Strategic Planning for Competitive Advantage

   CHAPTER
             2
                                         Marketing...
Learning Outcomes

                   Understand the importance of strategic marketing
 LOI               and know a basic...
Learning Outcomes

 LO4                   Explain the criteria for stating good marketing
                          object...
Learning Outcomes

 LO8               Describe the elements of the marketing mix

                   Explain why implement...
LOI             The Nature of Strategic Planning



                               Understand the importance
             ...
LOI
                                      Strategic Planning

                   Strategic
                   Strategic
  ...
Strategic Marketing Management
           What is the organization’s main activity?


                            How will...
LOI
                                    Marketing Planning


               Marketing Plan
               Marketing Plan  ...
Why Write a Marketing Plan?
               Provides a basis for comparison of actual
               and expected performan...
Marketing Plan Elements
                                               Business Mission
                                  ...
LOI REVIEW LEARNING OUTCOME
                    The Importance of Strategic Marketing




                What
           ...
LO2                Defining the Business Mission




                                Develop an appropriate
              ...
LO2          Defining the Business Mission

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

  ...
Southwest Airlines Mission
                    Statement




  SOURCE: http://www.southwestairlines.com/about_swa/mission
...
Strategic Business Units
 LO2
                           (SBUs)

  Characteristics:
    [SBU HAS…]

  •       A distinct m...
LO2              REVIEW LEARNING OUTCOME
                             Business Mission Statement


    Q: What business ar...
LO3             Conducting a Situation Analysis




                                   Explain the components
            ...
LO3
          Conducting a Situation Analysis


              SWOT Analysis Identifying
              SWOT Analysis
      ...
SWOT Analysis

      S
Internal
                          Things the company does well.
                          Things t...
LO3
                             Environmental Scanning


             Environmental
             Environmental           ...
LO3
                      REVIEW LEARNING OUTCOME
                      Components of a Situation Analysis

              ...
LO3                   REVIEW LEARNING OUTCOME
                      Components of a Situation Analysis

                  ...
LO4 Setting Marketing Plan Objectives




                            Explain the criteria for stating
                   ...
LO4
                                    Marketing Objective


                                                         A s...
LO4
                         Marketing Objectives

        Realistic
                                                     ...
LO4              REVIEW LEARNING OUTCOME
                Criteria for Good Marketing Objectives
     Realistic, measurable...
LO5                          Competitive Advantage




                                      Identify sources of
         ...
LO5
                               Competitive Advantage


                 Competitive
                 Competitive      ...
Competitive Advantage
                                                                          Cost
                     ...
LO5
                        Cost Competitive Advantage

                    Cost
                    Cost
                ...
LO5
      Cost Competitive Advantage

             Obtain inexpensive raw materials
             Create efficient plant op...
LO5
                   Sources of Cost Reduction


             Experience Curves
             Experience Curves          ...
LO5
                   Product/Service Differentiation


            Product //Service
            Product Service The pro...
LO5           Examples of
      Product/Service Differentiation

                     Brand names
                     Str...
LO5
                      Niche Competitive Advantage


                    Niche
                    Niche               ...
LO5
       Niche Competitive Advantage

      • Used by small companies with
        limited resources

      • May be use...
LO5                      Sources of Sustainable
                         Competitive Advantage
                           ...
LO5              REVIEW LEARNING OUTCOME
                     Sources of Competitive Advantage


                         ...
LO6                                Strategic Directions




                              Identify strategic alternatives
...
LO6
                  Strategic Alternatives

     Market                           Increase market share among
   Penetra...
Ansoff’s Strategic Opportunity Matrix


                                  Present Product                    New Product

...
Portfolio Matrix


                                                                     Problem
                          ...
Portfolio Matrix Strategies
                                                   Build


                                   ...
LO6              REVIEW LEARNING OUTCOME
                                      Strategic Alternatives


                  ...
LO7                 Describing the Target Market




                                            Discuss target
          ...
LO7
                                     Marketing Strategy


                    Marketing
                    Marketing ...
LO7
                Target Market Strategy

  • Segment the market based on
    groups with similar characteristics

  • A...
LO7
                Target Market Strategy


               Appeal to the entire market
               Appeal to the entir...
LO7              REVIEW LEARNING OUTCOME
                                  Target Market Strategies


                    ...
LO8                                  The Marketing Mix




                                      Describe the elements
   ...
LO8
                                      The Marketing Mix


                Marketing Mix
                Marketing Mix ...
Marketing Mix: The “Four Ps”
                                                                     Price


