Lamb Hair Mc Daniel 2012 2013 CHAPTER 2
Lamb, Hair, Mc. Daniel 2012 -2013 CHAPTER 2 Chapter 1 Copyright © 2012 by Cengage Learning Inc. All rights reserved © 2013 by Cengage Learning Inc. All Rights Reserved. 11 © AP IMAGES/JENNIFER GRAYLOCK Strategic Planning for Competitive Advantage
Learning Outcomes 1 Understand the importance of strategic planning 2 Define strategic business units (SBUs) 3 Identify strategic alternatives and know a basic outline for a marketing plan 4 Develop an appropriate business mission statement 5 Describe the components of a situation analysis 6 Identify sources of competitive advantage 2
Learning Outcomes 7 Explain the criteria for stating good marketing objectives 8 Discuss target market strategies 9 Describe the elements of the marketing mix 10 Explain why implementation, evaluation, and control of the marketing plan are necessary 11 Identify several techniques that help make strategic planning effective 3
The Nature of Strategic Planning Understand strategic marketing and explore a basic outline for a marketing plan 1 4
Strategic Marketing Management What is the organization’s main activity? How will it reach its goals? The answer is by examining: • SBUs (Strategic Business Units) • Strategic Alternatives • The Marketing Plan 5 1
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. 6 1
Strategic Business Units Define Strategic Business Units (SBUs) 2 7
Characteristics of Strategic Business Units (SBUs) An SBU … g Ø has a distinct mission and specific target market Ø has control over its resources Ø has its own competitors Ø has plans independent of other SBUs 8 2
Strategic Alternatives Identify strategic alternatives and know a basic outline for a marketing plan 3 9
Ansoff’s Opportunity Matrix Market Penetration 10 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 3
Exhibit 2. 1 Ansoff’s Strategic Opportunity Matrix Present Product Present Market Penetration New Market Development Starbucks sells more coffee to customers who register their reloadable Starbucks cards. Starbucks opens stores in Brazil and Chile. New Product Development Starbucks develops powdered instant coffee Via or Blond Roast. Diversification Starbucks launches Hear Music and buys Ethos Water. 3 11
Boston Consulting Group Portfolio Matrix Star Cash Cow Portfolio Matrix Question Mark Dog 12 3
Exhibit 2. 2 Portfolio Matrix for a Large Computer Manufacturer 3 13
Portfolio Matrix Strategies Build Hold Harvest Divest 14 3
Exhibit 2. 3 High Cautiously Invest/Grow Medium Harvest/Divest Cautiously Invest/Grow Low Market attractiveness Portfolio Matrix for a Large Computer Manufacturer Harvest/Divest Cautiously Invest Low Medium High Business Position 15 3
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. 16 3
Why Write a Marketing Plan? q Provides a basis for comparison of actual versus expected performance q Provides clearly stated activities to work toward common goals q Provides an examination of the marketing environment q Serves as a reference for the success of future activities q Allows entry into the marketplace with awareness 17 3
Business Mission Statement Exhibit 2. 4 Elements of a Marketing Plan Situation or SWOT Analysis Objectives Marketing Strategy Target Market Strategy Marketing Mix Product Distribution Promotion Price Implementation Evaluation Control 18
Marketing Plan Elements Selecting how to proceed depends on: 1. 2. Philosophy and culture Decision making tools The most common decision making tool is the SWOT analysis. 19 3
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. 20 3
Defining the Business Mission Develop an appropriate business mission statement 4 21
Defining the Business Mission § Answers the question, “What business are we in? ” § Focuses on the market(s) rather than the good or service § SBUs may also have a mission statement 22 4
Conducting a Situation Analysis Describe the components of a situation analysis 53 LO 23
SWOT Analysis Internal External 24 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. 5
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 25 5
Environmental Scanning Helps identify Opportunities and Threats Designing a marketing strategy is based on six major environmental forces: § Economic § Technological § Social § Competitive § Demographic 26 5 © AP IMAGES/PRNEWSFOTO/PEPSICO § Political/Legal
Competitive Advantage Identify sources of competitive advantage 6 27
Types of Competitive Advantage Cost Types of Competitive Advantage Product/Service Differentiation Niche 28 6
1. Competitive Advantage-Cost § Obtain inexpensive raw materials § Create efficient scale of plant operations § Design products for ease of manufacture § Control overhead costs § Avoid marginal customers 29 6
Sources of Cost Reduction 30 Experience Curves Product Design Efficient Labor Reengineering No-frills Production Innovations Government Subsidies New Service Delivery Methods 6
2. Competitive Advantage. Products/Service § Brand names § Strong dealer network § Product reliability § Image § Service 31 6
3. Competitive Advantage-Niche 32 § Used by small companies with limited resources § May be used in a limited geographic market 6
Building Sustainable Competitive Advantage 33 § 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 rivals. 6
Sources of Sustainable Competitive Advantage Patents Copyrights Locations Equipment Technology Skills and Assets of an Organization 34 Customer Service Promotion 6
Setting Marketing Plan Objectives Explain the criteria for stating good marketing objectives: “What is to be accomplished through marketing activities” 7 35
Marketing Objectives § Setting realistic goals § Measurable targets § Time specific aims § Compared to a benchmark For example: “Our objective is to achieve 10 percent dollar market share in the cat food market within 12 months of product introduction. ” 36 7
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 37 7
Describing the Target Market Discuss target market strategies 8 38
Describing the Target Marketing Strategy: 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): 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. 39 8
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 40 8
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 41 8
The Marketing Mix Describe the elements of the marketing mix 9 42
The Marketing Mix A unique blend of PRODUCT, PRICE, PROMOTION AND PLACE (distribution) 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” 43 9
Marketing Mix: Product § The starting point of the Product “ 4 Ps” is the product: § Physical unit § Products can be… § Package § Tangible goods § Warranty § Ideas § Services § Brand § Image § Value 44 9
Marketing Mix: 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 45 9
Marketing Mix: Promotion § Includes : Promotion § Advertising § Public relations § Brings about exchanges § Sales promotion with target markets by: § Personal selling § § 46 Informing Educating Persuading Reminding 9
Marketing Mix: Place § Product availability where and when customers want them Place § All activities from raw materials to finished products § Ensure products arrive in usable condition at designated places when needed 47 9
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 9 © 2013 by Cengage Learning Inc. All Rights Reserved. 48
Following Up on the Marketing Plan Explain why implementation, evaluation, and control of the marketing plan are necessary 10 49
Following Up on the Marketing Plan § Implementation § Evaluation & Control § Marketing audit is… 1. Comprehensive 2. Systematic 3. Independent 4. Periodic 50 … and involves: § Planning § Organizing § Controlling § Leading 10
Effective Strategic Planning Identify several techniques that help make strategic planning effective 11 51
Techniques for Effective Strategic Planning Continual attention Creativity Management commitment Effective Strategic Planning 52 11
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