Strategic Planning for

Competitive Advantage

Chapter 2

Chapter 2 Marketing 7e Lamb Hair McDaniel 1

©2004 South-Western/Thomson Learning
 Learning 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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©2004 South-Western/Thomson Learning
 Learning Objectives (continued)

4. Explain the components of a situation

analysis.
5. Identify sources of competitive advantage.
6. Identify strategic alternatives and describe
tools used to help select alternatives.

7. Discuss target market strategies.

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©2004 South-Western/Thomson Learning
 Learning Objectives (continued)

8. Describe 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 possible.

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1 On Line
Learning Objective
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http://www.vuitton.com
http://www.katespade.com

Understand the
importance of
strategic marketing
and know
a basic outline for a
marketing plan.

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1 Strategic Planning
On Line
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http://www.pepsi.com
The managerial process of
creating and maintaining a
fit between the
organization’s objectives
and resources and evolving
market opportunities.

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©2004 South-Western/Thomson Learning
1 Strategic Planning

LONG RUN
EVOLVING PROFITABILITY
MARKET AND GROWTH
OPPORTUNITIES

RESOURCES
&
OBJECTIVES

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1 Strategic Marketing Planning

▪ What is the organization’s main activity?

▪ How will it reach its goals?

The Marketing Plan

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1 Planning

The process of anticipating

future events and
determining strategies to
achieve organizational
objectives in the future.

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1 The Marketing Plan

A written document that

acts as a guidebook of
marketing activities for the
marketing manager.

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1 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
g
t in
✔ Allows entry into the r ke n
Ma Pla
marketplace with awareness

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 Business Mission Marketing Plan
1 Statement
Process
On Line
http://www.dmusic.com Objectives

Situation or SWOT
Analysis

Marketing Strategy

Target Market
Strategy

Marketing Mix
Product Distribution

Promotion Price

Implementation
Evaluation
Control
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©2004 South-Western/Thomson Learning
2 Learning Objective

Develop an
appropriate
business mission
statement.

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2 Defining the Business Mission
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▪ 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
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2 AMA’s Mission Statement

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2 PepsiCo’s Mission Statement

“PepsiCo’s overall mission is to increase the value of our

shareholders’ investment. We do this through sales
growth, cost controls and wise investment of resources.
We believe our commercial success depends upon
offering quality and value to our consumers and
customers; providing products that are safe, wholesome,
economically efficient and environmentally sound; and
providing a fair return to our investors while adhering to
the highest standards of integrity.”

http:\\www.pepsico.com

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 "The mission of The Walt Disney
Company is to be one of the world's
leading producers and providers of
entertainment and information.
Using our portfolio of brands to
differentiate our content, services
and consumer products, we seek to
develop the most creative,
innovative and profitable
entertainment experiences and
related products in the world

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©2004 South-Western/Thomson Learning
2 Strategic Business Units (SBUs)

Characteristics

1. A distinct mission and specific target

market
2. Control over their resources
3. Their own competitors
4. Plans independent of other SBUs

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3 Learning Objective

Describe the criteria

for stating good
marketing objectives.

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3 Marketing Objective

A statement of what is to be
accomplished through
marketing activities.

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3 Marketing Objectives

Marketing Objectives Must Be:

▪ Realistic
“Our objective is to
▪ Measurable increase market share
by 40% and to obtain
▪ Time specific customer satisfaction
ratings of at least 90%
▪ Consistent with in 2003.”
Organization’s
Priorities

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3 Examples of Marketing Objectives

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3 Marketing Plan Objectives

◆ Communicate marketing
management philosophies
◆ Provide direction
◆ Serve as motivators
◆ Clarify thinking
◆ Provide basis for control

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4 Learning Objective

Explain the
components
of a situation
analysis.

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©2004 South-Western/Thomson Learning
4 SWOT Analysis

Identifying
internal strengths (S)
and weaknesses (W)
and also examining
external opportunities (O)
and threats (T)

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4 SWOT Analysis

S Things the company does well.

Internal

W Things the company does not do well.

O Conditions in the external environment

that favor strengths.
External
Conditions in the external environment
T that do not relate to existing strengths
or favor areasCollege
©South-Western of current
Publishing weakness.
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©2004 South-Western/Thomson Learning
4 SWOT Analysis

◆ Production Costs
Strengths
and ◆ Marketing Skills
Weaknesses ◆ Employee Capabilities
INTERNAL
◆ Financial Resources
◆ Available Technology
◆ Company/Brand Image

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4 SWOT Analysis

◆Social
Opportunities
And ◆Demographic
Threats ◆Economic
EXTERNAL
◆Technological

◆Political/Legal

◆Competitive

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4 Environmental Scanning

Collection and interpretation of

information about forces,
events and relationships in the
external environment that may
affect the future of the
organization or the marketing
plan implementation.

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©2004 South-Western/Thomson Learning
4 Environmental Scanning

◆ Examination of macroenvironmental forces

◆ Social
◆ Demographic
◆ Economic
◆ Technological
◆ Political / Legal
◆ Competitive

◆ Helps identify market

opportunities
◆ Provides guidelines for
design of marketing strategy

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5 Learning Objective

Identify sources of
competitive
advantage

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5 Competitive 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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5 Competitive Advantage

Cost

Types of
Product/Service
Competitive Differentiation
Advantage

Niche Strategies

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5 Cost Competitive Advantage

Being the low-cost competitor

in an industry while
maintaining satisfactory
profit margins.

