1 Strategic Planning for Competitive Advantage
Jan 16, 2016
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Strategic Planning for Competitive Advantage
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.
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"?
The Importance of Strategic Marketing
WhatWhatWhatWhat
WhyWhyWhyWhy
HowHowHowHow
Strategic PlanningStrategic PlanningStrategic PlanningStrategic Planning
Long-term profitability Long-term profitability and growthand growth
Long-term profitability Long-term profitability and growthand growth
Write a marketing planWrite a marketing planWrite a marketing planWrite a marketing plan
GE, Toys R Us, McDonalds
Strategic Marketing Management
THE ANSWER IS A MARKETING PLAN.
What is the organization’s main activity?
How will it reach its goals?
Marketing Planning
Marketing Plan- A written documentthat acts as a guidebook for the
marketing manager.
Building a marketing plan is more than just meeting and knocking around ideas
haphazardly…
And it’s DEFINITELY more than adopting a strategy just because “all of a sudden” you
decided it seemed like a good idea…
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)
Marketing Plan Elements
Marketing Strategy
Product Distribution
Price
Marketing Mix
Business Mission Statement
Situation or SWOT Analysis
Objectives
Target Market Strategy
ImplementationEvaluation
Control
Promotion
Business Mission Statement
marketing myopiano directionfocus on marketsserved and benefitscustomers seek
Q: What business are we in?
A: Business mission statement
Too narrowToo broadJust right
marketing myopiano directionfocus on marketsserved and benefitscustomers seek
Star Trek EnterpriseWhy is a mission statement important?
Starbucks Mission Statement
Our mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.
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.
Nike Mission Statement
Find a sample to shareParkway 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."
Samples
• 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
Defining the Business Mission
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.
Strategic Business Unit (SBU)
• GE Technology Infrastructure(healthcare, aviation, transportation)
• GE Energy(energy, oil & gas, water)
• GE Capital(Commercial Finance, GE Money)
• NBC Universal(television, music, film)
Boeing SBU’s
Marketing Plan Elements
Marketing Strategy
Product Distribution
Price
Marketing Mix
Business Mission Statement
Situation or SWOT Analysis
Objectives
Target Market Strategy
ImplementationEvaluation
Control
Promotion
Conducting a Situation Analysis
LO3
SWOT Analysis- Identifying internalstrengths and weaknesses and also
examining externalopportunities and threats.
SWOT Analysis
©South-Western College Publishing
SSWWOOTT
Things the company does well.Things the company does well.
Things the company does not do well.Things the company does not do well.
Conditions in the external environment that favor strengths.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.
Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness.
InternalInternal
ExternalExternal
THE STRATEGIC MARKETING PROCESSTHE PLANNING PHASE
Analyze Competitors
Identify Industry Trends
Research Present and Prospective Customers
Assess the Organization
• SWOT Analysis Study
Step 1: Situation (SWOT) Analysis
Ben & Jerry’s SWOT analysis
Components of a Situation Analysis
production costs
marketing skills
financial resources
image
technology
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Environmental Scanning
Environmental Scanning- The collectionand interpretation of information aboutforces, events, and relationships in the
external environment that may affect the future of the organization or the
implementation of the marketing plan.
Copyright 2010 by Cengage Learning Inc. All Rights Reserved
Marketing Objective
A statement of what is
to be accomplished
through marketing activities.
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.”
Criteria for Good Marketing ObjectivesRealistic, measurable, and time-specific objectives Realistic, measurable, and time-specific objectives consistent with the firm’s 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
1.Profitability ObjectivesTo achieve a 20% return on capital by August 2019.
2. Market Share ObjectivesTo gain 25% of the market for sports shoes by September 2019.
3. Promotional ObjectivesTo increase trail of X washing powder from 2% to 5% of our target group by January 2019.
Examples of Smart Objectives
. Examples of Smart Objectives
4. Objectives for SurvivalTo survive the current double-dip recession.
5. Objectives for GrowthTo increase the size of our Brazilian operation from $200,000 in 2017 to $400,000 in 2018.
6. Objectives for BrandingTo make Y brand of bottled beer the preferred brand of 21-28 year old females in North America by February 2017.
Marketing Plan Elements
Marketing Strategy
Product Distribution
Price
Marketing Mix
Business Mission Statement
Situation or SWOT Analysis
Objectives
Target Market Strategy
ImplementationEvaluation
Control
Promotion
Describing the Target Market
Discuss target market strategies.
Vals Study
Marketing Strategy
Marketing Strategy- The activitiesof selecting and describing one or
more target markets and developingand maintaining a market mix thatwill produce mutually satisfyingexchanges with target markets.
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
Target Market Strategy
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
The Concept of Market Segmentation
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
• Benefitssought
• Former• Potential• 1st time• Light or
irregular• Medium• Heavy
Family Life Cycle
Segmentation ExampleMacy’s Department store: classified into five groups based upon demographics, values, and attitudes. For Example:
1. Fashion Statement-most affluent and educated, use credit cards, expect to be treated well by retail personnel.
2. Wanna-Buys –similar to a fashion statement but with less income. Enjoy buying on
impulse.
