1. Chapter 2 Copyright ©2010 Cengage Learning Inc. All rights reserved 1 MKTG 2 CHAPTER Strategic Planning for Competitive Advantage

2. Chapter 2Copyright ©2009 Cengage Learning Inc. All rights reserved. 2 LO 1 The managerial process of creating and maintaining a fit between the organization’s objectives and resources and evolving market opportunities. The goal is long-term profitability and growth. ………………..

3. Chapter 2Copyright ©2009 Cengage Learning Inc. All rights reserved. 3 LO 1 Strategic Planning A written document that acts as a guidebook of marketing activities for the marketing manager. …………………

4. Chapter 2Copyright ©2009 Cengage Learning Inc. All rights reserved. 4 LO 1 Why Write a Marketing Plan?  Provides a basis for comparison of actual and expected performance  Provides clearly stated activities to work toward common goals  Serves as a reference for the success of future activities  Provides an examination of the marketing environment  Allows entry into the marketplace with awareness

5. Chapter 2Copyright ©2009 Cengage Learning Inc. All rights reserved. 5 LO 1 Marketing Plan Elements Marketing Strategy ProductDistribution Price Marketing Mix Business Mission Statement Objectives Situation or SWOT Analysis Target Market Strategy Implementation Evaluation Control Promotion

6. Chapter 2Copyright ©2009 Cengage Learning Inc. All rights reserved. 6 Levels of Strategy  Corporate Level  Business Unit Level – SBU’s  Functional Level – Marketing

7. Chapter 2Copyright ©2009 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  Strategic Business Units (SBUs) may also have a mission statement

8. Chapter 2Copyright ©2009 Cengage Learning Inc. All rights reserved. 8

9. Chapter 2Copyright ©2009 Cengage Learning Inc. All rights reserved. 9 LO 2 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

10. Chapter 2 Copyright ©2010 Cengage Learning Inc. All rights reserved 10 LO 2 Business Mission Statement 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

11. Chapter 2 Copyright ©2010 Cengage Learning Inc. All rights reserved 11 What Businesses are we in? Businesses must be viewed as CONSUMER-SATISFYING process and not goods-producing process. MARKETING MYOPIA.

12. Chapter 2 Copyright ©2010 Cengage Learning Inc. All rights reserved 12 What Businesses are we in? Remember products are transient and basic NEEDS are not ….so, the key is to have a “market definition” of your business and not a product-based definition For example, is Xerox in the photocopying business?

13. Chapter 2 Copyright ©2010 Cengage Learning Inc. All rights reserved 13 Marketing Objective LO 3 A statement of what is to be accomplished through marketing activities. …………………

14. Chapter 2 Copyright ©2010 Cengage Learning Inc. All rights reserved 14 Marketing Objectives LO 3  Realistic  Measurable  Time specific  Consistent with and indicating the priorities of the organization “Our objective is to achieve 10 percent dollar market share in the cat food market within 12 months of product introduction.”

15. Chapter 2Copyright ©2009 Cengage Learning Inc. All rights reserved. 15 LO 4 Identifying internal strengths (S) and weaknesses (W) and also examining external opportunities (O) and threats (T) …………………

16. Chapter 2Copyright ©2009 Cengage Learning Inc. All rights reserved. 16 LO 4 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

17. Chapter 2Copyright ©2009 Cengage Learning Inc. All rights reserved. 17 LO 4 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. Environmental Scanning Environmental Scanning

18. Chapter 2Copyright ©2009 Cengage Learning Inc. All rights reserved. 18 Competitive Advantage LO 5 …………………. 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.

19. Chapter 2Copyright ©2009 Cengage Learning Inc. All rights reserved. 19 Competitive Advantage LO 5 Niche Strategies Cost Product/Service Differentiation Types of Competitive Advantage

20. Chapter 2Copyright ©2009 Cengage Learning Inc. All rights reserved. 20 LO 5 ……………….. Being the low-cost competitor in an industry while maintaining satisfactory profit margins.

21. Chapter 2Copyright ©2009 Cengage Learning Inc. All rights reserved. 21 Product/Service Differentiation LO 5 …………. The provision of something that is unique and valuable to buyers beyond simply offering a lower price than the competition’s.

22. Chapter 2Copyright ©2009 Cengage Learning Inc. All rights reserved. 22 LO 5 ………………… The advantage achieved when a firm seeks to target and effectively serve a small segment of the market.

23. Chapter 2Copyright ©2009 Cengage Learning Inc. All rights reserved. 23 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

24. Chapter 2 Copyright ©2010 Cengage Learning Inc. All rights reserved 24 Marketing Strategy LO 7 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. ………………….

25. Chapter 2 Copyright ©2010 Cengage Learning Inc. All rights reserved 25 LO 7 Target Market Strategies Entire MarketMultiple MarketsSingle Market Target Market Options

26. Chapter 2 Copyright ©2010 Cengage Learning Inc. All rights reserved 26 The Marketing Mix LO 8 A unique blend of product, distribution, promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market. Marketing Mix

27. Chapter 2 Copyright ©2010 Cengage Learning Inc. All rights reserved Following Up on the Marketing Plan LO 9  Implementation  Evaluation  Control  Marketing audit is…  Comprehensive  Systematic  Independent  Periodic http://www.youngbiz.com Online

28. Chapter 2 Copyright ©2010 Cengage Learning Inc. All rights reserved Market Share  a company's sales expressed as a percentage of the sales for the total industry.

29. Chapter 2 Copyright ©2010 Cengage Learning Inc. All rights reserved Market Share  There are three firms in the market –P. Diddy, Puff Daddy, and Diddy (very confusing, I know!). P. Diddy sells 40 units, Puff sells 50 units, and Diddy sells 10 units. Compute the market shares of all three firms.

30. Chapter 2 Copyright ©2010 Cengage Learning Inc. All rights reserved Market Shares: Light Beer Brands

31. Chapter 2 Copyright ©2010 Cengage Learning Inc. All rights reserved Relative Market Share  Relative market share = Market share of specific brand / market share of the leader in the market

32. Chapter 2 Copyright ©2010 Cengage Learning Inc. All rights reserved Relative Market Share  In 1995, Makita enjoyed a 50% market share in the tradesmen segment. Milwaukee was second with 10% and Black & Decker was third in the market with 5%. Compute the relative market shares of the three brands.

33. Chapter 2 Copyright ©2010 Cengage Learning Inc. All rights reserved Boston Consulting Group’s Growth-Share Matrix High Relative Market Share HighLow STARS PROBLEMCHILD CASH COWS DOGS Low Industry Growth (%)

34. Chapter 2 Copyright ©2010 Cengage Learning Inc. All rights reserved Strategic Alternatives LO 6 Market ………………. Market …………….. ………….. Development ………………….. Increase market share among existing customers Attract new customers to existing products Introduce new products into new markets Create new products for present markets

35. Chapter 2 Copyright ©2010 Cengage Learning Inc. All rights reserved Market Penetration Product Development Market Development PresentNew P R O D U C T New M A R K E T Diversification Present Competitive Growth Strategies

36. Chapter 2 Copyright ©2010 Cengage Learning Inc. All rights reserved Portfolio Matrix Strategies LO 6 Build Hold Harvest Divest