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Strategic Planning for Competitive Advantage

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1 Strategic Planning for Competitive Advantage
Marketing cannot be accomplished in isolation. Even though the marketing function resides with marketers, the concept of marketing must permeate the entire organization. Strategic Planning for Competitive Advantage

2 Enduring Understandings for Market Planning Unit
Marketing is customer focused. Marketing is much more than advertising and selling. A marketing plan is a roadmap for all companies' business efforts.

3 Essential Questions for Market Planning Unit
What is marketing? How do marketers find their customers?  What makes marketing dynamic? What causes a business to "close its doors"?

4 The Importance of Strategic Marketing
Chapter 2 Strategic Planning for Competitive Advantage The Importance of Strategic Marketing What Why How Strategic Planning Long-term profitability and growth Write a marketing plan GE, Toys R Us, McDonalds

5 Strategic Marketing Management
Chapter 2 Strategic Planning for Competitive Advantage Strategic Marketing Management What is the organization’s main activity? How will it reach its goals? Notes: How do companies go about strategic marketing planning? How do employees know how to implement the long-term goals of the firm? The answer is a marketing plan. THE ANSWER IS A MARKETING PLAN.

6 Chapter 2 Strategic Planning for Competitive Advantage
Marketing Planning Marketing Plan- A written document that acts as a guidebook for the marketing manager. Notes: Marketing planning involves the design of activities related to marketing objectives and the changing marketing environment. Marketing planning is the basis for all marketing strategies and decisions.

7 Building a marketing plan is more than just meeting and knocking around ideas haphazardly…

8 And it’s DEFINITELY more than adopting a strategy just because “all of a sudden” you decided it seemed like a good idea…

9 A Marketing Plan is a Roadmap for All of a Company’s Business Efforts
Marketing Plans are: Strategic and extensive Organized and analytical Either short or long range (depending on the company)

10 Marketing Plan Elements
Chapter 2 Strategic Planning for Competitive Advantage Marketing Plan Elements Business Mission Statement Situation or SWOT Analysis Objectives Marketing Strategy Target Market Strategy Marketing Mix Product Distribution Notes: Some elements are common to all marketing plans. These include the business mission and objectives, performing a SWOT analysis, determining a target market, and establishing a marketing mix. Other elements that may be included are budgets, implementation timetables, required marketing research efforts, or elements of advanced strategic planning. Exhibit 2.1: Elements of a marketing plan The Marketing Plan Appendix contains a Marketing Plan Outline. Promotion Price Implementation Evaluation Control

11 Business Mission Statement
Chapter 2 Strategic Planning for Competitive Advantage Business Mission Statement 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

12 Star Trek Enterprise Why is a mission statement important?

13 Starbucks Mission Statement
Chapter 2 Strategic Planning for Competitive Advantage Starbucks Mission Statement Our mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time. Notes: The Southwest Airlines mission statement is shown here and in Exhibit 2.2.

14 DECA Mission Statement
DECA prepares emerging leaders and entrepreneurs for careers in marketing, finance, hospitality and management in high schools and colleges around the globe.

15 Nike Mission Statement
Chapter 2 Strategic Planning for Competitive Advantage Nike Mission Statement Our mission for the Nike brand is: To bring inspiration and innovation to every athlete* in the world. *"If you have a body, you are an athlete." Notes: The AMA’s mission statement is show here and in Exhibit 2.2. Samples Find a sample to share Parkway Mission statement 15

16 Defining the Business Mission
Chapter 2 Strategic Planning for Competitive Advantage 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 Notes: The foundation of any marketing plan is the firm’s mission statement. The mission statement is based on an analysis of benefits sought by present and potential customers and an analysis of existing and anticipated environmental conditions. The mission statement establishes boundaries for all subsequent decisions, objectives, and strategies. Discussion/Team Activity: Find the mission statements for various organizations. Compare the mission statements with the markets served and the products sold by these organizations. 16

17 Strategic Business Unit (SBU)
Company division or a Product line within a division or a Single product or company brand that has an objective and mission different from other company business Can be marketed independently from the rest of the company.

