1. Strategic Planning for Competitive Advantage
CHAPTER 2
Marketing Lamb, Hair, McDaniel 9
Designed by
Eric Brengle
B-books, Ltd
Prepared by
Deborah Baker
Texas Christian University

2. The Nature of Strategic Planning
LOI
Understand the importance of strategic marketing and know a basic outline for a marketing plan 2

3. Strategic Planning LOI 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. 3

4. Strategic Marketing Management
Chapter 2 Strategic Planning for Competitive Advantage
Strategic Marketing Management
LOI
What is the organization’s main activity?
How will it reach its goals?
THE ANSWER IS A MARKETING PLAN. 4 4

5. Strategic Planning LOI Marketing Plan
Chapter 2 Strategic Planning for Competitive Advantage
Strategic Planning
LOI
Marketing Plan
A written document that acts as a guidebook of marketing activities for the marketing manager.
Notes:
A sustainable competitive advantage lasts only as long as the time it takes a competitor to imitate the strategy and plans.
Marketing managers should continually look for skills and assets that create and sustain competitive advantage.
A sustainable competitive advantage is a function of the speed with which competitors can imitate a company’s strategy and plans. Imitation requires a competitor to identify the leader’s competitive advantage, determine how it is achieved, and learn how to duplicate it.
Discussion/Team Activity:
Discuss examples of firms that have sustainable competitive advantage in each skill and asset source listed. 5 5

6. 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
LOI 6

7. Elements of a Strategic Marketing Plan
Mission statement
Marketing objectives
Situation analysis
Competitive advantage
Strategic Directions 7

8. Defining the Business Mission
LO2
Develop an appropriate business mission statement 8

9. Defining the Business Mission
Chapter 2 Strategic Planning for Competitive Advantage
LO2
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
Notes:
Performance of a situation (SWOT) analysis helps firms identify their competitive advantage.
Strengths and Weaknesses are an internal assessment. Opportunities and Threats are an external environment assessment.
Discussion/Team Activity:
Perform a SWOT analysis for companies within the same industry. How could you use this information if you worked for a particular company or for a competitive company? 9 9

10. Setting Marketing Plan Objectives
Chapter 2 Strategic Planning for Competitive Advantage
Setting Marketing Plan Objectives
LO3
Describe the criteria for stating good marketing objectives
Notes:
Strategic planning creates and maintains a fit between the organization’s resources and objectives and the evolving market opportunities. The goal is to sustain and increase long-run profitability and growth. Strategic decisions require long-term commitments of resources.
Strategic errors can threaten a firm’s survival, but a good plan can help protect and grow the firm.
Examples of strategic decisions: * Sears purchase of Lands’ End * Reebok’s decision to stop competing with Nike in the hard-core sports market and instead focus on being the top shoe brand for fashion-forward consumers. * McDonald’s decision to offer more healthful foods * S.C. Johnson’s introduction of Shout Color Catchers
Discussion/Team Activity:
Discuss strategic planning decisions of other companies.
Discuss why strategic planning is important for these companies. 10 10

11. Marketing Objective LO3 Marketing Objective
A statement of what is to be accomplished through marketing activities. 11

12. Marketing Objectives LO3 Realistic Measurable Time specific
Chapter 2 Strategic Planning for Competitive Advantage
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.”
Notes:
Examples of Strategic Alternatives
Market Penetration: Manufacturer cents-off coupons McDonald’s Happy Meals with Ty’s Teeny Beanie Babies
Market Development: Expansion into global markets by companies such as McDonald’s, Coca-Cola, and Pepsi
Product development: Brooks Brothers Joseph A. Bank Clothiers
Diversification: LTV Corporation, a steel producer, diversified into the monorail business Coca-Cola’s water-treatment and water-conditioning equipment
LO3 12 12

13. Conducting a Situation Analysis
LO4
Explain the components of a situation analysis 13

14. SWOT Analysis LO4 SWOT Analysis Identifying
internal strengths (S) and weaknesses (W) and also examining external opportunities (O) and threats (T) 14

15. S W O T SWOT Analysis LO4 Internal External
©South-Western College Publishing S W O 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
LO4 15

16. Competitive Advantage
LO5
Identify sources of competitive advantage 16

17. Competitive Advantage
LO5
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. 17

18. Competitive Advantage
LO5
Niche Strategies
Cost
Product/Service Differentiation
Types of Competitive Advantage 18

19. Cost Competitive Advantage
LO5
Cost Competitive Advantage
Being the low-cost competitor in an industry while maintaining satisfactory profit margins. 19

20. Cost Competitive Advantage
LO5
Obtain inexpensive raw materials
Create efficient plant operations
Design products for ease of manufacture
Control overhead costs
Avoid marginal customers 20

21. Sources of Cost Reduction
LO5
Experience Curves
Efficient Labor
No-frills Products
Government Subsidies
Product Design
Reengineering
Production Innovations
New Service Delivery Methods 21

22. Product/Service Differentiation
LO5
Product / Service Differentiation Competitive Advantage
The provision of something that is unique and valuable to buyers beyond simply offering a lower price than the competition’s. 22

23. Examples of Product/Service Differentiation
LO5
Brand names
Strong dealer network
Product reliability
Image
Service 23

24. Niche Competitive Advantage
LO5
Niche Competitive Advantage
The advantage achieved when a firm seeks to target and effectively serve a small segment of the market. 24

25. Niche Competitive Advantage
LO5
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 25

26. Sources of Sustainable Competitive Advantage
LO5
Patents
Copyrights
Locations
Equipment
Technology
Customer Service
Promotion
Skills and Assets of an Organization 26

27. Identify strategic alternatives
Strategic Directions
LO6
Identify strategic alternatives 27

28. Strategic Alternatives
LO6
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 28

29. Describing the Target Market
LO7
Discuss target market strategies 29

30. Marketing Strategy LO7 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. 30

31. Target Market Strategy
LO7
Segment the market based on groups with similar characteristics
Analyze the market based on attractiveness of market segments
Select one or more target markets 31

32. Target Market Strategy
LO7
Appeal to the entire market with one marketing mix
Concentrate on one marketing segment
Appeal to multiple markets with multiple marketing mixes 32