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Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 1
MKTG
Designed byAmy McGuire, B-books, Ltd.
Prepared byDeborah Baker, Texas Christian University
Lamb, Hair, McDaniel 2008-2009
2CHAPTERStrategic Planning for Competitive Advantage
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved. 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
LO1
LO2
LO3
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved. 3
Learning Outcomes
Explain the components of a situation analysis
Identify sources of competitive advantage
Identify strategic alternatives
Discuss target market strategies
LO4
LO6
LO7
LO5
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved. 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
LO8
LO9
LO10
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 5
Understand the importance of strategic marketing and know a
basic outline for a marketing plan
The Nature of Strategic PlanningThe Nature of Strategic PlanningLO1
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved. 6
LO1
Strategic 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.
StrategicPlanning
StrategicPlanning
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved. 7
LO1
Strategic Marketing Management
What is the organization’s main activity?
How will it reach its goals?
THE ANSWER IS A MARKETING PLAN.
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved. 8
LO1
Strategic Planning
A written document that acts as a
guidebook of marketing activities
for the marketing manager.
Marketing PlanMarketing Plan
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved. 9
LO1
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
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved. 10
LO1
Marketing Plan
Elements
Marketing Strategy
Product Distribution
Price
Marketing Mix
Business Mission Statement
Objectives
Situation or SWOT Analysis
Target Market Strategy
ImplementationEvaluation
Control
Promotion
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 11
REVIEW LEARNING OUTCOMELO1
The Importance of Strategic Marketing
WhatWhatWhatWhat
WhyWhyWhyWhy
HowHowHowHow
Strategic PlanningStrategic PlanningStrategic PlanningStrategic Planning
Long-term profitability and growthLong-term profitability and growthLong-term profitability and growthLong-term profitability and growth
Write a marketing planWrite a marketing planWrite a marketing planWrite a marketing plan
Online
http://www.dmusic.com
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 12
Develop an appropriate business
mission statement
Defining the Business MissionDefining the Business MissionLO2
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved. 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
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved. 14
LO2
AMA’s Mission Statement
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved. 15
LO2
Strategic Business Units (SBUs)
Characteristics:[SBU HAS…]
A distinct mission and specific target market Control over its resources Its own competitors Plans independent of other SBUs
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 16
REVIEW LEARNING OUTCOMELO2
Business Mission Statement
Q: What business are we in?
A: Business mission statement
Too narrowToo broadJust right
marketing myopiano directionfocus on marketsserved and benefitscustomers seek
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 17
Describe the criteria for stating good
marketing objectives
Setting Marketing Setting Marketing Plan ObjectivesPlan ObjectivesLO3
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 18
Marketing ObjectiveLO3
A statement of what is to
be accomplished through
marketing activities.
Marketing Objective
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 19
Marketing ObjectivesLO3
Realistic
Measurable
Time specific
Consistent with and indicating the priorities of the organization“Our objective is to achieve 10 percent dollar market share in the cat food market within 12
months of product introduction.”
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 20
REVIEW LEARNING OUTCOMELO3
Criteria for Good Marketing ObjectivesRealistic, measurable, and time-specific objectives Realistic, measurable, and time-specific objectives consistent with the firm’s 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
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 21
Explain the components of a situation analysis
Conducting a Situation AnalysisConducting a Situation AnalysisLO4
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved. 22
LO4
SWOT Analysis
Identifying internal strengths (S) and weaknesses (W) and also examining external opportunities (O) and threats (T)
SWOT AnalysisSWOT Analysis
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved. 23
LO4
SWOT Analysis
©South-Western College Publishing
SSWWOOTT
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.
InternalInternal
ExternalExternal
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved. 24
Biz Flix
LO4 U-571
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved. 25
LO4
Environmental Scanning
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.
