1. 1 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 2 Strategic Planning for Competitive Advantage Canadian Adaptation prepared by Don Hill, Langara College

2. 2 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Learning Objectives 1.Understand the importance of strategic marketing and know a basic outline for a marketing plan 2. Develop an appropriate business mission statement 3. Describe the criteria for stating good marketing objectives

3. 3 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Learning Objectives (continued) 4.Explain the components of a situation analysis 5. Identify sources of competitive advantage 6. Identify strategic alternatives 7. Discuss target market strategies

4. 4 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Learning Objectives (continued) 8. Describe the elements of the marketing mix 9. Explain why implementation, evaluation, and control of the marketing plan are necessary 10. Identify several techniques that help make strategic planning effective

5. 5 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Learning Objective Understand the importance of strategic marketing and know a basic outline for a marketing plan Online http://www.rona.ca http://www.homedepot.ca 1 1 1

6. 6 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Strategic Planning The managerial process of creating and maintaining a fit between the organization’s objectives and resources and evolving market opportunities. Online http://www.coke.com http://www.pepsi.com 1

7. 7 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Strategic Planning RESOURCES & OBJECTIVES EVOLVING MARKET OPPORTUNITIES LONG RUN PROFITABILITY AND GROWTH 1

8. 8 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2  What is the organization’s main activity?  How will it reach its goals?  What is the organization’s main activity?  How will it reach its goals? Strategic Marketing Planning The Marketing Plan 1

9. 9 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2Planning Planning The process of anticipating future events and determining strategies to achieve organizational objectives in the future. 1

10. 10 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 The Marketing Plan Marketing Plan A written document that acts as a guidebook of marketing activities for the marketing manager. 1

11. 11 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Why Write a Marketing Plan?  Provides a basis for comparison of actual and expected performance  Provides clearly stated activities that help employees work toward common goals  Serves as a reference for the success of future activities  Allows examination of the marketing environment in conjunction with the workings of the business 1

12. 12 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Marketing Plan Elements Online http://www.dmusic.com Marketing Strategy Product Promotion Distribution Price Marketing Mix Business Mission Statement Objectives Situation or SWOT Analysis Implementation Evaluation Control Target Market Strategy 1

13. 13 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 A Strategic Marketing Plan 1

14. 14 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Learning Objective 2 Develop an appropriate business mission statement 2 2

15. 15 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Defining the Business Mission Answers the question, “What business are we in and where are we going?” Focuses on the market(s) rather than the good or service Strategic Business Units may also have a mission statement 2

16. 16 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Canadian Tire’s Vision Statement 2 Our vision is to create sustainable growth by being a national Champion and Canada’s most trusted company. We will grow from our strengths—leveraging our brands, core capabilities, assets and extraordinary people. Online http://www.telus.com

17. 17 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Strategic Business Units (SBUs) 1. A distinct mission and specific target market 2. Control over their resources 3. Their own competitors 4. Plans independent of other SBUs Characteristics 2

18. 18 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 2 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 Review: Develop an appropriate business mission statement

19. 19 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Learning Objective Describe the criteria for stating good marketing objectives 3 3 3

20. 20 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Marketing Objective Marketing Objective Marketing Objective A statement of what is to be accomplished through marketing activities. 3

21. 21 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Marketing Objectives 3 Marketing Objectives Must Be:  Realistic  Measurable  Time specific  Consistent with and indicate the organization’s priorities “Our objective is to achieve 10 percent dollar market share in the specialty pet food market within 12 months of product introduction.”

22. 22 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Examples of Marketing Objectives 3

23. 23 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Review: Describe the criteria for stating good marketing objectives 3 Clear and specific 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

24. 24 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Learning Objective Explain the components of a situation analysis 4 4 4

25. 25 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 SWOT Analysis Identifying internal strengths (S) and weaknesses (W) and also examining external opportunities (O) and threats (T) 4

26. 26 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 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. 4

27. 27 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 4  production costs  marketing skills  financial resources  image  technology Strengths Weaknesses INTERNAL Review: Explain the components of a situation analysis

28. 28 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Review: Explain the components of a situation analysis 4  social  demographic  economic  technological  political/legal  competitive Opportunities Threats EXTERNAL

29. 29 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Learning Objective Identify sources of competitive advantage 5 5 5

30. 30 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 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. 5

