1. Insert Chapter Picture Here Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 1 Designed by Eric Brengle B-books, Ltd CHAPTER 2 Strategic Planning for Competitive Advantage Prepared by Deborah Baker Texas Christian University Marketing Lamb, Hair, McDaniel 9

2. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 2 Learning Outcomes Understand the importance of strategic marketing and know a basic outline for a marketing plan Develop an appropriate business mission statement Describe the criteria for stating good marketing objectives LO I LO 2 LO 3

3. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 3 Learning Outcomes Explain the components of a situation analysis Identify sources of competitive advantage Identify strategic alternatives Discuss target market strategies LO 5 LO 6 LO 7 LO 4

4. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 4 Learning Outcomes Describe the elements of the marketing mix Explain why implementation, evaluation, and control of the marketing plan are necessary Identify several techniques that help make strategic planning effective LO 9 LO IO LO 8

5. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 5 Understand the importance of strategic marketing and know a basic outline for a marketing plan The Nature of Strategic Planning LO I

6. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 6 Strategic Planning LO I 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.

7. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 7 LO I What is the organization’s main activity? Strategic Marketing Management How will it reach its goals? THE ANSWER IS A MARKETING PLAN.

8. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 8 Strategic Planning LO I Marketing Plan A written document that acts as a guidebook of marketing activities for the marketing manager.

9. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 9 LO I  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 Why Write a Marketing Plan?

10. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 10 LO I Marketing Plan Elements Marketing Strategy ProductDistribution Price Marketing Mix Business Mission Statement Objectives Situation or SWOT Analysis Target Market Strategy Implementation Evaluation Control Promotion

11. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 11 REVIEW LEARNING OUTCOME The Importance of Strategic Marketing LO IWhatWhatWhyWhy HowHow Strategic Planning Long-term profitability and growth Long-term profitability and growth Write a marketing plan Online http://www.dmusic.com

12. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 12 Develop an appropriate business mission statement Defining the Business Mission LO 2

13. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 13 LO 2  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

14. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 14 LO 2 AMA’s Mission Statement

15. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 15 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 LO 2

16. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 16 REVIEW LEARNING OUTCOME Business Mission Statement LO 2 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

17. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 17 Describe the criteria for stating good marketing objectives Setting Marketing Plan Objectives LO 3

18. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 18 LO 3 Marketing Objective A statement of what is to be accomplished through marketing activities. Marketing Objective

19. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 19 LO 3 Marketing Objectives  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.”

20. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 20 REVIEW LEARNING OUTCOME Criteria for Good Marketing Objectives LO 3 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

21. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 21 Explain the components of a situation analysis Conducting a Situation Analysis LO 4

22. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 22 LO 4 SWOT Analysis Identifying internal strengths (S) and weaknesses (W) and also examining external opportunities (O) and threats (T)

23. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 23 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

24. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 Biz Flix U-571 24 LO 4

25. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 25 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.

26. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 26 REVIEW LEARNING OUTCOME Components of a Situation Analysis LO 4  production costs  marketing skills  financial resources  image  technology Strengths Weaknesses INTERNAL ENVIRONMENT

27. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 27 REVIEW LEARNING OUTCOME Components of a Situation Analysis LO 4  social  demographic  economic  technological  political / legal  competitive Opportunities Threats EXTERNAL ENVIRONMENT

28. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 28 Identify sources of competitive advantage Competitive Advantage LO 5

29. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 29 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.

30. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 30 LO 5 Competitive Advantage Niche Strategies Cost Product/Service Differentiation Types of Competitive Advantage

31. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 31 Cost Competitive Advantage LO 5 Cost Competitive Advantage Being the low-cost competitor in an industry while maintaining satisfactory profit margins.

32. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 32 LO 5 Cost Competitive Advantage  Obtain inexpensive raw materials  Create efficient plant operations  Design products for ease of manufacture  Control overhead costs  Avoid marginal customers

33. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 33 LO 5 Sources of Cost Reduction Experience Curves Efficient Labor No-frills Products Government Subsidies Product Design Reengineering Production Innovations New Service Delivery Methods

34. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 34 Product / Service Differentiation Competitive Advantage LO 5 Product/Service Differentiation The provision of something that is unique and valuable to buyers beyond simply offering a lower price than the competition’s.

35. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 35 LO 5  Brand names  Strong dealer network  Product reliability  Image  Service Examples of Product/Service Differentiation

36. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 36 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.

37. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 37 LO 5 Niche Competitive Advantage  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

38. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 38 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

39. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 39 REVIEW LEARNING OUTCOME Sources of Competitive Advantage LO 5 Sources of Competitive Advantage Cost $ Product/Service Differentiation A vs. B vs. C Niche Strategies

40. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 40 Identify strategic alternatives Strategic Directions LO 6

41. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 41 LO 6 Strategic Alternatives Market Penetration Market Development Product Development Diversification Increase market share among existing customers Attract new customers to existing products Introduce new products into new markets Create new products for present markets

42. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 42 LO 6 Ansoff’s Strategic Opportunity Matrix Present ProductNew Product New Market Market Penetration Market Development Product Development Diversification Present Market http://www.pg.com Online

43. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 43 Portfolio Matrix LO 6 Stars Cash Cows Problem Children Dogs

44. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 44 Portfolio Matrix Strategies LO 6 Build Hold Harvest Divest

45. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 45 REVIEW LEARNING OUTCOME Strategic Alternatives LO 6 Identify strategic alternatives Diversification = Product development = products Market development = customers Market penetration = share new products + new markets

46. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 46 Discuss target market strategies Describing the Target Market LO 7

47. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 47 LO 7 Marketing Strategy 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.

48. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 48 LO 7 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

49. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 49 LO 7 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

50. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 50 REVIEW LEARNING OUTCOME Target Market Strategies LO 7 Entire MarketMultiple MarketsSingle Market Target Market Options

51. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 51 Describe the elements of the marketing mix The Marketing Mix LO 8

52. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 52 Marketing Mix LO 8 The Marketing Mix A unique blend of product, distribution, promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market.

53. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 53 Marketing Mix: The “Four Ps” Price Promotion Place Product LO 8

54. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 54 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 LO 8

55. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 55 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 LO 8 Place

56. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 56 Marketing Mix: The “Four Ps” LO 8 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 Online http://www.paramount.com http://www.warnerbros.com http://www.universalstudios.com

57. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 57 Marketing Mix: The “Four Ps” LO 8 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

58. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 58 REVIEW LEARNING OUTCOME Elements of the Marketing Mix LO 8

59. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 59 Explain why implementation, evaluation, and control of the marketing plan are necessary Following Up on the Marketing Plan LO 9

60. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 60  Implementation  Evaluation  Control  Marketing audit is… Comprehensive Systematic Independent Periodic LO 9 Following Up the Marketing Plan http://www.youngbiz.com Online

61. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 61 REVIEW LEARNING OUTCOME LO 9 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

62. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 62 Identify several techniques that help make strategic planning effective Effective Strategic Planning LO IO

63. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2 63 REVIEW LEARNING OUTCOME LO IO Techniques for Effective Strategic Planning Effective Strategic Planning Continual attention Creativity Management commitment Management commitment