                ...
Marketing Mix: The “Four Ps”
       The starting point of the
       “4 Ps”
                                              ...
Marketing Mix: The “Four Ps”
       Product availability where
       and when customers want
       them
                ...
Marketing Mix: The “Four Ps”
      Role is to bring about
      exchanges with target                                     ...
Marketing Mix: The “Four Ps”
      Price is what a buyer must
      give up to obtain a product.
                         ...
LO8              REVIEW LEARNING OUTCOME
                           Elements of the Marketing Mix




 Copyright ©2009 by ...
LO9               Following Up on the Marketing Plan



                             Explain why implementation,
         ...
LO9
      Following Up the Marketing Plan
  • Implementation

  • Evaluation

  • Control

  • Marketing audit is…
       ...
LO9
           REVIEW LEARNING OUTCOME
                Implementation, Evaluation, and Control

      Implementation      ...
LOIO                         Effective Strategic Planning




                                Identify several techniques
...
LOIO
            REVIEW LEARNING OUTCOME
                Techniques for Effective Strategic Planning




       Continual
...
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Int To Mktng Ch 2

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Int To Mktng Ch 2

  1. 1. Strategic Planning for Competitive Advantage CHAPTER 2 Marketing 10 Lamb, Hair, McDaniel Designed by Prepared by Eric Brengle Amit Shah B-books, Ltd. Frostburg State University Copyright ©2009 by Cengage Learning Inc. All rights reserved 1
  2. 2. Learning Outcomes Understand the importance of strategic marketing LOI and know a basic outline for a marketing plan Develop an appropriate business LO2 mission statement Explain the components of a situation analysis LO3 Copyright ©2009 by Cengage Learning Inc. All rights reserved 2
  3. 3. Learning Outcomes LO4 Explain the criteria for stating good marketing objectives LO5 Identify sources of competitive advantage LO6 Identify strategic alternatives LO7 Discuss target market strategies Copyright ©2009 by Cengage Learning Inc. All rights reserved 3
  4. 4. Learning Outcomes LO8 Describe the elements of the marketing mix Explain why implementation, evaluation, and LO9 control of the marketing plan are necessary Identify several techniques that help make LOIO strategic planning effective Copyright ©2009 by Cengage Learning Inc. All rights reserved 4
  5. 5. LOI The Nature of Strategic Planning Understand the importance of strategic marketing and know a basic outline for a marketing plan Copyright ©2009 by Cengage Learning Inc. All rights reserved 5
  6. 6. LOI Strategic Planning Strategic Strategic Planning 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. Copyright ©2009 by Cengage Learning Inc. All rights reserved 6
  7. 7. Strategic Marketing Management What is the organization’s main activity? How will it reach its goals? THE ANSWER IS A MARKETING PLAN. LOI 7 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  8. 8. LOI Marketing Planning Marketing Plan Marketing Plan A written document that acts as a guidebook of marketing activities for the marketing manager. Copyright ©2009 by Cengage Learning Inc. All rights reserved 8
  9. 9. 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 LOI Copyright ©2009 by Cengage Learning Inc. All rights reserved 9
  10. 10. Marketing Plan Elements Business Mission Statement Objectives Situation or SWOT Analysis Marketing Strategy Target Market Strategy Marketing Mix Product Distribution Promotion Price Implementation Evaluation Control LOI Copyright ©2009 by Cengage Learning Inc. All rights reserved 10
  11. 11. LOI REVIEW LEARNING OUTCOME The Importance of Strategic Marketing What What Strategic Planning Strategic Planning Long-term profitability Long-term profitability Why Why and growth and growth How How Write a marketing plan Write a marketing plan Copyright ©2009 by Cengage Learning Inc. All rights reserved 11
  12. 12. LO2 Defining the Business Mission Develop an appropriate business mission statement Copyright ©2009 by Cengage Learning Inc. All rights reserved 12
  13. 13. 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 13 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  14. 14. Southwest Airlines Mission Statement SOURCE: http://www.southwestairlines.com/about_swa/mission LO2 14 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  15. 15. Strategic Business Units LO2 (SBUs) Characteristics: [SBU HAS…] • A distinct mission and specific target market • Control over its resources • Its own competitors • Plans independent of other SBUs 15 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  16. 16. LO2 REVIEW LEARNING OUTCOME Business Mission Statement Q: What business are we in? A: Business mission statement Too narrow marketing myopia Too broad no direction Just right focus on markets served and benefits customers seek Copyright ©2009 by Cengage Learning Inc. All rights reserved 16
  17. 17. LO3 Conducting a Situation Analysis Explain the components of a situation analysis Copyright ©2009 by Cengage Learning Inc. All rights reserved 17
  18. 18. LO3 Conducting a Situation Analysis SWOT Analysis Identifying SWOT Analysis internal strengths (S) and weaknesses (W) and also examining external opportunities (O) and threats (T) Copyright ©2009 by Cengage Learning Inc. All rights reserved 18
