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1Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Prepared byPrepared byDeborah BakerDeborah Baker
Texas Christian UniversityTexas Christian University
2
Strategic Planning for Strategic Planning for
Competitive Competitive AdvantageAdvantage
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2Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Learning ObjectivesLearning Objectives
1. Understand the importance of strategic marketing and know a basic outline for a marketing plan
2. Develop an appropriate business mission statement
3. Describe the criteria for stating good marketing objectives
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3Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Learning Objectives (continued)Learning Objectives (continued)
4. Explain the components of a situation analysis
5. Identify sources of competitive advantage
6. Identify strategic alternatives
7. Discuss target market strategies
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4Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Learning Objectives (continued)Learning Objectives (continued)
8. Describe the elements of the marketing mix
9. Explain why implementation, evaluation, and control of the marketing plan are necessary
10. Identify several techniques that help make strategic planning effective
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5Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Learning Objective Learning Objective
Understand the importance of strategic marketing and know a basic outline for a marketing plan
On Linehttp://www.in-n-out.comhttp://www.mcdonalds.comhttp://www.burgerking.com
11
1
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6Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Strategic PlanningStrategic Planning
Strategic Planning
The managerial process of creating and
maintaining a fit between the
organization’s objectives and resources
and evolving market opportunities.
On Linehttp://www.coke.comhttp://www.pepsi.com
1
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7Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Strategic PlanningStrategic Planning
RESOURCES &
OBJECTIVES
EVOLVING MARKET
OPPORTUNITIES
LONG RUN LONG RUN PROFITABILITY PROFITABILITY AND GROWTHAND GROWTH
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What is the organization’s main activity?
How will it reach its goals?
What is the organization’s main activity?
How will it reach its goals?
Strategic Marketing PlanningStrategic Marketing Planning
The Marketing PlanThe Marketing PlanThe Marketing PlanThe Marketing Plan
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9Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
PlanningPlanning
PlanningPlanning
The process of anticipating future events
and determining strategies to achieve
organizational objectives in the future.
1
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10Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
The Marketing PlanThe Marketing Plan
Marketing PlanMarketing Plan
A written document that acts as a
guidebook of marketing activities
for the marketing manager.
1
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Why Write a Marketing Plan?Why Write a Marketing Plan?
Provides a basis for comparison of actual and expected performance
Provides clearly stated activities to work toward common goals
Serves as a reference for the success of future activities
Allows entry into the marketplace with awareness
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Marketing Plan Marketing Plan ElementsElements
On Linehttp://www.dmusic.com
Marketing Strategy
Product
Promotion
Distribution
Price
Marketing Mix
Business Mission Statement
Objectives
Situation or SWOT Analysis
ImplementationEvaluation
Control
Target Market Strategy
1
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13Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Review Learning Objective 1Review Learning Objective 1
On Linehttp://att.com
1
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
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Learning Objective Learning Objective
2
Develop an appropriate business mission statement22
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Defining the Business MissionDefining the Business Mission
Answers the question, “What business are we in and where are we going?”
Focuses on the market(s) rather than the good or service
Strategic Business Units may also have a mission statement
2
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AMA’s Mission StatementAMA’s Mission Statement
2
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Strategic Business Units (SBUs)Strategic Business Units (SBUs)
1. A distinct mission and specific target market
2. Control over their resources
3. Their own competitors
4. Plans independent of other SBUs
CharacteristicsCharacteristics
2
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Review Learning Objective 2Review Learning Objective 2
2
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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Learning Objective Learning Objective
Describe the criteria for stating good marketing objectives
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20Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Marketing ObjectiveMarketing Objective
Marketing ObjectiveMarketing Objective
A statement of what is to be
accomplished through
marketing activities.
3
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Marketing ObjectivesMarketing Objectives
3
Marketing Objectives Must Be:Marketing Objectives Must Be:
Realistic
Measurable
Time specific
Consistent with and indicate the organization’s priorities
“Our objective is to achieve 10 percent dollar
market share in the specialty pet food market
within 12 months of product introduction.”
