Strategic Planning for Competitive Advantage

2011-2012

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Understand the importance of strategic marketing and know a

basic outline for a marketing plan

The Nature of Strategic Planning

LO1

Strategic Planning

The GOAL of strategic planning is long-term profitability and growth.

the managerial process of creating and maintaining a fit between the organization’s objectives and resources and the evolving market opportunities.

Strategic Planning is…

Strategic Marketing Management

How do companies go about strategic marketing planning?

How do employees know how to implement the long-term goals of the firm?

How will it reach its goals?

THE ANSWER IS A MARKETING PLAN.

LO1

What Is a Marketing Plan?

Planning /Market Planning the process of anticipating future events and

determining strategies needed to achieve the over all marketing objectives within a changing market environment in the future.

Marketing Plan – a written document that acts as a guidebook

of marketing activities for the marketing manager.

A Marketing planning delineates a company’s long term goals and the strategies that will be used to achieve those goals. The strategies used will impact product lines, distribution channels, communications and pricing.

Why Write a Marketing Plan?

Provides a basis for comparison of actual and expected performance

Provides clearly stated activities to work toward common goals

Provides an examination of the marketing environment

Serves as a reference for the success of future activities

Allows entry into the marketplace with awareness

Writing a marketing plan allows the examination of the marketing environment in conjunction with the inner workings of the businesses. Once written it serves as a reference point for future activities, and allows the marketing manager to enter the marketplace with an awareness of problems and opportunities.

Elements of a Marketing

PlanMarketing Strategy

Product Distribution

Price

Marketing Mix

Business Mission Statement

Situation or SWOT Analysis

Objectives

Target Market Strategy

ImplementationEvaluation

Control

Promotion

Are school districts aBusiness? Do they use

A marketing plan? What would a school’s

Marketing plan include?

Marketing Plan

Go to Dmusic.comCreate a sample summary marketing plan as graphic

shownDmusic.com, an Internet start-up created by a teenage entrepreneur which offers various professional services for independent musiciansdivisionHS division

Writing the Marketing Plan

A complete marketing plan can allow an organization to achieve marketing objectives…

HOWEVER

the marketing plan is only as good as the information, effort, creativity and thought put into it.

LO1

Develop an appropriate business

mission statement

Defining the Business Mission

LO2

Defining the Business Mission

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

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

Individual department within a major company, called Strategic Business Units (SBUs) may also have their own mission statement

LO2

Mission Statement:Ben & Jerry’s

1. Product 1. To make, distribute and sell the finest quality all

natural ice cream and related products in a wide variety of innovative flavors made from Vermont Dairy products.

2. Economic1. To operate the company on a sound financial basis

of profitable growth, increasing value for our shareholders, and creating career opportunities and financial rewards for our employees.

3. Social 1. To operate the company in a way that actively

recognizes the central role that business plays in the structure of society by initiating innovative ways to improve the quality of life of a broad community—local, national, and international.

Describe the components of a situation analysis

Conducting a Situation Analysis

LO3

SWOT Analysis

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Strengths - things the company does well.Strengths - things the company does well.

Weaknesses - things the company does not do well.Weaknesses - things the company does not do well.

Opportunities - conditions in the external environment that favor strengths.

Opportunities - conditions in the external environment that favor strengths.

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

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

Internal

External

LO3

Components of a SWOT Analysis

Examining internal strengths and weaknesses.

Focus on organizational resources: • Production costs

• Marketing skills

• Financial resources

• Company or brand image

• Employee capabilities

• Technology

LO3

SWOT• Internal strengths and weaknesses focus

on production costs, financial resources brand image, technology, employee capabilities.

• Ex. Dell ‘s stock has fallen 42% SINCE 2007, so what should management look at? What are Dell’s strengths? It’s weakness?

• Look at their strength and weakness in the company and its competition

• Dell has a $6 billion server business STRENGHT

• But the shrinking PC part of their business accounts for 24% of their sales revenue

• this is a WEAKNESS part of the company• Were will Dell find growth opportunities for

the compay?

Environmental forces that

Help identify opportunities and threats before starting

Designing a marketing strategy is based on six major environmental forces:

• Social

• Demographic

• Economic

• Technological

• Political/Legal

• CompetitiveLO3 © A

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• How many of you drink vitamin water, owned by Coca-cola?

• Pepsi trying to break into the water market with Sobe lifewater had to hire Tom Silk a web savvy

• Marketer who make Guitar Hero famous, refocused Lifewater marketing to target the youth who love viral marketing, Sobe water tests

• Television ads on Youtube before airing them.• The strategy worked and doubled Sobe lifewater

market share

Explain the criteria for stating good

marketing objectives

Setting MarketingPlan Objectives

LO4

Marketing Objectives should be:

Realistic

Measurable

Time specific

Compared to a benchmark

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

months of product introduction.”

LO4

Criteria used when developing Good Marketing Objectives

Ask your self if the following statements are true about your company objectives:

1. Marketing management philosophy is communicated

2. Management direction is outlined

3. Provision for Employee Motivation is included

4. Force executives to clarify their thinking

5. Form a basis for control

LO4

Identify sources of competitive

advantage

Competitive Advantage

LO5

Competitive Advantage or edge

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.

LO5

Areas of Competitive Advantage

NicheNiche

CostCost

Product/Service Differentiation

Product/Service Differentiation

Types of Competitive Advantage

Types of Competitive Advantage

LO5

What makes your Product betterOr different

So customersKeep buying

Cost Competitive Advantage is achieved

by: Inexpensive raw materials

Creating efficient scale of plant operations

Design products for ease of manufacturing

Control overhead costs

Avoid marginal customers

LO5

Outsourcing to???

