Lamb Hair Mc Daniel 2011 2012 CHAPTER 2

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 Describe the components of a situation analysis LO 4 Explain the criteria for stating good marketing objectives LO 5 Identify sources of competitive advantage Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 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 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 3

The Nature of Strategic Planning Understand the importance of strategic marketing and know a basic outline for a marketing plan LO 1 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 4

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. LO 1 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 5

Strategic Marketing Management What is the organization’s main activity? How will it reach its goals? THE ANSWER IS A MARKETING PLAN. LO 1 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 6

What Is a Marketing Plan? u Planning – the process of anticipating future events and determining strategies to achieve organizational objectives in the future. u Marketing Planning – designing activities relating to marketing objectives and the changing marketing environment. u Marketing Plan – a written document that acts as a guidebook of marketing activities for the marketing manager. LO 1 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 7

Why Write a Marketing Plan? u Provides a basis for comparison of actual and expected performance u Provides clearly stated activities to work toward common goals u Provides an examination of the marketing environment u Serves as a reference for the success of future activities u Allows entry into the marketplace with awareness LO 1 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 8

Exhibit 2. 1 Elements of a Marketing Mix Business Mission Statement Situation or SWOT Analysis Objectives Marketing Strategy Target Market Strategy Marketing Mix LO 1 Chapter 2 Product Distribution Promotion Price Implementation Evaluation Control Copyright © 2012 by Cengage Learning Inc. All rights reserved 9

Marketing Plan Elements Selecting which alternative to pursue depends on: 1. Philosophy and culture 2. Decision making tools LO 1 Chapter 2 The most common decision making tool is the matrix form. Copyright © 2012 by Cengage Learning Inc. All rights reserved 10

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. LO 1 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 11

Defining the Business Mission Develop an appropriate business mission statement LO 2 Chapter 2

Defining the Business Mission u Answers the question, “What business are we in? ” u Focuses on the market(s) rather than the good or service u Strategic Business Units (SBUs) may also have a mission statement LO 2 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 13

Mission Statement: Ben & Jerry’s 1. 2. 3. LO 2 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 14

Strategic Business Units (SBUs) Characteristics: [SBU HAS…] u A distinct mission and specific target market u Control over its resources u Its own competitors u Plans independent of other SBUs LO 2 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 15

Conducting a Situation Analysis Describe the components of a situation analysis LO 3 Chapter

SWOT Analysis Internal External LO 3 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 17

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 LO 3 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 18

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 LO 3 Chapter 2 • Competitive Copyright © 2012 by Cengage Learning Inc. All rights reserved 19

Beyond the Book Opportunities in Education • Grockit and Dream. Box develop integrated web-based educational tools. • Technology-based education solutions offer interactive instruction for less than a private tutor. • Companies like these can use their technological expertise to create and take advantage of opportunities in the recession environment. Source: Joseph De Avila, "Pursuing an Academic Edge at Home, " The Wall Street Journal, July 23, 2009, D 1 -D 2. Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 20

Setting Marketing Plan Objectives Explain the criteria for stating good marketing objectives LO 4

Marketing Objectives u Realistic u Measurable u Time specific u 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. ” LO 4 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 22

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 LO 4 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 23

Competitive Advantage Identify sources of competitive advantage LO 5 Chapter 2 Copyright © 2012

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. LO 5 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 25

Competitive Advantage Cost Types of Competitive Advantage Product/Service Differentiation Niche LO 5 Chapter 2

Cost Competitive Advantage u Obtain inexpensive raw materials u Create efficient scale of plant operations u Design products for ease of manufacture u Control overhead costs u Avoid marginal customers LO 5 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 27

Sources of Cost Reduction Experience Curves Product Design Efficient Labor Reengineering No-frills Production Innovations Government Subsidies New Service Delivery Methods LO 5 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 28

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. LO 5 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 29

Examples of Product/Service Differentiators u Brand names u Strong dealer network u Product reliability u Image u Service LO 5 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 30

