Lamb, Hair, McDaniel 2011-2012 CHAPTER 2 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 © AP IMAGES/JENNIFER GRAYLOCK Strategic Planning for Competitive Advantage The Nature of Strategic Planning Understand the importance of strategic marketing and know a basic outline for a marketing plan LO1 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 2 Strategic Planning Strategic Planning is… the managerial process of creating and maintaining a fit between the organization’s objectives and resources and the evolving market opportunities. The GOAL of strategic planning is long-term profitability and growth. LO1 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 3 Strategic Marketing Management What is the organization’s main activity? How will it reach its goals? THE ANSWER IS A MARKETING PLAN. LO1 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 4 What Is a Marketing Plan? Planning – the process of anticipating future events and determining strategies to achieve organizational objectives in the future. Marketing Planning – designing activities relating to marketing objectives and the changing marketing environment. Marketing Plan – a written document that acts as a guidebook of marketing activities for the marketing manager. LO1 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 5 Why Write a Marketing Plan? Provides a basis for comparison of actual and expected performance Provides clearly stated activities to work toward common goals Provides an examination of the marketing environment Serves as a reference for the success of future activities Allows entry into the marketplace with awareness LO1 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 6 Exhibit 2.1 Elements of a Marketing Mix Business Mission Statement Situation or SWOT Analysis Objectives Marketing Strategy Target Market Strategy Marketing Mix LO1 Chapter 2 Product Distribution Promotion Price Implementation Evaluation Control Copyright ©2012 by Cengage Learning Inc. All rights reserved 7 Marketing Plan Elements Selecting which alternative to pursue depends on: 1. Philosophy and culture 2. Decision making tools LO1 Chapter 2 The most common decision making tool is the matrix form. Copyright ©2012 by Cengage Learning Inc. All rights reserved 8 Writing the Marketing Plan A complete marketing plan can allow an organization to achieve marketing objectives… HOWEVER the marketing plan is only as good as the information, effort, creativity and thought put into it. LO1 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 9 Defining the Business Mission Develop an appropriate business mission statement LO2 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 10 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 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 11 Mission Statement: Ben & Jerry’s 1. 2. 3. LO2 Chapter 2 Product To make, distribute and sell the finest quality all natural ice cream and related products in a wide variety of innovative flavors made from Vermont Dairy products. Economic To operate the company on a sound financial basis of profitable growth, increasing value for our shareholders, and creating career opportunities and financial rewards for our employees. Social To operate the company in a way that actively recognizes the central role that business plays in the structure of society by initiating innovative ways to improve the quality of life of a broad community— local, national, and international. Copyright ©2012 by Cengage Learning Inc. All rights reserved 12 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 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 13 Conducting a Situation Analysis Describe the components of a situation analysis LO3 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 14 SWOT Analysis Internal External LO3 Chapter 2 S W O T Strengths - things the company does well. Weaknesses - things the company does not do well. Opportunities - conditions in the external environment that favor strengths. Threats - conditions in the external environment that do not relate to existing strengths or favor areas of ©South-Western College Publishing current weakness. Copyright ©2012 by Cengage Learning Inc. All rights reserved 15 Components of a SWOT Analysis Examining internal strengths and weaknesses. Focus on organizational resources: • Production costs • Marketing skills • Financial resources • Company or brand image • Employee capabilities • Technology LO3 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 16 Environmental Scanning Helps identify opportunities and threats. Designing a marketing strategy is based on six major environmental forces: • Social © AP IMAGES/PRNEWSFOTO/PEPSICO • Demographic • Economic • Technological • Political/Legal LO3 Chapter 2 • Competitive Copyright ©2012 by Cengage Learning Inc. All rights reserved 17 Setting Marketing Plan Objectives Explain the criteria for stating good marketing objectives LO4 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 18 Marketing Objectives Realistic Measurable Time specific Compared to a benchmark “Our objective is to achieve 10 percent dollar market share in the cat food market within 12 months of product introduction.” LO4 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 19 Criteria for Good Marketing Objectives Carefully specified objectives serve several functions: 1. Communicate marketing management philosophy 2. Provide management direction 3. Motivate employees 4. Force executives to clarify their thinking 5. Form a basis for control LO4 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 20 Competitive Advantage Identify sources of competitive advantage LO5 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 21 Competitive Advantage 