18 Strategic Business Unit (SBU)
GE Technology Infrastructure (healthcare, aviation, transportation) GE Capital (Commercial Finance, GE Money) GE Energy (energy, oil & gas, water) NBC Universal (television, music, film)

19 Marketing Plan Elements
Chapter 2 Strategic Planning for Competitive Advantage Marketing Plan Elements Business Mission Statement Situation or SWOT Analysis Objectives Marketing Strategy Target Market Strategy Marketing Mix Product Distribution Notes: Some elements are common to all marketing plans. These include the business mission and objectives, performing a SWOT analysis, determining a target market, and establishing a marketing mix. Other elements that may be included are budgets, implementation timetables, required marketing research efforts, or elements of advanced strategic planning. Exhibit 2.1: Elements of a marketing plan The Marketing Plan Appendix contains a Marketing Plan Outline. Promotion Price Implementation Evaluation Control 19

20 Conducting a Situation Analysis
Chapter 2 Strategic Planning for Competitive Advantage Conducting a Situation Analysis SWOT Analysis- Identifying internal strengths and weaknesses and also examining external opportunities and threats. LO3 Notes: When examining internal strengths and weaknesses, the marketing manager should focus on organizational resources such as production costs, marketing skills, financial resources, company or brand image, employee capabilities, and available technology. When examining external opportunities and threats, marketing managers must analyze aspects of the marketing environment.

21 Chapter 2 Strategic Planning for Competitive Advantage
SWOT Analysis ©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 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?

22 THE STRATEGIC MARKETING PROCESS
THE PLANNING PHASE Step 1: Situation (SWOT) Analysis Situation Analysis SWOT Analysis Strengths Weaknesses Opportunities Threats

23 THE STRATEGIC MARKETING PROCESS
THE PLANNING PHASE Step 1: Situation (SWOT) Analysis SWOT Analysis Study Identify Industry Trends Analyze Competitors Assess the Organization Research Present and Prospective Customers

24 Ben & Jerry’s SWOT analysis

25 Components of a Situation Analysis
Chapter 2 Strategic Planning for Competitive Advantage Components of a Situation Analysis production costs marketing skills financial resources image technology INTERNAL ENVIRONMENT Notes: Additional strengths include superiority in manufacturing, service, quality and value perception, as well as employee capabilities.

26 Environmental Scanning
Chapter 2 Strategic Planning for Competitive Advantage Environmental Scanning 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. Notes: Environmental scanning helps identify market opportunities and threats and provides guidelines for the design of marketing strategy. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

27 Chapter 2 Strategic Planning for Competitive Advantage
Marketing Objective A statement of what is to be accomplished through marketing activities.

28 Chapter 2 Strategic Planning for Competitive Advantage
Marketing Objectives 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.” Notes: Objectives must also be consistent with and indicate the priorities of the organization Objectives should flow from the business mission statement to the rest of the marketing plan

29 Criteria for Good Marketing Objectives
Chapter 2 Strategic Planning for Competitive Advantage Criteria for Good Marketing Objectives 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

30 Marketing Plan Elements
Chapter 2 Strategic Planning for Competitive Advantage Marketing Plan Elements Business Mission Statement Situation or SWOT Analysis Objectives Marketing Strategy Target Market Strategy Marketing Mix Product Distribution Notes: Some elements are common to all marketing plans. These include the business mission and objectives, performing a SWOT analysis, determining a target market, and establishing a marketing mix. Other elements that may be included are budgets, implementation timetables, required marketing research efforts, or elements of advanced strategic planning. Exhibit 2.1: Elements of a marketing plan The Marketing Plan Appendix contains a Marketing Plan Outline. Promotion Price Implementation Evaluation Control 30

31 Describing the Target Market
Chapter 2 Strategic Planning for Competitive Advantage Describing the Target Market Discuss target market strategies. Vals Study

32 Chapter 2 Strategic Planning for Competitive Advantage
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.

33 Target Market Strategy
Chapter 2 Strategic Planning for Competitive Advantage 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

34 Target Market Strategy
Chapter 2 Strategic Planning for Competitive Advantage 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 Notes: Three strategies for selecting target markets are shown here. These strategies are discussed in detail in Chapter 8. Discussion/Team Activity: Discuss the differences in the target markets for McDonald’s, Burger King’s, and Wendy’s.

35 The Concept of Market Segmentation
Chapter 8 Segmenting and Targeting Markets Notes: Exhibit 8.1 illustrates the concept of market segmentation, using age and gender as the bases. Discussion/Team Activity: Discuss other ways of segmenting the market in addition to age and gender.

