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Chapter 1Chapter 2 Copyright ©2008 by South-Western, a division of
Thomson Learning. All rights reserved *
MKTG
Lamb, Hair, McDaniel 2007-2008
Chapter 2 Strategic Planning for Competitive Advantage
*
Chapter 2 Copyright ©2008 by South-Western, a division of Thomson
Learning. All rights reserved *
Learning Outcomes
Understand the importance of strategic marketing and know a basic
outline for a marketing plan
Develop an appropriate business
LO1
LO2
LO3
*
Chapter 2 Copyright ©2008 by South-Western, a division of Thomson
Learning. All rights reserved *
Learning Outcomes
Identify sources of competitive advantage
Identify strategic alternatives
*
Chapter 2 Copyright ©2008 by South-Western, a division of Thomson
Learning. All rights reserved *
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 ©2008 by South-Western, a division of Thomson
Learning. All rights reserved *
Understand the importance of strategic marketing and know a basic
outline for a marketing plan
The Nature of Strategic Planning
LO1
*
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Learning. All rights reserved *
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.
Chapter 2 Strategic Planning for Competitive Advantage
*
Notes:
Strategic planning creates and maintains a fit between the
organization’s resources and objectives and the evolving market
opportunities. The goal is to sustain and increase long-run
profitability and growth. Strategic decisions require long-term
commitments of resources.
Strategic errors can threaten a firm’s survival, but a good plan
can help protect and grow the firm.
Examples of strategic decisions:
* Sears purchase of Lands’ End
* Reebok’s decision to stop competing with Nike in the hard-core
sports market and instead focus on being the top shoe brand for
fashion-forward consumers.
* McDonald’s decision to offer more healthful foods
* S.C. Johnson’s introduction of Shout Color Catchers
Discussion/Team Activity:
Discuss why strategic planning is important for these
companies.
Chapter 2 Copyright ©2008 by South-Western, a division of Thomson
Learning. All rights reserved *
LO1
How will it reach its goals?
THE ANSWER IS A MARKETING PLAN.
Chapter 2 Strategic Planning for Competitive Advantage
*
Notes:
How do companies go about strategic marketing planning? How do
employees know how to implement the long-term goals of the
firm?
The answer is a marketing plan.
Chapter 2 Copyright ©2008 by South-Western, a division of Thomson
Learning. All rights reserved *
Planning at Different Levels
Chapter 2 Copyright ©2008 by South-Western, a division of Thomson
Learning. All rights reserved *
LO1
Strategic Planning
Marketing Plan
A written document that acts as a guidebook of marketing activities
for the marketing manager.
Chapter 2 Strategic Planning for Competitive Advantage
*
Notes:
Marketing planning involves the design of activities related to
marketing objectives and the changing marketing environment.
Planning is the basis for all marketing strategies and
decisions.
Chapter 2 Copyright ©2008 by South-Western, a division of Thomson
Learning. All rights reserved *
PUMA Mission Statement
PUMA has the long-term mission of becoming the most desirable
Sportlifestyle company.
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Learning. All rights reserved *
PUMA Corporate Strategy
At the heart of our company strategy is the focus on continuously
pursuing a more flexible and efficient organization that is fit to
thrive in an increasingly dynamic and fast-paced industry. To this
extent, over the course of the past few years, we have
decentralized our structure on the way to creating the first truly
virtual sports company.
In 2006 PUMA has launched Phase IV of its long-term oriented
business plan (see "Corporate Development"). To help manage the
matrix organizational structure and as part of PUMA’s company
development over the past years was, we have created the Group
Executive Committee, which incorporates the functions of brand
management, product, finance, growth management, legal and
organizational structure into one core body.
The resulting cross-functional communication has further enhanced
PUMA’s corporate agility. Implementing this nimble structure
enables PUMA to realize efficiencies in areas such as product
lifecycle, management and sourcing.
The end result helps reduce lead times and costs, while
concurrently fostering improvement in quality. These advances are
part of a constantly evolving process in which our corporate
strategy and structure lends us competitive advantage.
Chapter 2 Copyright ©2008 by South-Western, a division of Thomson
Learning. All rights reserved *
PUMA Brand Strategy
The brand is focusing on bringing distinctive designs and a global
outlook to each product range by blending influences of sport,
lifestyle and fashion.