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Examples of Marketing ObjectivesExamples of Marketing Objectives
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Review Learning Objective 3Review Learning Objective 3
3
Clear and specific objectives:Clear and specific objectives:Clear and specific objectives:Clear and specific objectives:
1. Communicate marketing management philosophy1. Communicate marketing management philosophy
2. Provide management direction2. Provide management direction
3. Motivate employees3. Motivate employees
4. Force executives to think clearly4. Force executives to think clearly
5. Allow for better evaluation of results5. Allow for better evaluation of results
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24Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Learning Objective Learning Objective
Explain the components of a situation analysis
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25Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
SWOT AnalysisSWOT Analysis
SWOT AnalysisSWOT Analysis
Identifying internal strengths (S)
and weaknesses (W)
and also examining
external opportunities (O)
and threats (T)
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26Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
SWOT AnalysisSWOT Analysis
©South-Western College Publishing
SS
WW
OO
TT
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
4
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Environmental ScanningEnvironmental Scanning
Environmental ScanningEnvironmental ScanningThe 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.
4
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Review Learning Objective 4Review Learning Objective 4
4
production costs
marketing skills
financial resources
image
technology
Strengths
Weaknesses
INT
ER
NA
LIN
TE
RN
AL
OP
PO
RT
UN
ITIE
SO
PP
OR
TU
NIT
IES
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Review Learning Objective 4Review Learning Objective 4
4
social
demographic
economic
technological
political/legal
competitive
Opportunities
Threats
EX
TE
RN
AL
E
XT
ER
NA
L
EN
VIR
ON
ME
NT
EN
VIR
ON
ME
NT
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30Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Learning Objective Learning Objective
Identify sources of competitive advantage
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Competitive AdvantageCompetitive Advantage
Competitive AdvantageCompetitive Advantage
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.
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Competitive AdvantageCompetitive 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
On Linehttp://www.travelocity.comhttp://www.expedia.com
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Cost Competitive AdvantageCost Competitive Advantage
Cost Competitive AdvantageCost Competitive Advantage
Being the low-cost competitor
in an industry while maintaining
satisfactory profit margins.
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34Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Obtain inexpensive raw materials
Create efficient operations
Design products for ease of manufacture
Control overhead costs
Avoid marginal customers
Obtain inexpensive raw materials
Create efficient operations
Design products for ease of manufacture
Control overhead costs
Avoid marginal customers
Cost Competitive AdvantageCost Competitive Advantage
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35Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Sources of Cost ReductionSources 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
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Product/Service DifferentiationProduct/Service Differentiation
Product/Service Differentiation Product/Service Differentiation
Competitive AdvantageCompetitive Advantage
Advantage achieved when a firm
provides something that is unique
and valuable to buyers beyond simply
offering a lower price than the competition.
5
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Examples of Examples of Product/Service DifferentiationProduct/Service Differentiation
Brand names
Strong dealer network
Product reliability
Image
Service
5
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Niche Competitive AdvantageNiche Competitive Advantage
Niche Competitive AdvantageNiche Competitive Advantage
Advantage achieved when a firm
seeks to target and effectively serve a
small segment of the market.
5
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Niche Competitive AdvantageNiche Competitive Advantage
Used by small companies with limited resources
May be used in a limited geographic market
Product line may be focused on a specific product line
5
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40Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
SustainableSustainableCompetitive AdvantageCompetitive Advantage
Sustainable Competitive AdvantageSustainable Competitive Advantage
An advantage that cannot be copied
by the competition.
5
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41Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Sources of Sustainable Sources of Sustainable Competitive AdvantageCompetitive Advantage
PatentsPatents
CopyrightsCopyrights
LocationsLocations
EquipmentEquipment
TechnologyTechnology
Customer ServiceCustomer Service
PromotionPromotion
Organization’sOrganization’s Skills and Assets Skills and Assets
Organization’sOrganization’s Skills and Assets Skills and Assets
5
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42Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Review Learning Objective 5Review Learning Objective 5
5
Sources ofSources ofCompetitive AdvantageCompetitive Advantage
Sources ofSources ofCompetitive AdvantageCompetitive Advantage
Cost$
Cost$
Product/ServiceDifferentiationA vs. B vs. C
Product/ServiceDifferentiationA vs. B vs. C
NicheStrategies
NicheStrategies
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Learning Objective Learning Objective
Identify strategic alternatives
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44Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Strategic AlternativesStrategic Alternatives
MarketPenetration
MarketPenetration
MarketDevelopment
MarketDevelopment
Product Development
Product Development
DiversificationDiversification
Increase market share among existing customers
Attract new customers to existing products
Introduce new products into new markets
Create new products for present markets
6
Video Click!
