1 Strategic Planning for Competitive Advantage

Enduring Understandings for Market Planning Unit Marketing is customer focused. Marketing is much more than advertising and selling. A marketing plan is a roadmap for all companies' business efforts.

Essential Questions for Market Planning Unit What is marketing? How do marketers find their customers? What makes marketing dynamic? What causes a business to "close its doors"?

The Importance of Strategic MarketingWhatWhatWhyWhy HowHow Strategic Planning Long-term profitability and growth Long-term profitability and growth Write a marketing plan GE, Toys R Us, McDonalds

Strategic Marketing Management THE ANSWER IS A MARKETING PLAN. What is the organization’s main activity? How will it reach its goals?

Marketing Planning Marketing Plan- A written document that acts as a guidebook for the marketing manager.

Building a marketing plan is more than just meeting and knocking around ideas haphazardly…

And it’s DEFINITELY more than adopting a strategy just because “all of a sudden” you decided it seemed like a good idea…

A Marketing Plan is a Roadmap for All of a Company’s Business Efforts Marketing Plans are: – Strategic and extensive – Organized and analytical – Either short or long range (depending on the company)

Marketing Plan Elements Marketing Strategy ProductDistribution Price Marketing Mix Business Mission Statement Situation or SWOT Analysis Objectives Target Market Strategy Implementation Evaluation Control Promotion

Business Mission Statement marketing myopia no direction focus on markets served and benefits customers seek Q: What business are we in? A: Business mission statement Too narrow Too broad Just right marketing myopia no direction focus on markets served and benefits customers seek

Star Trek Enterprise Why is a mission statement important?

Starbucks Mission Statement Our mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.

DECA Mission Statement DECA prepares emerging leaders and entrepreneurs for careers in marketing, finance, hospitality and management in high schools and colleges around the globe.

Nike Mission Statement Find a sample to share Parkway Mission statement Our mission for the Nike brand is: To bring inspiration and innovation to every athlete* in the world. *"If you have a body, you are an athlete." Samples

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

Strategic Business Unit (SBU) Company division or a Product line within a division or a Single product or company brand that has an objective and mission different from other company business Can be marketed independently from the rest of the company.

 Strategic Business Unit (SBU) GE Technology Infrastructure (healthcare, aviation, transportation) GE Energy (energy, oil & gas, water) GE Capital (Commercial Finance, GE Money) NBC Universal (television, music, film)

Boeing SBU’s

Marketing Plan Elements Marketing Strategy ProductDistribution Price Marketing Mix Business Mission Statement Situation or SWOT Analysis Objectives Target Market Strategy Implementation Evaluation Control Promotion

Conducting a Situation Analysis LO 3 SWOT Analysis- Identifying internal strengths and weaknesses and also examining external opportunities and threats.

SWOT Analysis ©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

THE STRATEGIC MARKETING PROCESS THE PLANNING PHASE  Analyze Competitors  Identify Industry Trends  Research Present and Prospective Customers  Assess the Organization SWOT Analysis Study  Step 1: Situation (SWOT) Analysis

Ben & Jerry’s SWOT analysis

Components of a Situation Analysis  production costs  marketing skills  financial resources  image  technology INTERNAL ENVIRONMENT

26 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. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Marketing Objective A statement of what is to be accomplished through marketing activities.

Marketing Objectives  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.”

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

1.Profitability Objectives To achieve a 20% return on capital by August Market Share Objectives To gain 25% of the market for sports shoes by September Promotional Objectives To increase trail of X washing powder from 2% to 5% of our target group by January Examples of Smart Objectives

. Smart Objectives 4. Objectives for Survival To survive the current double-dip recession. 5. Objectives for Growth To increase the size of our Brazilian operation from $200,000 in 2017 to $400,000 in Objectives for Branding To make Y brand of bottled beer the preferred brand of year old females in North America by February 2017.

Marketing Plan Elements Marketing Strategy ProductDistribution Price Marketing Mix Business Mission Statement Situation or SWOT Analysis Objectives Target Market Strategy Implementation Evaluation Control Promotion

Describing the Target Market Discuss target market strategies. Vals Study

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.

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

Target Market Strategy Appeal to the entire market with one marketing mix Concentrate on one marketing segment Appeal to multiple markets with multiple marketing mixes

The Concept of Market Segmentation

Bases for Segmenting Consumer Markets GeographyDemographicsPsychographicsBenefitsUsage Rate Region Market size Market density Climate Age Gender Income Race/ethnicity Family life cycle Personality Motives Lifestyle Geodemo- graphics Benefits sought Former Potential 1 st time Light or irregular Medium Heavy

Family Life Cycle

Segmentation Example Macy’s Department store: classified into five groups based upon demographics, values, and attitudes. For Example: 1. Fashion Statement-most affluent and educated, use credit cards, expect to be treated well by retail personnel. 2.Wanna-Buys –similar to a fashion statement but with less income. Enjoy buying on impulse.

Segmentation Example 3.Family Values – represent large families, often are professionals, buying focuses on children or the home 4.Down to Basics – Most likely to have children, not college educated, careful spenders, prefer not to use credit, like coupons. 5.Matriarchs- older often retired, they like department stores but are risk adverse and have few purchase plans.

