1 Copyright ©2009 by Cengage Learning Inc. All rights reserved Designed by Eric Brengle B-books, Ltd. CHAPTER 2 Strategic Planning for Competitive Advantage Prepared by Amit Shah Frostburg State University Marketing Lamb, Hair, McDaniel 10

Copyright ©2009 by Cengage Learning Inc. All rights reserved Strategic Planning 2 LO I 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.

Copyright ©2009 by Cengage Learning Inc. All rights reserved Strategic Marketing Management 3 LO I What is the organization’s main activity? How will it reach its goals? THE ANSWER IS A MARKETING PLAN.

Copyright ©2009 by Cengage Learning Inc. All rights reserved Marketing Planning 4 LO I Marketing Plan A written document that acts as a guidebook of marketing activities for the marketing manager.

Copyright ©2009 by Cengage Learning Inc. All rights reserved Why Write a Marketing Plan? 5 LO I  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

Copyright ©2009 by Cengage Learning Inc. All rights reserved Marketing Plan Elements 6 LO I Marketing Strategy ProductDistribution Price Marketing Mix Business Mission Statement Objectives Situation or SWOT Analysis Target Market Strategy Implementation Evaluation Control Promotion

Copyright ©2009 by Cengage Learning Inc. All rights reserved 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 7 LO 2

Copyright ©2009 by Cengage Learning Inc. All rights reserved 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 8 LO 2

Copyright ©2009 by Cengage Learning Inc. All rights reserved Conducting a Situation Analysis 9 LO 3 SWOT Analysis Identifying internal strengths (S) and weaknesses (W) and also examining external opportunities (O) and threats (T)

Copyright ©2009 by Cengage Learning Inc. All rights reserved SWOT Analysis 10 LO 3 ©South-Western College Publishing S S W W O O T T 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. Internal External

Copyright ©2009 by Cengage Learning Inc. All rights reserved Environmental Scanning 11 LO 3 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.

Copyright ©2009 by Cengage Learning Inc. All rights reserved Marketing Objective 12 LO 4 A statement of what is to be accomplished through marketing activities. Marketing Objective

Copyright ©2009 by Cengage Learning Inc. All rights reserved Marketing Objectives 13 LO 4  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.”

Copyright ©2009 by Cengage Learning Inc. All rights reserved Competitive Advantage 14 Competitive Advantage LO 5 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.

Copyright ©2009 by Cengage Learning Inc. All rights reserved Competitive Advantage 15 LO 5 Niche Strategies Cost Product/Service Differentiation Types of Competitive Advantage

Copyright ©2009 by Cengage Learning Inc. All rights reserved Cost Competitive Advantage 16 Cost Competitive Advantage LO 5 Being the low-cost competitor in an industry while maintaining satisfactory profit margins.

Copyright ©2009 by Cengage Learning Inc. All rights reserved Cost Competitive Advantage 17 LO 5  Obtain inexpensive raw materials  Create efficient plant operations  Design products for ease of manufacture  Control overhead costs  Avoid marginal customers

Copyright ©2009 by Cengage Learning Inc. All rights reserved Sources of Cost Reduction 18 LO 5 Experience Curves Efficient Labor No-frills Goods and Services No-frills Goods and Services Government Subsidies Product Design Reengineering Production Innovations New Service Delivery Methods

Copyright ©2009 by Cengage Learning Inc. All rights reserved Product/Service Differentiation 19 Product / Service Differentiation Competitive Advantage LO 5 The provision of something that is unique and valuable to buyers beyond simply offering a lower price than the competition’s.

Copyright ©2009 by Cengage Learning Inc. All rights reserved Examples of Product/Service Differentiation 20 LO 5  Brand names  Strong dealer network  Product reliability  Image  Service

Copyright ©2009 by Cengage Learning Inc. All rights reserved Niche Competitive Advantage 21 Niche Competitive Advantage LO 5 The advantage achieved when a firm seeks to target and effectively serve a single segment of the market.

Copyright ©2009 by Cengage Learning Inc. All rights reserved 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 22 LO 5

Copyright ©2009 by Cengage Learning Inc. All rights reserved Sources of Sustainable Competitive Advantage 23 LO 5 Patents Copyrights Locations Equipment Technology Customer Service Promotion Skills and Assets of an Organization Skills and Assets of an Organization

Copyright ©2009 by Cengage Learning Inc. All rights reserved Ansoff’s Strategic Opportunity Matrix 24 LO 6 Present ProductNew Product New Market Market Penetration Market Development Product Development Diversification Present Market

Copyright ©2009 by Cengage Learning Inc. All rights reserved Marketing Strategy 25 LO 7 Marketing Strategy Marketing Strategy 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.

Copyright ©2009 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 26 LO 7

Copyright ©2009 by Cengage Learning Inc. All rights reserved Target Market Strategy 27 LO 7 Appeal to the entire market with one marketing mix Concentrate on one marketing segment Appeal to multiple markets with multiple marketing mixes

Copyright ©2009 by Cengage Learning Inc. All rights reserved The Marketing Mix 28 Marketing Mix LO 8 A unique blend of product, distribution, promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market.

Copyright ©2009 by Cengage Learning Inc. All rights reserved Marketing Mix: The “Four Ps” 29 Price Promotion Place Product LO 8

Copyright ©2009 by Cengage Learning Inc. All rights reserved Marketing Mix: The “Four Ps” 30  The starting point of the “4 Ps”  Includes  Physical unit  Package  Warranty  Service  Brand  Image  Value Product  Products can be…  Tangible goods  Ideas  Services LO 8

Copyright ©2009 by Cengage Learning Inc. All rights reserved Marketing Mix: The “Four Ps” 31  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 LO 8 Place

Copyright ©2009 by Cengage Learning Inc. All rights reserved Marketing Mix: The “Four Ps” 32 LO 8 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

Copyright ©2009 by Cengage Learning Inc. All rights reserved Marketing Mix: The “Four Ps” 33 LO 8 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 ©2009 by Cengage Learning Inc. All rights reserved Following Up the Marketing Plan Implementation Evaluation Control Marketing audit is… Comprehensive Systematic Independent Periodic 34 LO 9