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45Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Ansoff’s Strategic Opportunity Ansoff’s Strategic Opportunity MatrixMatrix
Present Product New Product
New Market
MarketPenetration
MarketDevelopment
ProductDevelopment
Diversification
Present Market
On Linehttp://www.pg.com
6
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Selecting a Strategic AlternativeSelecting a Strategic Alternative
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Profitability
PhilosophiesPhilosophiesPhilosophiesPhilosophies
Market Share
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Review Learning Objective 6Review Learning Objective 6
6
Identify strategic alternativesIdentify strategic alternatives
Diversification =
Product development = products
Market development = customers
Market penetration = share
new productsnew markets
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48Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Learning Objective Learning Objective
Discuss target market strategies
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49Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Marketing StrategyMarketing 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.
Marketing StrategyMarketing Strategy
7
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50Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Target Market StrategyTarget 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
7
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Appeal to the entire market with one marketing mix
Appeal to the entire market with one marketing mix
Target Market StrategiesTarget Market Strategies
Concentrate on one marketing segment
Concentrate on one marketing segment
Appeal to multiple marketswith multiple marketing mixes
Appeal to multiple marketswith multiple marketing mixes
7
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52Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Review Learning Objective 7Review Learning Objective 7
Entire Market
Single Market
Multiple Markets
7
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53Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Learning Objective Learning Objective
Describe elements of the marketing mix
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54Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Marketing MixMarketing Mix
A unique blend of product, distribution,
promotion, and pricing strategies
designed to produce mutually satisfying
exchanges with a target market.
The Marketing MixThe Marketing Mix
8
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55Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Marketing Mix: The “Four Ps”Marketing Mix: The “Four Ps”
PricePrice
PromotionPromotion
PlacePlace
ProductProduct
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56Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Product StrategiesProduct Strategies
The starting point of the “4 Ps”
Includes physical unit, package, warranty, service, brand, image, and value
ProductProduct
8
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Distribution (Place) StrategiesDistribution (Place) Strategies
PlacePlace
Product availability where and when customers want them.
Involves all activities from raw materials to finished products
8
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58Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Chapter 2
Promotion StrategiesPromotion Strategies
PromotionPromotion Role is to bring about
exchanges with target markets
Includes integration of personal selling, advertising, sales promotion, and public relations
On Linehttp://www.paramount.comhttp://www.warnerbros.comhttp://www.universalstudios.com
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Pricing StrategiesPricing Strategies
The most flexible of the “4 Ps”-- quickest to change
Competitive weapon
Price x Units Sold = Total Revenue
PricePrice
8
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Learning Objective Learning Objective
Explain why implementation, evaluation, and control of the marketing plan are necessary
On Linehttp://www.youngbiz.com
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99
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Following Up the Marketing PlanFollowing Up the Marketing Plan
Implementation
Evaluation
Control Marketing Audit is…
Comprehensive Systematic Independent Periodic
9
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Review Learning Objective 9Review Learning Objective 9
9
Product PlacePromotionPrice
Product PlacePromotionPrice
Met objectives?Met objectives?
Implementation Evaluation
Audits• comprehensive• systematic• independent• periodic
Audits• comprehensive• systematic• independent• periodic
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Learning Objective Learning Objective
Identify several techniques that help make strategic planning effective
10
1010
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Effective Strategic PlanningEffective Strategic Planning
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Effective Strategic Planning
Effective Strategic Planning
Continualattention
Continualattention CreativityCreativity Management
commitment
Managementcommitment