In order to achieve these goals, our brand template emphasises
PUMA’s distinctiveness, individualism, spontaneity,
internationalism and sporting heritage.
An important part of our brand strategy is maintaining vigilant
watch over our distribution channels, ensuring that we maintain the
high level of desirability necessary for sustainable growth.
Concurrently, in areas where licensee growth is desired, we will
provide solid guidance and strict alertness to make certain that
the brand’s objectives and direction are maintained.
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Learning. All rights reserved *
LO1
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 Strategic Planning for Competitive Advantage
*
Notes:
Writing a marketing plan allows the examination of the marketing
environment in conjunction with the inner workings of the
businesses. Once written it serves as a reference point for future
activities, and allows the marketing manager to enter the
marketplace with an awareness of problems and opportunities.
Chapter 2 Copyright ©2008 by South-Western, a division of Thomson
Learning. All rights reserved *
LO1
Marketing
Plan
Elements
*
Notes:
Some elements are common to all marketing plans. These include the
business mission and objectives, performing a SWOT analysis,
determining a target market, and establishing a marketing
mix.
Other elements that may be included are budgets, implementation
timetables, required marketing research efforts, or elements of
advanced strategic planning.
Exhibit 2.1:
The Marketing Plan Appendix contains a Marketing Plan
Outline.
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Learning. All rights reserved *
REVIEW LEARNING OUTCOME
What
Why
How
*
Online
Dmusic
Use Exhibit 2.1 to create a sample summary marketing plan for
Dmusic.com, an Internet start-up created by a teenage
entrepreneur.
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Learning. All rights reserved *
Develop an appropriate business mission statement
Defining the Business Mission
*
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Learning. All rights reserved *
LO2
Focuses on the market(s)
Strategic Business Units (SBUs) may also have a mission
statement
Chapter 2 Strategic Planning for Competitive Advantage
*
Notes:
The foundation of any marketing plan is the firm’s mission
statement. The mission statement is based on an analysis of
benefits sought by present and potential customers and an analysis
of existing and anticipated environmental conditions. The mission
statement establishes boundaries for all subsequent decisions,
objectives, and strategies.
Discussion/Team Activity:
Find the mission statements for various organizations. Compare the
mission statements with the markets served and the products sold by
these organizations.
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Learning. All rights reserved *
LO2
*
The AMA’s mission statement is shown here.
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Learning. All rights reserved *
LO2
Control over its resources
Chapter 2 Strategic Planning for Competitive Advantage
*
Notes:
An organization may need to define a mission statement and
objectives for a Strategic Business Unit (SBU), which is a subgroup
of a single business or a collection of related businesses within
the larger organization
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Learning. All rights reserved *
REVIEW LEARNING OUTCOME
A: Business mission statement
*
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Learning. All rights reserved *
Sample Mission Statements
MADD: To stop drunk driving, support the victims of this violent
crime, and prevent underage drinking.
Armour: To find new technology and enhance the performance of every
athlete and outdoorsman. Lighter. Faster. Stronger. Better.
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Learning. All rights reserved *
Sample Mission Statements
The following are some examples of mission statements from real
enterprises.
3M
Mary Kay Cosmetics
Merck
Walt Disney
"To make people happy."
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Learning. All rights reserved *
Disney Mission & Values
VALUES:
Creativity, dreams and imagination
Preservation and control of the Disney "magic"
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Learning. All rights reserved *
Wal-Mart
Wal-Mart's Mission
At Wal-Mart, we are guided by our three founding basic beliefs, and
these include: Respect for the Individual, Service to Our
Customers, and Strive for Excellence.
We are a global retailer committed to growing our company by
improving the standard of living for our customers and serving
communities around the world. We earn the trust of our customers
every day by providing a broad assortment of quality merchandise
and services at every day low prices while fostering a culture that
rewards and embraces mutual respect, integrity and diversity.
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Learning. All rights reserved *
Target
Philosophy + Values
Expect more of everything: More great design, more choices, more
convenience, more service and more clothes, housewares and
designer-created items that you’ll never find anywhere else. And
pay less. It’s as simple as that.
