!lans are subject to the choices and policies that the organization has made. Some Iirms have
goals oI social responsibility, Ior example. Some Iirms are willing to take a greater risk, which
may result in a very large payoII but also involve the risk oI a large loss, than
others.
Levels of planning and strategies.
!lans Ior a Iirm can be made at several diIIerent levels. At the corporate level, the management
considers the objectives oI the firm as a whole. For example, MicrosoIt may want seek to grow
by providing high quality soItware, hardware, and services to consumers. To achieve this goal,
the Iirm may be willing to invest aggressively.
!lans can also be made at the business unit level. For example, although MicrosoIt is best known
Ior its operating systems and applications soItware, the Iirm also provides Internet access and
makes video games. DiIIerent managers will have responsibilities Ior diIIerent areas, and goals
may best be made by those closest to the business area being considered. It is also more practical
to hold managers accountable Ior perIormance iI the plan is being made at a more speciIic level.
Boeing has both commercial aircraIt and deIense divisions. Each is run by diIIerent managers,
although there is some overlap in technology between the two. ThereIore, plans are needed both
at the corporate and at the business levels.

Social Responsibility in Marketing
Ethical responsibilities and constraints. Businesses and people Iace some constraints on what
can ethically be done to make money or to pursue other goals. Fraud and deception are not only
morally wrong but also inhibit the eIIicient Iunctioning oI the economy. There are also behaviors
that, even iI they are not strictly illegal in a given jurisdiction, cannot be undertaken with a good
conscience. There are a number oI areas where an individual must consider his or her conscience
to decide iI a venture is acceptable. Some 'paycheck advance loan operators charge very high
interest rates on small loans made in anticipation oI a consumer`s next paycheck. Depending on
state laws, eIIective interest rates (interest rates plus other Iees involved) may exceed 20 per
month. In some cases, borrowers put up their automobiles as security, with many losing their
only source oI transportation through deIault. Although some consider this practice
unconscionable, others assert that such loans may be the only way that a Iamily can obtain cash
to Iill an immediate need. Because oI costs oI administration are high, these costs, when spread
over a small amount, will amount to a large percentage. Further, because the customer groups in
question tend to have poor credit ratings with high anticipated rates oI deIault, rates must be high
enough to cover this.
Sustainability. Sustainability is a notion that proposes that socially responsible Iirms will
somehow Iinancially outperIorm other less responsible Iirms in the long run.
The individual, the firm, and society. DiIIerent individuals vary in their ethical convictions.
Some are willing to work Ior the tobacco industry, Ior example, while others are not.
Making it profitable for the tobacco industry to ~harvest. Many see the tobacco industry as
the 'enemy and may not want to do anything that can beneIit the industry.
~Win-win marketing. In some cases, it may actually be proIitable Ior companies to do good
deeds. This may be the case, Ior example, when a Iirm receives a large amount oI Iavorable
publicity Ior its contributions, resulting in customer goodwill and an enhanced brand value.


International Marketing

Scope
A number oI issues are involved in marketing internationally and cross-culturally:

