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Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2

1

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CHAPTER

2

Strategic Planning for Competitive Advantage

Prepared byDeborah Baker

Texas Christian University

Introduction to MarketingMcDaniel, Lamb, Hair

9

2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2

Learning Outcomes

Understand the importance of strategic marketing and know a basic outline for a marketing plan

Develop an appropriate business mission statement

Describe the criteria for stating good marketing objectives

LOI

LO2

LO3


Learning Outcomes

Explain the components of a situation analysis

Identify sources of competitive advantage

Identify strategic alternatives

Discuss target market strategies

LO5

LO6

LO7

LO4


Learning Outcomes

Describe the elements of the marketing mix

Explain why implementation, evaluation, and control of the marketing plan are necessary

Identify several techniques that help make strategic planning effective

LO9

LOIO

LO8


Understand the importance of strategic marketing

and know a basic outline for a marketing plan

The Nature of Strategic PlanningLOI


Strategic Planning

StrategicPlanning

StrategicPlanning

LOI

The managerial process of creating

and maintaining a fit between the

organization’s objectives and

resources and evolving market

opportunities.

The goal is long-term profitability

and growth.


LOI

What is the organization’s main activity?

Strategic Marketing Management

How will it reach its goals?

THE ANSWER IS A MARKETING PLAN.


Strategic PlanningLOI

Marketing PlanMarketing Plan A written document that acts as a guidebook of marketing activities for the marketing manager.

9Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2LOI

Provides a basis for comparison of actual and expected performance

Provides clearly stated activities to work toward common goals

Serves as a reference for the success of future activities

Provides an examination of the marketing environment

Allows entry into the marketplace with awareness

Why Write a Marketing Plan?

10Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 LOI

Marketing Plan Elements

Marketing Strategy

Product Distribution

Price

Marketing Mix

Business Mission Statement

Objectives

Situation or SWOT Analysis

Target Market Strategy

ImplementationEvaluation

Control

Promotion


REVIEW LEARNING OUTCOMEThe Importance of Strategic Marketing

LOI

WhatWhatWhatWhat

WhyWhyWhyWhy

HowHowHowHow

Strategic PlanningStrategic PlanningStrategic PlanningStrategic Planning

Long-term profitability Long-term profitability and growthand growth

Long-term profitability Long-term profitability and growthand growth

Write a marketing planWrite a marketing planWrite a marketing planWrite a marketing plan

Online

http://www.dmusic.com


Develop an appropriate business mission statement

Defining the Business MissionLO2


LO2

Answers the question, “What business are we in?”

Focuses on the market(s) rather than the good or service

Strategic Business Units (SBUs) may also have a mission statement

Defining the Business Mission


LO2 AMA’s Mission Statement


Strategic Business Units (SBUs)

Characteristics:[SBU HAS…]

A distinct mission and specific target market Control over its resources Its own competitors Plans independent of other SBUs

LO2


REVIEW LEARNING OUTCOMEBusiness Mission Statement

LO2

marketing myopiano directionfocus on marketsserved and benefitscustomers seek

Q: What business are we in?

A: Business mission statement

Too narrowToo broadJust right

marketing myopiano directionfocus on marketsserved and benefitscustomers seek


Describe the criteria for stating good marketing objectives

Setting Marketing Plan ObjectivesLO3


LO3 Marketing Objective

A statement of what is to be

accomplished through

marketing activities.

Marketing Objective

19Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 LO3

Marketing Objectives

Realistic

Measurable

Time specific

Consistent with and indicate the organization’s priorities

“Our objective is to achieve 10 percent dollar market share in the cat food market within 12

months of product introduction.”


REVIEW LEARNING OUTCOMECriteria for Good Marketing Objectives

LO3

Realistic, measurable, and time-specific objectives Realistic, measurable, and time-specific objectives consistent with the firm’s objectives:consistent with the firm’s objectives:

1. Communicate marketing management philosophy

2. Provide management direction

3. Motivate employees

4. Force executives to think clearly

5. Allow for better evaluation of results


Explain the components of a situation analysis

Conducting a Situation AnalysisLO4


LO4

SWOT AnalysisSWOT Analysis

SWOT Analysis

Identifying

internal strengths (S)

and weaknesses (W)

and also examining

external opportunities (O)

and threats (T)


SWOT Analysis

©South-Western College Publishing

SSWWOOTT

Things the company does well.Things the company does well.

