1. Strategic Planning Chapters 8: Competition

2. The Marketing Plan Marketing Strategy Product Promotion Distribution Price Marketing Mix Business Mission Statement Objectives Situation or SWOT Analysis Target Market Strategy Implementation Evaluation Control

3. Strategy Formulation - 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. Types: – Cost Competitive Advantage (bottom line) – Differential (remember differentiation? Must be relative to the competition) – Niche (doing one thing well – concentrated approach

4. Cost Competitive Advantage Experience Curves Efficient Labor No-frills Products Government Subsidies Product Design Reengineering Production Innovations New Delivery Methods

5. Differentiation (product/service) Competitive Advantage Advantage achieved when a firm provides something that is unique and valuable to buyers beyond simply offering a lower price than the competition. Brand name, dealer network, product reliability, service, image are all possibilities

6. Niche Competitive Advantage Advantage achieved when a firm seeks to target and effectively serve a small segment of the market. –Used by small companies with limited resources –May be used in a limited geographic market –Product line may be focused on a specific product line

7. Strategic Alternatives Present ProductNew Product New Market Market Penetration Market Development Product Development Diversification Present Market

8. Market Penetration Seeks a larger market share in a market in which the organization already has an offering Increase buyers usage or consumption rates Attract the competition’s buyers Stimulating product trial

9. Market Development Introducing its existing offerings to markets other than those that the organization is currently serving Competitor SW and retaliation potential Modification of basic offer Different distribution outlets Exporting, licensing, joint venture, alliances and direct investments

10. Product Development Creating new offerings for existing markets Product innovation (gillette) Product augmentation (internet access) Product line extension (lite beer, low carb)

11. Diversification Development or acquisition of offerings new to the organization and introducing those offerings to publics not previously served by the organization (consolidation in financial services)

12. Porter’s Five Forces (Group exercise: Analyze for plan after next slide) Potential Entrants (Threat of Mobility) Buyers (Buyer power) Industry Competitors (Segment rivalry) Suppliers (Supplier power) Substitutes (Threats of substitutes)

13. The Industry Concept Number of sellers & degree of differentiation –Pure monopoly, oligopoly, monopolistic competition (restaurant), pure competition (airline?) Entry, mobility and exist barriers (patents, tariffs, labeling) Costs Degree of vertical integration (Good or bad?) Degree of globalization

14. Analyzing Competitors: Things to consider Strategies – the strategic group (similarities in prod lines and attributes) Objectives (short or long term player) Strengths and Weaknesses (p. 155) –Dominant, strong, favorable, tenable, weak, nonviable –GROUP EXERCISE: ID in your plan Reaction Patterns: Price Wars

15. If you are a market leader… Expand the total market –New users, new uses, more usage Defend the market share – the art of war Defense strategies –Position defense (brand power), flank defense (new products/advert), preemptive defense (envelop), counteroffensive defense (subsidize products), mobile defense (diversify) Expand market share

16. If you are a market challenger… Who are you targeting and what do you want to accomplish? Strategies –Frontal attack (matching), flank attack (geography/micropolis), encirclement attack, bypass attack (buy big), guerrilla attack (internet) Specific strategies p.163 –Price discount, cheaper goods, prestige goods, product proliferation, product innovation, improved service, distribution innovation, cost reductions, promotion

17. If you are the market follower… Strategies –Counterfeiter, cloner, imitator, adapter

18. If you are the market niche(166) End user specialist Vertical level specialist Customer size specialist Specific customer specialist Geographic specialist Product/Product line specialist Product feature specialist Quality price specialist Service specialist Channel specialist

19. Final Group exercise Identify your place in the market (leader, challenger, follower) Match specific strategies to –Your organization as a whole. –Your specific product lines or business units.