Lamb, Hair, McDaniel
2010-2011
CHAPTER 2
Strategic Planning for
Competitive Advantage
1
Learning Outcomes
LO 1 Understand the importance of strategic marketing
and know a basic outline for a marketing plan
LO 2 Develop an appropriate business mission statement
LO 3 Explain the components of a situation analysis
LO 4 Describe the criteria for stating good marketing
objectives
LO 5 Identify sources of competitive advantage
2
Learning Outcomes
LO 6 Identify strategic alternatives
LO 7 Discuss target market strategies
LO 8 Describe the elements of the marketing mix
LO 9 Explain why implementation, evaluation, and control
of the marketing plan are necessary
LO 10 Identify several techniques that help make
strategic planning effective
3
The Nature of Strategic
Planning
Understand the
importance of strategic
marketing and know a
basic outline for a
marketing plan
LO1
4
Strategic Planning
The goal is long-term profitability and growth.
LO1
5
Strategic Marketing
Management
What is the organization’s main activity?
How will it reach its goals?
THE ANSWER IS A MARKETING PLAN.
LO1
6
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
LO1
7
Marketing
Plan
Elements
Business Mission
Statement
Objectives
Situation & SWOT
Analysis
Marketing Strategy
Target Market
Strategy
Marketing Mix
LO1
Product
Distribution
Promotion
Price
Implementation
Evaluation
Control
8
The Importance of Strategic
Marketing
What
Strategic Planning
Why
Long-term profitability and growth
How
Write a marketing plan
LO1
9
Marketing Decisions
McDonald’s past ad campaigns focused
focused on
on
children, often using characters and/or
talking food
• http://www.metacafe.com/watch/250341/old_mcd
http://www.metacafe.com/watch/250341/old_mcdo
onalds_commercial/
nalds_commercial/
Current campaigns focus on healthy
ingredients
• http://www.mcdonalds.com/usa/eat.html
http://www.mcdonalds.com/usa/eat.html
LO1
10
Defining the Business Mission
Develop an
appropriate business
mission statement
LO2
11
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
LO2
12
AMA’s Mission Statement
LO2
13
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
LO2
14
Conducting a Situation Analysis
Explain the
components of a
situation analysis
LO3
15
SWOT Analysis
Internal
External
LO3
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.
©South-Western
College
Publishing
16
Environmental Scanning
Helps Identify opportunities and threats
Guidelines for Designing Marketing
Strategy Based on six forces:
• Social
• Demographic
• Economic
• Technological
• Political/Legal
LO3
• Competitive
17
Components of a
Situation Analysis

production costs

marketing skills

financial resources

image

technology
ENVIRONMENT
INTERNAL
Strengths
Weaknesses
LO3
18
Setting Marketing
Plan Objectives
Describe the criteria
for stating good
marketing objectives
LO4
19
Marketing Objectives
 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.”
LO4
20
Criteria for Good Marketing
Objectives
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
LO4
21
Competitive Advantage
Identify sources
of competitive
advantage
LO5
22
Competitive Advantage
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.
23
Competitive Advantage
Cost
Types of
Competitive
Advantage
Product/Service
Differentiation
Niche Strategies
LO5
24
Cost Competitive
Advantage
 Obtain inexpensive raw
materials
 Create efficient plant
operations
 Design products for ease
of manufacture
 Control overhead costs
 Avoid marginal customers
LO5
25
Sources of Cost
Reduction
Experience Curves
Product Design
Efficient Labor
Reengineering
No-frills Products
Production Innovations
Government Subsidies
New Service
Delivery Methods
LO5
26
Examples of Product/Service
Differentiators
 Brand names
 Strong dealer network
 Product
reliability
 Image
 Service
LO5
27
LO5
Beyond the Book
Elements of Competitive Advantage
Access to unique talent and skills
Cost savings because of higher productivity or low overhead
Existing relationships (switching costs working in your favor)
Virally organized product and organization
Large network of users
Speed
Monopoly power
Story that resonates with your target audience
Large media budget
Insight into worldview of prospects (you make what they care about)
Emotionally intelligent sales force or customer service people
Access to capital and willingness to lose money to build share
Connection to community
SOURCE: Adapted from “Seth’s Blog: Your Competitive Advantage,” accessed on
November 7, 2008 at http://sethgodin.typepad.com/seths_blog/2008/09/your-competitiv.html
28
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 category
LO5
29
Sources of Sustainable
Competitive Advantage
Patents
Copyrights
Locations
Equipment
Technology
Skills and Assets
of an
Organization
LO5
Customer Service
Promotion
30
Strategic Directions
Identify strategic
alternatives
LO6
31
LO6
Strategic Alternatives
Market
Penetration
Increase market share among
existing customers
Market
Development
Attract new customers to
existing products
Product
Development
Create new products for
present markets
Diversification
Introduce new products
into new markets
32
Portfolio Matrix
LO6
Stars
Problem
Children
Cash Cows
Dogs
33
•Stars: Large Profits
•Need cash for growth
•Cash Cows: Dominant market share
•Technological development
•Allocate excess cash to categories with growth
potential
•Problem Children: Need Cash
•Invest heavily or drop
•Dogs: Low growth and small market share
LO6
•Drop
34
Portfolio Matrix
Strategies
Build
Hold
Harvest
Divest
LO6
35
Describing
the Target Market
Discuss target
market strategies
LO7
36
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
LO7
37
Target Market Strategy
Appeal to the entire market
with one marketing mix
Concentrate on one
marketing segment
Appeal to multiple markets
with multiple marketing mixes
LO7
38
Target Market Strategies
Target Market Options
Entire Market
LO7
Multiple Markets
Single Market
39
The Marketing Mix
Describe the
elements of the
marketing mix
LO8
40
The Marketing Mix
Marketing Mix
A unique blend of product,
distribution, promotion, and
pricing strategies designed to
produce mutually satisfying
exchanges with a target market.
LO8
41
Marketing Mix:
The “Four Ps”
Price
Promotion
Place
Product
LO8
42
Marketing Mix:
The “Four Ps”
The starting point of
the “4 Ps” Includes:
Physical unit
Package
Warranty
Service
Brand
Image
Value
LO8
Product
Products can be…
 Tangible goods
 Ideas
 Services
43
Marketing Mix:
The “Four Ps”
Place
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
LO8
44
Marketing Mix:
The “Four Ps”
Promotion
Includes integration of:
Personal selling
Advertising
 Role is to bring about
Sales promotion
exchanges with target
Public relations
markets by:
 Informing
 Educating
 Persuading
 Reminding
Sony Vaio Advertisement
Reebok EasyTone Shoe Advertisement
Online
LO8
45
Marketing Mix:
The “Four Ps”
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
LO8
46
Beyond the Book
Anatomy of a Promotion
Campaign
LO8
The role of promotion
is to inform, persuade,
and remind. Chick-FilA’s popular “Eat Mor
Chikin” cows have the
been the subject of
outdoor advertising,
television advertising,
and even a yearly
calendar that contains
over $20 worth of
coupons for free food.
47
Following Up on
the Marketing Plan
Explain why
implementation,
evaluation, and control
of the marketing plan
are necessary
LO9
48
Following Up on
the Marketing Plan
 Implementation
 Evaluation
 Control
 Marketing audit is…
LO9




Comprehensive
Systematic
Independent
Periodic
49
Effective Strategic Planning
Identify several
techniques that help
make strategic
planning effective
LO10
50
Techniques for Effective
Strategic Planning
Continual
attention
LO10
Creativity
Management
commitment
Effective
Strategic
Planning
51