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Learning Outcomes
Copyright 2010 by Cengage Learning Inc. All Rights Reserved
1
Describe four marketing management philosophies
Define the term marketing
Discuss the differences between sales and market orientations
Describe several reasons for studying marketing
LO1
LO2
LO3
LO4
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Chapter 2: Strategic Planning for Competitive Advantage
Prepared by Amit Shah, Frostburg State University
Designed by Eric Brengle, B-books, Ltd.
Copyright 2010 by Cengage Learning Inc. All Rights Reserved 2
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Understand the importance of strategic marketing and know a basic outline for a marketing plan
Develop an appropriate business mission statement
Explain the components of a situation analysis
LO1
LO2
LO3
Learning Outcomes
Copyright 2010 by Cengage Learning Inc. All Rights Reserved
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Learning Outcomes
4
Explain the criteria for stating good marketing objectives
Identify sources of competitive advantage
Identify strategic alternatives
Discuss target market strategies
LO4
LO5
LO6
LO7
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The Importance of Strategic Marketing
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LO1
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
Copyright 2010 by Cengage Learning Inc. All Rights Reserved
GE, Toys R Us, McDonalds
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Strategic Marketing Management
THE ANSWER IS A MARKETING PLAN.
What is the organization’s main activity?
How will it reach its goals?
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Marketing Planning
Marketing Plan- A written documentthat acts as a guidebook for the
marketing manager.
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Building a marketing plan is more than just meeting and knocking around ideas
haphazardly…
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And it’s DEFINITELY more than adopting a strategy just because “all of a sudden” you
decided it seemed like a good idea…
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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)
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Marketing Plan Elements
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Marketing Strategy
Product Distribution
Price
Marketing Mix
Business Mission Statement
Situation or SWOT Analysis
Objectives
Target Market Strategy
ImplementationEvaluation
Control
Promotion
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Business Mission Statement
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LO2
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
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Star Trek EnterpriseWhy is a mission statement important?
LO1
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Southwest Airlines Mission Statement
SOURCE: http://www.southwestairlines.com/about_swa/mission.html
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AMA’s Mission Statement
Samples
Find a sample to shareParkway Mission statement
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• 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
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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)
TODAY’S ORGANIZATIONS ORGANIZATIONAL STRUCTURE AND STRATEGIES
LO2
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Marketing Plan Elements
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Marketing Strategy
Product Distribution
Price
Marketing Mix
Business Mission Statement
Situation or SWOT Analysis
Objectives
Target Market Strategy
ImplementationEvaluation
Control
Promotion
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Conducting a Situation Analysis
LO3
SWOT Analysis- Identifying internalstrengths and weaknesses and also
examining externalopportunities and threats.
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SWOT Analysis
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©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
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THE STRATEGIC MARKETING PROCESSTHE PLANNING PHASE
Weaknesses
Strengths
Threats
Opportunities
LO4
• Situation Analysis
• SWOT Analysis
Step 1: Situation (SWOT) Analysis
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THE STRATEGIC MARKETING PROCESSTHE PLANNING PHASE
Analyze Competitors
Identify Industry Trends
Research Present and Prospective Customers
Assess the Organization
LO4
• SWOT Analysis Study
Step 1: Situation (SWOT) Analysis
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Ben & Jerry’s SWOT analysis serves as the basis for management actions regarding growth
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Components of a Situation Analysis
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LO3
production costs
marketing skills
financial resources
image
technology
Strengths
Weaknesses
INT
ER
NA
LIN
TE
RN
AL
EN
VIR
ON
ME
NT
EN
VIR
ON
ME
NT
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Marketing Objective
A statement of what is
to be accomplished
through marketing activities.
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Marketing Objectives
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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.”
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Criteria for Good Marketing Objectives
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LO4
Realistic, 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
Copyright 2010 by Cengage Learning Inc. All Rights Reserved
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Marketing Plan Elements
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Marketing Strategy
Product Distribution
Price
Marketing Mix
Business Mission Statement
Situation or SWOT Analysis
Objectives
Target Market Strategy
ImplementationEvaluation
Control
Promotion
Copyright 2010 by Cengage Learning Inc. All Rights Reserved
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Describing the Target Market
Discuss target market strategies.
LO7
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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.
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Target Market Strategy
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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
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Strategic Directions
Identify strategic alternatives.
LO6
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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
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Cost Competitive Advantage
Cost Competitive Advantage- Being thelow-cost competitor in an industry
while maintaining satisfactoryprofit margins.
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Examples:Obtain inexpensive raw materialsDesign products for ease of manufactureControl overhead costs
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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:
Sensodyne/Polident/Poligrip
Orvis—fishing company
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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
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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 marketsJoseph A. Banks Suits
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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 premium water
Diversification
McDonalds introducesLine of children’s
clothing
Present Market
Online
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Four alternative market-product strategies for Ben & Jerry’s to expand sales revenues using diversification analysis
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Strategic Alternatives
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LO6
Identify strategic alternativesIdentify strategic alternatives
Diversification =
Product development = products
Market development = customers
Market penetration = share
new products +new markets
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SETTING STRATEGIC DIRECTIONSWHERE DO WE WANT TO GO?
LO3
Business Portfolio Analysis (BCG)
Mar
ket
Gro
wth
Rat
e
Stars
Cash Cows Dogs
Question Marks
Relative Market Share
High
High Low
Low
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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
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BCG Portfolio Matrix
StarsHandheld/Computers
Cash CowsLaptops/Personal computer
ProblemChildren/Question
MarksPalm Pilots
DogsMainframe computer
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Portfolio Matrix Strategies
Build
Hold
Harvest
Divest
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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
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Segmentation ExampleFemale Department Shoppers 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.
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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.
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Who’s Who?
1.Fashion Statement,2.Family Values,3. Wanna Buy’s,4. Matriach5.Down-to-Basics
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Who’s Who?
Wanna Buy’s
Down-to-BasicsMatriach
Fashion Statement
Family Values
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Marketing Plan Elements
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Marketing Strategy
Product Distribution
Price
Marketing Mix
Business Mission Statement
Situation or SWOT Analysis
Objectives
Target Market Strategy
ImplementationEvaluation
Control
Promotion
Copyright 2010 by Cengage Learning Inc. All Rights Reserved
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Marketing Mix: The “Four Ps”
Price
Promotion
Place
Product
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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
Product
Products can be… Tangible goods Ideas Services
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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
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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
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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 Ps”-- quickest to change
Competitive weapon
Price x Units Sold = Total Revenue
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The elements of the marketing mix must be blended to produce a cohesive marketing program
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LO10
Techniques for Effective Strategic Planning
Effective Strategic Planning
Effective Strategic Planning
Continualattention
Continualattention CreativityCreativity Management
commitment
Managementcommitment
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Page 58
Following Up the Marketing Plan
• Implementation
• Evaluation
• Control
• Marketing audit is…• Comprehensive• Systematic• Independent• Periodic
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LO9
Product PlacePromotionPrice
Product PlacePromotionPrice
Met objectives?
Met objectives?
Implementation Evaluation
Audits• comprehensive• systematic• independent• periodic
Audits• comprehensive• systematic• independent• periodic
Implementation, Evaluation, and Control
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