Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel CHAPTER 2 Strategic Planning for Competitive Advantage ©

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1

Lamb, Hair, McDaniel

CHAPTER 2

Strategic Planning for Competitive Advantage

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Strategic Planning

The GOAL of strategic planning is long-term profitability and growth.

LO1

the managerial process of creating and maintaining a fit between the organization’s objectives and resources and the evolving market opportunities.

Strategic Planning is…


What Is a Marketing Plan?

Planning – the process of anticipating future events and determining strategies to achieve organizational objectives in the future.

Marketing Planning – designing activities relating to marketing objectives and the changing marketing environment.

Marketing Plan – a written document that acts as a guidebook of marketing activities for the marketing manager.

LO1


Why Write a Marketing Plan?

Provides a basis for comparison of actual and expected performance

Provides clearly stated activities to work toward common goals

Provides an examination of the marketing environment

Serves as a reference for the success of future activities

Allows entry into the marketplace with awareness

LO1


Exhibit 2.1Exhibit 2.1Elements of a Elements of a Marketing MixMarketing Mix

Marketing Strategy

Product Distribution

Price

Marketing Mix

Business Mission Statement

Situation or SWOT Analysis

Objectives

Target Market Strategy

ImplementationEvaluation

Control

Promotion

LO1


Writing the Marketing Plan

A complete marketing plan can allow an organization to achieve marketing objectives…

HOWEVER

the marketing plan is only as good as the information, effort, creativity and thought put into it.

LO1


LO2

Defining the Business Mission Answers the question, “What business are we in?”

Focuses on the market(s) rather than the good or service

If Mission is:Too Narrow Marketing MyopiaToo Broad No DirectionJust Right Focus on markets served and benefits customers seek


Mission Statement:Ben & Jerry’s

LO2

1. Product To make, distribute and sell the finest quality all natural ice cream and related products in a wide variety of innovative flavors made from Vermont Dairy products.

2. Economic To operate the company on a sound financial basis of profitable growth, increasing value for our shareholders, and creating career opportunities and financial rewards for our employees.

3. Social To operate the company in a way that actively recognizes the central role that business plays in the structure of society by initiating innovative ways to improve the quality of life of a broad community—local, national, and international.


SWOT Analysis

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Strengths - things the company does well.Strengths - things the company does well.

Weaknesses - things the company does not do well.Weaknesses - things the company does not do well.

Opportunities - conditions in the external environment that favor strengths.

Opportunities - conditions in the external environment that favor strengths.

Threats - conditions in the external environment that do not relate to existing strengths or favor areas of current weakness.

Threats - conditions in the external environment that do not relate to existing strengths or favor areas of current weakness.

Internal

External

LO3


Components of a SWOT Analysis

Examining internal strengths and weaknesses.

Focus on organizational resources:

• Production costs

• Marketing skills

• Financial resources

• Company or brand image

• Employee capabilities

• Technology

LO3


Environmental ScanningHelps identify opportunities and threats.

Designing a marketing strategy is based on six major environmental forces:

• Social

• Demographic

• Economic

• Technological

• Political/Legal

• CompetitiveLO3 © A

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Marketing Objectives

Realistic

Measurable

Time specific

Compared to a benchmark

“Our objective is to achieve 10 percent dollar market share in the cat food market within 12

months of product introduction.”

LO4


Criteria for Good Marketing Objectives

Carefully specified objectives serve several functions:

1. Communicate marketing management philosophy

2. Provide management direction

3. Motivate employees

4. Force executives to clarify their thinking

5. Form a basis for control

LO4


Competitive Advantage

CompetitiveAdvantage

CompetitiveAdvantage

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.

LO5


Competitive Advantage

NicheNiche

CostCost

Product/Service Differentiation

Product/Service Differentiation

Types of Types of Competitive Competitive AdvantageAdvantage

Types of Types of Competitive Competitive AdvantageAdvantage

LO5


Cost Competitive Advantage

Obtain inexpensive raw materials

Create efficient scale of plant operations

Design products for ease of manufacture

Control overhead costs

Avoid marginal customers

LO5


Sources of Cost Reduction

Experience CurvesExperience Curves

Efficient LaborEfficient Labor

No-frills ProductsNo-frills Products

Government SubsidiesGovernment Subsidies

Product DesignProduct Design

ReengineeringReengineering

Production InnovationsProduction Innovations

New Service Delivery Methods

New Service Delivery Methods

LO5


Product/Service Differentiation Competitive Advantage

LO5

the provision of something that is unique and valuable to buyers beyond simply offering a lower price than that of the competition.