Protectionism. Although trade generally beneIits a country as a whole, powerIul interests
within countries Irequently put obstaclesi.e., they seek to inhibit Iree trade. There are several
ways this can be done:
O %ariff barriers: A duty, or tax or Iee, is put on products imported. This is usually a
percentage oI the cost oI the good.
O ":otas: A country can export only a certain number oI goods to the importing country.
For example, Mexico can export only a certain quantity oI tomatoes to the United States,
and Asian countries can send only a certain quota oI textiles here.
O 'ol:ntary` export restraints: These are not oIIicial quotas, but involve agreements
made by countries to limit the amount oI goods they export to an importing country.
Such restraints are typically motivated by the desire to avoid more stringent restrictions iI
the exporters do not agree to limit themselves. For example, Japanese car manuIacturers
have agreed to limit the number oI automobiles they export to the United States.
O S:bsidies to domestic prod:cts: II the government supports domestic producers oI a
product, these may end up with a cost advantage relative to Ioreign producers who do not
get this subsidy. U.S. honey manuIacturers receive such subsidies.
O on-tariff barriers, such as diIIerential standards in testing Ioreign and domestic
products Ior saIety, disclosure oI less inIormation to Ioreign manuIacturers needed to get
products approved, slow processing oI imports at ports oI entry, or arbitrary laws which
Iavor domestic manuIacturers.
O Product Need Satisfaction. We oIten take Ior granted the 'obvious need that products
seem to Iill in our own culture; however, Iunctions served may be very diIIerent in
othersIor example, while cars have a large transportation role in the U.S., they are
impractical to drive in Japan, and thus cars there serve more oI a role oI being a status
symbol or providing Ior individual indulgence. In the U.S., Iast Iood and instant drinks
such as Tang are intended Ior convenience; elsewhere, they may represent more oI a
treat. Thus, it is important to examine through marketing research consumers` true
motives, desires, and expectations in buying a product.
O Approaches to Product Introduction. Firms Iace a choice oI alternatives in marketing
their products across markets. An extreme strategy involves customi:ation, whereby the
Iirm introduces a unique product in each country, usually with the belieI tastes diIIer so
much between countries that it is necessary more or less to start Irom 'scratch in
creating a product Ior each market. On the other extreme, standardi:ation involves
making one global product in the belieI the same product can be sold across markets
without signiIicant modiIicatione.g., Intel microprocessors are the same regardless oI
the country in which they are sold. Finally, in most cases Iirms will resort to some kind
oI adaptation, whereby a common product is modiIied to some extent when moved
between some marketse.g., in the United States, where Iuel is relatively less expensive,
many cars have larger engines than their comparable models in Europe and Asia;
however, much oI the design is similar or identical, so some economies are achieved.
Similarly, while Kentucky Fried Chicken serves much the same chicken with the eleven
herbs and spices in Japan, a lesser amount oI sugar is used in the potato salad, and Iries
are substituted Ior mashed potatoes.
The Marketing Mix Product
Consumer products can be categorized as convenience goods, Ior which consumers are willing to
invest very limited shopping eIIorts. Thus, it is essential to have these products readily available
and have the brand name well known. Shopping goods, in contrast, are goods in which the
consumer is willing to invest a great deal oI time and eIIort. For example, consumers will spend
a great deal oI time looking Ior a new car or a medical procedure. Specialty goods are those that
are oI interest only to a narrow segment oI the populatione.g., drilling machines. Industrial
goods can also be broken down into subgroups, depending on their uses. It should also be noted
that, within the context oI marketing decisions, the term product reIers to more than tangible
goodsa service can be a product, too.
This represents a wide product mix 3M, Ior example, makes a large assortment oI goods that are
thought to be related in the sense that they use the Iirm`s ability to bond surIaces together. epth
reIers to the variety that is oIIered within each product line. Maybelline oIIers a great deal oI
depth in lipsticks with subtle diIIerences in shades while Morton Salt oIIers Iew varieties oI its
product.
!roducts may be diIIerentiated in several ways. Some may be represented as being oI superior
quality (e.g., Maytag), or they may diIIer in more arbitrary ways in terms oI stylessome people
like one style better than another, while there is no real consensus on which one is the superior
one. Finally, products can be diIIerentiated in terms oI oIIering diIIerent levels oI serviceIor
example, Volvo oIIers a guarantee oI Iree, reliable towing anywhere should the vehicle break
down. American Express oIIers services not oIIered by many other charge cards.





