Strategic planing for competitive advantage

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Strategic planing for competitive advantage

  1. 1. Strategic Planning for Competitive Advantage 2chapter Prepared by Deborah Baker Texas Christian University ©2002 South-WesternChapter 2 Version 6e 1
  2. 2. Learning Objectives 1. Understand the importance of strategic marketing and know a basic outline for a marketing plan. 2 2. Develop an appropriate business mission statement.chapter 3. Describe the criteria for stating good marketing objectives. ©2002 South-WesternChapter 2 Version 6e 2
  3. 3. Learning Objectives (continued) 4 2chapter ©2002 South-WesternChapter 2 Version 6e 3
  4. 4. Learning Objectives (continued) 8. Describe elements of the marketing mix. 9. Explain why implementation, evaluation, and control of the marketing plan are 2 necessary.chapter 10. Identify several techniques that help make strategic planning possible. ©2002 South-WesternChapter 2 Version 6e 4
  5. 5. 1 Learning Objective Understand the importance of strategic marketing and know a basic outline for a marketing plan. ©2002 South-WesternChapter 2 Version 6e 5
  6. 6. 1 Strategic Planning The managerial process of creating and maintaining a fit between the organization’s objectives and resources and evolving market opportunities. ©2002 South-WesternChapter 2 Version 6e 6
  7. 7. 1 Strategic Planning N G RU TY LON ABILI FIT OWTH EVOLVING PRO GR D MARKET AN OPPORUNITIES RESOURCES & OBJECTIVES ©2002 South-WesternChapter 2 Version 6e 7
  8. 8. 1 Strategic Marketing Planning  What is the organization’s main activity?  How will it reach its goals? The Marketing Plan The Marketing Plan ©2002 South-WesternChapter 2 Version 6e 8
  9. 9. 1 Planning The process of anticipating future events and determining strategies to achieve organizational objectives in the future. ©2002 South-WesternChapter 2 Version 6e 9
  10. 10. 1 The Marketing Plan A written document that acts as a guidebook of marketing activities for the marketing manager. ©2002 South-WesternChapter 2 Version 6e 10
  11. 11. 1 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 Pla ng success of future activities keti n Mar ©2002 South-WesternChapter 2 Version 6e 11
  12. 12. 1 Marketing Plan Elements Business Mission Statement Objectives Situation or SWOT Analysis Marketing Strategy Target Market Strategy Marketing Mix Product Distribution Promotion Price Implementation ©2002 South-WesternChapter 2 Version 6e Evaluation 12 Control
  13. 13. 2 Learning Objective Develop an appropriate business mission statement. ©2002 South-WesternChapter 2 Version 6e 13
  14. 14. 2 Defining the Business Mission  Answers the question: What business are we in and where are we going?  Focuses on the market(s) rather than the good or service  Strategic Business Units may also have a mission statement ©2002 South-WesternChapter 2 Version 6e 14
  15. 15. 2 PepsiCo’s Mission Statement “PepsiCo’s overall mission is to increase the value of our shareholders’ investment. We do this through sales growth, cost controls and wise investment of resources. We believe our commercial success depends upon offering quality and value to our consumers and customers; providing products that are safe, wholesome, economically efficient and environmentally sound; and providing a fair return to our investors while adhering to the highest standards of integrity.” http:www.pepsico.com ©2002 South-WesternChapter 2 Version 6e 15
  16. 16. 2 Strategic Business Units (SBUs) Characteristics Characteristics 1. A distinct mission and specific target market 2. Control over their resources 3. Their own competitors 4. Plans independent of other SBUs ©2002 South-WesternChapter 2 Version 6e 16
  17. 17. 3 Learning Objective Describe the criteria for stating good marketing objectives. ©2002 South-WesternChapter 2 Version 6e 17
  18. 18. 3 Marketing Objective A statement of what is to be accomplished through marketing activities. ©2002 South-WesternChapter 2 Version 6e 18
  19. 19. 3 Marketing Objectives Marketing Objectives Must Be:  Realistic “Our objective is to increase market  Measurable share by 40% and to obtain customer  Time specific satisfaction ratings of at least 90% in 2001.”  Consistent with Organization’s Priorities ©2002 South-WesternChapter 2 Version 6e 19
  20. 20. 3 Marketing Plan Objectives  Communicate marketing management philosophies  Provide direction  Serve as motivators  Clarify thinking  Provide basis for control ©2002 South-WesternChapter 2 Version 6e 20
  21. 21. 4 Learning Objective Explain the components of a situation analysis. ©2002 South-WesternChapter 2 Version 6e 21
  22. 22. 4 SWOT Analysis Identifying internal strengths (S) and weaknesses (W) and also examining external opportunities (O) and threats (T) ©2002 South-WesternChapter 2 Version 6e 22
  23. 23. 4 SWOT Analysis S Things the company does well. Things the company does well.Internal W Things the company does not do well. Things the company does not do well. O Conditions in the external environment Conditions in the external environment that favor strengths. that favor strengths.External Conditions in the external environment T Conditions in the external environment that do not relate to existing strengths that do not relate to existing strengths or favor areas of current weakness. or favor areas of Publishing weakness. ©South-Western College current ©2002 South-Western Chapter 2 Version 6e 23
