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1
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CHAPTER
2
Strategic Planning for Competitive Advantage
Prepared byDeborah Baker
Texas Christian University
Introduction to MarketingMcDaniel, Lamb, Hair
9
2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Learning Outcomes
Understand the importance of strategic marketing and know a basic outline for a marketing plan
Develop an appropriate business mission statement
Describe the criteria for stating good marketing objectives
LOI
LO2
LO3
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Learning Outcomes
Explain the components of a situation analysis
Identify sources of competitive advantage
Identify strategic alternatives
Discuss target market strategies
LO5
LO6
LO7
LO4
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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
LO9
LOIO
LO8
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Understand the importance of strategic marketing
and know a basic outline for a marketing plan
The Nature of Strategic PlanningLOI
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Strategic Planning
StrategicPlanning
StrategicPlanning
LOI
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.
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LOI
What is the organization’s main activity?
Strategic Marketing Management
How will it reach its goals?
THE ANSWER IS A MARKETING PLAN.
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Strategic PlanningLOI
Marketing PlanMarketing Plan A written document that acts as a guidebook of marketing activities for the marketing manager.
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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
Why Write a Marketing Plan?
10Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 LOI
Marketing Plan Elements
Marketing Strategy
Product Distribution
Price
Marketing Mix
Business Mission Statement
Objectives
Situation or SWOT Analysis
Target Market Strategy
ImplementationEvaluation
Control
Promotion
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REVIEW LEARNING OUTCOMEThe Importance of Strategic Marketing
LOI
WhatWhatWhatWhat
WhyWhyWhyWhy
HowHowHowHow
Strategic PlanningStrategic PlanningStrategic PlanningStrategic Planning
Long-term profitability Long-term profitability and growthand growth
Long-term profitability Long-term profitability and growthand growth
Write a marketing planWrite a marketing planWrite a marketing planWrite a marketing plan
Online
http://www.dmusic.com
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Develop an appropriate business mission statement
Defining the Business MissionLO2
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LO2
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
Defining the Business Mission
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LO2 AMA’s Mission Statement
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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
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REVIEW LEARNING OUTCOMEBusiness Mission Statement
LO2
marketing myopiano directionfocus on marketsserved and benefitscustomers seek
Q: What business are we in?
A: Business mission statement
Too narrowToo broadJust right
marketing myopiano directionfocus on marketsserved and benefitscustomers seek
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Describe the criteria for stating good marketing objectives
Setting Marketing Plan ObjectivesLO3
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LO3 Marketing Objective
A statement of what is to be
accomplished through
marketing activities.
Marketing Objective
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Marketing Objectives
Realistic
Measurable
Time specific
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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REVIEW LEARNING OUTCOMECriteria for Good Marketing Objectives
LO3
Realistic, measurable, and time-specific objectives Realistic, measurable, and time-specific objectives consistent with the firm’s 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
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Explain the components of a situation analysis
Conducting a Situation AnalysisLO4
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LO4
SWOT AnalysisSWOT Analysis
SWOT Analysis
Identifying
internal strengths (S)
and weaknesses (W)
and also examining
external opportunities (O)
and threats (T)
23Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 LO4
SWOT Analysis
©South-Western College Publishing
SSWWOOTT
Things the company does well.Things the company does well.
Things the company does not do well.Things the company does not do well.
Conditions in the external environment that favor strengths.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.
Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness.
InternalInternal
ExternalExternal
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Biz FlixU-571
24
LO4
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LO4
Environmental Scanning
Environmental Scanning
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.
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REVIEW LEARNING OUTCOMEComponents of a Situation Analysis
LO4
production costs
marketing skills
financial resources
image
technology
Strengths
Weaknesses
INT
ER
NA
LIN
TE
RN
AL
EN
VIR
ON
ME
NT
EN
VIR
ON
ME
NT
27Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
REVIEW LEARNING OUTCOME Components of a Situation Analysis
LO4
social
demographic
economic
technological
political / legal
competitive
Opportunities
Threats
EX
TE
RN
AL
E
XT
ER
NA
L
EN
VIR
ON
ME
NT
EN
VIR
ON
ME
NT
28Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Identify sources of competitive advantage
Competitive AdvantageLO5
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CompetitiveAdvantage
CompetitiveAdvantage
LO5 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.
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LO5 Competitive Advantage
Niche StrategiesNiche Strategies
CostCost
Product/Service Differentiation
Product/Service Differentiation
Types of Types of Competitive Competitive AdvantageAdvantage
Types of Types of Competitive Competitive AdvantageAdvantage
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Cost Competitive Advantage
Cost Competitive Advantage
LO5 Cost Competitive Advantage
Being the low-cost competitor
in an industry while maintaining
satisfactory profit margins.