We team up with world-class designers in home, fashion,
accessories, beauty, furniture and outdoor living and create
exclusive products to decorate and delight—people like Michael
Graves, Amy Coe, Sonia Kashuk, Liz Lange and Isaac Mizrahi. And
since it’s at Target, you know you’ll always find it at a
reasonable—or even surprising—price that lets you add high-quality
design to your life, in every room, every day.
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Learning. All rights reserved *
Describe the criteria for stating good marketing objectives
Setting Marketing
Plan Objectives
*
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Learning. All rights reserved *
Marketing Objective
LO3
Marketing
Objective
A statement of what is to be accomplished through marketing
activities.
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*
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Learning. All rights reserved *
Marketing Objectives
Consistent with and indicate the organization’s priorities
“Our objective is to achieve 10 percent dollar market share in the
cat food market within 12 months of product introduction.”
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*
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REVIEW LEARNING OUTCOME
Realistic, measurable, and time-specific objectives consistent with
the firm’s objectives:
1. Communicate marketing management philosophy
2. Provide management direction
5. Allow for better evaluation of results
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*
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Learning. All rights reserved *
Explain the components of a situation analysis
Conducting a Situation Analysis
*
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Learning. All rights reserved *
LO4
*
NOTES:
Marketing has two facets. The first is that it’s a philosophy.
Second, marketing is an organization function and a set of
processes used to implement the philosophy.
David Packard, cofounder of Hewlett-Packard, stated that “marketing
is too important to be left only to the marketing department.”
Marketing is a process that focuses on delivering value and
benefits to customers. It uses communication, distribution, and
pricing strategies to provide customers with the goods and services
they want. It includes building long-term, mutually rewarding
relationships. It entails an understanding that organizations have
many connected stakeholder partners, including employees,
suppliers, stockholders, distributors, and others.
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Learning. All rights reserved *
LO4
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
*
Performance of a situation (SWOT) analysis helps firms identify
their competitive advantage.
Strengths and Weaknesses are an internal assessment. Opportunities
and Threats are an external environment assessment.
Discussion/Team Activity:
Perform a SWOT analysis for companies within the same industry. How
could you use this information if you worked for a particular
company or for a competitive company?
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Learning. All rights reserved *
Presentation © 2005 Marian Burk Wood - all rights reserved
2-8
Strengths FedEx, Kinko’s brands Air, ground strength Stable
workforce
Weaknesses Possible labor actions Slower growth in package
volume
Opportunities New markets (China) Custom/special services More
channels (Kinko’s)
Threats Intense competition Technology Fuel costs
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Learning. All rights reserved *
Biz Flix
*
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Learning. All rights reserved *
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.
Environmental
Scanning
*
NOTES:
Marketing has two facets. The first is that it’s a philosophy.
Second, marketing is an organization function and a set of
processes used to implement the philosophy.
David Packard, cofounder of Hewlett-Packard, stated that “marketing
is too important to be left only to the marketing department.”
Marketing is a process that focuses on delivering value and
benefits to customers. It uses communication, distribution, and
pricing strategies to provide customers with the goods and services
they want. It includes building long-term, mutually rewarding
relationships. It entails an understanding that organizations have
many connected stakeholder partners, including employees,
suppliers, stockholders, distributors, and others.
Chapter 2 Copyright ©2008 by South-Western, a division of Thomson
Learning. All rights reserved *
The Dynamic Marketing Environment
The total business and social environment that a company operates
in
Two main aspects to the marketing environment
Macro influences
External forces largely beyond the control of a firm that influence
the marketing opportunities and activities of all firms.
Firms can influence this but have no direct control over it
Micro influences
Help shape its marketing activities.
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Learning. All rights reserved *
Demographics
age
income
occupation
education
gender
*
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Learning. All rights reserved *
Average age is increasing
Cultural shifts growing faster than the rest of the
population
Hispanic community
Asian community.
Demographic changes
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Learning. All rights reserved *
Stage of the Business Cycle
prosperity
recession
recovery
Inflation
Interest rates.