  19. 19. SWOT Analysis S Internal Things the company does well. Things the company does well. W Things the company does not do well. Things the company does not do well. O External Conditions in the external environment that Conditions in the external environment that favor strengths. favor strengths. Conditions in the external environment that Conditions in the external environment that T do not relate to existing strengths or favor do not relate to existing strengths or favor areas©South-Western College Publishing areasof current weakness. of current weakness. LO3 Copyright ©2009 by Cengage Learning Inc. All rights reserved 19
  20. 20. LO3 Environmental Scanning Environmental Environmental The collection and interpretation Scanning Scanning 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. Copyright ©2009 by Cengage Learning Inc. All rights reserved 20
  21. 21. LO3 REVIEW LEARNING OUTCOME Components of a Situation Analysis Strengths ENVIRONMENT production costs INTERNAL marketing skills financial resources image technology Weaknesses Copyright ©2009 by Cengage Learning Inc. All rights reserved 21
  22. 22. LO3 REVIEW LEARNING OUTCOME Components of a Situation Analysis Opportunities social ENVIRONMENT EXTERNAL demographic economic technological political / legal competitive Threats Copyright ©2009 by Cengage Learning Inc. All rights reserved 22
  23. 23. LO4 Setting Marketing Plan Objectives Explain the criteria for stating good marketing objectives Copyright ©2009 by Cengage Learning Inc. All rights reserved 23
  24. 24. LO4 Marketing Objective A statement of what is to be Marketing accomplished through Objective marketing activities. Copyright ©2009 by Cengage Learning Inc. All rights reserved 24
  25. 25. LO4 Marketing Objectives Realistic “Our objective is to Measurable increase sales of Purina brand cat food by 15 Time specific percent over 2009 sales of $300 million.” Compared to a benchmark 25 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  26. 26. LO4 REVIEW LEARNING OUTCOME Criteria for Good Marketing Objectives Realistic, measurable, and time-specific 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 Copyright ©2009 by Cengage Learning Inc. All rights reserved 26
  27. 27. LO5 Competitive Advantage Identify sources of competitive advantage Copyright ©2009 by Cengage Learning Inc. All rights reserved 27
  28. 28. LO5 Competitive Advantage Competitive Competitive The set of unique features of a Advantage Advantage company and its products that are perceived by the target market as significant and superior to the competition. Copyright ©2009 by Cengage Learning Inc. All rights reserved 28
  29. 29. Competitive Advantage Cost Cost Types of Types of Product/Service Product/Service Competitive Competitive Differentiation Differentiation Advantage Advantage Niche Strategies Niche Strategies LO5 29 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  30. 30. LO5 Cost Competitive Advantage Cost Cost Competitive Competitive Being the low-cost competitor Advantage Advantage in an industry while maintaining satisfactory profit margins. Copyright ©2009 by Cengage Learning Inc. All rights reserved 30
  31. 31. LO5 Cost Competitive Advantage Obtain inexpensive raw materials Create efficient plant operations Design products for ease of manufacture Control overhead costs Avoid marginal customers 31 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  32. 32. LO5 Sources of Cost Reduction Experience Curves Experience Curves Product Design Product Design Efficient Labor Efficient Labor Reengineering Reengineering No-frills Goods and No-frills Goods and Production Innovations Production Innovations Services Services New Service New Service Government Subsidies Government Subsidies Delivery Methods Delivery Methods 32 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  33. 33. LO5 Product/Service Differentiation Product //Service Product Service The provision of something Differentiation Differentiation that is unique and valuable Competitive Competitive to buyers beyond simply Advantage Advantage offering a lower price than the competition’s. Copyright ©2009 by Cengage Learning Inc. All rights reserved 33
  34. 34. LO5 Examples of Product/Service Differentiation Brand names Strong dealer network Product reliability Image Service 34 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  35. 35. LO5 Niche Competitive Advantage Niche Niche The advantage achieved when Competitive Competitive a firm seeks to target and Advantage Advantage effectively serve a single segment of the market. Copyright ©2009 by Cengage Learning Inc. All rights reserved 35
  36. 36. 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 36 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  37. 37. LO5 Sources of Sustainable Competitive Advantage Patents Patents Copyrights Copyrights Locations Locations Equipment Equipment Technology Technology Skills and Assets Skills and Assets of an of an Customer Service Customer Service Organization Organization Promotion Promotion Copyright ©2009 by Cengage Learning Inc. All rights reserved 37
  38. 38. LO5 REVIEW LEARNING OUTCOME Sources of Competitive Advantage Sources of Sources of Competitive Advantage Competitive Advantage Product/Service Product/Service Cost Cost Niche Niche Differentiation Differentiation $$ Strategies Strategies A vs. B vs. C A vs. B vs. C Copyright ©2009 by Cengage Learning Inc. All rights reserved 38