NEW PRODUCT DEVELOLOPMENT
New product development tends to happen in stages. Although Iirms oIten go back and Iorth
between these idealized stages, the Iollowing sequence is illustrative oI the development oI a
new product.
O New product strategy development. DiIIerent Iirms will have diIIerent strategies on
how to approach new products. Some Iirms have stockholders who want to minimize risk
and avoid investing in too many new innovations. Some Iirms can only survive iI they
innovate Irequently and have stockholders who are willing to take this risk. For example,
Hewlett-!ackard has to constantly invent new products since competitors learn to work
around its patents and will be able to manuIacture the products at a lower cost.
O Idea generation. Firms solicit ideas as to new products it can make. Ideas might come
Irom customers, employees, consultants, or engineers. Many Iirms receive a large
number oI ideas each year and can only invest in some oI them.
O Screening and evaluation: Some products that aIter some analysis are clearly not
Ieasible or are not consistent with the core competencies oI the Iirm are eliminated.
O Business analysis. Ideas are now exposed to more rigorous analysis. !roIit projections,
risks, market size, and competitive response are considered. II promising, market
research may be done.
O Development: The product is designed and manuIacturing Iacilities are planned.
O Market testing: Frequently, Iirms will try to 'test a product in one region to see iI it
will sell in reality beIore it is released nationally and internationally. There is a lesser risk
iI the Iirm only commits money to advertising and other marketing eIIorts in one region.
Retailers will also be more receptive in other parts oI the country and world iI it has been
demonstrated that the product sold well in one region. The Iirm may also experiment with
diIIerent prices Ior the product.
O Commercialization: Facilities to manuIacture the product on a larger scale are now put
into operation and the Iirm starts a national marketing campaign and distribution eIIort.


THE PRODUCT LIFE CYCLE
!roducts oIten go through a life cycle. Initially, a product is introduced.

Since the product is not well known and is usually expensive (e.g., as microwave ovens were in
the late 1970s), sales are usually limited. Eventually, however, many products reach a growth
phasesales increase dramatically. More Iirms enter with their models oI the product.
Frequently, unIortunately, the product will reach a maturity stage where little growth will be
seen. For example, in the United States, almost every household has at least one color TV set.
Some products may also reach a decline stage, usually because the product category is being
replaced by something better. For example, typewriters experienced declining sales as more
consumers switched to computers or other word processing equipment. The product liIe cycle is
tied to the phenomenon oI diIIusion oI innovation. When a new product comes out, it is likely to
Iirst be adopted by consumers who are more innovative than othersthey are willing to pay a
premium price Ior the new product and take a risk on unproven technology. It is important to be
on the good side oI innovators since many other later adopters will tend to rely Ior advice on the
innovators who are thought to be more knowledgeable about new products Ior advice.
At later phases oI the !LC, the Iirm may need to modiIy its market strategy. For example, Iacing
a saturated market Ior baking soda in its traditional use, Arm & Hammer launched a major
campaign to get consumers to use the product to deodorize reIrigerators. Deodorizing powders to
be used beIore vacuuming were also created.

Promotion: Integrated Marketing Communication
Integrated Marketing Communication (IMC) involves the idea that a Iirm`s promotional eIIorts
should be coordinated to achieve the best combined eIIects oI the Iirm`s eIIorts. Resources are
allocated to achieve those outcomes that the Iirm values the most.
!romotion involves a number oI tools we can use to increase demand Ior our The most well
known component oI promotion is advertising, but we can also use tools such as the Iollowing:
O Public relations (the Iirm`s staII provides inIormation to the media in the hopes oI
getting coverage). This strategy has beneIits (it is oIten less expensive and media
coverage is usually more credible than advertising) but it also entails a risk in that we
can`t control what the media will say. Note that this is particularly a useIul tool Ior small
and growing businessesespecially those that make a product which is inherently
interesting to the audience.
O Trade promotion. Here, the Iirm oIIers retailers and wholesalers temporary discounts,
which may or may not be passed on to the consumer, to stimulate sales.
O Sales promotion. Consumers are given either price discounts, coupons, or rebates.
O Personal selling. Sales people either make 'cold calls on potential customers and/or
respond to inquiries.
O In-store displays. Firms oIten pay a great deal oI money to have their goods displayed
prominently in the store. More desirable display spaces include: end oI an aisle, Iree-
standing displays, and near the check-out counter. Occasionally, a representative may
display the product.
O Samples
O Premiums