  24. 24. 4 SWOT Analysis Strengths and Weaknesses Strengths and Weaknesses INTERNAL INTERNAL  Production Costs  Marketing Skills  Employee Capabilities  Financial Resources  Available Technology  Company/Brand Image ©2002 South-WesternChapter 2 Version 6e 24
  25. 25. 4 SWOT Analysis Opportunities and Threats Opportunities and Threats EXTERNAL EXTERNAL Social Technological Demographic Political/Legal Economic Competitive ©2002 South-WesternChapter 2 Version 6e 25
  26. 26. 4 Environmental Scanning Collection and interpretation of information about forces, events and relationships in the external environment that may affect the future of the organization or the marketing plan implementation. ©2002 South-WesternChapter 2 Version 6e 26
  27. 27. 4 Environmental Scanning  Examination of macroenvironmental forces Social Demographic Economic Technological Political / Legal Competitive  Helps identify market opportunities  Provides guidelines for design of marketing strategy ©2002 South-WesternChapter 2 Version 6e 27
  28. 28. 5 Learning Objective Identify sources of competitive advantage ©2002 South-WesternChapter 2 Version 6e 28
  29. 29. 5 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. ©2002 South-WesternChapter 2 Version 6e 29
  30. 30. 5 Competitive Advantage Cost Cost Types of Types of Competitive Competitive Product/Service Product/Service Advantage Advantage Differentiation Differentiation Niche Strategies Niche Strategies ©2002 South-WesternChapter 2 Version 6e 30
  31. 31. 5 Cost Leadership  Obtain inexpensive raw materials  Create efficient operations  Design products for manufacture  Control overhead costs  Avoid marginal customers ©2002 South-WesternChapter 2 Version 6e 31
  32. 32. 5 Cost Competitive Advantage Being the low-cost competitor in an industry while maintaining satisfactory profit margins. ©2002 South-WesternChapter 2 Version 6e 32
  33. 33. 5 Sources of Cost Reduction Experience Curves Experience Curves Product Design Product Design Efficient Labor Efficient Labor Reengineering Reengineering No-frills Products No-frills Products Production Innovations Production Innovations Government Subsidies Government Subsidies New Delivery Methods New Delivery Methods ©2002 South-WesternChapter 2 Version 6e 33
  34. 34. Differentiation 5 Competitive Advantage Advantage achieved when a firm provides something that is unique and valuable to buyers beyond simply offering a lower price than the competition. ©2002 South-WesternChapter 2 Version 6e 34
  35. 35. 5 Common Differential Advantages  Brand names  Strong dealer network  Product reliability  Image  Service ©2002 South-WesternChapter 2 Version 6e 35
  36. 36. Sources of Differential 5 Competitive Advantage Value impressions Augmented products  Features of a  Features of a product that product that are signal value not expected by the customer ©2002 South-WesternChapter 2 Version 6e 36
  37. 37. Niche 5 Competitive Advantage Advantage achieved when a firm seeks to target and effectively serve a small segment of the market. ©2002 South-WesternChapter 2 Version 6e 37
  38. 38. 5 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 line ©2002 South-WesternChapter 2 Version 6e 38
  39. 39. Sustainable 5 Competitive Advantage A differential advantage that cannot be copied by the competition. ©2002 South-WesternChapter 2 Version 6e 39
  40. 40. Sources of Sustainable 5 Competitive Advantage Patents Patents Copyrights Copyrights Locations Locations Equipment Equipment Technology Technology Organization’s Organization’s Skills and Assets Customer Service Customer Service Skills and Assets Promotion Promotion ©2002 South-WesternChapter 2 Version 6e 40
  41. 41. Strategic Windows 5 The limited period during which the “fit” between the key requirements of a market and the particular competencies of a firm are at an optimum. ©2002 South-WesternChapter 2 Version 6e 41
  42. 42. 6 Learning Objective Identify strategic alternatives and describe tools used to help select alternatives. ©2002 South-WesternChapter 2 Version 6e 42
  43. 43. 6 Strategic Windows Market Market Increase market share among Penetration Penetration existing customers Market Market Attract new customers to Development Development existing products Product Product Create new products for Development Development present markets Diversification Introduce new products Diversification into new markets ©2002 South-WesternChapter 2 Version 6e 43
  44. 44. 6 Strategic Alternatives Market Market Increase market share among Increase market share among Penetration Penetration existing customers. existing customers. Market Market Attract new customers Attract new customers Development Development to existing products to existing products Product Product Create new products Create new products Development Development for present markets for present markets Introduce new products Introduce new products Diversification Diversification into new markets. into new markets. ©2002 South-WesternChapter 2 Version 6e 44