EnvironmentalScanning
EnvironmentalScanning
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 26
REVIEW LEARNING OUTCOMELO4
Components of a Situation Analysis
production costs
marketing skills
financial resources
image
technology
Strengths
Weaknesses
INT
ER
NA
LIN
TE
RN
AL
EN
VIR
ON
ME
NT
EN
VIR
ON
ME
NT
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 27
REVIEW LEARNING OUTCOMELO4
Components of a Situation Analysis
social
demographic
economic
technological
political / legal
competitive
Opportunities
Threats
EX
TE
RN
AL
E
XT
ER
NA
L
EN
VIR
ON
ME
NT
EN
VIR
ON
ME
NT
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 28
Identify sources of competitive
advantage
Competitive AdvantageCompetitive AdvantageLO5
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved. 29
Competitive AdvantageLO5
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.
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved. 30
Competitive AdvantageLO5
Niche StrategiesNiche Strategies
CostCost
Product/Service Differentiation
Product/Service Differentiation
Types of Types of Competitive Competitive AdvantageAdvantage
Types of Types of Competitive Competitive AdvantageAdvantage
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved. 31
Cost Competitive AdvantageLO5
Cost Competitive Advantage
Cost Competitive Advantage
Being the low-cost
competitor in an industry
while maintaining
satisfactory profit
margins.
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved. 32
Cost Competitive AdvantageLO5
Obtain inexpensive raw materials
Create efficient plant operations
Design products for ease of manufacture
Control overhead costs
Avoid marginal customers
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved. 33
Sources of Cost ReductionLO5
Experience CurvesExperience Curves
Efficient LaborEfficient Labor
No-frills ProductsNo-frills Products
Government SubsidiesGovernment Subsidies
Product DesignProduct Design
ReengineeringReengineering
Production InnovationsProduction Innovations
New Service Delivery Methods
New Service Delivery Methods
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved. 34
Product/Service DifferentiationLO5
Product/ServiceDifferentiation Competitive Advantage
Product/ServiceDifferentiation Competitive Advantage
The provision of
something that is unique
and valuable to buyers
beyond simply offering a
lower price than the
competition’s.
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved. 35
Examples of Product/Service Differentiators
LO5
Brand names
Strong dealer network
Product reliability
Image
Service
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 36
LO5B
eyond
the
Book
Competitive Advantage – More Fun
SOURCE: Yukari Iwatani Kane, “Look, It’s Mii—on Wii!” Wall Street Journal March 16, 2007 B1
Demand for Nintendo’s game console, the Wii, has consumers waiting in long lines or paying premium prices on online auctions for the console. Rival products, while popular, haven’t been flying off the shelves. That’s probably because a unique feature on the Wii console provides Nintendo a competitive advantage. That feature, called Mii, is software that allows users to create online characters that look like themselves, or someone else. Fans say they get addicted to the thrill of seeing themselves running around the screen, playing tennis or boxing with Mii characters like George W. Bush or Michael Jackson.
© 2
007
The
Ass
oci
ate
d P
ress
. A
ll rig
hts
res
erv
ed.
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved. 37
Niche Competitive AdvantageLO5
Niche Competitive Advantage
Niche Competitive Advantage
The advantage achieved
when a firm seeks to
target and effectively
serve a small segment of
the market.
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved. 38
Niche Competitive AdvantageLO5
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
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved. 39
Sources of Sustainable Competitive Advantage
LO5
PatentsPatents
CopyrightsCopyrights
LocationsLocations
EquipmentEquipment
TechnologyTechnology
Customer ServiceCustomer Service
PromotionPromotion
Skills and AssetsSkills and Assets
of anof anOrganizationOrganization
Skills and AssetsSkills and Assets
of anof anOrganizationOrganization
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 40
REVIEW LEARNING OUTCOMELO5
Sources of Competitive Advantage
Sources ofSources ofCompetitive AdvantageCompetitive Advantage
Sources ofSources ofCompetitive AdvantageCompetitive Advantage
Cost$
Cost$
Product/ServiceDifferentiationA vs. B vs. C
Product/ServiceDifferentiationA vs. B vs. C
NicheStrategies
NicheStrategies
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 41
Identify strategic alternatives
Strategic DirectionsStrategic DirectionsLO6
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 42
Strategic AlternativesLO6
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
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 43
Ansoff’s Strategic Opportunity Matrix
LO6
Present Product New Product
New Market
MarketPenetration
MarketDevelopment
ProductDevelopment
Diversification
Present Market
http://www.pg.com
Online
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 44
Portfolio MatrixLO6
Stars
Cash Cows
ProblemChildren
Dogs
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 45
Portfolio Matrix StrategiesLO6
Build
Hold
Harvest
Divest
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 46
REVIEW LEARNING OUTCOMELO6
Strategic Alternatives
Identify strategic alternativesIdentify strategic alternatives
Diversification =
Product development = products
Market development = customers
Market penetration = share
new products +new markets
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 47
Discuss target market strategies
Describing the Target MarketDescribing the Target MarketLO7
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 48
Marketing Strategy
LO7
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.
