Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 1 MKTG Designed by Amy McGuire, B-books, Ltd. Prepared by Deborah Baker, Texas Christian

Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 1

MKTG

Designed byAmy McGuire, B-books, Ltd.

Prepared byDeborah Baker, Texas Christian University

Lamb, Hair, McDaniel 2008-2009

2CHAPTERStrategic Planning for Competitive Advantage

Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved. 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

LO1

LO2

LO3


Learning Outcomes

Explain the components of a situation analysis

Identify sources of competitive advantage

Identify strategic alternatives

Discuss target market strategies

LO4

LO6

LO7

LO5


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

LO8

LO9

LO10


Understand the importance of strategic marketing and know a

basic outline for a marketing plan

The Nature of Strategic PlanningThe Nature of Strategic PlanningLO1


LO1

Strategic Planning

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.

StrategicPlanning

StrategicPlanning


LO1

Strategic Marketing Management

What is the organization’s main activity?

How will it reach its goals?

THE ANSWER IS A MARKETING PLAN.


LO1

Strategic Planning

A written document that acts as a

guidebook of marketing activities

for the marketing manager.

Marketing PlanMarketing Plan


LO1

Why Write a Marketing Plan?

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


LO1

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 OUTCOMELO1

The Importance of Strategic Marketing

WhatWhatWhatWhat

WhyWhyWhyWhy

HowHowHowHow

Strategic PlanningStrategic PlanningStrategic PlanningStrategic Planning

Long-term profitability and growthLong-term profitability and growthLong-term profitability and growthLong-term profitability and 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 MissionDefining the Business MissionLO2


LO2

Defining the Business Mission

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


LO2

AMA’s Mission Statement


LO2

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



Business Mission Statement

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 Setting Marketing Plan ObjectivesPlan ObjectivesLO3


Marketing ObjectiveLO3

A statement of what is to

be accomplished through

marketing activities.

Marketing Objective


Marketing ObjectivesLO3

Realistic

Measurable

Time specific

Consistent with and indicating the priorities of the organization“Our objective is to achieve 10 percent dollar market share in the cat food market within 12

months of product introduction.”



Criteria for Good Marketing ObjectivesRealistic, 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 AnalysisConducting a Situation AnalysisLO4


LO4

SWOT Analysis

Identifying internal strengths (S) and weaknesses (W) and also examining external opportunities (O) and threats (T)

SWOT AnalysisSWOT Analysis


LO4

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


Biz Flix

LO4 U-571


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.

EnvironmentalScanning

EnvironmentalScanning



Components of a Situation Analysis

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



Components of a Situation Analysis

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 AdvantageCompetitive AdvantageLO5


Competitive AdvantageLO5

CompetitiveAdvantage

CompetitiveAdvantage

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.


Competitive AdvantageLO5

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 AdvantageLO5

Cost Competitive Advantage

Cost Competitive Advantage

Being the low-cost

competitor in an industry

while maintaining

satisfactory profit

margins.


Cost Competitive AdvantageLO5

Obtain inexpensive raw materials

Create efficient plant operations

Design products for ease of manufacture

Control overhead costs

Avoid marginal customers


Sources of Cost ReductionLO5

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/Service DifferentiationLO5

Product/ServiceDifferentiation Competitive Advantage

Product/ServiceDifferentiation Competitive Advantage

The provision of

something that is unique

and valuable to buyers

beyond simply offering a

lower price than the

competition’s.


Examples of Product/Service Differentiators

LO5

Brand names

Strong dealer network

Product reliability

Image

Service


LO5B

eyond

the

Book

Competitive Advantage – More Fun

SOURCE: Yukari Iwatani Kane, “Look, It’s Mii—on Wii!” Wall Street Journal March 16, 2007 B1

Demand for Nintendo’s game console, the Wii, has consumers waiting in long lines or paying premium prices on online auctions for the console. Rival products, while popular, haven’t been flying off the shelves. That’s probably because a unique feature on the Wii console provides Nintendo a competitive advantage. That feature, called Mii, is software that allows users to create online characters that look like themselves, or someone else. Fans say they get addicted to the thrill of seeing themselves running around the screen, playing tennis or boxing with Mii characters like George W. Bush or Michael Jackson.

© 2

007

The

Ass

oci

ate

d P

ress

. A

ll rig

hts

res

erv

ed.


Niche Competitive AdvantageLO5

Niche Competitive Advantage

Niche Competitive Advantage

The advantage achieved

when a firm seeks to

target and effectively

serve a small segment of

the market.


Niche Competitive AdvantageLO5

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


Sources of Sustainable Competitive Advantage

LO5

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



Sources of Competitive Advantage

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 DirectionsStrategic DirectionsLO6


Strategic AlternativesLO6

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

LO6

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



Strategic Alternatives

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 MarketDescribing the Target MarketLO7


Marketing Strategy

LO7

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.

MarketingStrategy

MarketingStrategy



LO7

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

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



Target Market Strategies

Entire Market Multiple Markets Single Market

Target Market Options


Describe the elements of the marketing mix

The Marketing MixThe Marketing MixLO8


The Marketing Mix

LO8

A unique blend of product,

distribution, promotion, and

pricing strategies designed to

produce mutually satisfying

exchanges with a target market.

Marketing MixMarketing Mix


Marketing Mix: The “Four Ps”

LO8

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

Place



LO8

Promotion

Online

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

Role is to bring about exchanges with target markets by: Informing Educating Persuading Reminding

Includes integration of: Personal selling Advertising Sales promotion Public relations



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



Elements of the Marketing Mix


LO8B

eyond

the

Book

Anatomy of an Ad

Marketdevelopment =sell anti-agingcream tomen (notjust women)

Ads aretypes ofpromotion

CompetitiveAdvantage?

Men =targetmarket

Moisturizer =product

Clive Owen [celebrity endorsement] = promotion strategy?


Explain why implementation,

evaluation, and control of the marketing plan

are necessary

Following Up on Following Up on the Marketing Planthe Marketing PlanLO9

Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved

Following Up on the Marketing Plan

LO9

Implementation

Evaluation

Control

Marketing audit is… Comprehensive Systematic Independent Periodic http://www.youngbiz.com

Online



Implementation, Evaluation, and Control

Product PlacePromotionPrice

Product PlacePromotionPrice

Objectives met?Objectives met?

Implementation Evaluation

Audits• comprehensive• systematic• independent• periodic

Audits• comprehensive• systematic• independent• periodic


Identify several techniques that help

make strategic planning effective

Effective Strategic PlanningEffective Strategic PlanningLO10



0

Techniques for Effective Strategic Planning

Effective Strategic Planning

Effective Strategic Planning

Continualattention

Continualattention CreativityCreativity Management

commitment

Managementcommitment

Documents

Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 1 MKTG Designed by Amy McGuire, B-books, Ltd. Prepared by Deborah Baker, Texas Christian