Segmentation Example3. Family Values – represent large families, often are professionals, buying focuses on children or the home
4. Down to Basics – Most likely to have children, not college educated, careful spenders, prefer not to use credit, like coupons.
5. Matriarchs- older often retired, they like department stores but are risk adverse
and have few purchase plans.
Who’s Who?
1.Fashion Statement2.Family Values3. Wanna Buy’s4. Matriarch5.Down-to-Basics
Who’s Who?
Wanna Buy’s
Down-to-BasicsMatriach
Fashion Statement
Family Values
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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.
How do we Understand the Pet Owner’s Attitudes?How do we Understand the Pet Owner’s Attitudes?
There are distinct segments of pet owners and they all shop in your stores: 7Practical 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
Basic Food FeedersPet 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
Healthy Habitualists
Look for something easy and nutritious.
Very brand loyal Not as worried about taste
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
Marketing Plan Elements
Marketing Strategy
Product Distribution
Price
Marketing Mix
Business Mission Statement
Situation or SWOT Analysis
Objectives
Target Market Strategy
ImplementationEvaluation
Control
Promotion
Strategic Directions
Identify strategic alternatives.
Competitive Advantage
Niche StrategiesNiche Strategies
CostCost
Product/Service Differentiation
Product/Service Differentiation
Types of Types of Competitive Competitive AdvantageAdvantage
Types of Types of Competitive Competitive AdvantageAdvantage
Cost Competitive Advantage
Cost Competitive Advantage- Being thelow-cost competitor in an industry
while maintaining satisfactoryprofit margins.
Examples:Obtain inexpensive raw materialsDesign products for ease of manufactureControl overhead costs
Product differentiation
• Brand Names –Lexus• Product Reliability -Maytag• Strong Dealer Network -
Harley Davidson • Service -Fed Ex• Image –
Neiman Marcus• Product Innovation - -Nike
Niche 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:
Party Pastry’s Cupcakes
Fleet Feet
Fro Yo
SETTING STRATEGIC DIRECTIONSWHERE DO WE WANT TO GO?
Business Portfolio Analysis (BCG) Boston Consulting Group
Mar
ket
Gro
wth
Rat
e
Stars
Cash Cows Dogs
Question Marks
Relative Market Share
High
High Low
Low
BCG business portfolio analysis for Kodak’s consumer SBUs for 2003 (solid circle) and 2011 (hollow circle)
Kodak digitalphoto printer
Kodak digitalpicture frame
① ④
③
Kodak film sales: US,Canada, & W. Europe
Kodak digitalcamera
②
BCG Portfolio MatrixBoston Consulting Group
StarsNotebooks
Cash CowsLaptops/Personal computer
ProblemChildren/Question
MarksPalm Pilots
DogsMainframe computer
Computer Example
Assignment
• Select a partner• Select a business 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
Strategic AlternativesMarket
Penetration
MarketDevelopment
Product Development
Diversification
Increase market share among existing customersMcDonalds: Beanie Babies
Attract new customers to existing productsCoke in India 850/350
Introduce new products into new marketsSony-Columbia pictures
Create new products for present marketsTaco Bell Fresco Style
Ansoff’s Strategic Opportunity Matrix
Present Product New Product
New Market
Market PenetrationMcDonalds sells
More happy mealsWith Disney promo
MarketDevelopmentMcDonalds opens
Restaurants in China
ProductDevelopment
McDonalds introducesSalads and McWater
Diversification
McDonalds introducesLine of children’s
clothing
Present Market
Online
Strategic Alternatives
Identify strategic alternativesIdentify strategic alternatives
Diversification =
Product development = products
Market development = customers
Market penetration = share
new products +new markets
Portfolio Matrix Strategies
Build
Hold
Harvest
Divest
Pringles
Bisquick/GeneralMills
Lever Brothers/Lifebuoy
Marketing Plan Elements
Marketing Strategy
Product Distribution
Price
Marketing Mix
Business Mission Statement
Situation or SWOT Analysis
Objectives
Target Market Strategy
ImplementationEvaluation
Control
Promotion
Marketing Mix: The “Four Ps”
Price
Promotion
Place
Product
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
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
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
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 weapon
Price x Units Sold = Total Revenue
The elements of the marketing mix must be blended to produce a cohesive marketing program
Following Up the Marketing Plan
• Implementation
• Evaluation
• Control
• Marketing audit is…• Comprehensive• Systematic• Independent• Periodic
Product PlacePromotionPrice
Product PlacePromotionPrice
Met objectives?
Met objectives?
Implementation Evaluation
Audits• comprehensive• systematic• independent• periodic
Audits• comprehensive• systematic• independent• periodic
Implementation, Evaluation, and Control
Techniques for Effective Strategic Planning
Effective Strategic Planning
Effective Strategic Planning
Continualattention
Continualattention CreativityCreativity Management
commitment
Managementcommitment