  45. 45. 6 Strategic Opportunity Matrix Present Product New Product Present Market Product Market Penetration Development New Market Diversification Market Development ©2002 South-WesternChapter 2 Version 6e 45
  46. 46. 6 Selecting a Strategic Alternative Common Tools Philosophy Profitability Portfolio Matrix $ Market Share ©2002 South-WesternChapter 2 Version 6e 46
  47. 47. Portfolio Matrix 6 Tools for allocating resources among products or strategic business units on the basis of relative market share and market growth rate. ©2002 South-WesternChapter 2 Version 6e 47
  48. 48. 6 BCG Portfolio Matrix MARKET SHARE DOMINANCE MARKET GROWTH RATE HIGH LOW HIGH ? $ LOW ©2002 South-WesternChapter 2 Version 6e 48
  49. 49. 6 BCG Portfolio Matrix MARKET SHARE DOMINANCE HIGH LOW High growth High growth Low market share Market leaders HIGH LOW Need cashMARKET GROWTH RAT Require cash Poor profit margins $ Low growth Low growth High market share Low market share High cash flow Minimal cash flow ©2002 South-Western Chapter 2 Version 6e 49
  50. 50. 6 Portfolio Matrix Example MARKET SHARE DOMINANCE HIGH LOW Notebook Palmtop Computer (PROBLEM (STAR) CHILD) HIGH LOWMARKET GROWTH RAT Personal Mainframe Computer Computer (CASH COW) (DOG) ©2002 South-Western Chapter 2 Version 6e 50
  51. 51. 6 Strategies for Resource Allocation Provide financial resources if SBU Build Build (Problem Child) has potential to be a Star. Preserve market share if SBU is a successful Hold Hold Cash Cow. Use cash flow for other SBUs. Increase short-term cash return. Harvest Harvest Appropriate for all SBUs except Stars. Get rid of SBUs with low shares in Divest Divest low-growth markets. ©2002 South-WesternChapter 2 Version 6e 51
  52. 52. 6 Market Attractiveness Matrix Tool for allocating resources among strategic business units on the basis of market attractiveness and firm’s positioning. ©2002 South-WesternChapter 2 Version 6e 52
  53. 53. 6 Market Attractiveness Matrix (GE) BUSINESS POSITON STRONG MEDIUM WEAK MARKET ATTRACTIVENESS HIGH High Attractiveness Medium Attractiveness MEDIUM Low Attractiveness LOW ©2002 South-WesternChapter 2 Version 6e 53
  54. 54. 6 Market Attractiveness Attributes of an Attractive Market  High profitability  Rapid growth  Lack of government regulation  Insensitivity to price increase  Lack of competition  Availability of technology ©2002 South-WesternChapter 2 Version 6e 54
  55. 55. 7 Learning Objective Discuss target market strategies. ©2002 South-WesternChapter 2 Version 6e 55
  56. 56. 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. ©2002 South-WesternChapter 2 Version 6e 56
  57. 57. 7 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 ©2002 South-WesternChapter 2 Version 6e 57
  58. 58. 7 Target Market Strategy  Develop a marketing mix that will produce satisfying exchanges with target markets ©2002 South-WesternChapter 2 Version 6e 58
  59. 59. 8 Learning Objective Describe elements of the marketing mix. ©2002 South-WesternChapter 2 Version 6e 59
  60. 60. 8 The Marketing Mix A unique blend of product, distribution, promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market. ©2002 South-WesternChapter 2 Version 6e 60
  61. 61. 8 Marketing Mix: The “Four Ps” Price Price Promotion Promotion Place Place Product Product ©2002 South-WesternChapter 2 Version 6e 61
  62. 62. 8 Product Strategies  The starting point of the “4 Ps” Product Product  Includes physical unit, package, warranty, service, brand, image, and value ©2002 South-WesternChapter 2 Version 6e 62
  63. 63. 8 Distribution (Place) Strategies  Product availability where and when Place Place customers want them.  Involves all activities from raw materials to finished products ©2002 South-WesternChapter 2 Version 6e 63
  64. 64. 8 Promotion Strategies  Role is to bring about exchanges with target Promotion Promotion markets  Includes integration of personal selling, advertising, sales promotion, and public relations ©2002 South-WesternChapter 2 Version 6e 64
  65. 65. 8 Pricing Strategies  The most flexible of the “4 Ps” Price Price  Price X Units Sold = Total Revenue ©2002 South-WesternChapter 2 Version 6e 65
  66. 66. 9 Learning Objective Explain why implementation, evaluation, and control of the marketing plan are necessary. ©2002 South-WesternChapter 2 Version 6e 66
  67. 67. 9 Following Up the Marketing Plan  Implementation  Evaluation  Control  Marketing Audit Comprehensive Systematic Independent Periodic ©2002 South-WesternChapter 2 Version 6e 67
  68. 68. 9 The Marketing Audit A thorough, systematic, periodic evaluation of the goals, strategies, structure, and performance of the marketing organization. ©2002 South-WesternChapter 2 Version 6e 68
  69. 69. 10 Learning Objective Identify several techniques that help make strategic planning effective. ©2002 South-WesternChapter 2 Version 6e 69
  70. 70. 10 Effective Strategic Planning Ongoing Ongoing Process Process Requirements Requirements Creativity Creativity Management Management Support Support ©2002 South-WesternChapter 2 Version 6e 70

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