  39. 39. LO6 Strategic Directions Identify strategic alternatives Copyright ©2009 by Cengage Learning Inc. All rights reserved 39
  40. 40. LO6 Strategic Alternatives Market Increase market share among Penetration existing customers Market Attract new customers to Development existing products Create new products for Product Development present markets Introduce new products Diversification into new markets 40 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  41. 41. Ansoff’s Strategic Opportunity Matrix Present Product New Product Present Market Product Market Penetration Development New Market Diversification Market Development LO6 Copyright ©2009 by Cengage Learning Inc. All rights reserved 41
  42. 42. Portfolio Matrix Problem Stars Children Cash Cows Dogs LO6 42 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  43. 43. Portfolio Matrix Strategies Build Hold Harvest Divest LO6 43 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  44. 44. LO6 REVIEW LEARNING OUTCOME Strategic Alternatives Identify strategic alternatives Market development = customers Market penetration = share Product development = products new products + Diversification = new markets Copyright ©2009 by Cengage Learning Inc. All rights reserved 44
  45. 45. LO7 Describing the Target Market Discuss target market strategies Copyright ©2009 by Cengage Learning Inc. All rights reserved 45
  46. 46. LO7 Marketing Strategy Marketing Marketing The activities of selecting and Strategy Strategy describing one or more target markets and developing and maintaining a market mix that will produce mutually satisfying exchanges with target markets. Copyright ©2009 by Cengage Learning Inc. All rights reserved 46
  47. 47. 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 47 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  48. 48. LO7 Target Market Strategy Appeal to the entire market Appeal to the entire market with one marketing mix with one marketing mix Concentrate on one Concentrate on one marketing segment marketing segment Appeal to multiple markets Appeal to multiple markets with multiple marketing mixes with multiple marketing mixes 48 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  49. 49. LO7 REVIEW LEARNING OUTCOME Target Market Strategies Target Market Options Entire Market Multiple Markets Single Market Copyright ©2009 by Cengage Learning Inc. All rights reserved 49
  50. 50. LO8 The Marketing Mix Describe the elements of the marketing mix Copyright ©2009 by Cengage Learning Inc. All rights reserved 50
  51. 51. LO8 The Marketing Mix Marketing Mix Marketing Mix A unique blend of product, distribution, promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market. Copyright ©2009 by Cengage Learning Inc. All rights reserved 51
  52. 52. Marketing Mix: The “Four Ps” Price Promotion Place Product LO8 52 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  53. 53. Marketing Mix: The “Four Ps” The starting point of the “4 Ps” Product Includes Physical unit Products can be… Package Tangible goods Warranty Ideas Service Services Brand Image Value LO8 53 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  54. 54. Marketing Mix: The “Four Ps” Product availability where and when customers want them Place All activities from raw materials to finished products Ensure products arrive in usable condition at designated places when needed LO8 54 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  55. 55. Marketing Mix: The “Four Ps” Role is to bring about exchanges with target Promotion markets by: Informing Includes integration of: Educating Personal selling Persuading Reminding Advertising Sales promotion Public relations LO8 55 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  56. 56. Marketing Mix: The “Four Ps” Price is what a buyer must give up to obtain a product. Price The most flexible of the “4 Ps”-- quickest to change Competitive weapon Price x Units Sold = Total Revenue LO8 56 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  57. 57. LO8 REVIEW LEARNING OUTCOME Elements of the Marketing Mix Copyright ©2009 by Cengage Learning Inc. All rights reserved 57
  58. 58. LO9 Following Up on the Marketing Plan Explain why implementation, evaluation, and control of the marketing plan are necessary Copyright ©2009 by Cengage Learning Inc. All rights reserved 58
  59. 59. LO9 Following Up the Marketing Plan • Implementation • Evaluation • Control • Marketing audit is… • Comprehensive • Systematic • Independent • Periodic 59 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  60. 60. LO9 REVIEW LEARNING OUTCOME Implementation, Evaluation, and Control Implementation Evaluation Product Product Place Place Met Met Promotion Promotion objectives? objectives? Price Price Audits Audits •• comprehensive comprehensive •• systematic systematic •• independent independent •• periodic periodic Copyright ©2009 by Cengage Learning Inc. All rights reserved 60
  61. 61. LOIO Effective Strategic Planning Identify several techniques that help make strategic planning effective Copyright ©2009 by Cengage Learning Inc. All rights reserved 61
  62. 62. LOIO REVIEW LEARNING OUTCOME Techniques for Effective Strategic Planning Continual Continual Management Management Creativity Creativity attention attention commitment commitment Effective Effective Strategic Strategic Planning Planning Copyright ©2009 by Cengage Learning Inc. All rights reserved 62
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