A Product/Service Differentiation

Competitive Advantage is…


Examples of Product/Service Differentiators

Brand names

Strong dealer network

Product reliability

Image

Service

LO5


Niche Competitive Advantage

Used by small companies with limited resources

May be used in a limited geographic market

LO5


Building Sustainable Building Sustainable Competitive AdvantageCompetitive Advantage

Sustainable competitive advantage is an advantage that cannot be copied by the competition.

A firm that has successfully achieved a competitive advantage will stake out a position unique in some manner from its rivals.

LO5


Sources of Sustainable Competitive Advantage

PatentsPatents

CopyrightsCopyrights

LocationsLocations

EquipmentEquipment

TechnologyTechnology

Customer ServiceCustomer Service

PromotionPromotion

Skills and AssetsSkills and Assets

of anof anOrganizationOrganization

Skills and AssetsSkills and Assets

of anof anOrganizationOrganization

LO5


Strategic Alternatives

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

LO6


LO6

Exhibit 2.2Exhibit 2.2Ansoff’s Strategic Ansoff’s Strategic

Opportunity Opportunity MatrixMatrix


LO6

Selecting a Strategic Alternative

DogDog

Question MarkQuestion Mark

StarStar

Cash CowCash Cow

Portfolio Portfolio MatrixMatrix

Portfolio Portfolio MatrixMatrix


LO6

Exhibit 2.3Exhibit 2.3Portfolio Matrix for a Large Portfolio Matrix for a Large Computer ManufacturerComputer Manufacturer


Portfolio Matrix Strategies

Build

Hold

Harvest

Divest

LO6


the activities of selecting and describing one or more target markets and developing and maintaining a marketing mix that will produce mutually satisfying exchanges with target markets.

LO7

Marketing Strategy involves…

Describing the Target Market

the description and estimation of the size and sales potential of market segments that are of interest to the firm and the assessment of key competitors in these market segments.

Marketing Opportunity Analysis (MOA) involves…


• Segment the market based on groups with similar characteristics

• Analyze the market based on attractiveness of market segments

• Select one or more target markets

LO7



Appeal to the entire market with one marketing mix

Appeal to the entire market with one marketing mix

Concentrate on one marketing segment

Concentrate on one marketing segment

Appeal to multiple marketswith multiple marketing mixes

Appeal to multiple marketswith multiple marketing mixes

LO7



The Marketing Mix

LO8

a unique blend of product, place (distribution),

promotion, and pricing strategies designed to

produce mutually satisfying exchanges with a

target market.

The Marketing Mix is…

The elements of the marketing mix

are often referred to as the

“Four Ps”“Four Ps”


Marketing Mix: The “Four Ps”

The starting point of the “4 Ps” Includes:

Physical unitPackageWarrantyServiceBrandImageValue

Product

Products can be…Tangible goods IdeasServices

LO8


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

LO8


Marketing Mix:The “Four Ps”

Promotion

Role is to bring about exchanges with target markets by: InformingEducatingPersuadingReminding

Includes integration of:AdvertisingPublic relationsSales promotionPersonal selling

LO8


Marketing Mix:The “Four Ps” Price

Price is what a buyer must give up to obtain a product.

The most flexible of the “4 Ps”—quickest to change

Competitive weaponPrice x Units Sold = Total Revenue

LO8


Following Up on the Marketing Plan

Implementation

Evaluation and Control

Marketing audit is… Comprehensive Systematic Independent Periodic

LO9


Techniques for Effective Strategic Planning

Effective Strategic Planning

Effective Strategic Planning

Continualattention

Continualattention CreativityCreativity Management

commitment

Managementcommitment

LO10


Assignment

Cirque Du Soleil Case AssignmentPlease get in groups of 5 to 7

studentsAssignment:

Outline a rudimentary SWOT analysis for Cirque du Soleil.

List and describe three keys to Cirque du Soleil’s competitive advantage.

Case

Documents

Chapter 2 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel CHAPTER 2 Strategic Planning for Competitive Advantage ©