Economic Conditions
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Learning. All rights reserved *
Rivals for Customers’ Limited
Competition
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Learning. All rights reserved *
Social and Cultural Forces
Cultural values beliefs and lifestyles
Socio-cultural Patterns Changing
quickly
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Learning. All rights reserved *
Shift toward environmental concerns
Blurring of gender roles
Time premium (stresses convenience)
Social & Cultural Forces
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Learning. All rights reserved *
Monetary and Fiscal Policies
Political & Legal Forces
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Learning. All rights reserved *
Legislation Affecting Marketing
Sherman Antitrust Act
Robinson-Patman Act
Wheeler-Lea Act
Lanham Trademark
Regulate Competition
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Learning. All rights reserved *
Legislation Affecting Marketing
Automobile Disclosure Act
Kefauver-Harris Drug Amendments
Fair Packaging and Labeling Act
Cigarette Labeling and Advertising Acts
Consumer Credit Protection Act
Consumer Product Safety Act
Consumer Product Warranty Act
Children’s Television Act
Protect Consumers
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Learning. All rights reserved *
The Technological Environment
Technology is an investment a firm must make to succeed
Patents protect inventions
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Learning. All rights reserved *
Impacts lifestyles, consumption patterns, economic well-being
Affects how marketing is carried out
Starting new industries
Altering existing industries
Create new ways of doing business
Creates/destroys industries.
Technology
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Learning. All rights reserved *
Forces controllable by management
Micro-Environment
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Learning. All rights reserved *
REVIEW LEARNING OUTCOME
production costs
marketing skills
financial resources
*
Additional strengths include superiority in manufacturing, service,
quality and value perception, as well as employee
capabilities.
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REVIEW LEARNING OUTCOME
social
demographic
economic
technological
*
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Learning. All rights reserved *
Identify sources
*
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Learning. All rights reserved *
Competitive Advantage
LO5
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
*
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Learning. All rights reserved *
Competitive Advantage
*
Notes:
A firm’s competitive advantage is the reason or reasons that cause
customers to patronize that firm and not the competition.
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Learning. All rights reserved *
Cost Competitive Advantage
Being the low-cost competitor in an industry while maintaining
satisfactory profit margins.
Cost
Competitive
Advantage
*
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Learning. All rights reserved *
Cost Competitive Advantage
Control overhead costs
Avoid marginal customers
*
Notes:
Having a cost competitive advantage means being the low-cost
competitor in an industry while maintaining satisfactory profit
margins. This enables a firm to deliver superior customer
value.
Cost leadership can result from the reasons listed on this
slide.
Cost competitive advantages are subject to continual erosion.
Discussion/Team Activity:
Identify firms that have a cost competitive advantage and describe
how they deliver superior value.
Examples:
DuPont
General Electric
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Learning. All rights reserved *
Sources of Cost Reduction
*
Notes: Sources of Cost Reduction
Experience Curves: Costs decline as experience with a product
increases, and encompasses marketing, manufacturing, and
administration costs.
Efficient Labor: Labor costs in low-skill, labor-intensive
industries can be reduced by going offshore or by
outsourcing.
No-frills Products: Removing frills and options can reduce
costs.
Government subsidies: Governments may provide grants and
interest-free loans for target industries.
Product design: Cutting-edge design and reverse engineering can
offset costs.
Reengineering: Reengineering in the form of pruning product lines,
closing obsolete factories, or renegotiating supplier contracts can
make firms more efficient.
Product innovations: New technology and simplified production
techniques can reduce production costs.
New methods of service delivery:
Examples include:
* Internet ticket booking and self-check-in kiosks in the airline
industry
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Learning. All rights reserved *
Product/Service Differentiation
LO5
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.
Chapter 2 Strategic Planning for Competitive Advantage
*
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Learning. All rights reserved *
Examples of
Product/Service Differentiation
*
Product/Service Differentiation tends to provide a longer lasting
competitive advantage than does cost competitive advantage.
As a result, this strategy is more attractive to many top
managers.
Discussion/Team Activity:
Brand name:
Service:
FedEx
Nordstrom
Innovation:
Nike
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Learning. All rights reserved *
Niche Competitive Advantage
LO5
Niche
Competitive
Advantage
The advantage achieved when a firm seeks to target and effectively
serve a small segment of the market.
Chapter 2 Strategic Planning for Competitive Advantage
*
Notes:
A niche competitive advantage targets and serves a single segment.
This allows small companies with limited resources to market
against giant competitors.
An example of a successful niche marketer is The Orvis Company, a
specialist in fly fishing manufacturing and sales.
