Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel CHAPTER 2 Strategic Planning for Competitive Advantage © AP IMAGES/JENNIFER GRAYLOCK

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 2 Strategic Planning The GOAL of strategic planning is long-term profitability and growth. LO 1 the managerial process of creating and maintaining a fit between the organization’s objectives and resources and the evolving market opportunities. Strategic Planning is…

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 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. LO 1

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 4 Why Write a Marketing Plan?  Provides a basis for comparison of actual and expected performance  Provides clearly stated activities to work toward common goals  Provides an examination of the marketing environment  Serves as a reference for the success of future activities  Allows entry into the marketplace with awareness LO 1

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 5 Exhibit 2.1 Elements of a Marketing Mix Marketing Strategy ProductDistribution Price Marketing Mix Business Mission Statement Situation or SWOT Analysis Objectives Target Market Strategy Implementation Evaluation Control Promotion LO 1

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 6 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. LO 1

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 7 LO 2 Defining the Business Mission  Answers the question, “What business are we in?”  Focuses on the market(s) rather than the good or service If Mission is:  Too Narrow  Marketing Myopia  Too Broad  No Direction  Just Right  Focus on markets served and benefits customers seek

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 8 Mission Statement: Ben & Jerry’s LO 2 1.Product To make, distribute and sell the finest quality all natural ice cream and related products in a wide variety of innovative flavors made from Vermont Dairy products. 2.Economic To operate the company on a sound financial basis of profitable growth, increasing value for our shareholders, and creating career opportunities and financial rewards for our employees. 3.Social To operate the company in a way that actively recognizes the central role that business plays in the structure of society by initiating innovative ways to improve the quality of life of a broad community— local, national, and international.

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 9 SWOT Analysis ©South-Western College Publishing S S W W O O T 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 current weakness. Internal External LO 3

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 10 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 LO 3

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 11 Environmental Scanning Helps identify opportunities and threats. Designing a marketing strategy is based on six major environmental forces: Social Demographic Economic Technological Political/Legal Competitive LO 3 © AP IMAGES/PRNEWSFOTO/PEPSICO

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 12 Marketing Objectives  Realistic  Measurable  Time specific  Compared to a benchmark “Our objective is to achieve 10 percent dollar market share in the cat food market within 12 months of product introduction.” LO 4

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 13 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 LO 4

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 14 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. LO 5

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 15 Competitive Advantage Niche Cost Product/Service Differentiation Types of Competitive Advantage LO 5

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 16 Cost Competitive Advantage  Obtain inexpensive raw materials  Create efficient scale of plant operations  Design products for ease of manufacture  Control overhead costs  Avoid marginal customers LO 5

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 17 Sources of Cost Reduction Experience Curves Efficient Labor No-frills Products Government Subsidies Product Design Reengineering Production Innovations New Service Delivery Methods LO 5

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 18 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 that of the competition. A Product/Service Differentiation Competitive Advantage is…

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 19 Examples of Product/Service Differentiators  Brand names  Strong dealer network  Product reliability  Image  Service LO 5

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 20 Niche Competitive Advantage  Used by small companies with limited resources  May be used in a limited geographic market LO 5

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 21 Building Sustainable Competitive Advantage  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 its rivals. LO 5

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 22 Sources of Sustainable Competitive Advantage Patents Copyrights Locations Equipment Technology Customer Service Promotion Skills and Assets of an Organization Skills and Assets of an Organization LO 5

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 23 Strategic Alternatives Market Penetration Market Development 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 LO 6

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 24 LO 6 Exhibit 2.2 Ansoff’s Strategic Opportunity Matrix

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 25 LO 6 Selecting a Strategic Alternative Dog Question Mark Star Cash Cow Portfolio Matrix

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 26 LO 6 Exhibit 2.3 Portfolio Matrix for a Large Computer Manufacturer

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 27 Portfolio Matrix Strategies Build Hold Harvest Divest LO 6

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 28 the 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. LO 7 Marketing Strategy involves… Describing the Target Market the 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. Marketing Opportunity Analysis (MOA) involves…

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 29 Segment the market based on groups with similar characteristics Analyze the market based on attractiveness of market segments Select one or more target markets LO 7 Target Market Strategy

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 30 Appeal to the entire market with one marketing mix Concentrate on one marketing segment Appeal to multiple markets with multiple marketing mixes LO 7 Target Market Strategy

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 31 The Marketing Mix LO 8 a unique blend of product, place (distribution), promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market. The Marketing Mix is… “Four Ps” The elements of the marketing mix are often referred to as the “Four Ps”

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 32 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 LO 8

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 33 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 LO 8

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 34 Marketing Mix: The “Four Ps” Promotion  Role is to bring about exchanges with target markets by:  Informing  Educating  Persuading  Reminding  Includes integration of:  Advertising  Public relations  Sales promotion  Personal selling LO 8

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 35 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 LO 8

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 36 Following Up on the Marketing Plan  Implementation  Evaluation and Control  Marketing audit is…  Comprehensive  Systematic  Independent  Periodic LO 9

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 37 Techniques for Effective Strategic Planning Effective Strategic Planning Continual attention Creativity Management commitment Management commitment LO 10

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 38 Assignment  Cirque Du Soleil Case Assignment  Please get in groups of 5 to 7 students  Assignment:  Outline a rudimentary SWOT analysis for Cirque du Soleil.  List and describe three keys to Cirque du Soleil’s competitive advantage. Case