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1. Strategic Planning for Competitive Advantage CHAPTER 2 Marketing 10 Lamb, Hair, McDaniel Designed by Prepared by Eric Brengle Amit Shah B-books, Ltd. Frostburg State…
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  • 1. Strategic Planning for Competitive Advantage CHAPTER 2 Marketing 10 Lamb, Hair, McDaniel Designed by Prepared by Eric Brengle Amit Shah B-books, Ltd. Frostburg State University Copyright ©2009 by Cengage Learning Inc. All rights reserved 1
  • 2. Learning Outcomes Understand the importance of strategic marketing LOI and know a basic outline for a marketing plan Develop an appropriate business LO2 mission statement Explain the components of a situation analysis LO3 Copyright ©2009 by Cengage Learning Inc. All rights reserved 2
  • 3. Learning Outcomes LO4 Explain the criteria for stating good marketing objectives LO5 Identify sources of competitive advantage LO6 Identify strategic alternatives LO7 Discuss target market strategies Copyright ©2009 by Cengage Learning Inc. All rights reserved 3
  • 4. Learning Outcomes LO8 Describe the elements of the marketing mix Explain why implementation, evaluation, and LO9 control of the marketing plan are necessary Identify several techniques that help make LOIO strategic planning effective Copyright ©2009 by Cengage Learning Inc. All rights reserved 4
  • 5. LOI The Nature of Strategic Planning Understand the importance of strategic marketing and know a basic outline for a marketing plan Copyright ©2009 by Cengage Learning Inc. All rights reserved 5
  • 6. LOI Strategic Planning Strategic Strategic Planning Planning The managerial process of creating and maintaining a fit between the organization’s objectives and resources and evolving market opportunities. The goal is long-term profitability and growth. Copyright ©2009 by Cengage Learning Inc. All rights reserved 6
  • 7. Strategic Marketing Management What is the organization’s main activity? How will it reach its goals? THE ANSWER IS A MARKETING PLAN. LOI 7 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  • 8. LOI Marketing Planning Marketing Plan Marketing Plan A written document that acts as a guidebook of marketing activities for the marketing manager. Copyright ©2009 by Cengage Learning Inc. All rights reserved 8
  • 9. 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 Provides an examination of the marketing environment Allows entry into the marketplace with awareness LOI Copyright ©2009 by Cengage Learning Inc. All rights reserved 9
  • 10. Marketing Plan Elements Business Mission Statement Objectives Situation or SWOT Analysis Marketing Strategy Target Market Strategy Marketing Mix Product Distribution Promotion Price Implementation Evaluation Control LOI Copyright ©2009 by Cengage Learning Inc. All rights reserved 10
  • 11. LOI REVIEW LEARNING OUTCOME The Importance of Strategic Marketing What What Strategic Planning Strategic Planning Long-term profitability Long-term profitability Why Why and growth and growth How How Write a marketing plan Write a marketing plan Copyright ©2009 by Cengage Learning Inc. All rights reserved 11
  • 12. LO2 Defining the Business Mission Develop an appropriate business mission statement Copyright ©2009 by Cengage Learning Inc. All rights reserved 12
  • 13. LO2 Defining the Business Mission • 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 13 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  • 14. Southwest Airlines Mission Statement SOURCE: http://www.southwestairlines.com/about_swa/mission LO2 14 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  • 15. Strategic Business Units LO2 (SBUs) Characteristics: [SBU HAS…] • A distinct mission and specific target market • Control over its resources • Its own competitors • Plans independent of other SBUs 15 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  • 16. LO2 REVIEW LEARNING OUTCOME Business Mission Statement Q: What business are we in? A: Business mission statement Too narrow marketing myopia Too broad no direction Just right focus on markets served and benefits customers seek Copyright ©2009 by Cengage Learning Inc. All rights reserved 16
  • 17. LO3 Conducting a Situation Analysis Explain the components of a situation analysis Copyright ©2009 by Cengage Learning Inc. All rights reserved 17
  • 18. LO3 Conducting a Situation Analysis SWOT Analysis Identifying SWOT Analysis internal strengths (S) and weaknesses (W) and also examining external opportunities (O) and threats (T) Copyright ©2009 by Cengage Learning Inc. All rights reserved 18