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LO5 Cost Competitive Advantage
Obtain inexpensive raw materials
Create efficient plant operations
Design products for ease of manufacture
Control overhead costs
Avoid marginal customers
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LO5 Sources of Cost Reduction
Experience CurvesExperience Curves
Efficient LaborEfficient Labor
No-frills ProductsNo-frills Products
Government SubsidiesGovernment Subsidies
Product DesignProduct Design
ReengineeringReengineering
Production InnovationsProduction Innovations
New Service Delivery Methods
New Service Delivery Methods
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Product / ServiceDifferentiation Competitive Advantage
Product / ServiceDifferentiation Competitive Advantage
LO5 Product/Service Differentiation
The provision of something that is unique
and valuable
to buyers beyond simply
offering a lower price than
the competition’s.
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LO5
Brand names
Strong dealer network
Product reliability
Image
Service
Examples of Product/Service Differentiation
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Niche Competitive Advantage
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.
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LO5 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
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Chapter 2
Sources of Sustainable Competitive AdvantageLO5
PatentsPatents
CopyrightsCopyrights
LocationsLocations
EquipmentEquipment
TechnologyTechnology
Customer ServiceCustomer Service
PromotionPromotion
Skills and AssetsSkills and Assets
of anof anOrganizationOrganization
Skills and AssetsSkills and Assets
of anof anOrganizationOrganization
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REVIEW LEARNING OUTCOMESources of Competitive Advantage
LO5
Sources ofSources ofCompetitive AdvantageCompetitive Advantage
Sources ofSources ofCompetitive AdvantageCompetitive Advantage
Cost$
Cost$
Product/ServiceDifferentiationA vs. B vs. C
Product/ServiceDifferentiationA vs. B vs. C
NicheStrategies
NicheStrategies
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Identify strategic alternatives
Strategic DirectionsLO6
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LO6 Strategic Alternatives
MarketPenetration
MarketDevelopment
Product Development
Diversification
Increase market share among existing customers
Attract new customers to existing products
Introduce new products into new markets
Create new products for present markets
42Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 LO6
Ansoff’s Strategic Opportunity Matrix
Present Product New Product
New Market
MarketPenetration
MarketDevelopment
ProductDevelopment
Diversification
Present Market
http://www.pg.com
Online
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Portfolio MatrixLO6
Stars
Cash Cows
ProblemChildren
Dogs
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Portfolio Matrix StrategiesLO6
Build
Hold
Harvest
Divest
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REVIEW LEARNING OUTCOMEStrategic Alternatives
LO6
Identify strategic alternativesIdentify strategic alternatives
Diversification =
Product development = products
Market development = customers
Market penetration = share
new products +new markets
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Discuss target market strategies
Describing the Target MarketLO7
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LO7 Marketing Strategy
MarketingStrategy
MarketingStrategy
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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LO7 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
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LO7 Target Market Strategy
Appeal to the entire market with one marketing mix
Appeal to the entire market with one marketing mix
Concentrate on one marketing segment
Concentrate on one marketing segment
Appeal to multiple marketswith multiple marketing mixes
Appeal to multiple marketswith multiple marketing mixes
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REVIEW LEARNING OUTCOME Target Market Strategies
LO7
Entire Market Multiple Markets Single Market
Target Market Options
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Describe the elements of the marketing mix
The Marketing MixLO8
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Marketing MixMarketing Mix
LO8 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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Marketing Mix: The “Four Ps”
Price
Promotion
Place
Product
LO8
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Marketing Mix: The “Four Ps”
The starting point of the “4 Ps”
Includes Physical unit Package Warranty Service Brand Image Value
Product
Products can be… Tangible goods Ideas Services
LO8
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Marketing Mix: The “Four Ps”
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
Place
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Marketing Mix: The “Four Ps”LO8
Promotion Role is to bring about
exchanges with target markets by:
Informing Educating Persuading Reminding
Includes integration of:
Personal selling
Advertising
Sales promotion
Public relations
Online
http://www.paramount.comhttp://www.warnerbros.comhttp://www.universalstudios.com
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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
Price x Units Sold = Total Revenue
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REVIEW LEARNING OUTCOMEElements of the Marketing Mix
LO8
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Explain why implementation, evaluation, and control of the marketing plan
are necessary
Following Up on the Marketing PlanLO9
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Implementation
Evaluation
Control
Marketing audit is…• Comprehensive• Systematic• Independent• Periodic
LO9 Following Up the Marketing Plan
http://www.youngbiz.com
Online
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REVIEW LEARNING OUTCOMELO9
Product PlacePromotionPrice
Product PlacePromotionPrice
Met objectives?
Met objectives?
Implementation Evaluation
Audits• comprehensive• systematic• independent• periodic
Audits• comprehensive• systematic• independent• periodic
Implementation, Evaluation, and Control
62Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Identify several techniques that help make strategic
planning effective
Effective Strategic PlanningLOIO
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REVIEW LEARNING OUTCOMELOI
O Techniques for Effective Strategic Planning
Effective Strategic Planning
Effective Strategic Planning
Continualattention
Continualattention CreativityCreativity Management
commitment
Managementcommitment