Who’s Who? 1.Fashion Statement 2.Family Values 3. Wanna Buy’s 4. Matriarch 5.Down-to-Basics

Who’s Who? Wanna Buy’s Down-to- Basics Matriach Fashion Statement Family Values

44 Segmentation study tells us how pet owners feel about their pets and the role food plays in that relationship. Their attitudes influence the brands they purchase and their sensitivity to price, promotion, and assortment. How do we Understand the Pet Owner’s Attitudes? There are distinct segments of pet owners and they all shop in your stores: 7 Practical Providers They like pets, but are not goo-goo about them.  Look for convenient, practical, affordable food  High price sensitivity - Will switch for a good deal Uninvolved Owners  Food must be: - Affordable - Quick - Easy to feed  Very high price sensitivity Expert Driven Providers Expert advice – from veterinarian, breeder or other perceived expert – is very important.  Information seekers  Nutrition focused  Primarily feed dry food  Very low price sensitivity Basic Food Feeders Pet most likely belongs to the children, but needs to be fed.  Food that looks like human food is more appealing  High price sensitivity-look for sales Healthy Habitualists Look for something easy and nutritious.  Very brand loyal  Not as worried about taste Indulgent Nutritionists Still searching for right balance of taste and nutrition.  Try new products  Mix wet and dry  Like variety  Below average price sensitivity Pampering Preparers Homemade food is used to show love.  Store-bought food alone does not suffice  Nutrition is important, but taste is paramount  Food = Love  Average price sensitivity

Marketing Plan Elements Marketing Strategy ProductDistribution Price Marketing Mix Business Mission Statement Situation or SWOT Analysis Objectives Target Market Strategy Implementation Evaluation Control Promotion

Strategic Directions Identify strategic alternatives.

Competitive Advantage Niche Strategies Cost Product/Service Differentiation Types of Competitive Advantage

Cost Competitive Advantage Cost Competitive Advantage- Being the low-cost competitor in an industry while maintaining satisfactory profit margins. Examples: Obtain inexpensive raw materials Design products for ease of manufacture Control overhead costs

Product differentiation Brand Names –LexusLexus Product Reliability-MaytagMaytag Strong Dealer Network -Harley DavidsonHarley Davidson Service-Fed ExFed Ex Image –Neiman MarcusNeiman Marcus Product Innovation - -NikeNike

Niche Competitive Advantage The advantage achieved when a firm seeks to target and effectively serve a small segment of the market. Example: Party Pastry’s Cupcakes Fleet Feet Fro Yo

SETTING STRATEGIC DIRECTIONS WHERE DO WE WANT TO GO?  Business Portfolio Analysis (BCG) Boston Consulting Group Market Growth Rate Stars Cash Cows Dogs Question Marks Relative Market Share High Low

BCG business portfolio analysis for Kodak’s consumer SBUs for 2003 (solid circle) and 2011 (hollow circle) Kodak digital photo printer Kodak digital picture frame ① ④ ③ Kodak film sales: US, Canada, & W. Europe Kodak digital camera ②

BCG Portfolio Matrix Boston Consulting Group Stars Notebooks Cash Cows Laptops/ Personal computer Problem Children/Question Marks Palm Pilots Dogs Mainframe computer Computer Example

Assignment Select a partner Select a business of interest to research Design a BCG (Boston Consulting Group) Model Matrix for the business using one PowerPoint slide Include the company Stars, Cash Cows, Problem Children/Question Marks and Dogs

Strategic Alternatives Market Penetration Market Development Product Development Diversification Increase market share among existing customers McDonalds: Beanie Babies Attract new customers to existing products Coke in India 850/350 Introduce new products into new markets Sony-Columbia pictures Create new products for present markets Taco Bell Fresco Style

Ansoff’s Strategic Opportunity Matrix Present ProductNew Product New Market Market Penetration McDonalds sells More happy meals With Disney promo Market Development McDonalds opens Restaurants in China Product Development McDonalds introduces Salads and McWater Diversification McDonalds introduces Line of children’s clothing Present Market Online

Strategic Alternatives Identify strategic alternatives Diversification = Product development = products Market development = customers Market penetration = share new products + new markets

Portfolio Matrix Strategies Build Hold Harvest Divest Pringles Bisquick/General Mills Lever Brothers/Lifebuoy

Marketing Plan Elements Marketing Strategy ProductDistribution Price Marketing Mix Business Mission Statement Situation or SWOT Analysis Objectives Target Market Strategy Implementation Evaluation Control Promotion

Marketing Mix: The “Four Ps” Price Promotion Place Product

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

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

Marketing Mix: The “Four Ps” 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

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

The elements of the marketing mix must be blended to produce a cohesive marketing program

Following Up the Marketing Plan Implementation Evaluation Control Marketing audit is… Comprehensive Systematic Independent Periodic

Product Place Promotion Price Product Place Promotion Price Met objectives? ImplementationEvaluation Audits comprehensive systematic independent periodic Audits comprehensive systematic independent periodic Implementation, Evaluation, and Control

Techniques for Effective Strategic Planning Effective Strategic Planning Continual attention Creativity Management commitment Management commitment