Niche Competitive Advantage u Used by small companies with limited resources u May be used in a limited geographic market LO 5 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 31

Building Sustainable Competitive Advantage u Sustainable competitive advantage is an advantage that cannot be copied by the competition. u A firm that has successfully achieved a competitive advantage will stake out a position unique in some manner from its rivals. LO 5 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 32

Sources of Sustainable Competitive Advantage Patents Copyrights Locations Equipment Technology Skills and Assets of an Organization Customer Service LO 5 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved Promotion 33

Strategic Directions Identify strategic alternatives LO 6 Chapter 2 Copyright © 2012 by Cengage

LO 6 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 35

Exhibit 2. 2 Ansoff’s Strategic Opportunity Matrix LO 6 Chapter 2 Copyright © 2012

Selecting a Strategic Alternative Star Cash Cow Portfolio Matrix LO 6 Chapter 2 Question

Exhibit 2. 3 Portfolio Matrix for a Large Computer Manufacturer LO 6 Chapter 2

Portfolio Matrix Strategies Build Hold Harvest Divest LO 6 Chapter 2 Copyright © 2012

Describing the Target Market Discuss target market strategies LO 7 Chapter 2 Copyright ©

Describing the Target 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… LO 7 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 41

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 LO 7 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 42

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 LO 7 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 43

The Marketing Mix Describe the elements of the marketing mix LO 8 Chapter 2

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” LO 8 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 45

Marketing Mix: The “Four Ps” u. The starting point of the “ 4 Ps” Includes: LO 8 Chapter 2 u. Physical unit u. Package u. Warranty u. Service u. Brand u. Image u. Value Product u. Products can be… u Tangible goods u Ideas u Services Copyright © 2012 by Cengage Learning Inc. All rights reserved 46

Marketing Mix: The “Four Ps” Place u. Product availability where and when customers want them u. All activities from raw materials to finished products LO 8 Chapter 2 u. Ensure products arrive in usable condition at designated places when needed Copyright © 2012 by Cengage Learning Inc. All rights reserved 47

Marketing Mix: The “Four Ps” u. Includes integration of: Promotion u. Advertising u. Public relations u Role is to bring about u. Sales promotion exchanges with target u. Personal selling markets by: u Informing u Educating u Persuading u Reminding LO 8 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 48

Marketing Mix: The “Four Ps” Price u. Price is what a buyer must give up to obtain a product. u. The most flexible of the “ 4 Ps”—quickest to change u. Competitive weapon u. Price x Units Sold = Total Revenue LO 8 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 49

Beyond the Book Whole Foods Changes Its Pricing Strategy • As customers face financial struggles, Whole Foods is changing its pricing strategy by: – highlighting deals and sales – pricing items individually instead of per pound – bundle items in bulk discounts Source: Katy Mc. Laughlin and Timothy Martin, "As Sales Slip, Whole Foods Tries Health Push, " Wall Street Journal, August 5, 2009, B 1 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 50

Following Up on the Marketing Plan Explain why implementation, evaluation, and control of the marketing plan are necessary LO 9 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 51

Following Up on the Marketing Plan u Implementation u Evaluation and Control u Marketing audit is… u u Comprehensive Systematic Independent Periodic LO 9 Chapter 2 Copyright © 2012 by Cengage Learning Inc. All rights reserved 52

Effective Strategic Planning Identify several techniques that help make strategic planning effective LO 10

Techniques for Effective Strategic Planning Continual attention LO 10 Chapter 2 Creativity Management commitment Effective Strategic Planning Copyright © 2012 by Cengage Learning Inc. All rights reserved 54

Beyond the Book Chapter 2 Videos Chapter 2 Method – Strategic Planning for Competitive Advantage Based on what you heard in the video, does method have a marketing plan? http: //www. cengage. com/marketing/boo k_content/1439039429_lamb/company_c lips/ch 02. html Copyright © 2012 by Cengage Learning Inc. All rights reserved 55