36 Bases for Segmenting Consumer Markets
Chapter 8 Segmenting and Targeting Markets Bases for Segmenting Consumer Markets Geography Demographics Psychographics Benefits Usage Rate Region Market size Market density Climate Age Gender Income Race/ethnicity Family life cycle Personality Motives Lifestyle Geodemo-graphics Benefits sought Former Potential 1st time Light or irregular Medium Heavy

37 Family Life Cycle Chapter 8 Segmenting and Targeting Markets Notes:
Exhibit 8.2 demonstrates both traditional and contemporary FLC patterns and shows how families’ needs, incomes, etc. differ at each stage. Married couples make up just 50.7% of the U.S. population. Unmarried Americans make up 42% of the workforce and 40% of home buyers. Discussion/Team Activity: Find examples of advertisements that target different stages of the family life cycle.

38 7 How do we Understand the Pet Owner’s Attitudes? 38
There are distinct segments of pet owners and they all shop in your stores: Segmentation study tells us how pet owners feel about their pets and the role food plays in that relationship. Their attitudes influence the brands they purchase and their sensitivity to price, promotion, and assortment. Practical Providers They like pets, but are not goo-goo about them. Look for convenient, practical, affordable food High price sensitivity Will switch for a good deal Uninvolved Owners Food must be: - Affordable - Quick - Easy to feed Very high price sensitivity Expert Driven Providers Expert advice – from veterinarian, breeder or other perceived expert – is very important. Information seekers Nutrition focused Primarily feed dry food Very low price sensitivity Healthy Habitualists Look for something easy and nutritious. Very brand loyal Not as worried about taste Basic Food Feeders Pet most likely belongs to the children, but needs to be fed. Food that looks like human food is more appealing High price sensitivity-look for sales Indulgent Nutritionists Still searching for right balance of taste and nutrition. Try new products Mix wet and dry Like variety Below average price sensitivity Pampering Preparers Homemade food is used to show love. Store-bought food alone does not suffice Nutrition is important, but taste is paramount Food = Love Average price sensitivity 38

39 Segmentation Example Macy’s Department store: classified into five
groups based upon demographics, values, and attitudes. For Example: Fashion Statement-most affluent and educated, use credit cards, expect to be treated well by retail personnel. Wanna-Buys –similar to a fashion statement but with less income. Enjoy buying on impulse. 39

40 Segmentation Example Family Values – represent large families,
often are professionals, buying focuses on children or the home Down to Basics – Most likely to have children, not college educated, careful spenders, prefer not to use credit, like coupons. Matriarchs- older often retired, they like department stores but are risk adverse and have few purchase plans. 40

41 Who’s Who? 1.Fashion Statement 2.Family Values 3. Wanna Buy’s
4. Matriarch 5.Down-to-Basics 41

42 Who’s Who? Family Values Down-to-Basics Matriach Wanna Buy’s
Fashion Statement 42

43 Marketing Plan Elements
Chapter 2 Strategic Planning for Competitive Advantage Marketing Plan Elements Business Mission Statement Situation or SWOT Analysis Objectives Marketing Strategy Target Market Strategy Marketing Mix Product Distribution Notes: Some elements are common to all marketing plans. These include the business mission and objectives, performing a SWOT analysis, determining a target market, and establishing a marketing mix. Other elements that may be included are budgets, implementation timetables, required marketing research efforts, or elements of advanced strategic planning. Exhibit 2.1: Elements of a marketing plan The Marketing Plan Appendix contains a Marketing Plan Outline. Promotion Price Implementation Evaluation Control 43

44 Chapter 2 Strategic Planning for Competitive Advantage
Strategic Directions Identify strategic alternatives.

45 Competitive Advantage
Chapter 2 Strategic Planning for Competitive Advantage Competitive Advantage Niche Strategies Cost Product/Service Differentiation Types of Competitive Advantage Notes: A firm’s competitive advantage is the reason or reasons that cause customers to patronize that firm and not the competition.

