Chapter 2: Strategic Planning for Competitive Advantage Prepared by Amit Shah, Frostburg State...

Chapter 2: Strategic Planning for Competitive Advantage

Prepared by Amit Shah, Frostburg State University

Designed by Eric Brengle, B-books, Ltd.

Copyright 2010 by Cengage Learning Inc. All Rights Reserved 1

2

Understand the importance of strategic marketing and know a basic outline for a marketing plan

Develop an appropriate business mission statement

Explain the components of a situation analysis

LO1

LO2

LO3

Learning Outcomes

Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Learning Outcomes

3

Explain the criteria for stating good marketing objectives

Identify sources of competitive advantage

Identify strategic alternatives

Discuss target market strategies

LO4

LO5

LO6

LO7


Learning Outcomes

4

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

LO9

LO10

LO8


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The Nature of Strategic Planning

Understand the importance of strategic marketing

and know a basic outline for a marketing plan.

LO1


6

Strategic Planning

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.


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Strategic Marketing Management

THE ANSWER IS A MARKETING PLAN.

What is the organization’s main activity?

How will it reach its goals?


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Marketing Planning

Marketing Plan- A written documentthat acts as a guidebook for the

marketing manager.


Why Write a Marketing Plan?

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LOI• 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 offuture activities

•Provides an examination of the marketing environment

•Allows entry into the marketplace with awareness


Marketing Plan Elements

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Marketing Strategy

Product Distribution

Price

Marketing Mix

Business Mission Statement

Situation or SWOT Analysis

Objectives

Target Market Strategy

ImplementationEvaluation

Control

Promotion


Review Learning OutcomeThe Importance of Strategic Marketing

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LO1

WhatWhat

WhyWhy

HowHow

Strategic PlanningStrategic Planning

Long-term profitability Long-term profitability and growthand growth

Write a marketing planWrite a marketing plan


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Defining the Business Mission

Develop an appropriate business mission statement.

LO2


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

13Copyright 2010 by Cengage Learning Inc. All Rights Reserved

14

Southwest Airlines Mission Statement

SOURCE: http://www.southwestairlines.com/about_swa/mission.html


Strategic Business Units (SBUs)

Characteristics:An SBU HAS…

• A distinct mission and specific target market

• Control over its resources• Its own competitors• Plans independent of other SBUs


Review Learning OutcomeBusiness Mission Statement

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LO2

marketing myopiano directionfocus on marketsserved and benefitscustomers seek

Q: What business are we in?

A: Business mission statement

Too narrowToo broadJust right

marketing myopiano directionfocus on marketsserved and benefitscustomers seek


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Conducting a Situation Analysis

Explain the components of a situation analysis.

LO3


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Conducting a Situation Analysis

LO3

SWOT Analysis- Identifying internalstrengths and weaknesses and also

examining externalopportunities and threats.


SWOT Analysis

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©South-Western College Publishing

SWOT

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.

InternalInternal

ExternalExternal


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Environmental Scanning

Environmental Scanning- The collectionand interpretation of information aboutforces, events, and relationships in the

external environment that may affect the future of the organization or the

implementation of the marketing plan.


Review Learning OutcomeComponents of a Situation Analysis

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LO3

production costs marketing skills financial resources image technology

Strengths

Weaknesses

INTE

RN

AL

INTE

RN

AL

ENVI

RO

NM

ENT

ENVI

RO

NM

ENT


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Setting Marketing Plan Objectives

Explain the criteria for stating good marketing objectives.

LO4


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Marketing Objective

A statement of what is

to be accomplished

through marketing activities.


Marketing Objectives

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Realistic

Measurable

Time specific

Compared to a benchmark

“Our objective is to increase sales of Purina

brand cat food by 15 percent over 2009 sales of

$300 million.”


Review Learning OutcomeCriteria for Good Marketing Objectives

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LO4

Realistic, measurable, and time-specific objectives Realistic, measurable, and time-specific objectives consistent with the firm’s 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


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Competitive Advantage

Identify sources of competitive advantage.

LO5


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Competitive Advantage- The set of unique features of a company andits products that are perceived by

the target market as significantand superior to the competition.


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Niche Strategies

Cost

Product/Service Differentiation

Types of Types of Competitive Competitive AdvantageAdvantage


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Cost Competitive Advantage

Cost Competitive Advantage- Being thelow-cost competitor in an industry

while maintaining satisfactoryprofit margins.


