1Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Strategic Planning for Competitive Advantage Prepared by Deborah Baker

1Chapter 2 Marketing 7e Lamb Hair McDaniel©2004 South-Western/Thomson Learning

Strategic Planning for Strategic Planning for Competitive AdvantageCompetitive Advantage

Prepared byPrepared byDeborah BakerDeborah Baker

Texas Christian UniversityTexas Christian University

Chapter 2


Learning ObjectivesLearning Objectives

1. Understand the importance of strategic marketing and know a basic outline for a marketing plan.

2. Develop an appropriate business mission statement.

3. Describe the criteria for stating good marketing objectives.


Learning Objectives Learning Objectives (continued)(continued)

4. Explain the components of a situation analysis.

5. Identify sources of competitive advantage.

6. Identify strategic alternatives and describe tools used to help select alternatives.

7. Discuss target market strategies.


Learning Objectives Learning Objectives (continued)(continued)

8. Describe elements of the marketing mix.

9. Explain why implementation, evaluation, and control of the marketing plan are necessary.

10. Identify several techniques that help make strategic planning possible.


Learning Objective Learning Objective

Understand the importance of strategic marketing and know a basic outline for a marketing plan.

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On Linehttp://www.coach.comhttp://www.vuitton.comhttp://www.katespade.com


Strategic PlanningStrategic Planning

The managerial process of

creating and maintaining a

fit between the

organization’s objectives

and resources and evolving

market opportunities.

11

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On Linehttp://www.coke.comhttp://www.pepsi.com


Strategic PlanningStrategic Planning

RESOURCES &

OBJECTIVES

EVOLVING MARKET

OPPORTUNITIES

LONG RUN LONG RUN PROFITABILITY PROFITABILITY AND GROWTHAND GROWTH

11


What is the organization’s main activity?

How will it reach its goals?

What is the organization’s main activity?

How will it reach its goals?

Strategic Marketing PlanningStrategic Marketing Planning

The Marketing PlanThe Marketing PlanThe Marketing PlanThe Marketing Plan

11


PlanningPlanning

The process of anticipating

future events and

determining strategies to

achieve organizational

objectives in the future.

11


The Marketing PlanThe Marketing Plan

A written document that

acts as a guidebook of

marketing activities for the

marketing manager.

11


Why Write a Marketing Plan?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

Allows entry into the marketplace with awareness

Marketing

Plan

11


Marketing Plan Marketing Plan ProcessProcess11

Marketing Strategy

Product

Promotion

Distribution

Price

Marketing Mix

Business Mission Statement

Objectives

Situation or SWOT Analysis

ImplementationEvaluation

Control

Target Market Strategy

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On Linehttp://www.dmusic.com



Develop an appropriate business mission statement.

22


Defining the Business MissionDefining 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

22

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On Linehttp://www.att.com


AMA’s Mission StatementAMA’s Mission Statement22


PepsiCo’s Mission StatementPepsiCo’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

22


Strategic Business Units Strategic Business Units (SBUs)(SBUs)

1. A distinct mission and specific target market

2. Control over their resources

3. Their own competitors

4. Plans independent of other SBUs

CharacteristicsCharacteristics

22



Describe the criteria for stating good marketing objectives.

33


Marketing ObjectiveMarketing Objective

A statement of what is to be

accomplished through

marketing activities.

33


“Our objective is to increase market share by 40% and to obtain customer satisfaction ratings of at least 90%

in 2003.”

Marketing ObjectivesMarketing Objectives

Marketing Objectives Must Be:Marketing Objectives Must Be:

Realistic

Measurable

Time specific

Consistent with Organization’s Priorities

33


Examples of Marketing Examples of Marketing ObjectivesObjectives

33


Marketing Plan ObjectivesMarketing Plan Objectives

Communicate marketing management philosophies

Provide direction

Serve as motivators

Clarify thinking

Provide basis for control

33



Explain the components of a situation analysis.

44


SWOT AnalysisSWOT Analysis

Identifying

internal strengths (S)

and weaknesses (W)

and also examining

external opportunities (O) and

threats (T)

44



©South-Western College Publishing

SS

WW

OO

TT

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.

