chapter 2: strategic planning for competitive advantage prepared by amit shah, frostburg state...
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Chapter 2: Strategic Planning for Competitive Advantage
Prepared by Amit Shah, Frostburg State University
Designed by Eric Brengle, B-books, Ltd.
Copyright 2010 by Cengage Learning Inc. All Rights Reserved 1
2
Understand the importance of strategic marketing and know a basic outline for a marketing plan
Develop an appropriate business mission statement
Explain the components of a situation analysis
LO1
LO2
LO3
Learning Outcomes
Copyright 2010 by Cengage Learning Inc. All Rights Reserved
Learning Outcomes
3
Explain the criteria for stating good marketing objectives
Identify sources of competitive advantage
Identify strategic alternatives
Discuss target market strategies
LO4
LO5
LO6
LO7
Copyright 2010 by Cengage Learning Inc. All Rights Reserved
Learning Outcomes
4
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
LO10
LO8
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5
The Nature of Strategic Planning
Understand the importance of strategic marketing
and know a basic outline for a marketing plan.
LO1
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6
Strategic Planning
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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7
Strategic Marketing Management
THE ANSWER IS A MARKETING PLAN.
What is the organization’s main activity?
How will it reach its goals?
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8
Marketing Planning
Marketing Plan- A written documentthat acts as a guidebook for the
marketing manager.
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Why Write a Marketing Plan?
9
LOI• 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 offuture activities
•Provides an examination of the marketing environment
•Allows entry into the marketplace with awareness
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Marketing Plan Elements
10
Marketing Strategy
Product Distribution
Price
Marketing Mix
Business Mission Statement
Situation or SWOT Analysis
Objectives
Target Market Strategy
ImplementationEvaluation
Control
Promotion
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Review Learning OutcomeThe Importance of Strategic Marketing
11
LO1
WhatWhat
WhyWhy
HowHow
Strategic PlanningStrategic Planning
Long-term profitability Long-term profitability and growthand growth
Write a marketing planWrite a marketing plan
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12
Defining the Business Mission
Develop an appropriate business mission statement.
LO2
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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
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14
Southwest Airlines Mission Statement
SOURCE: http://www.southwestairlines.com/about_swa/mission.html
Copyright 2010 by Cengage Learning Inc. All Rights Reserved
Strategic Business Units (SBUs)
Characteristics:An SBU HAS…
• A distinct mission and specific target market
• Control over its resources• Its own competitors• Plans independent of other SBUs
15Copyright 2010 by Cengage Learning Inc. All Rights Reserved
Review Learning OutcomeBusiness Mission Statement
16
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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17
Conducting a Situation Analysis
Explain the components of a situation analysis.
LO3
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18
Conducting a Situation Analysis
LO3
SWOT Analysis- Identifying internalstrengths and weaknesses and also
examining externalopportunities and threats.
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SWOT Analysis
19
©South-Western College Publishing
SWOT
Things the company does well.
Things the company does not do well.
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.
InternalInternal
ExternalExternal
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20
Environmental Scanning
Environmental Scanning- The collectionand interpretation of information aboutforces, events, and relationships in the
external environment that may affect the future of the organization or the
implementation of the marketing plan.
Copyright 2010 by Cengage Learning Inc. All Rights Reserved
Review Learning OutcomeComponents of a Situation Analysis
21
LO3
production costs marketing skills financial resources image technology
Strengths
Weaknesses
INTE
RN
AL
INTE
RN
AL
ENVI
RO
NM
ENT
ENVI
RO
NM
ENT
Copyright 2010 by Cengage Learning Inc. All Rights Reserved
22
Setting Marketing Plan Objectives
Explain the criteria for stating good marketing objectives.
LO4
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23
Marketing Objective
A statement of what is
to be accomplished
through marketing activities.
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Marketing Objectives
24
Realistic
Measurable
Time specific
Compared to a benchmark
“Our objective is to increase sales of Purina
brand cat food by 15 percent over 2009 sales of
$300 million.”
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Review Learning OutcomeCriteria for Good Marketing Objectives
25
LO4
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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26
Competitive Advantage
Identify sources of competitive advantage.
LO5
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27
Competitive Advantage
Competitive Advantage- The set of unique features of a company andits products that are perceived by
the target market as significantand superior to the competition.
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28
Competitive Advantage
Niche Strategies
Cost
Product/Service Differentiation
Types of Types of Competitive Competitive AdvantageAdvantage
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29
Cost Competitive Advantage
Cost Competitive Advantage- Being thelow-cost competitor in an industry
while maintaining satisfactoryprofit margins.