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5 Cost Competitive Advantage

▪ Obtain inexpensive raw materials

▪ Create efficient operations
▪ Design products for manufacture
▪ Control overhead costs
▪ Avoid marginal customers

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5 Sources of Cost Reduction

Experience Curves Product Design

Efficient Labor Reengineering

No-frills Products Production Innovations

Government Subsidies New Delivery Methods

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5 Product/Service Differentiation

Advantage achieved when a

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

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 Examples of
5
Product/Service Differentiation

▪ Brand names
▪ Strong dealer network
▪ Product reliability
▪ Image
▪ Service

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 Dell’s Competitive advantage

▪ High performance products

▪ Efficient and flexible manufacturing
Operation
▪ Direct relationship marketing
concept: "With an average of
approximately 1,400 telephone calls

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 ▪ Tailoring its product offerings and
communication programs to meet its
customer's needs.

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 Niche
5
Competitive Advantage

Advantage achieved when a

firm seeks to target and
effectively serve a small
segment of the market.

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5 Niche 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

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 Sustainable
5
Competitive Advantage

An advantage
that cannot be copied
by the competition.

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 Sources of Sustainable
5
Competitive Advantage
Patents

Copyrights

Locations

Equipment

Organizatio Technology
n’s
Skills and Customer Service
Assets Promotion
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6 Learning Objective

Identify strategic
alternatives and
describe tools used
to help select
alternatives.

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©2004 South-Western/Thomson Learning
6 Strategic Alternatives

Market Increase market share among

Penetration existing customers

Market Attract new customers to

Development existing products

Product Create new products for

Development present markets

Diversification Introduce new products

into new markets

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6 Strategic Opportunity Matrix
On Line
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Present Product New Product

Present Market Product

Market
Penetration Development

New Market Diversification

Market Development

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6 Selecting a Strategic Alternative

Common Tools Philosophy

Profitability
Portfolio Matrix

$ Market Share

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6 Portfolio Matrix

Tools for allocating resources

among products or strategic
business units on the basis of
relative market share and
market growth rate.
?
$

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6 BCG Portfolio Matrix

MARKET SHARE DOMINANCE

MARKET GROWTH RATE HIGH LOW

HIGH
?
$
LOW

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6 BCG Portfolio Matrix

MARKET SHARE DOMINANCE

HIGH LOW
MARKET GROWTH RATE

High growth High growth

HIGH

Market leaders Low market share

Require cash Need cash
Large profits Poor profit margins

$
LOW

Low growth Low growth

High market share Low market share
High cash flow Minimal cash flow
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6 BCG Portfolio Matrix Example

MARKET SHARE DOMINANCE

HIGH LOW
MARKET GROWTH RATE

Sub-Notebook Integrated
HIGH

s phone/Palm
and Hand-Held devices
Computer PROBLEM
STAR CHILD
Laptop and Mainframe
Personal Computer
LOW

Computers
CASH
COW DOG
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6 Strategies for Resource Allocation

Provide financial resources if SBU (Problem

Build Child) has potential to be a Star.

Preserve market share if SBU is a successful

Hold Cash Cow. Use cash flow for other SBUs.

Increase short-term cash return.

Harvest Appropriate for all SBUs except Stars.

Get rid of SBUs with low shares in

Divest low-growth markets.

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7 Learning Objective

Discuss target
market strategies.

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7 Marketing 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.

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©2004 South-Western/Thomson Learning
7 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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7 Target Market Selections

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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7 Target Market Strategy

Develop a marketing mix that will

produce satisfying exchanges with
target markets

Product
Place
Promotion
Price

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©2004 South-Western/Thomson Learning
8 Learning Objective

Describe elements of
the marketing mix.

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©2004 South-Western/Thomson Learning
8 The Marketing Mix

A unique blend of product,

distribution, promotion, and
pricing strategies designed to
produce mutually satisfying
exchanges with a target
market.

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8 Marketing Mix: The “Four Ps”

Price

Promotion

Place

Product

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8 Product Strategies

▪ The starting point of

the “4 Ps”

Product ▪ Includes physical unit,

package, warranty,
service, brand, image,
and value

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8 Distribution (Place) Strategies

▪ Product availability
where and when
customers want them.
Place
▪ Involves all activities
from raw materials to
finished products

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8 Promotion Strategies
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▪ Role is to bring about
exchanges with target
markets
Promotion
▪ Includes integration of
personal selling,
advertising, sales
promotion, and public
relations

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8 Pricing Strategies

▪ The most flexible of

the “4 Ps”
Price
▪ Price X Units Sold =
Total Revenue

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9 Learning Objective
On Line
http://www.youngbiz.com

Explain why
implementation,
evaluation, and
control of the
marketing plan
are necessary.

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9 Following Up the Marketing Plan

◆ Implementation

◆ Evaluation
◆ Control
◆ Marketing Audit
▪Comprehensive
▪Systematic
▪Independent
▪Periodic

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9 The Marketing Audit

A thorough, systematic,
periodic evaluation of the
goals, strategies, structure,
and performance of the
marketing organization.

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©2004 South-Western/Thomson Learning
1
Learning Objective
0

Identify several
techniques that help
make strategic
planning effective.

Chapter 2 Marketing 7e Lamb Hair McDaniel 69

©2004 South-Western/Thomson Learning
1
Effective Strategic Planning
0

Continual
Attention
Requirements
for Effective
Creativity
Strategic
Planning
Management
Commitment

Chapter 2 Marketing 7e Lamb Hair McDaniel 70

©2004 South-Western/Thomson Learning