Cost Competitive Advantage

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Obtain inexpensive raw materials

Create efficient plant operations

Design products for ease of manufacture

Control overhead costs

Avoid marginal customers


Sources of Cost Reduction

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Experience Curves

Efficient Labor

No-frills Goods and Services

Government Subsidies

Product Design

Reengineering

Production Innovations

New Service Delivery Methods


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Product/Service Differentiation

The provision of something that is unique and valuable to

buyers beyond simply offering a lower price than the competition’s.


Examples of Product/Service Differentiation

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Brand names

Strong dealer network

Product reliability

Image

Service


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Niche Competitive Advantage

Niche Competitive Advantage- The advantage when a firm seek to get and

effectively serve a single segment of themarket.


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


Sources of Sustainable Competitive Advantage

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Patents

Copyrights

Locations

Equipment

Technology

Customer Service

Promotion

Skills and AssetsSkills and Assets

of anof anOrganizationOrganization


Review Learning OutcomeSources of Competitive Advantage

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Sources ofSources ofCompetitive AdvantageCompetitive Advantage

Cost$

Product/ServiceDifferentiationA vs. B vs. C

NicheStrategies

LO5


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Strategic Directions

Identify strategic alternatives.

LO6


Strategic Alternatives

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MarketPenetration

MarketDevelopment

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


Ansoff’s Strategic Opportunity Matrix

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Present Product New Product

New Market

MarketPenetration

MarketDevelopment

ProductDevelopment

Diversification

Present Market


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Portfolio Matrix

Stars

Cash Cows

ProblemChildren

Dogs


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Portfolio Matrix Strategies

Build

Hold

Harvest

Divest


Review Learning OutcomeStrategic Alternatives

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LO6

Identify strategic alternativesIdentify strategic alternatives

Diversification =

Product development = products

Market development = customers

Market penetration = share

new products +new markets


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Describing the Target Market

Discuss target market strategies.

LO7


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Marketing Strategy

Marketing Strategy- The activitiesof selecting and describing one or

more target markets and developingand maintaining a market mix thatwill produce mutually satisfyingexchanges with target markets.



• Segment the market based on groups with similar characteristics

• Analyze the market based on attractiveness of market segments

• Select one or more target markets



47

Appeal to the entire market with one marketing mix

Concentrate on one marketing segment

Appeal to multiple marketswith multiple marketing mixes


Review Learning Outcome Target Market Strategies

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LO7

Entire Market Multiple Markets Single Market

Target Market Options


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The Marketing Mix

Describe the elements of the marketing mix.

LO8


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The Marketing Mix

i

A unique blend of product, distribution,

promotion, and pricing

strategies designed to produce

mutually satisfying

exchanges with a target market.


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Marketing Mix: The “Four Ps”

Price

Promotion

Place

Product


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The starting point of the

“4 Ps”

Includes Physical unit Package Warranty Service Brand Image Value

Product

Products can be… Tangible goods Ideas Services


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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

Place


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Promotion Role is to bring about

exchanges with target markets by:

Informing Educating Persuading Reminding

Includes integration of:Personal sellingAdvertisingSales promotionPublic relations


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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


Review Learning OutcomeElements of the Marketing Mix

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LO8


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Following Up on the Marketing Plan

Explain why implementation, evaluation, and control of the marketing plan

are necessary.

LO9


Following Up the Marketing Plan

• Implementation• Evaluation

• Control

• Marketing audit is…• Comprehensive• Systematic• Independent• Periodic


Review Learning Outcome

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LO9

Product PlacePromotionPrice

Met objectives?

Implementation Evaluation

Audits• comprehensive• systematic• independent• periodic

Implementation, Evaluation, and Control


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Effective Strategic Planning

Identify several techniques that help make

strategic planning effective.

LO10


Effective Strategic Planning• Effective Strategic Planning

requires…

• Continual attention – ongoing rather than annual

• Creativity – challenging assumptions

• Management Commitment – support and participation from the top


Review Learning Outcome

62

LO10

Techniques for Effective Strategic Planning

Effective Strategic Planning

Continualattention Creativity Management

commitment


Chapter 2: Strategic Planning for Competitive Advantage Prepared by Amit Shah, Frostburg State...

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