Page 320 - Introduction to Business

294 PART 3 Marketing

• To reduce inventory costs by 10 percent
• To have 20 percent of readers of a magazine recall an advertisement that a
company placed there
• To reduce the time the sales force spends on paperwork by 20 percent
There are various principles that companies need to recognize as they set objec-
tives. Objectives must be realistic. Two companies that ignored this principle are Du
Pont and Chrysler. When Du Pont failed to obtain profit objectives, Business Week
said that CEO Charles O. Holiday’s “grandiose ambitions have brought major dis-
22
appointment.” Fortune made this comment about Chrysler’s problems: “It made
unrealistic projections about the future at the same time that it was spending
23
money extravagantly.” Objectives must recognize company resources because
these act as a constraint on the ability of a company to achieve objectives. After all,
a company has a limited number of sales personnel, a limited number of delivery
trucks, and a limited amount of warehouse space. Objectives need to be specific so
that there will be no misunderstanding as to what is expected. Attaching a specific
number to the objective helps clarify it.
reality Think about any full- or part-time job experience you have had. What
CH ECK objectives was the company trying to achieve?

Strategies

strategies Ways that companies use to Strategies are the ways that companies use to achieve their objectives. While a wide
achieve their objectives variety of strategies can be employed, those selected should give the best chance for
meeting goals. This is more likely to occur if companies have a thorough under-
standing of their markets and the environment, especially technology and compe-
tition, and their internal strengths and weaknesses. Here are some examples of
strategies that have been deployed by major companies.
• Dell Computer delays the final configuration of its personal computers until
customers call in with indications of what they want. The company uses direct
sales, rather than marketing its products through stores. Growth will be
internal rather than by acquiring other firms. 24
• Exxon acquired Mobil in 1999. Almost $5 billion in cost savings were wrung out of
the combined firms. The company intends to increase its output of oil and gas. 25
• Chrysler wants to reduce its break-even point to 83 percent of plant capacity. 26
• eBay decided to try to increase the number of customers and the number of
goods traded, move into global markets, and make the user experience “more
fun, exciting, and easier.” 27
• Boeing will be providing higher margin service and seeking more aggressively
to increase its share of space and defense business. 28
• James B. Adamson, Kmart’s chairperson, wants to emphasize its private-label
brands and position itself as a promotional discounter. It is also trying to get
its best customers to shop 4 times a month instead of 3.2 times. 29
• Gillette has traditionally relied on its engineering skills, which result in superior
products that carry premium prices. 30
• J.C. Penney closed 44 stores and laid off 5000 staff personnel. 31
• Kohl’s stores sell department store brands at discount prices. Kohl’s “offers
easy-to-navigate stores in accessible locations to time-strapped middle-class
families.” 32
• Saks Fifth Avenue department stores expanded into smaller markets in the
United States. 33

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