Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 1 MKTG Designed by Amy McGuire, B-books, Ltd. Prepared by Deborah Baker, Texas Christian University Lamb, Hair, McDaniel CHAPTER Strategic Planning for Competitive Advantage

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 2 Understand the importance of strategic marketing and know a basic outline for a marketing plan The Nature of Strategic Planning The Nature of Strategic Planning LO 1

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 3 Develop an appropriate business mission statement Defining the Business Mission LO 2

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 4 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  Strategic Business Units (SBUs) may also have a mission statement

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 5

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 6 Describe the criteria for stating good marketing objectives Setting Marketing Plan Objectives LO 3

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 7 Marketing Objective LO 3 A statement of what is to be accomplished through marketing activities. Marketing Objective

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 8 Marketing Objectives LO 3  Realistic  Measurable  Time specific  Consistent with and indicate the organization’s priorities “Our objective is to achieve 10 percent dollar market share in the cat food market within 12 months of product introduction.”

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 9 REVIEW LEARNING OUTCOME LO 3 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

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 10 Identify sources of competitive advantage Competitive Advantage LO 5

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 11 Competitive Advantage LO 5 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.

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 12 Competitive Advantage LO 5 Niche Strategies Cost Product/Service Differentiation Types of Competitive Advantage

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 13 Cost Competitive Advantage LO 5 Cost Competitive Advantage Being the low-cost competitor in an industry while maintaining satisfactory profit margins.

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 14 Cost Competitive Advantage LO 5  Obtain inexpensive raw materials  Create efficient plant operations  Design products for ease of manufacture  Control overhead costs  Avoid marginal customers

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 15 Sources of Cost Reduction LO 5 Experience Curves Efficient Labor No-frills Products Government Subsidies Product Design Reengineering Production Innovations New Service Delivery Methods

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 16 Product/Service Differentiation LO 5 Product/Service Differentiation Competitive Advantage The provision of something that is unique and valuable to buyers beyond simply offering a lower price than the competition’s.

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 17 Examples of Product/Service Differentiation LO 5  Brand names  Strong dealer network  Product reliability  Image  Service

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 18 Niche Competitive Advantage LO 5 Niche Competitive Advantage The advantage achieved when a firm seeks to target and effectively serve a small segment of the market.

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 19 Niche Competitive Advantage LO 5  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

Chapter 2Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 20 Sources of Sustainable Competitive Advantage LO 5 Patents Copyrights Locations Equipment Technology Customer Service Promotion Skills and Assets of an Organization Skills and Assets of an Organization