Internal

External

44



Production Costs

Marketing Skills

Employee Capabilities

Financial Resources

Available Technology

Company/Brand Image

Strengths Strengths

and and WeaknessesWeaknessesINTERNALINTERNAL

Strengths Strengths and and

WeaknessesWeaknessesINTERNALINTERNAL

44



OpportunitiesOpportunities

AndAndThreatsThreats

EXTERNALEXTERNAL

OpportunitiesOpportunitiesAndAnd

ThreatsThreatsEXTERNALEXTERNAL

Social

Demographic

Economic

Technological

Political/Legal

Competitive

44


Environmental ScanningEnvironmental 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.

44


Environmental ScanningEnvironmental Scanning

Examination of macroenvironmental forcesSocialDemographicEconomicTechnologicalPolitical / LegalCompetitive

Helps identify market opportunities

Provides guidelines for design of marketing strategy

44



Identify sources of competitive advantage

55


Competitive AdvantageCompetitive 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.

55


Competitive AdvantageCompetitive Advantage

Niche StrategiesNiche Strategies

CostCost

Product/Service Differentiation

Product/Service Differentiation

Types of Competitive Advantage

Types of Competitive Advantage

55

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On Linehttp://www.travelocity.com


Cost Competitive AdvantageCost Competitive Advantage

Being the low-cost competitor

in an industry while

maintaining satisfactory

profit margins.

55


Obtain inexpensive raw materials

Create efficient operations

Design products for manufacture

Control overhead costs

Avoid marginal customers

Obtain inexpensive raw materials

Create efficient operations

Design products for manufacture

Control overhead costs

Avoid marginal customers

Cost Competitive AdvantageCost Competitive Advantage55


Sources of Cost ReductionSources of Cost Reduction

Experience CurvesExperience Curves

Efficient LaborEfficient Labor

No-frills ProductsNo-frills Products

Government SubsidiesGovernment Subsidies

Product DesignProduct Design

ReengineeringReengineering

Production InnovationsProduction Innovations

New Delivery MethodsNew Delivery Methods

55


Product/Service DifferentiationProduct/Service Differentiation

Advantage achieved when a

firm provides something that

is unique and valuable to

buyers beyond simply

offering a lower price

than the competition.

55


Examples of Examples of Product/Service Product/Service

DifferentiationDifferentiation

Brand names

Strong dealer network

Product reliability

Image

Service

55


NicheNicheCompetitive AdvantageCompetitive Advantage

Advantage achieved when a

firm seeks to target and

effectively serve a small

segment of the market.

55


Niche Competitive AdvantageNiche 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

55


SustainableSustainableCompetitive AdvantageCompetitive Advantage

An advantage

that cannot be copied

by the competition.

55


Sources of Sustainable Sources of Sustainable Competitive AdvantageCompetitive Advantage

PatentsPatents

CopyrightsCopyrights

LocationsLocations

EquipmentEquipment

TechnologyTechnology

Customer ServiceCustomer Service

PromotionPromotion

Organization’sOrganization’s Skills and Assets Skills and Assets

Organization’sOrganization’s Skills and Assets Skills and Assets

55



Identify strategic alternatives and describe tools used to help select alternatives.

66


Strategic AlternativesStrategic Alternatives

MarketPenetration

MarketPenetration

MarketDevelopment

MarketDevelopment

Product Development

Product Development

DiversificationDiversification

Increase market share among existing customers

Attract new customers to existing products

Introduce new products into new markets

Create new products for present markets

66


Strategic Opportunity MatrixStrategic Opportunity Matrix

Present Product New Product

New Market

MarketPenetration

MarketDevelopment

ProductDevelopment

Diversification

Present Market

66

On Linehttp://www.pg.com

On Linehttp://www.pg.com


Selecting a Strategic Selecting a Strategic AlternativeAlternative

Common Tools Philosophy

Market Share

Profitability

Portfolio Matrix

$$$$

66


Portfolio MatrixPortfolio Matrix

Tools for allocating resources

among products or strategic

business units on the basis of

relative market share and

market growth rate.