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Niche Competitive Advantage
May be used in a limited geographic market
Product line may be focused on a specific product category
Chapter 2 Strategic Planning for Competitive Advantage
*
Discussion/Team Activity:
Discuss how a small firm serving a particular niche market can
successfully compete against larger, global firms with greater
resources. (For example, how might a small bookstore owner compete
with Barnes & Noble and Amazon.com?)
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Learning. All rights reserved *
Sources of Sustainable
*
Notes:
A sustainable competitive advantage lasts only as long as the time
it takes a competitor to imitate the strategy and plans.
Marketing managers should continually look for skills and assets
that create and sustain competitive advantage.
A sustainable competitive advantage is a function of the speed with
which competitors can imitate a company’s strategy and plans.
Imitation requires a competitor to identify the leader’s
competitive advantage, determine how it is achieved, and learn how
to duplicate it.
Discussion/Team Activity:
Discuss examples of firms that have sustainable competitive
advantage in each skill and asset source listed.
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REVIEW LEARNING OUTCOME
Niche
Strategies
*
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Learning. All rights reserved *
Identify strategic alternatives
*
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Learning. All rights reserved *
Strategic Alternatives
*
McDonald’s Happy Meals with Ty’s Teeny Beanie Babies
Market Development:
Expansion into global markets by companies such as McDonald’s,
Coca-Cola, and Pepsi
Product development:
Brooks Brothers
LTV Corporation, a steel producer, diversified into the monorail
business
Coca-Cola’s water-treatment and water-conditioning equipment
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Learning. All rights reserved *
Ansoff’s Strategic
*
Procter & Gamble
Explore Procter & Gamble’s Web site and identify how it uses
each of the four strategic alternatives. Does one seem to be
predominant? Which one? Can you find common threads among products,
categories, and geographic locations that might affect P&G’s
approach?
Notes:
Exhibit 2.2 is an example of Ansoff’s Strategic Opportunity Matrix
for Starbucks.
Discussion/Team Activity:
Select various companies and complete the Ansoff Strategic
Opportunity Matrix.
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Learning. All rights reserved *
Where do Starbucks’ initiatives fit?
New stores in the US
New stores globally
Music and entertainment
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Learning. All rights reserved *
Portfolio Matrix
*
Notes:
The Portfolio Matrix from Boston Consulting Group classifies each
SBU by its present or forecast growth and market share. The
assumption is that market share and profitability are strongly
linked.
A star is a fast-growing market leader. Stars usually have large
profits but need cash to finance growth. A marketing tactic is to
protect market share by reinvesting earnings in product
improvement, distribution, promotion, and production efficiency.
Strive to capture new users as they enter the market.
A cash cow generates more cash than it needs to maintain market
share. It is in a low-growth market, but the product has dominant
market share. The marketing strategy is to maintain market
dominance by being the price leader and by making technological
improvements. Allocate excess cash to high-growth prospects.
A problem child shows rapid growth but poor profit margins. It has
a low market share in a high-growth industry. It needs a great deal
of cash to prevent conversion to dog status. Strategies are to
invest to gain better market share, acquire competitors, or drop
the SBU.
A dog has low growth potential and a small market share. Most dogs
leave the market. The strategy options are to divest or
harvest.
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Learning. All rights reserved *
BCG Matrix
Method focuses on the potential of a firm’s existing successful
products to generate cash that the firm can then use to invest in
new products
New products are chosen for their potential to become future cash
generators
Two dimensions:
Market growth rate
Relative market share
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BCG Matrix: Stars
requires funding to keep up with production and promotion
demands
strategies seek to maximize market share in the face of increasing
competition
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Learning. All rights reserved *
BCG Matrix: Cash Cows
SBUs with dominant market share in a low-growth potential
market
product is well established and market share can be maintained with
minimal funding
firms milk cows of profits to fund growth of other products in
portfolio
too many cows can become a liability due to the lack of growth
potential
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BCG Matrix: Question Marks
sometimes called problem children
The dilemma? Investing more money into the SBU may:
improve market share in a high potential market OR
result in negative cash flow and failure
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Learning. All rights reserved *
BCG Matrix: Dogs
specialized products in limited markets unlikely to grow
firms may sell dogs to smaller firms or eliminate product from
market
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Learning. All rights reserved *
Disney’s Touchstone
Disney emphasizes its movie brand for grownups as a star
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Learning. All rights reserved *
Portfolio Matrix Strategies
*
Note:
Build: If an SBU has the potential to be a star, building would be
an appropriate goal.