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Cost Competitive Advantage
30
Obtain inexpensive raw materials
Create efficient plant operations
Design products for ease of manufacture
Control overhead costs
Avoid marginal customers
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Sources of Cost Reduction
31
Experience Curves
Efficient Labor
No-frills Goods and Services
Government Subsidies
Product Design
Reengineering
Production Innovations
New Service Delivery Methods
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32
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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Examples of Product/Service Differentiation
33
Brand names
Strong dealer network
Product reliability
Image
Service
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34
Niche Competitive Advantage
Niche Competitive Advantage- The advantage when a firm seek to get and
effectively serve a single segment of themarket.
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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
35Copyright 2010 by Cengage Learning Inc. All Rights Reserved
Sources of Sustainable Competitive Advantage
36
Patents
Copyrights
Locations
Equipment
Technology
Customer Service
Promotion
Skills and AssetsSkills and Assets
of anof anOrganizationOrganization
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Review Learning OutcomeSources of Competitive Advantage
37
Sources ofSources ofCompetitive AdvantageCompetitive Advantage
Cost$
Product/ServiceDifferentiationA vs. B vs. C
NicheStrategies
LO5
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38
Strategic Directions
Identify strategic alternatives.
LO6
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Strategic Alternatives
39
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
Copyright 2010 by Cengage Learning Inc. All Rights Reserved
Ansoff’s Strategic Opportunity Matrix
40
Present Product New Product
New Market
MarketPenetration
MarketDevelopment
ProductDevelopment
Diversification
Present Market
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41
Portfolio Matrix
Stars
Cash Cows
ProblemChildren
Dogs
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42
Portfolio Matrix Strategies
Build
Hold
Harvest
Divest
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Review Learning OutcomeStrategic Alternatives
43
LO6
Identify strategic alternativesIdentify strategic alternatives
Diversification =
Product development = products
Market development = customers
Market penetration = share
new products +new markets
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44
Describing the Target Market
Discuss target market strategies.
LO7
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45
Marketing Strategy
Marketing Strategy- The activitiesof selecting and describing one or
more target markets and developingand maintaining a market mix thatwill produce mutually satisfyingexchanges with target markets.
Copyright 2010 by Cengage Learning Inc. All Rights Reserved
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
46Copyright 2010 by Cengage Learning Inc. All Rights Reserved
Target Market Strategy
47
Appeal to the entire market with one marketing mix
Concentrate on one marketing segment
Appeal to multiple marketswith multiple marketing mixes
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Review Learning Outcome Target Market Strategies
48
LO7
Entire Market Multiple Markets Single Market
Target Market Options
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49
The Marketing Mix
Describe the elements of the marketing mix.
LO8
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50
The Marketing Mix
i
A unique blend of product, distribution,
promotion, and pricing
strategies designed to produce
mutually satisfying
exchanges with a target market.
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51
Marketing Mix: The “Four Ps”
Price
Promotion
Place
Product
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52
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
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53
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
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54
Marketing Mix: The “Four Ps”
Promotion Role is to bring about
exchanges with target markets by:
Informing Educating Persuading Reminding
Includes integration of:Personal sellingAdvertisingSales promotionPublic relations
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55
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
Copyright 2010 by Cengage Learning Inc. All Rights Reserved
Review Learning OutcomeElements of the Marketing Mix
56
LO8
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57
Following Up on the Marketing Plan
Explain why implementation, evaluation, and control of the marketing plan
are necessary.
LO9
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Following Up the Marketing Plan
• Implementation• Evaluation
• Control
• Marketing audit is…• Comprehensive• Systematic• Independent• Periodic
58Copyright 2010 by Cengage Learning Inc. All Rights Reserved
Review Learning Outcome
59
LO9
Product PlacePromotionPrice
Met objectives?
Implementation Evaluation
Audits• comprehensive• systematic• independent• periodic
Implementation, Evaluation, and Control
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60
Effective Strategic Planning
Identify several techniques that help make
strategic planning effective.
LO10
Copyright 2010 by Cengage Learning Inc. All Rights Reserved
Effective Strategic Planning• Effective Strategic Planning
requires…
• Continual attention – ongoing rather than annual
• Creativity – challenging assumptions
• Management Commitment – support and participation from the top
61Copyright 2010 by Cengage Learning Inc. All Rights Reserved
Review Learning Outcome
62
LO10
Techniques for Effective Strategic Planning
Effective Strategic Planning
Continualattention Creativity Management
commitment
Copyright 2010 by Cengage Learning Inc. All Rights Reserved
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