31. 31 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Competitive Advantage Niche Strategies Cost Product/Service Differentiation Types of Competitive Advantage 5

32. 32 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Cost Competitive Advantage Being the low-cost competitor in an industry while maintaining satisfactory profit margins. 5

33. 33 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2  Obtain inexpensive raw materials  Create efficient operations  Design products for ease of manufacture  Control overhead costs  Outsourcing and vertical integration  Avoid marginal customers  Obtain inexpensive raw materials  Create efficient operations  Design products for ease of manufacture  Control overhead costs  Outsourcing and vertical integration  Avoid marginal customers Cost Competitive Advantage 5

34. 34 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Sources of Cost Reduction Experience Curves Efficient Labor No-frills Products Government Subsidies Product Design Reengineering Production Innovations New Service Delivery Methods 5

35. 35 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Product/Service Differentiation Product/Service Differentiation 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. 5

36. 36 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Examples of Product/Service Differentiation  Brand names  Strong dealer network  Product reliability  Image  Service 5

37. 37 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Niche Competitive Advantage Advantage achieved when a firm seeks to target and effectively serve a small segment of the market. 5

38. 38 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 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 line 5

39. 39 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Sustainable Competitive Advantage An advantage that cannot be readily copied by the competition. 5

40. 40 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Sources of Sustainable Competitive Advantage Patents Copyrights Locations Equipment Technology Customer Service Promotion Organization’s Skills and Assets Skills and AssetsOrganization’s 5

41. 41 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Review: Identify sources of competitive advantage 5 Sources of Competitive Advantage Cost $ Product/Service Differentiation A vs. B vs. C Niche Strategies

42. 42 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Learning Objective Identify strategic alternatives 6 6 6

43. 43 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Strategic Alternatives Market Penetration Market Development 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 6 Video Click!

44. 44 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Ansoff’s Strategic Opportunity Matrix Present ProductNew Product New Market Market Penetration Market Development Product Development Diversification Present Market Online www.westernunion.ca 6

45. 45 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Selecting a Strategic Alternative 6 Profitability PhilosophiesPhilosophies Market Share Online www.clearly.ca

46. 46 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Review Learning Objective 6 6 Identify strategic alternatives Diversification = Product development = products Market development = customers Market penetration = share new products new markets

47. 47 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Learning Objective Discuss target market strategies 7 7 7

48. 48 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 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. Marketing Strategy 7

49. 49 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 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 7

50. 50 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Appeal to the entire market with one marketing mix Target Market Strategies Concentrate on one marketing segment Appeal to multiple markets with multiple marketing mixes 7

51. 51 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Review: Target marketing strategies Entire Market Single Market Multiple Markets 7

52. 52 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Learning Objective Describe elements of the marketing mix 8 8 8

53. 53 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Marketing Mix A unique blend of product, distribution, promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market. The Marketing Mix 8

54. 54 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Marketing Mix: The “Four Ps” Price Promotion Place Product 8

55. 55 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Product Strategies The starting point of the “4 Ps” Includes physical unit, package, warranty, service, brand, image, and value Product 8

56. 56 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Distribution (Place) Strategies Place Product availability where and when customers want them. Involves all activities from raw materials to finished products 8

57. 57 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Promotion Strategies Promotion Role is to bring about exchanges with target markets Includes integration of personal selling, advertising, sales promotion, and public relations Online http://www.paramount.com http://www.warnerbros.com http://www.universalstudios.com 8

58. 58 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Pricing Strategies The most flexible of the “4 Ps”-- quickest to change Competitive weapon Price x Units Sold = Total Revenue Price 8

59. 59 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Learning Objective Explain why implementation, evaluation, and control of the marketing plan are necessary 9 9 9

60. 60 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Following Up the Marketing Plan  Implementation  Evaluation  Control  Marketing Audit is…  Comprehensive  Systematic  Independent  Periodic 9

61. 61 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Review Learning Objective 9 9 Product Place Promotion Price Product Place Promotion Price Met objectives? ImplementationEvaluation Audits comprehensive systematic independent periodic Audits comprehensive systematic independent periodic

62. 62 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Learning Objective Identify several techniques that help make strategic planning effective 10 Online http://www.youngbiz.com

63. 63 Copyright © 2009 by Nelson Education, Ltd. All rights reserved. Chapter 2 Effective Strategic Planning 10 Effective Strategic Planning Continual attention Creativity Management commitment Management commitment