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. LO5 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 22 Competitive Advantage Cost Types of Competitive Advantage Product/Service Differentiation Niche LO5 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 23 Cost Competitive Advantage Obtain inexpensive raw materials Create efficient scale of plant operations Design products for ease of manufacture Control overhead costs Avoid marginal customers LO5 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 24 Sources of Cost Reduction Experience Curves Product Design Efficient Labor Reengineering No-frills Products Production Innovations Government Subsidies New Service Delivery Methods LO5 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 25 Product/Service Differentiation Competitive Advantage A Product/Service Differentiation Competitive Advantage is… the provision of something that is unique and valuable to buyers beyond simply offering a lower price than that of the competition. LO5 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 26 Examples of Product/Service Differentiators Brand names Strong dealer network Product reliability Image Service LO5 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 27 Niche Competitive Advantage Used by small companies with limited resources May be used in a limited geographic market LO5 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 28 Building Sustainable Competitive Advantage Sustainable competitive advantage is an advantage that cannot be copied by the competition. A firm that has successfully achieved a competitive advantage will stake out a position unique in some manner from its rivals. LO5 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 29 Sources of Sustainable Competitive Advantage Patents Copyrights Locations Equipment Technology Skills and Assets of an Organization Customer Service LO5 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved Promotion 30 Strategic Directions Identify strategic alternatives LO6 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 31 LO6 Strategic Alternatives Market Penetration Chapter 2 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 Copyright ©2012 by Cengage Learning Inc. All rights reserved 32 Exhibit 2.2 Ansoff’s Strategic Opportunity Matrix LO6 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 33 Selecting a Strategic Alternative Star Cash Cow Portfolio Matrix Question Mark LO6 Chapter 2 Dog Copyright ©2012 by Cengage Learning Inc. All rights reserved 34 Exhibit 2.3 Portfolio Matrix for a Large Computer Manufacturer LO6 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 35 Portfolio Matrix Strategies Build Hold Harvest Divest LO6 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 36 Describing the Target Market Discuss target market strategies LO7 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 37 Describing the Target Market Marketing Strategy involves… the activities of selecting and describing one or more target markets and developing and maintaining a marketing mix that will produce mutually satisfying exchanges with target markets. Marketing Opportunity Analysis (MOA) involves… LO7 Chapter 2 the description and estimation of the size and sales potential of market segments that are of interest to the firm and the assessment of key competitors in these market segments. Copyright ©2012 by Cengage Learning Inc. All rights reserved 38 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 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 39 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 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 40 The Marketing Mix Describe the elements of the marketing mix LO8 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 41 The Marketing Mix The Marketing Mix is… a unique blend of product, place (distribution), promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market. The elements of the marketing mix are often referred to as the “Four Ps” LO8 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 42 Marketing Mix: The “Four Ps” The starting point of the “4 Ps” Includes: LO8 Chapter 2 Physical unit Package Warranty Service Brand Image Value Product Products can be… Tangible goods Ideas Services Copyright ©2012 by Cengage Learning Inc. All rights reserved 43 Marketing Mix: The “Four Ps” Place Product availability where and when customers want them All activities from raw materials to finished products LO8 Chapter 2 Ensure products arrive in usable condition at designated places when needed Copyright ©2012 by Cengage Learning Inc. All rights reserved 44 Marketing Mix: The “Four Ps” Includes integration of: Promotion Advertising Public relations Role is to bring about Sales promotion exchanges with target Personal selling markets by: Informing Educating Persuading Reminding LO8 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 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 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 46 Following Up on the Marketing Plan Explain why implementation, evaluation, and control of the marketing plan are necessary LO9 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 47 Following Up on the Marketing Plan Implementation Evaluation and Control Marketing audit is… Comprehensive Systematic Independent Periodic LO9 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 48 Effective Strategic Planning Identify several techniques that help make strategic planning effective LO10 Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 49 Techniques for Effective Strategic Planning Continual attention LO10 Chapter 2 Creativity Management commitment Effective Strategic Planning Copyright ©2012 by Cengage Learning Inc. All rights reserved 50