Things the company does not do well.Things the company does not do well.

Conditions in the external environment that favor strengths.Conditions in the external environment that favor strengths.

Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness.

Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness.

InternalInternal

ExternalExternal

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2

Biz FlixU-571

24

LO4


LO4

Environmental Scanning



The collection and interpretation of

information about forces, events,

and relationships in the external

environment that may affect the

future of the organization or the

implementation

of the marketing plan.


REVIEW LEARNING OUTCOMEComponents of a Situation Analysis

LO4

production costs

marketing skills

financial resources

image

technology

Strengths

Weaknesses

INT

ER

NA

LIN

TE

RN

AL

EN

VIR

ON

ME

NT

EN

VIR

ON

ME

NT


REVIEW LEARNING OUTCOME Components of a Situation Analysis

LO4

social

demographic

economic

technological

political / legal

competitive

Opportunities

Threats

EX

TE

RN

AL

E

XT

ER

NA

L

EN

VIR

ON

ME

NT

EN

VIR

ON

ME

NT


Identify sources of competitive advantage

Competitive AdvantageLO5


CompetitiveAdvantage

CompetitiveAdvantage

LO5 Competitive Advantage

The set of unique features of a

company and its products that

are perceived by the target

market as significant and

superior to the competition.


LO5 Competitive Advantage

Niche StrategiesNiche Strategies

CostCost

Product/Service Differentiation

Product/Service Differentiation

Types of Types of Competitive Competitive AdvantageAdvantage

Types of Types of Competitive Competitive AdvantageAdvantage


Cost Competitive Advantage

Cost Competitive Advantage

LO5 Cost Competitive Advantage

Being the low-cost competitor

in an industry while maintaining

satisfactory profit margins.


LO5 Cost Competitive Advantage

Obtain inexpensive raw materials

Create efficient plant operations

Design products for ease of manufacture

Control overhead costs

Avoid marginal customers


LO5 Sources of Cost Reduction

Experience CurvesExperience Curves

Efficient LaborEfficient Labor

No-frills ProductsNo-frills Products

Government SubsidiesGovernment Subsidies

Product DesignProduct Design

ReengineeringReengineering

Production InnovationsProduction Innovations

New Service Delivery Methods

New Service Delivery Methods


Product / ServiceDifferentiation Competitive Advantage

Product / ServiceDifferentiation Competitive Advantage

LO5 Product/Service Differentiation

The provision of something that is unique

and valuable

to buyers beyond simply

offering a lower price than

the competition’s.


LO5

Brand names

Strong dealer network

Product reliability

Image

Service

Examples of Product/Service Differentiation


Niche Competitive Advantage

Niche Competitive Advantage

LO5 Niche Competitive Advantage

The advantage achieved when a

firm seeks to target and

effectively serve a small

segment of the market.