Experience with a productBrings cost down, in mkt, manuft.

And administration

Areas where Cost Reduction can be made

No-frills ProductsNo-frills Products

Government SubsidiesGovernment Subsidies

Experience CurvesExperience Curves

Efficient LaborEfficient Labor

Product DesignProduct Design

ReengineeringReducing product line

ReengineeringReducing product line

Production InnovationsProduction Innovations

New Service Delivery Methods-

medical field, on-line magazines

New Service Delivery Methods-

medical field, on-line magazines

LO5

Product/Service Differentiation Competitive Advantage

LO5

the provision of something that is unique and valuable to buyers beyond simply offering a lower price than that of the competition.

A Product/Service Differentiation

Competitive Advantage is…

Do on line vocabulary

How do you create product differentiation through?

Brand names

Strong dealer network

Product reliability

Image

Service

LO5

Product/service Differentiation provides

Longer lastingCompetitive advantage

long term Than cost competitive

advantage

Lexus

Caterpillar-construction

Maytag

BMW

Fed-ex

Niche Competitive Advantage

Used by small companies with limited resources

May be used in a limited geographic market

Identify a product or products that you feel have a “niche” market

How can a small bookstore compete with Barnes & Noble or Amazon.com?

LO5

Building Sustainable Competitive Advantage

Sustainable competitive advantage is an advantage that cannot be copied by the competition.

A firm that has successfully achieved a competitive advantage will stake out a position unique in some manner from its rivals.

Netflix over blockbuster, Tylenol over detail

LO5

Sources of Sustainable Competitive Advantage

PatentsPatents

CopyrightsCopyrights

LocationsLocations

EquipmentEquipment

TechnologyTechnology

Customer ServiceCustomer Service

PromotionPromotion

Skills and Assets

of anOrganization

Skills and Assets

of anOrganization

LO5

How long can a Company maintain

A competitive Advantage?

Identify strategic alternatives

Strategic Directions

LO6

Strategic Alternatives to gain competitive advantage

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

LO6

Ex. Manufacturers use coupons

Expansion into global mkts.McDonalds, Coco-cola,

Pepsi

McDonald’s introduces yogurt parfaits,

salads, and fruit to offer customers more healthy options.

CVS, launched Beauty 360 Stores premium cosmetics

LO6

Ansoff’s Strategic Opportunity Matrix

STARBUCKS

Market Penetration Increase market share among existing customersMarket Development Attract new customers to existing productsProduct Development Create new products for present marketsDiversification Introduce new products into new markets

LO6

Selecting a Strategic Alternative by product

DogDog

Problem childProblem child

StarStar

Cash CowCash Cow

Product classifications

Product classifications

1.A star is a fast-growing market leader. Stars usually have large profits but need cash to finance growth.

2.A cash cow generates more cash than it needs to maintain market share. It is in a low-growth market, but the product has dominant market share

3.A problem child shows rapid growth but poor profit margins. It has a low market share in a high-growth industry. It needs a great deal of cash to prevent conversion to dog status.

4.A dog has low growth potential and a small market share. Most dogs leave the market. The strategy options are to divest or harvest.

Strategies

Build

Hold

Harvest

Divest

LO6

If a product has the potential to be a star, building would be an appropriate goal

If a product is a cash cow goal is to Preserve market share

Take the money and run not Used for stars

Get rid of your problem children And dogs

Discuss target market strategies

Describingthe Target Market

LO7

the activities of selecting and describing one or more target markets and developing and maintaining a marketing mix that will produce mutually satisfying exchanges with target markets.

LO7

Marketing Strategy involves…

Describing the Target Market

the description and estimation of the size and sales potential of market segments that are of interest to the firm and the assessment of key competitors in these market segments.

Marketing Opportunity Analysis (MOA) involves…

• 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

LO7

Target Market Strategy

Describe the elements of the marketing mix

The Marketing Mix

LO8

The Marketing Mix

LO8

a unique blend of product, place (distribution),

promotion, and pricing strategies designed to

produce mutually satisfying exchanges with a

target market.

The Marketing Mix is…

The elements of the marketing mix

are often referred to as the

“Four Ps”

Marketing Mix: The “Four Ps”

The starting point of the “4 Ps” Includes:

Physical unitPackageWarrantyServiceBrandImageValue

Product

Products can be…Tangible goods IdeasServices

LO8

Marketing Mix: The “Four Ps”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

Marketing Mix:The “Four Ps”

Promotion

Role is to bring about exchanges with target markets by: InformingEducatingPersuadingReminding

Includes integration of:AdvertisingPublic relationsSales promotionPersonal selling

LO8

Marketing Mix:The “Four Ps” Price

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

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

Competitive weaponPrice x Units Sold = Total Revenue

LO8

Explain why implementation,

evaluation, and control of the marketing plan

are necessary

Following Up on the Marketing Plan

LO9

Following Up on the Marketing Plan

Implementation

Evaluation and Control

Marketing audit is… Comprehensive Systematic Independent Periodic

LO9

Identify several techniques that help

make strategic planning effective

Effective Strategic Planning

LO10

Techniques for Effective Strategic Planning

Effective Strategic Planning

Effective Strategic Planning

Continualattention

Continualattention CreativityCreativity Management

commitment

Managementcommitment

LO10