1 Chapter 2 Instructor Shan A. Garib, Fall 2012

Market: Any place where buyers and sellers can exchange goods and services Eg. Ebay, supermarket, classroom 2

 Strategic Planning: creating and maintaining a fit between organizational objective, resources and market opportunities -long term profitability and growth -commit resources -wrong decisions threaten survival Questions: 1. What is the main activity? 2. How reach goals? 3

Planning: anticipating future events and determining strategies to reach objectives Marketing Plan: document guidebook for marketing activities Why Write a Marketing Plan? -define objectives, identify actions needed to reach goals -common goals for managers and workers -compare actual and expected performance -anticipate problems 4

Defined: 1.Mission 2.Objectives 3.Situation Analysis – SW/OT 4.ID Target Market 5.ID Marketing Mix (Product, Place/Distribution, Promotion, Price) 6.Implementation 7.Other: Budgets (time, money), research 5

Mission Statment: what business are we in?? -analysis of benefits sought by customers -focuss on markets served Sales oriented vs. Market oriented Marketing Myopia: defining business interms of goods and services not, customer wants Also want to define things interms of business within company – strategic business units 6

Marketing Objective: statement of what is to be accomplished through marketing Should: 1. realisitc, measurable, time specific “Achieve 10% of market share with in 12 months” 2. Indicate priorities of business “...and introduce 5 new products in the next year” 7

Marketing Objective: statement of what is be to accomplished through marketing Serve Several Functions: 1. Communicate management philisophies -provide direction for marketing managers 2. Motivation to strive 3. Used for control 8

Before marketing activities are defined, marketers must understand the current and potential environment internally and externally Internal: organizational resources  Strengths  Weakens eg. Costs, skills budget External: environmental scanning  Opportunity  Threats eg. Social, demographic, technological 9

Use SWOT to identify your... Competitve Advantage: unique features make product superior to competitors Types A. Cost B. Product/Service differentiation C. Niche strategies 10

Competitive Advantage: unique features make product superior to competitors A. Cost Competitive Advantage – getting low cost raw materials, efficiently produce item, having easily manufactured products Cost Competitive Advantage: being a low cost compeitor in the industry while making a profit leasing to superior customer value 11

Cost advantage – getting low cost raw materials, efficiently produce item, having easily manufactured products Costs reduced through: 1. Experience curves – costs go down as experience with a product increases -reflect learning by doing, technological advances eg. Salad making 12

Cost advantage – getting low cost raw materials, efficiently produce item, having easily manufactured products Costs reduced through: 2. Efficient Labour – outsourceing 3. No-frills goods and services – eg WestJet no meals 4. Government Subsidies – no interest loans 13

Cost advantage – getting low cost raw materials, efficiently produce item, having easily manufactured products Costs reduced through: 5. Product Design – make product easy to produce 6. Re-engineering – rethink and redesign processes 14

Cost advantage – getting low cost raw materials, efficiently produce item, having easily manufactured products Costs reduced through: 7. Product Innovations – make production easier 8. New Methods of Service Delivery – online ordering 15

Competitive Advantage: unique features make product superior to competitors B. Product /Service Differentiation Competitive Advantage – longer lasting advantage, providing value beyond low price eg. Brand names based on quality 16

Competitve Advantage: unique features make product superior to competitors C. Niche Competitive Advantage – target and serve single market -usually for smaller companies with limited not able to compete with larger competitors eg. Serve only certain age group, geographical area 17

Competitve Advantage: unique features make product superior to competitors A Sustainable Competitive Advantage – cannot be copied by competitors, consumers have no reason why to patronize competitors eg. Rolex -created through: 1. skills – superior customer service 2. assets – patents, superior -imitation by competitors indicates lack of competitive advantage 18

 Result of SWOT and identification of a Competitive Advantage is ability of evaluate strategic direction of firm ◦ Next step in marketing planning is selecting a strategic alternative 19

Selecting a strategic alternatives To discover marketing opportunities management must identify alternatives Ansoff Matrix develops alternatives by matching products with markets through four options: 1.Market penetration – increase market share among EXISTING CUSTOMERS 2.Market development – attracting NEW CUSTOMERS 3.Product development – create new products for existing customers eg. Green cars 4.Diversification – introducing new products into new markets eg. Davidoff cigarettes makes cologne 20

Selecting a strategic alternatives Threats: External threats arise from political, economic, social, technological (PEST) forces. Technological developments may make your offerings obsolete. Market changes may result from the changes in the customer needs, competitors' moves, or demographic shifts. The political situation determines government policy and taxation structure.PEST 21

 Marketing Strategy involves selecting and describing market segments  Market Segment: group sharing characteristics with similar product needs eg. Students  A target marketing strategy involves using a market opportunity analysis which is the description and estimation of size of market and sales potential, assessment of competitors in segment 22

 Marketing Mix: blend of product, place/distribution, promotion, pricing (four P’s) to bring about maximal value of exchange -use to gain advantages over competitors 23

 Marketing Mix:  Product – package, warranty, after sales support, image  Place – making products available when and where customers want them 24

 Marketing Mix:  Promotion – advertising, public relations, sales promotion, personal selling – informing, education and persuading  Pricing – what buyer must give up to get product - quickest to change 25

 Implimentaition: turns marketing plan into action to accomplish plan’s objectives -involves: -detailed job assignments -timelines -budgets Evaluation and Control – after marketing plan implimentation 26

Evaluation: gauging the extent to which marketing objectives have been achieved Common reasons for failing to achieve objectives: 1. Unrealistic objectives 2. Inappropriate marketing strategies 3. Poor implimentation 4. Changes in the environment 27

Control: correcting actions that do not help organization help achieve objectives done through... Marketing Audit: periodic evaluation of the objectives and performance of organization -manage marketing resources 28

Marketing Audit characteristics: a) comprehensive coverage of marketing issues, good and bad b) Systematic and orderly c)Independantly conducted to be objective d)Periodicly carried out on a scheduled timeline not only during crisis 29

Strategic planning: requires continual attention, creativity, and management’s commitment -should be an ongoing process because environment is continually changing and resources continually evolving 30