??$$$$

66


BCG Portfolio MatrixBCG Portfolio Matrix

MA

RK

ET

GR

OW

TH

RA

TE

MARKET SHARE DOMINANCE

HIGH LOW

LO

W

H

IGH

??

$$$$

66



HIGH LOW

MA

RK

ET

GR

OW

TH

RA

TE

LO

W

H

IGH

High growthMarket leaders Require cash

Large profits

Low growth

High market shareHigh cash flow

Low growthLow market shareMinimal cash flow

High growth

Low market shareNeed cash

Poor profit margins

$$$$

BCG Portfolio MatrixBCG Portfolio Matrix66


BCG Portfolio Matrix ExampleBCG Portfolio Matrix Example

Sub-Notebooks

and Hand-Held Computer

Integrated phone/Palm

devices

Laptop and Personal

Computers

MainframeComputer

MA

RK

ET

GR

OW

TH

RA

TE

LO

W

H

IGH


HIGH LOW

STAR PROBLEM

CHILD

CASH COW DOG

66


Strategies for Resource Strategies for Resource AllocationAllocation

BuildBuild

HoldHold

HarvestHarvest

DivestDivest

Provide financial resources if SBU (Problem Child) has potential to be a Star.

Preserve market share if SBU is a successful Cash Cow. Use cash flow for other SBUs.

Increase short-term cash return. Appropriate for all SBUs except Stars.

Get rid of SBUs with low shares in low-growth markets.

66



Discuss target market strategies.

77


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.

Marketing StrategyMarketing Strategy77


Target Market StrategyTarget 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

77


Appeal to the entire market with one marketing mix

Appeal to the entire market with one marketing mix

Target Market SelectionsTarget Market Selections

Concentrate on one marketing segment

Concentrate on one marketing segment

Appeal to multiple marketswith multiple marketing mixes

Appeal to multiple marketswith multiple marketing mixes

77


Target Market StrategyTarget Market Strategy

Develop a marketing mix that will produce satisfying exchanges with

target markets

ProductProductPlacePlace

PromotionPromotionPricePrice

ProductProductPlacePlace

PromotionPromotionPricePrice

77



Describe elements of the marketing mix.

88


A unique blend of product,

distribution, promotion, and

pricing strategies designed to

produce mutually satisfying

exchanges with a target

market.

The Marketing MixThe Marketing Mix88


PricePrice

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

PromotionPromotion

PlacePlace

ProductProduct

88


Product StrategiesProduct Strategies

The starting point of the “4 Ps”

Includes physical unit, package, warranty, service, brand, image, and value

ProductProduct

88


Distribution (Place) StrategiesDistribution (Place) Strategies

PlacePlace

Product availability where and when customers want them.

Involves all activities from raw materials to finished products

88


Promotion StrategiesPromotion Strategies

PromotionPromotion

Role is to bring about exchanges with target markets

Includes integration of personal selling, advertising, sales promotion, and public relations

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On Linehttp://www.paramount.comhttp://www.warnerbros.comhttp://www.universalstudios.com


Pricing StrategiesPricing Strategies

The most flexible of the “4 Ps”

Price X Units Sold = Total Revenue

PricePrice

88



Explain why implementation, evaluation, and control of the marketing plan are necessary.

99

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On Linehttp://www.youngbiz.com


Following Up the Marketing Following Up the Marketing PlanPlan

Implementation

Evaluation

Control Marketing Audit

ComprehensiveSystematicIndependentPeriodic

99


The Marketing AuditThe Marketing Audit

A thorough, systematic,

periodic evaluation of the

goals, strategies, structure,

and performance of the

marketing organization.

99



Identify several techniques that help make strategic planning effective.

1010


Effective Strategic PlanningEffective Strategic Planning

Management CommitmentManagement Commitment

ContinualAttention

ContinualAttention

CreativityCreativity

Requirementsfor Effective

Strategic Planning

Requirementsfor Effective

Strategic Planning

1010

Documents

1Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Strategic Planning for Competitive Advantage Prepared by Deborah Baker