46 Cost Competitive Advantage
Chapter 2 Strategic Planning for Competitive Advantage Cost Competitive Advantage Cost Competitive Advantage- Being the low-cost competitor in an industry while maintaining satisfactory profit margins. Examples: Obtain inexpensive raw materials Design products for ease of manufacture Control overhead costs Notes: A cost competitive advantage enables a firm to deliver superior customer value

47 Product differentiation
Brand Names –Lexus Product Reliability -Maytag Strong Dealer Network -Caterpillar tractor Service Fed Ex Image –Neiman Marcus Nike---Product Innovation -Nike Air and Nike Shox

48 Niche Competitive Advantage
Chapter 2 Strategic Planning for Competitive Advantage Niche Competitive Advantage Niche Competitive Advantage The advantage achieved when a firm seeks to target and effectively serve a small segment of the market. Example: Sensodyne/Polident/Poligrip Orvis—fishing company Notes: A niche competitive advantage targets and serves a single segment. This allows small companies with limited resources to market against giant competitors. An example of a successful niche marketer is The Orvis Company, a specialist in fly fishing manufacturing and sales. 48

49 Strategic Alternatives
Chapter 2 Strategic Planning for Competitive Advantage Strategic Alternatives Market Penetration Market Development Product Development Diversification Increase market share among existing customers McDonalds: Beanie Babies Attract new customers to existing products Coke in India 850/350 Introduce new products into new markets Sony-Columbia pictures Create new products for present markets Taco Bell Fresco Style 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 49

50 Ansoff’s Strategic Opportunity Matrix
Chapter 2 Strategic Planning for Competitive Advantage Ansoff’s Strategic Opportunity Matrix Present Product New Product New Market Market Penetration McDonalds sells More happy meals With Disney promo Development McDonalds opens Restaurants in China Product McDonalds introduces Salads and McWater Diversification Line of children’s clothing Present Market Online Procter & Gamble Explore Procter & Gamble’s Web site and identify how it uses each of the four strategic alternatives. Does one seem to be predominant? Which one? Can you find common threads among products, categories, and geographic locations that might affect P&G’s approach? Notes: Exhibit 2.4 is an example of Ansoff’s Strategic Opportunity Matrix for McDonald’s. Discussion/Team Activity: Select various companies and complete the Ansoff Strategic Opportunity Matrix. Online 50

51 Strategic Alternatives
Chapter 2 Strategic Planning for Competitive Advantage Strategic Alternatives Identify strategic alternatives Diversification = Product development = products Market development = customers Market penetration = share new products + new markets

52 SETTING STRATEGIC DIRECTIONS
WHERE DO WE WANT TO GO? Business Portfolio Analysis (BCG) Boston Consulting Group Market Growth Rate Stars Cash Cows Dogs Question Marks Relative Market Share High Low

53 BCG business portfolio analysis for Kodak’s consumer SBUs for 2003 (solid circle) and 2011 (hollow circle) Kodak digital picture frame Kodak digital photo printer Kodak digital camera Kodak film sales: US, Canada, & W. Europe

54 BCG Portfolio Matrix Boston Consulting Group
Chapter 2 Strategic Planning for Competitive Advantage BCG Portfolio Matrix Boston Consulting Group Computer Example Stars Notebooks Cash Cows Laptops/ Personal computer Problem Children/Question Marks Palm Pilots Dogs Mainframe computer Notes: The Portfolio Matrix from Boston Consulting Group classifies each SBU by its present or forecast growth and market share. The assumption is that market share and profitability are strongly linked. A star is a fast-growing market leader. Stars usually have large profits but need cash to finance growth. A marketing tactic is to protect market share by reinvesting earnings in product improvement, distribution, promotion, and production efficiency. Strive to capture new users as they enter the market. A cash cow generates more cash than it needs to maintain market share. It is in a low-growth market, but the product has dominant market share. The marketing strategy is to maintain market dominance by being the price leader and by making technological improvements. Allocate excess cash to high-growth prospects. A problem child shows rapid growth but poor profit margins. It has a low market share in a high-growth industry. It needs a great deal of cash to prevent conversion to dog status. Strategies are to invest to gain better market share, acquire competitors, or drop the SBU. A dog has low growth potential and a small market share. Most dogs leave the market. The strategy options are to divest or harvest. 54

55 Portfolio Matrix Strategies
Chapter 2 Strategic Planning for Competitive Advantage Portfolio Matrix Strategies Build Hold Harvest Divest Pringles Bisquick/General Mills Lever Brothers/Lifebuoy Note: Build: If an SBU has the potential to be a star, building would be an appropriate goal. Hold: If an SBU is a successful cash cow, a goal would be to hold or preserve market share. Harvest: This is an appropriate strategy for all SBUs except stars. The basic goal is to increase short-term cash return without much concern for the long-run impact. Divest: Getting rid of SBUs with low shares of low-growth markets is often appropriate. Problem children and dogs are suitable for this strategy.

