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

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 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 Describe the components of a situation analysis LO 4 Explain the criteria for stating good marketing objectives LO 5 Identify sources of competitive advantage Learning Outcomes

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

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 4 Understand the importance of strategic marketing and know a basic outline for a marketing plan The Nature of Strategic Planning LO 1

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 5 Strategic Planning The managerial process of creating and maintaining a fit between the organization’s objectives and resources and evolving market opportunities. The GOAL of strategic planning is long-term profitability and growth. Strategic Planning

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 6 Strategic Marketing Management What is the organization’s main activity? How will it reach its goals? THE ANSWER IS A MARKETING PLAN.

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 7 Strategic Planning A written document that acts as a guidebook of marketing activities for the marketing manager. Marketing Plan

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

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 9 Exhibit 2.1 Elements of a Marketing Plan Marketing Strategy ProductDistribution Price Marketing Mix Business Mission Statement Situation or SWOT Analysis Objectives Target Market Strategy Implementation Evaluation Control Promotion

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

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 11 Develop an appropriate business mission statement Defining the Business Mission LO 2

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

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 13 Pepsico Mission Statement Our mission is to be the world's premier consumer products company focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity.

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

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 15 Describe the components of a situation analysis (SWOT) Conducting a Situation Analysis LO 3

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 16 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

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 17 Environmental Scanning Helps identify opportunities and threats (external). Designing a marketing strategy is based on six major environmental forces: Social Demographic Economic Technological Political/Legal Competitive © AP IMAGES/PRNEWSFOTO/PEPSICO

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 18 Explain the criteria for stating good marketing objectives Setting Marketing Plan Objectives LO 4

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 19 Marketing Objective A statement of what is to be accomplished through marketing activities. Marketing Objective

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 20 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.”

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 21 Identify sources of competitive advantage Competitive Advantage LO 5

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 22 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. better in a way that has positive value to their consumers

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 23 Competitive Advantage Niche Cost Product/Service Differentiation Types of Competitive Advantage

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 24 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

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 25 Product/Service Differentiation Competitive Advantage 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 26 Examples of Product/Service Differentiators  Brand names  Strong dealer network  Product reliability  Image  Service

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 27 Niche Competitive Advantage  Used by small companies with limited resources  May be used in a limited geographic market

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 28 Building Sustainable Competitive Advantage  Sustainable competitive advantage is an advantage that cannot be copied by the competition. (LONG TERM)  A firm that has successfully achieved a competitive advantage will stake out a position unique in some manner from its rivals.

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 29 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

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 30 Identify strategic alternatives Strategic Directions LO 6

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 31 Strategic Alternatives Market Penetration Market Development Market Development Product Development Diversification Increase market share among existing customers Increase market share among existing customers Attract new customers to existing products Attract new customers to existing products Introduce new products into new markets Introduce new products into new markets Create new products for present markets Create new products for present markets

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 32 Ansoff’s Strategic Opportunity Matrix Present ProductNew Product New Market Market Penetration Market Development Product Development Diversification Present Market

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 33 BCG Portfolio Matrix Stars Cash Cows Problem Children Dogs

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 34 Exhibit 2.3 Portfolio Matrix for a Large Computer Manufacturer

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 35 Portfolio Matrix Strategies Build Hold Harvest Divest

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 36 Discuss target market strategies Describing the Target Market LO 7

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 37 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. Marketing Strategy Marketing Strategy

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 38 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

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 39 Appeal to the entire market with one marketing mix Concentrate on one marketing segment Appeal to multiple markets with multiple marketing mixes Target Market Strategy

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 40 Describe the elements of the marketing mix The Marketing Mix LO 8

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 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 Mix, aka, the “4 Ps”

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 42 Marketing Mix: The “Four Ps”  The starting point  Physical unit  Package  Warranty  Service  Brand  Image  Value Product  Products can be…  Tangible goods  Ideas  Services

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 43 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

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 44 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

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 45 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

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 46 Following Up on the Marketing Plan  Implementation  Evaluation  Control  Marketing audit is…  Comprehensive  Systematic  Independent  Periodic Online