Hold: If an SBU is a successful cash cow, a goal would be to hold
or preserve market share.
Harvest: This is an appropriate strategy for all SBUs except stars.
The basic goal is to increase short-term cash return without much
concern for the long-run impact.
Divest: Getting rid of SBUs with low shares of low-growth markets
is often appropriate. Problem children and dogs are suitable for
this strategy.
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REVIEW LEARNING OUTCOME
*
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Learning. All rights reserved *
Discuss target
market strategies
*
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Learning. All rights reserved *
Marketing Strategy
LO7
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.
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*
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Learning. All rights reserved *
Target Market Strategy
Select one or more target markets
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*
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Learning. All rights reserved *
Target Market Strategy
with one marketing mix
*
Notes:
Three strategies for selecting target markets are shown here. These
strategies are discussed in detail in Chapter 7.
Discussion/Team Activity:
1. Discuss the differences in the target markets for McDonald’s,
Burger King’s, and Wendy’s.
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Learning. All rights reserved *
REVIEW LEARNING OUTCOME
*
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Learning. All rights reserved *
Describe the elements of the marketing mix
The Marketing Mix
*
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Learning. All rights reserved *
The Marketing Mix
A unique blend of product, distribution, promotion, and pricing
strategies designed to produce mutually satisfying exchanges with a
target market.
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*
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Learning. All rights reserved *
Marketing Mix: The “Four Ps”
LO8
Price
Promotion
Place
Product
*
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Marketing Mix: The “Four Ps”
LO8
“4 Ps”
*
Notes:
The product is the starting point of the marketing mix. It is
difficult to decide on a promotion campaign, determine a price, or
design a distribution strategy until the product offering and
product strategy are defined.
The product is not only the physical unit but also the packaging,
warranty, after-sale service, brand name, company image, value, and
other factors.
Products may be tangible goods, services, and ideas.
Product decisions are discussed in Chapter 9 and 10, services
marketing in Chapter 11.
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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
*
Notes:
The goal of distribution is to ensure products arrive in usable
condition at the right place when customers need them.
Distribution is covered in Chapters 12 and 13.
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Marketing Mix: The “Four Ps”
Role is to bring about exchanges with target markets by:
Informing
Educating
Persuading
Reminding
*
Warner Brothers
Universal Studios
How do movie companies use their Web sites as part of their
promotion strategies? Visit the sites for the movie studios listed
to see what films they are promoting heavily. Also look at
movie-specific sites. Are there differences how the movie-specific
site promotes the film and how the studio’s umbrella site promotes
the film? Explain what you find.
Notes:
Promotion includes personal selling, advertising, sales promotion,
and public relations.
Each element of the promotion mix is coordinated with the others to
create a promotional blend. Integrated Marketing Communications is
discussed in Chapters 14, 15, and 16. Technology-driven aspects of
promotional marketing are covered in Chapter 19.
A good promotion strategy can increase sales, but does not
guarantee success.
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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
Chapter 2 Strategic Planning for Competitive Advantage
*
Notes:
Price is an important competitive weapon and is often the most
flexible of the marketing mix. Of the four Ps, it can be changed
most quickly.
Price multiplied by the number of units sold equals total revenue
for the firm.
Pricing decisions are discussed in Chapters 17 and 18.
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REVIEW LEARNING OUTCOME
Chapter 2 Strategic Planning for Competitive Advantage
*
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Learning. All rights reserved *
Explain why implementation, evaluation, and control of the
marketing plan
are necessary
*
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Learning. All rights reserved *
Following Up on
the Marketing Plan
*
Implementation is essentially “doing what you said you were going
to do.” However, many organizations repeatedly experience failures
in strategy implementation.
The marketing audit provides the mechanisms for evaluating
marketing results compared to the plan’s goals.
Online
Youngbiz.com
Visit the YoungBiz Web site’s list of Top 100 entrepreneurs. Select
one of the entrepreneurial ventures listed and create a marketing
plan for it using the concepts and strategies discussed in this
chapter. How would you implement, evaluate, and control the
plan?