56 Assignment Select a partner
Select a business to of interest to research Design a BCG (Boston Consulting Group) Model Matrix for the business using one PowerPoint slide Include the company Stars, Cash Cows, Problem Children/Question Marks and Dogs

57 Marketing Plan Elements
Chapter 2 Strategic Planning for Competitive Advantage Marketing Plan Elements Business Mission Statement Situation or SWOT Analysis Objectives Marketing Strategy Target Market Strategy Marketing Mix Product Distribution Notes: Some elements are common to all marketing plans. These include the business mission and objectives, performing a SWOT analysis, determining a target market, and establishing a marketing mix. Other elements that may be included are budgets, implementation timetables, required marketing research efforts, or elements of advanced strategic planning. Exhibit 2.1: Elements of a marketing plan The Marketing Plan Appendix contains a Marketing Plan Outline. Promotion Price Implementation Evaluation Control 57

58 Marketing Mix: The “Four Ps”
Chapter 2 Strategic Planning for Competitive Advantage Marketing Mix: The “Four Ps” Price Promotion Place Product 58

59 Marketing Mix: The “Four Ps”
Chapter 2 Strategic Planning for Competitive Advantage 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 Notes: The product is the starting point of the marketing mix. It is difficult to decide on a promotion campaign, determine a price, or design a distribution strategy until the product offering and product strategy are defined. The product is not only the physical unit but also the packaging, warranty, after-sale service, brand name, company image, value, and other factors. Products may be tangible goods, services, and ideas. Product decisions are discussed in Chapter 9 and 10, services marketing in Chapter 11. 59

60 Marketing Mix: The “Four Ps”
Chapter 2 Strategic Planning for Competitive Advantage 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 Place Notes: The goal of distribution is to ensure products arrive in usable condition at the right place when customers need them. Distribution is covered in Chapters 12 and 13. 60

61 Marketing Mix: The “Four Ps”
Chapter 2 Strategic Planning for Competitive Advantage Marketing Mix: The “Four Ps” 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 Paramount Warner Brothers Universal Studios How do movie companies use their Web sites as part of their promotion strategies? Visit the sites for the movie studios listed to see what films they are promoting heavily. Also look at movie-specific sites. Are there differences how the movie-specific site promotes the film and how the studio’s umbrella site promotes the film? Explain what you find. Notes: Promotion includes personal selling, advertising, sales promotion, and public relations. Each element of the promotion mix is coordinated with the others to create a promotional blend. Integrated Marketing Communications is discussed in Chapters 14, 15, and 16. Technology-driven aspects of promotional marketing are covered in Chapter 19. A good promotion strategy can increase sales, but does not guarantee success. 61

62 Marketing Mix: The “Four Ps”
Chapter 2 Strategic Planning for Competitive Advantage Marketing Mix: The “Four Ps” 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 Price Notes: Price is an important competitive weapon and is often the most flexible of the marketing mix. Of the four Ps, it can be changed most quickly. Price multiplied by the number of units sold equals total revenue for the firm. Pricing decisions are discussed in Chapters 17 and 18. 62

63 The elements of the marketing mix must be blended to produce a cohesive marketing program

64 Chapter 2 Strategic Planning for Competitive Advantage
Techniques for Effective Strategic Planning Effective Strategic Planning Continual attention Creativity Management commitment Notes: Effective strategic planning requires continual attention, creativity, and management commitment. 2. Strategic planning is not an annual event, but an ongoing process. The environment is continually changing, and the firm’s internal resources and capabilities are continually evolving. 3. Strategic planning is based on creativity. Assumptions about the firm and the environment should be challenged and new strategies established to sustain competitive advantage. 4. Management support and participation are critical to the success of strategic planning.

65 Following Up the Marketing Plan
Chapter 2 Strategic Planning for Competitive Advantage Following Up the Marketing Plan Implementation Evaluation Control Marketing audit is… Comprehensive Systematic Independent Periodic Notes: Implementation is the process that turns marketing plans into action assignments and ensures that these assignments are executed in a way that accomplishes the plan’s objectives. These activities may involve job assignments, activity descriptions, timelines, budgets, and lots of communication. Implementation is essentially “doing what you said you were going to do.” However, many organizations repeatedly experience failures in strategy implementation. The marketing audit provides the mechanisms for evaluating marketing results compared to the plan’s goals.

66 Chapter 2 Strategic Planning for Competitive Advantage
Implementation, Evaluation, and Control Product Place Promotion Price Met objectives? Implementation Evaluation Audits comprehensive systematic independent periodic


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