The Boston Consulting Group (BCG) matrix

!rovides a Iirm an opportunity to assess how well its business units work together. Each business
unit is evaluated in terms oI two Iactors: market share and the growth prospects in the market.
Generally, the larger a Iirm`s share, the stronger its position, and the greater the growth in a
market, the better Iuture possibilities. Four combinations emerge:
O A star represents a business unit that has a high share in a growing market. For example,
Motorola has a large share in the rapidly growing market Ior cellular phones.
O A 6uestion mark results when a unit has a small share in a rapidly growing market. The
Iirm`s position, then, is not as strong as it would have been had its market share been
greater, but there is an opportunity to grow. For example, Hewlett-!ackard has a small
share oI the digital camera market, but this is a very rapidly growing market.
O A cash cow results when a Iirm has a large share in a market that is not growing, and may
even be shrinking. Brother has a large share oI the typewriter market.
O A dog results when a business unit has a small share in a market that is not growing. This
is generally a somewhat unattractive situation, although dogs can still be proIitable in the
short run. For example, Smith Corona how has a small share oI the typewriter market.
Firms are usually best oI with a portIolio that has a balance oI Iirms in each category. The cash
cows tend to generate cash but re6uire little future investment. On the other hand, stars generate
some cash, but even more cash is needed to invest in the futureIor research and development,
marketing campaigns, and building new manuIacturing Iacilities. ThereIore, a Iirm may take
excess cash Irom the cash cow and divert it to the star. For example, Brother could 'harvest its
proIits Irom typewriters and invest this in the unit making color laser printers, which will need
the cash to grow. II a Iirm has cash cows that generate a lot oI cash, this may be used to try to
improve the market share oI a question mark. A Iirm that has a number oI promising stars in its
portIolio may be in serious trouble iI it does not have any cash cows to support it. II it is about to
run out oI cashregardless oI how proIitable it is is becomes vulnerable as a takeover target
Irom a Iirm that has the cash to continue running it.

A SWOT (~Strengths, Opportunities, Weaknesses, and Threats

Analysis is used to help the Iirm identify effective strategies. SuccessIul Iirms such as MicrosoIt
have certain strengths. MicrosoIt, Ior example, has a great deal oI technology, a huge staII oI
very talented engineers, a great deal oI experience in designing soItware, a very large market
share, a well respected brand name, and a great deal oI cash. MicrosoIt also has some
weaknesses, however: The game console and MSN units are currently running at a loss, and
MSN has been unable to achieve desired levels oI growth. Firms may Iace opportunities in the
current market. MicrosoIt, Ior example, may have the opportunity to take advantage oI its brand
name to enter into the hardware market. MicrosoIt may also become a trusted source oI
consumer services. MicrosoIt currently Iaces several threats, including the weak economy.
Because Iewer new computers are bough during a recession, Iewer operating systems and
soItware packages.
Rather than merely listing strengths, weaknesses, opportunities, and threats, a SWOT
analysis should suggest how the firm may use its strengths and opportunities to overcome
weaknesses and threats. Decisions should also be made as to how resources should be
allocated. For example, MicrosoIt could either decide to put more resources into MSN or to
abandon this unit entirely. MicrosoIt has a great deal oI cash ready to spend, so the option to put
resources toward MSN is available. MicrosoIt will also need to see how threats can be addressed.
The Iirm can earn political good will by engaging in charitable acts, which it has money
available to Iund. For example, MicrosoIt has donated soItware and computers to schools. It can
Iorego temporary proIits by reducing prices temporarily to increase demand, or can 'hold out
by maintaining current prices while not selling as many units.
Criteria for effective marketing plans. Marketing plans should meet several criteria:
O The plan must be specific enough so that it can be implemented and communicated to
people in the Iirm. 'Improving proIitability is usually too vague, but increasing net
proIits by 5, increasing market share by 10, gaining distribution in 2,000 more stores,
and reducing manuIacturing costs by 2 are all speciIic.
O The plan must be measurable so that one can see iI it has been achieved. The above plans
involve speciIic numbers.
O The goal must be achievable or realistic. !lans that are unrealistic may result in poor use
oI resources or lowered morale within the Iirm.
O The goals must be consistent. For example, a Iirm cannot ordinarily simultaneously plan
improve product Ieatures, increase proIits, and reduce prices.