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REVIEW LEARNING OUTCOME
*
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Learning. All rights reserved *
Identify several techniques that help make strategic planning
effective
Effective Strategic Planning
*
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Learning. All rights reserved *
REVIEW LEARNING OUTCOME
Continual
attention
Creativity
Management
commitment
Effective
Strategic
Planning
*
Notes:
Strategic planning is not an annual event, but an ongoing process.
The environment is continually changing, and the firm’s internal
resources and capabilities are continually evolving.
Strategic planning is based on creativity. Assumptions about the
firm and the environment should be challenged and new strategies
established to sustain competitive advantage.
Management support and participation are critical to the success of
strategic planning.
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Starbuck’s Mission
Establish Starbucks as the premier purveyor of the finest coffee in
the world while maintaining our uncompromising principles while we
grow.
The following six guiding principles will help us measure the
appropriateness of our decisions:
Provide a great work environment and treat each other with respect
and dignity.
Embrace diversity as an essential component in the way we do
business.
Apply the highest standards of excellence to the purchasing,
roasting and fresh delivery of our coffee.
Develop enthusiastically satisfied customers all of the time.
Contribute positively to our communities and our environment.
Recognize that profitability is essential to our future
success.
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Starbucks’ fiscal 2006 objectives
Objectives
The Company is targeting total net revenue growth of approximately
20 percent on a quarterly and full year basis.
Starbucks expects comparable store sales growth in the range of
three percent to seven percent
Strategy
Starbucks continues to target opening at least 1,800 new stores on
a global basis in fiscal 2006.
Continued innovation
New formats
Entertainment
Tactics
In the United States, Starbucks plans to open approximately 700
Company-operated locations and 600 licensed locations.
In International markets, Starbucks plans to open approximately 150
Company-operated stores and 350 licensed stores;
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Starbucks Entertainment
Starbucks Coffee Company launched Starbucks Entertainment in 2004
to help customers discover quality entertainment options as part of
their daily coffee routines.
Acquired Hear Music in 1999 to become Starbucks Hear Music, the
sound of music at Starbucks
Starbucks Entertainment extended beyond music and announced a
unique partnership with Lionsgate to market and distribute the
inspirational film “Akeelah and the Bee.” The company expects the
film to be the first of many such partnerships that help customers
discover unique and rewarding entertainment.
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Starbuck’s Hear Music
Starbucks Hear Music™ Coffeehouse
This innovative retail store blends the classic Starbucks
coffeehouse experience with an extensive selection of physical CDs
and the next generation of the Hear Music™ media bars which provide
customers with an easy, fun, self-service way to discover and
customize music on CDs drawing from more than 1 million digital
tracks – offering a fully integrated coffee and music
experience.
Selection criteria include location, foot traffic, the music
culture of the city, population of tourists and residents, and
visibility for these unique stores.
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Starbucks and Lionsgate
The Lionsgate brand name is synonymous with original, daring,
quality entertainment in markets around the globe.
We are excited about extending our powerful marketing and
distribution reach to the movie industry and feel very confident
that our customers will appreciate the recommendation.”
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Akeelah and the Bee Promotion
Unique, Experiential Promotion Designed to Enhance the Starbucks
Experience and Broaden Film’s Reach by Introducing it to Millions
More Movie-goers
Through a fun, innovative and unprecedented experiential marketing
campaign, Starbucks will provide customers the opportunity to
interact with key aspects of the story
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Akeelah and the Bee Promotion
Rather than featuring the standard movie poster used in more
traditional promotional campaigns, the Starbucks campaign builds on
the movie’s theme of the power of words by leveraging unique
in-store placements and techniques that have not been implemented
before.
Customers will be invited to step inside Akeelah's journey as
part of their daily coffee routine.
The campaign will drive buzz and challenge customers to expand
their vocabulary and spelling prowess with difficult-to-spell and
exotic words printed on a wide variety of collateral such as flash
cards, magnets, in-store signage, coasters, and cup sleeves.
In addition, beginning April 17, travel-sized SCRABBLE® will be
sold in all Starbucks locations in the U.S. and Canada, further
supporting the central theme of the campaign: “Changing the World
One Word at a Time.”
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Where do Starbucks’ initiatives fit?
New stores in the US
New stores globally
Music and entertainment