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Lamb, Hair, McDaniel

CHAPTER 2

Strategic Planning for Competitive Advantage

2010-2011

2

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

Learning Outcomes

3

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

Learning Outcomes

4

Understand the importance of strategic marketing and know a

basic outline for a marketing plan

The Nature of Strategic Planning

LO1

5

Strategic Planning

The goal is long-term profitability and growth.

LO1

6

Strategic Marketing Management

What is the organization’s main activity?

How will it reach its goals?

THE ANSWER IS A MARKETING PLAN.

LO1

7

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

8

Marketing Plan

ElementsMarketing Strategy

Product Distribution

Price

Marketing Mix

Business Mission Statement

Objectives

Situation & SWOT Analysis

Target Market Strategy

ImplementationEvaluation

Control

Promotion

LO1

9

The Importance of Strategic Marketing

What

Why

How

Strategic Planning

Long-term profitability and growth

Write a marketing plan

LO1

10

Marketing Decisions

McDonald’s past ad campaigns focused on children, often using characters and/or talking food

• http://www.metacafe.com/watch/250341/old_mcdonalds_commercial/

Current campaigns focus on healthy ingredients

• http://www.mcdonalds.com/usa/eat.html

LO1

McDonald’s past ad campaigns focused on children, often using characters and/or talking food

• http://www.metacafe.com/watch/250341/old_mcdonalds_commercial/

Current campaigns focus on healthy ingredients

• http://www.mcdonalds.com/usa/eat.html

11

Develop an appropriate business

mission statement

Defining the Business Mission

LO2

12

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

13

AMA’s Mission Statement

LO2

14

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

15

Explain the components of a situation analysis

Conducting a Situation Analysis

LO3

16

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.

Internal

External

LO3

17

Environmental ScanningHelps Identify opportunities and threats

Guidelines for Designing Marketing Strategy Based on six forces:

• Social

• Demographic

• Economic

• Technological

• Political/Legal

• Competitive

LO3

18

Components of a Situation Analysis

production costs marketing skills financial resources image technology

Strengths

Weaknesses

INT

ER

NA

L

EN

VIR

ON

ME

NT

LO3

19

Describe the criteria for stating good

marketing objectives

Setting MarketingPlan Objectives

LO4

20

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

21

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

22

Identify sources of competitive

advantage

Competitive Advantage

LO5

23

Competitive Advantage

CompetitiveAdvantage

CompetitiveAdvantage

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

24

Competitive Advantage

Niche StrategiesNiche Strategies

CostCost

Product/Service Differentiation

Product/Service Differentiation

Types of Competitive Advantage

Types of Competitive Advantage

LO5

25

Cost Competitive Advantage

Obtain inexpensive raw materials

Create efficient plant operations

Design products for ease of manufacture

Control overhead costs

Avoid marginal customers

LO5

26

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

LO5

27

Examples of Product/Service Differentiators

Brand names

Strong dealer network

Product

reliability

Image

Service

LO5

28

Elements of Competitive Advantage

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

Access to unique talent and skillsCost 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

LO5

Beyon

d

the B

ook

29

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

30

Sources of Sustainable Competitive Advantage

PatentsPatents

CopyrightsCopyrights

LocationsLocations

EquipmentEquipment

TechnologyTechnology

Customer ServiceCustomer Service

PromotionPromotion

Skills and Assets

of anOrganization

Skills and Assets

of anOrganization

LO5

31

Identify strategic alternatives

Strategic Directions

LO6

32

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

LO6

33

Portfolio Matrix

Stars

Cash Cows

ProblemChildren

Dogs

LO6

34

• 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

• Drop

LO6

35

Portfolio Matrix Strategies

Build

Hold

Harvest

Divest

LO6

36

Discuss target market strategies

Describingthe Target Market

LO7

37

• 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

Target Market Strategy

38

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

LO7

Target Market Strategy

39

Target Market Strategies

Entire Market Multiple Markets Single Market

Target Market Options

LO7

40

Describe the elements of the marketing mix

The Marketing Mix

LO8

41

The Marketing Mix

A unique blend of product,

distribution, promotion, and

pricing strategies designed to

produce mutually satisfying

exchanges with a target market.

Marketing MixMarketing Mix

LO8

42

Marketing Mix: The “Four Ps”

Price

Promotion

Place

Product

LO8

43

Marketing Mix: The “Four Ps”

The starting point of the “4 Ps” Includes:

Physical unitPackageWarrantyServiceBrandImageValue

Product

Products can be…Tangible goods IdeasServices

LO8

44

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

Place

LO8

45

Marketing Mix:The “Four Ps” Promotion

Online

Sony Vaio Advertisement

Reebok EasyTone Shoe Advertisement

Role is to bring about exchanges with target markets by: InformingEducatingPersuadingReminding

Includes integration of:Personal sellingAdvertisingSales promotionPublic relations

LO8

46

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 weaponPrice x Units Sold = Total

Revenue

LO8

47

Beyond

the

Book

Anatomy of a Promotion Campaign

The role of promotion is to inform, persuade, and remind. Chick-Fil-A’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.

LO8

48

Explain why implementation,

evaluation, and control of the marketing plan

are necessary

Following Up on the Marketing Plan

LO9

49

Following Up on the Marketing Plan

Implementation

Evaluation

Control

Marketing audit is… Comprehensive Systematic Independent PeriodicLO9

50

Identify several techniques that help

make strategic planning effective

Effective Strategic Planning

LO10

51

Techniques for Effective Strategic Planning

Effective Strategic Planning

Effective Strategic Planning

Continualattention

Continualattention CreativityCreativity Management

commitment

Managementcommitment

LO10