MarketingStrategy
MarketingStrategy
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 49
Target Market Strategy
LO7
Segment the market based on groups with similar characteristics
Analyze the market based on attractiveness of market segments
Select one or more target markets
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 50
Target Market Strategy
LO7
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
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 51
REVIEW LEARNING OUTCOMELO7
Target Market Strategies
Entire Market Multiple Markets Single Market
Target Market Options
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 52
Describe the elements of the marketing mix
The Marketing MixThe Marketing MixLO8
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 53
The Marketing Mix
LO8
A unique blend of product,
distribution, promotion, and
pricing strategies designed to
produce mutually satisfying
exchanges with a target market.
Marketing MixMarketing Mix
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 54
Marketing Mix: The “Four Ps”
LO8
Price
Promotion
Place
Product
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 55
Marketing Mix: The “Four Ps”
LO8
The starting point of the “4 Ps”
Includes Physical unit Package Warranty Service Brand Image Value
Product
Products can be… Tangible goods Ideas Services
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 56
Marketing Mix: The “Four Ps”
LO8
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
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 57
Marketing Mix: The “Four Ps”
LO8
Promotion
Online
http://www.paramount.comhttp://www.warnerbros.comhttp://www.universalstudios.com
Role is to bring about exchanges with target markets by: Informing Educating Persuading Reminding
Includes integration of: Personal selling Advertising Sales promotion Public relations
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 58
Marketing Mix: The “Four Ps”
LO8
Price Price is what a buyer
must give up to obtain a product.
The most flexible of the “4 Ps”-- quickest to change
Competitive weapon
Price x Units Sold = Total Revenue
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 59
REVIEW LEARNING OUTCOMELO8
Elements of the Marketing Mix
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 60
LO8B
eyond
the
Book
Anatomy of an Ad
Marketdevelopment =sell anti-agingcream tomen (notjust women)
Ads aretypes ofpromotion
CompetitiveAdvantage?
Men =targetmarket
Moisturizer =product
Clive Owen [celebrity endorsement] = promotion strategy?
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 61
Explain why implementation,
evaluation, and control of the marketing plan
are necessary
Following Up on Following Up on the Marketing Planthe Marketing PlanLO9
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved
Following Up on the Marketing Plan
LO9
Implementation
Evaluation
Control
Marketing audit is… Comprehensive Systematic Independent Periodic http://www.youngbiz.com
Online
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 63
REVIEW LEARNING OUTCOMELO9
Implementation, Evaluation, and Control
Product PlacePromotionPrice
Product PlacePromotionPrice
Objectives met?Objectives met?
Implementation Evaluation
Audits• comprehensive• systematic• independent• periodic
Audits• comprehensive• systematic• independent• periodic
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 64
Identify several techniques that help
make strategic planning effective
Effective Strategic PlanningEffective Strategic PlanningLO10
Chapter 2 Copyright ©2009 Cengage Learning Inc. All rights reserved 65
REVIEW LEARNING OUTCOMELO1
0
Techniques for Effective Strategic Planning
Effective Strategic Planning
Effective Strategic Planning
Continualattention
Continualattention CreativityCreativity Management
commitment
Managementcommitment