Strategic Planning for Competitive Advantage

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Strategic Planning for Competitive Advantage

  1. 1. CHAPTER 2 Strategic Planning for Competitive Advantage Designed by Eric Brengle B-books, Ltd Prepared by Deborah Baker Texas Christian University Introduction to Marketing McDaniel, Lamb, Hair 9
  2. 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 LO I LO 2 LO 3
  3. 3. Learning Outcomes Explain the components of a situation analysis Identify sources of competitive advantage Identify strategic alternatives Discuss target market strategies LO 5 LO 6 LO 7 LO 4
  4. 4. 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 LO 9 LO IO LO 8
  5. 5. The Nature of Strategic Planning Understand the importance of strategic marketing and know a basic outline for a marketing plan LO I
  6. 6. Strategic Planning LO I 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. Strategic Planning
  7. 7. Strategic Marketing Management LO I What is the organization’s main activity? How will it reach its goals? THE ANSWER IS A MARKETING PLAN.
  8. 8. Strategic Planning LO I Marketing Plan A written document that acts as a guidebook of marketing activities for the marketing manager.
  9. 9. Why Write a Marketing Plan? LO I <ul><li>Provides a basis for comparison of actual and expected performance </li></ul><ul><li>Provides clearly stated activities to work toward common goals </li></ul><ul><li>Serves as a reference for the success of future activities </li></ul><ul><li>Provides an examination of the marketing environment </li></ul><ul><li>Allows entry into the marketplace with awareness </li></ul>
  10. 10. Marketing Plan Elements LO I Implementation Evaluation Control Promotion Marketing Strategy Product Distribution Price Marketing Mix Business Mission Statement Objectives Situation or SWOT Analysis Target Market Strategy
  11. 11. REVIEW LEARNING OUTCOME The Importance of Strategic Marketing LO I What Why How Strategic Planning Long-term profitability and growth Write a marketing plan Online http://www.dmusic.com
  12. 12. Defining the Business Mission Develop an appropriate business mission statement LO 2
  13. 13. <ul><li>Answers the question, “What business are we in?” </li></ul><ul><li>Focuses on the market(s) rather than the good or service </li></ul><ul><li>Strategic Business Units (SBUs) may also have a mission statement </li></ul>Defining the Business Mission LO 2
  14. 14. AMA’s Mission Statement LO 2
  15. 15. Strategic Business Units (SBUs) <ul><li>Characteristics: [SBU HAS…] </li></ul><ul><li>A distinct mission and specific target market </li></ul><ul><li>Control over its resources </li></ul><ul><li>Its own competitors </li></ul><ul><li>Plans independent of other SBUs </li></ul>LO 2
  16. 16. REVIEW LEARNING OUTCOME Business Mission Statement LO 2 marketing myopia no direction focus on markets served and benefits customers seek Q: What business are we in? A: Business mission statement Too narrow Too broad Just right marketing myopia no direction focus on markets served and benefits customers seek
  17. 17. Setting Marketing Plan Objectives Describe the criteria for stating good marketing objectives LO 3
  18. 18. Marketing Objective LO 3 A statement of what is to be accomplished through marketing activities. Marketing Objective
  19. 19. Marketing Objectives LO 3 <ul><li>Realistic </li></ul><ul><li>Measurable </li></ul><ul><li>Time specific </li></ul><ul><li>Consistent with and indicate the organization’s priorities </li></ul>“ Our objective is to achieve 10 percent dollar market share in the cat food market within 12 months of product introduction.”