LO5 Niche Competitive Advantage

Used by small companies with limited resources

May be used in a limited geographic market

Product line may be focused on a specific product category

38Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved

Chapter 2

Sources of Sustainable Competitive AdvantageLO5

PatentsPatents

CopyrightsCopyrights

LocationsLocations

EquipmentEquipment

TechnologyTechnology

Customer ServiceCustomer Service

PromotionPromotion

Skills and AssetsSkills and Assets

of anof anOrganizationOrganization

Skills and AssetsSkills and Assets

of anof anOrganizationOrganization


REVIEW LEARNING OUTCOMESources of Competitive Advantage

LO5

Sources ofSources ofCompetitive AdvantageCompetitive Advantage

Sources ofSources ofCompetitive AdvantageCompetitive Advantage

Cost$

Cost$

Product/ServiceDifferentiationA vs. B vs. C

Product/ServiceDifferentiationA vs. B vs. C

NicheStrategies

NicheStrategies


Identify strategic alternatives

Strategic DirectionsLO6


LO6 Strategic Alternatives

MarketPenetration

MarketDevelopment

Product Development

Diversification

Increase market share among existing customers

Attract new customers to existing products

Introduce new products into new markets

Create new products for present markets


Ansoff’s Strategic Opportunity Matrix

Present Product New Product

New Market

MarketPenetration

MarketDevelopment

ProductDevelopment

Diversification

Present Market

http://www.pg.com

Online


Portfolio MatrixLO6

Stars

Cash Cows

ProblemChildren

Dogs


Portfolio Matrix StrategiesLO6

Build

Hold

Harvest

Divest


REVIEW LEARNING OUTCOMEStrategic Alternatives

LO6

Identify strategic alternativesIdentify strategic alternatives

Diversification =

Product development = products

Market development = customers

Market penetration = share

new products +new markets


Discuss target market strategies

Describing the Target MarketLO7


LO7 Marketing Strategy

MarketingStrategy

MarketingStrategy

The activities of selecting and describing

one or more target markets and

developing and maintaining a market mix

that will produce mutually satisfying

exchanges with target markets.


LO7 Target Market Strategy

Segment the market based on groups with similar characteristics

Analyze the market based on attractiveness of market segments

Select one or more target markets


LO7 Target Market Strategy

Appeal to the entire market with one marketing mix

Appeal to the entire market with one marketing mix

Concentrate on one marketing segment

Concentrate on one marketing segment

Appeal to multiple marketswith multiple marketing mixes

Appeal to multiple marketswith multiple marketing mixes


REVIEW LEARNING OUTCOME Target Market Strategies

LO7

Entire Market Multiple Markets Single Market

Target Market Options


Describe the elements of the marketing mix

The Marketing MixLO8


Marketing MixMarketing Mix

LO8 The Marketing Mix

A unique blend of product,

distribution, promotion, and pricing

strategies designed to produce

mutually satisfying exchanges with a

target market.


Marketing Mix: The “Four Ps”

Price

Promotion

Place

Product

LO8



The starting point of the “4 Ps”

Includes Physical unit Package Warranty Service Brand Image Value

Product

Products can be… Tangible goods Ideas Services

LO8



Product availability where and when customers want them

All activities from raw materials to finished products

Ensure products arrive in usable condition at designated places when needed

LO8

Place


Marketing Mix: The “Four Ps”LO8

Promotion Role is to bring about

exchanges with target markets by:

Informing Educating Persuading Reminding

Includes integration of:

Personal selling

Advertising

Sales promotion

Public relations

Online

http://www.paramount.comhttp://www.warnerbros.comhttp://www.universalstudios.com


Marketing Mix: The “Four Ps”LO8

Price

Price is what a buyer must give up to obtain a product.

The most flexible of the “4 Ps”-- quickest to change

Competitive weapon

Price x Units Sold = Total Revenue


REVIEW LEARNING OUTCOMEElements of the Marketing Mix

LO8


Explain why implementation, evaluation, and control of the marketing plan

are necessary

Following Up on the Marketing PlanLO9


Implementation

Evaluation

Control

Marketing audit is…• Comprehensive• Systematic• Independent• Periodic

LO9 Following Up the Marketing Plan

http://www.youngbiz.com

Online


REVIEW LEARNING OUTCOMELO9

Product PlacePromotionPrice

Product PlacePromotionPrice

Met objectives?

Met objectives?

Implementation Evaluation

Audits• comprehensive• systematic• independent• periodic

Audits• comprehensive• systematic• independent• periodic

Implementation, Evaluation, and Control


Identify several techniques that help make strategic

planning effective

Effective Strategic PlanningLOIO


REVIEW LEARNING OUTCOMELOI

O Techniques for Effective Strategic Planning

Effective Strategic Planning

Effective Strategic Planning

Continualattention

Continualattention CreativityCreativity Management

commitment

Managementcommitment