Lamb, Hair, McDaniel

2012-2013

CHAPTER 2

Strategic Planning for Competitive Advantage

Chapter 1

Copyright 2012 by Cengage Learning Inc. All rights reserved

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AP IMAGES/JENNIFER GRAYLOCK

iStockphoto.com/Dem10

Strategic Marketing Management

What is the organizations main activity?

How will it reach its goals? The answer is by examining: SBUs Marketing Plan Strategic Alternatives
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Strategic Planning is
the managerial process of creating and maintaining a fit between the organizations objectives and resources and the evolving market opportunities.

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

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Ansoffs Opportunity Matrix

Market Penetration
Market Development Product Development

Increase market share among existing customers

Attract new customers to existing products

Create new products for present markets Introduce new products into new markets
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Diversification

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Ansoffs Strategic Opportunity Matrix

Present Product
Present Market Market Penetration
Starbucks sells more coffee to customers who register their reloadable Starbucks cards.

Exhibit 2.1

New Product
Product Development
Starbucks develops powdered instant coffee Via.

New Market

Market Development
Starbucks opens stores in Brazil and Chile

Diversification
Starbucks launches Hear Music and buys Ethos Water.

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Boston Consulting Group

Portfolio Matrix
Star

Cash Cow

Portfolio Matrix
Question Mark

Dog
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Portfolio Matrix for a Large Computer Manufacturer

Exhibit 2.2

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Portfolio Matrix Strategies

Build

Hold

Harvest

Divest

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Portfolio Matrix for a Large Computer Manufacturer Market attractiveness

Exhibit 2.3

High

Cautiously Invest

Invest/Grow

Invest/Grow

Medium

Harvest/Divest

Cautiously Invest

Invest/Grow

Low

Harvest/Divest
Low

Harvest/Divest
Medium

Cautiously Invest
High

Business Position
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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.

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Business Mission Statement

Exhibit 2.4
Elements of a Marketing Mix

Situation or SWOT Analysis

Objectives

Marketing Strategy
Target Market Strategy

Marketing Mix
Product Promotion Distribution Price

Implementation Evaluation Control

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Defining the Business Mission

Answers the question, What business are we in? Focuses on the market(s) rather than the good or service SBUs may also have a mission statement
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SWOT Analysis
Internal

External

S W O T

Strengths - things the company does well. Weaknesses - things the company does not do well. 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 South-Western College Publishing current weakness. 5

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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
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Environmental Scanning
Helps identify opportunities and threats.

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

Social Demographic Economic Technological Political/Legal Competitive
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AP IMAGES/PRNEWSFOTO/PEPSICO

Competitive Advantage
Cost

Types of Competitive Advantage

Product/Service Differentiation

Niche

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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

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Sources of Cost Reduction

Experience Curves Efficient Labor No-frills Products Government Subsidies Product Design Reengineering Production Innovations New Service Delivery Methods

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Examples of Product/Service Differentiators

Brand names Strong dealer network Product reliability Image Service

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Niche Competitive Advantage

Used by small companies with limited resources
May be used in a limited geographic market

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Building Sustainable Competitive 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.
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Sources of Sustainable Competitive Advantage

Patents Copyrights Locations Equipment

Technology
Skills and Assets of an Organization
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Customer Service Promotion

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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.

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Describing the Target Market

Marketing Strategy
involves
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.

Marketing Opportunity Analysis (MOA) involves

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.
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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

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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

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The Marketing Mix is

a unique blend of product, place (distribution), promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market.
The elements of the marketing mix are often referred to as the

Four Ps
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Marketing Mix: The Four Ps

The starting point of the 4 Ps Includes:
Physical unit Package Warranty Service Brand Image Value
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Product Products can be

Tangible goods Ideas Services

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Marketing Mix: The Four Ps

Place

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
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Marketing Mix: The Four Ps

Includes integration of: Promotion Advertising Public relations Role is to bring about Sales promotion exchanges with target Personal selling markets by:
Informing Educating Persuading Reminding
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Marketing Mix: The Four Ps

Price

Price is what a buyer must give up to obtain a product. The most flexible of the 4 Psquickest to change Competitive weapon Price x Units Sold = Total Revenue
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Following Up on the Marketing Plan

Implementation
Evaluation and Control Marketing audit is

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Comprehensive Systematic Independent Periodic

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Techniques for Effective Strategic Planning

Continual attention

Creativity

Management commitment

Effective Strategic Planning

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