  20. 20. REVIEW LEARNING OUTCOME Criteria for Good Marketing Objectives LO 3 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
  21. 21. Conducting a Situation Analysis Explain the components of a situation analysis LO 4
  22. 22. SWOT Analysis LO 4 Identifying internal strengths (S) and weaknesses (W) and also examining external opportunities (O) and threats (T) SWOT Analysis
  23. 23. SWOT Analysis LO 4 ©South-Western College Publishing S W O T Things the company does well. Things the company does not do well. 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. Internal External
  24. 24. Biz Flix U-571 LO 4
  25. 25. Environmental Scanning LO 4 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. Environmental Scanning
  26. 26. REVIEW LEARNING OUTCOME Components of a Situation Analysis LO 4 <ul><li>production costs </li></ul><ul><li>marketing skills </li></ul><ul><li>financial resources </li></ul><ul><li>image </li></ul><ul><li>technology </li></ul>Strengths Weaknesses INTERNAL ENVIRONMENT
  27. 27. REVIEW LEARNING OUTCOME Components of a Situation Analysis LO 4 <ul><li>social </li></ul><ul><li>demographic </li></ul><ul><li>economic </li></ul><ul><li>technological </li></ul><ul><li>political / legal </li></ul><ul><li>competitive </li></ul>Opportunities Threats EXTERNAL ENVIRONMENT
  28. 28. Competitive Advantage Identify sources of competitive advantage LO 5
  29. 29. Competitive Advantage LO 5 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 Advantage
  30. 30. Competitive Advantage LO 5 Niche Strategies Cost Product/Service Differentiation Types of Competitive Advantage
  31. 31. Cost Competitive Advantage LO 5 Cost Competitive Advantage Being the low-cost competitor in an industry while maintaining satisfactory profit margins.
  32. 32. Cost Competitive Advantage LO 5 <ul><li>Obtain inexpensive raw materials </li></ul><ul><li>Create efficient plant operations </li></ul><ul><li>Design products for ease of manufacture </li></ul><ul><li>Control overhead costs </li></ul><ul><li>Avoid marginal customers </li></ul>
  33. 33. Sources of Cost Reduction LO 5 Experience Curves Efficient Labor No-frills Products Government Subsidies Product Design Reengineering Production Innovations New Service Delivery Methods
  34. 34. Product/Service Differentiation LO 5 Product / Service Differentiation Competitive Advantage The provision of something that is unique and valuable to buyers beyond simply offering a lower price than the competition’s.
  35. 35. Examples of Product/Service Differentiation LO 5 <ul><li>Brand names </li></ul><ul><li>Strong dealer network </li></ul><ul><li>Product reliability </li></ul><ul><li>Image </li></ul><ul><li>Service </li></ul>
  36. 36. Niche Competitive Advantage LO 5 Niche Competitive Advantage The advantage achieved when a firm seeks to target and effectively serve a small segment of the market.
  37. 37. Niche Competitive Advantage <ul><li>Used by small companies with limited resources </li></ul><ul><li>May be used in a limited geographic market </li></ul><ul><li>Product line may be focused on a specific product category </li></ul>LO 5
  38. 38. Sources of Sustainable Competitive Advantage LO 5 Patents Copyrights Locations Equipment Technology Customer Service Promotion Skills and Assets of an Organization
  39. 39. REVIEW LEARNING OUTCOME Sources of Competitive Advantage LO 5 Sources of Competitive Advantage Cost $ Product/Service Differentiation A vs. B vs. C Niche Strategies
  40. 40. Strategic Directions Identify strategic alternatives LO 6
  41. 41. Strategic Alternatives LO 6 Market Penetration Market Development 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
  42. 42. Ansoff’s Strategic Opportunity Matrix LO 6 Present Product New Product New Market Market Penetration Market Development Product Development Diversification Present Market http://www.pg.com Online
  43. 43. Portfolio Matrix LO 6 Stars Cash Cows Problem Children Dogs
  44. 44. Portfolio Matrix Strategies LO 6 Build Hold Harvest Divest
  45. 45. REVIEW LEARNING OUTCOME Strategic Alternatives LO 6 Identify strategic alternatives Diversification = Product development = products Market development = customers Market penetration = share new products + new markets
  46. 46. Describing the Target Market Discuss target market strategies LO 7
  47. 47. Marketing Strategy LO 7 Marketing Strategy 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.
  48. 48. Target Market Strategy <ul><li>Segment the market based on groups with similar characteristics </li></ul><ul><li>Analyze the market based on attractiveness of market segments </li></ul><ul><li>Select one or more target markets </li></ul>LO 7
  49. 49. Target Market Strategy LO 7 Appeal to the entire market with one marketing mix Concentrate on one marketing segment Appeal to multiple markets with multiple marketing mixes
  50. 50. REVIEW LEARNING OUTCOME Target Market Strategies LO 7 Entire Market Multiple Markets Single Market Target Market Options
  51. 51. The Marketing Mix Describe the elements of the marketing mix LO 8
  52. 52. The Marketing Mix LO 8 Marketing Mix A unique blend of product, distribution, promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market.
  53. 53. Marketing Mix: The “Four Ps” LO 8 Price Promotion Place Product
  54. 54. Marketing Mix: The “Four Ps” <ul><li>The starting point of the “4 Ps” </li></ul><ul><li>Includes </li></ul><ul><ul><li>Physical unit </li></ul></ul><ul><ul><li>Package </li></ul></ul><ul><ul><li>Warranty </li></ul></ul><ul><ul><li>Service </li></ul></ul><ul><ul><li>Brand </li></ul></ul><ul><ul><li>Image </li></ul></ul><ul><ul><li>Value </li></ul></ul>Product <ul><li>Products can be… </li></ul><ul><ul><li>Tangible goods </li></ul></ul><ul><ul><li>Ideas </li></ul></ul><ul><ul><li>Services </li></ul></ul>LO 8
  55. 55. Marketing Mix: The “Four Ps” <ul><li>Product availability where and when customers want them </li></ul><ul><li>All activities from raw materials to finished products </li></ul><ul><li>Ensure products arrive in usable condition at designated places when needed </li></ul>LO 8 Place
  56. 56. Marketing Mix: The “Four Ps” LO 8 Promotion <ul><li>Role is to bring about exchanges with target markets by: </li></ul><ul><ul><li>Informing </li></ul></ul><ul><ul><li>Educating </li></ul></ul><ul><ul><li>Persuading </li></ul></ul><ul><ul><li>Reminding </li></ul></ul><ul><li>Includes integration of: </li></ul><ul><ul><li>Personal selling </li></ul></ul><ul><ul><li>Advertising </li></ul></ul><ul><ul><li>Sales promotion </li></ul></ul><ul><ul><li>Public relations </li></ul></ul>http://www.paramount.com http://www.warnerbros.com http://www.universalstudios.com Online
  57. 57. Marketing Mix: The “Four Ps” LO 8 Price <ul><li>Price is what a buyer must give up to obtain a product. </li></ul><ul><li>The most flexible of the “4 Ps”-- quickest to change </li></ul><ul><li>Competitive weapon </li></ul><ul><li>Price x Units Sold = Total Revenue </li></ul>
  58. 58. REVIEW LEARNING OUTCOME Elements of the Marketing Mix LO 8
  59. 59. Following Up on the Marketing Plan Explain why implementation, evaluation, and control of the marketing plan are necessary LO 9
  60. 60. <ul><li>Implementation </li></ul><ul><li>Evaluation </li></ul><ul><li>Control </li></ul><ul><li>Marketing audit is… </li></ul><ul><ul><ul><li>Comprehensive </li></ul></ul></ul><ul><ul><ul><li>Systematic </li></ul></ul></ul><ul><ul><ul><li>Independent </li></ul></ul></ul><ul><ul><ul><li>Periodic </li></ul></ul></ul>Following Up the Marketing Plan LO 9 http://www.youngbiz.com Online
  61. 61. REVIEW LEARNING OUTCOME LO 9 Implementation, Evaluation, and Control Product Place Promotion Price Met objectives? Implementation Evaluation <ul><li>Audits </li></ul><ul><li>comprehensive </li></ul><ul><li>systematic </li></ul><ul><li>independent </li></ul><ul><li>periodic </li></ul>
  62. 62. Effective Strategic Planning Identify several techniques that help make strategic planning effective LO IO
  63. 63. REVIEW LEARNING OUTCOME LO IO Techniques for Effective Strategic Planning Effective Strategic Planning Continual attention Creativity Management commitment

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