  • 19. SWOT Analysis S Internal Things the company does well. Things the company does well. W Things the company does not do well. Things the company does not do well. O External Conditions in the external environment that Conditions in the external environment that favor strengths. favor strengths. Conditions in the external environment that Conditions in the external environment that T do not relate to existing strengths or favor do not relate to existing strengths or favor areas©South-Western College Publishing areasof current weakness. of current weakness. LO3 Copyright ©2009 by Cengage Learning Inc. All rights reserved 19
  • 20. LO3 Environmental Scanning Environmental Environmental The collection and interpretation Scanning Scanning 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. Copyright ©2009 by Cengage Learning Inc. All rights reserved 20
  • 21. LO3 REVIEW LEARNING OUTCOME Components of a Situation Analysis Strengths ENVIRONMENT production costs INTERNAL marketing skills financial resources image technology Weaknesses Copyright ©2009 by Cengage Learning Inc. All rights reserved 21
  • 22. LO3 REVIEW LEARNING OUTCOME Components of a Situation Analysis Opportunities social ENVIRONMENT EXTERNAL demographic economic technological political / legal competitive Threats Copyright ©2009 by Cengage Learning Inc. All rights reserved 22
  • 23. LO4 Setting Marketing Plan Objectives Explain the criteria for stating good marketing objectives Copyright ©2009 by Cengage Learning Inc. All rights reserved 23
  • 24. LO4 Marketing Objective A statement of what is to be Marketing accomplished through Objective marketing activities. Copyright ©2009 by Cengage Learning Inc. All rights reserved 24
  • 25. LO4 Marketing Objectives Realistic “Our objective is to Measurable increase sales of Purina brand cat food by 15 Time specific percent over 2009 sales of $300 million.” Compared to a benchmark 25 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  • 26. LO4 REVIEW LEARNING OUTCOME Criteria for Good Marketing Objectives Realistic, measurable, and time-specific 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 ©2009 by Cengage Learning Inc. All rights reserved 26
  • 27. LO5 Competitive Advantage Identify sources of competitive advantage Copyright ©2009 by Cengage Learning Inc. All rights reserved 27
  • 28. LO5 Competitive Advantage Competitive Competitive The set of unique features of a Advantage Advantage company and its products that are perceived by the target market as significant and superior to the competition. Copyright ©2009 by Cengage Learning Inc. All rights reserved 28
  • 29. Competitive Advantage Cost Cost Types of Types of Product/Service Product/Service Competitive Competitive Differentiation Differentiation Advantage Advantage Niche Strategies Niche Strategies LO5 29 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  • 30. LO5 Cost Competitive Advantage Cost Cost Competitive Competitive Being the low-cost competitor Advantage Advantage in an industry while maintaining satisfactory profit margins. Copyright ©2009 by Cengage Learning Inc. All rights reserved 30
  • 31. LO5 Cost Competitive Advantage Obtain inexpensive raw materials Create efficient plant operations Design products for ease of manufacture Control overhead costs Avoid marginal customers 31 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  • 32. LO5 Sources of Cost Reduction Experience Curves Experience Curves Product Design Product Design Efficient Labor Efficient Labor Reengineering Reengineering No-frills Goods and No-frills Goods and Production Innovations Production Innovations Services Services New Service New Service Government Subsidies Government Subsidies Delivery Methods Delivery Methods 32 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  • 33. LO5 Product/Service Differentiation Product //Service Product Service The provision of something Differentiation Differentiation that is unique and valuable Competitive Competitive to buyers beyond simply Advantage Advantage offering a lower price than the competition’s. Copyright ©2009 by Cengage Learning Inc. All rights reserved 33
  • 34. LO5 Examples of Product/Service Differentiation Brand names Strong dealer network Product reliability Image Service 34 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  • 35. LO5 Niche Competitive Advantage Niche Niche The advantage achieved when Competitive Competitive a firm seeks to target and Advantage Advantage effectively serve a single segment of the market. Copyright ©2009 by Cengage Learning Inc. All rights reserved 35
  • 36. LO5 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 category 36 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  • 37. LO5 Sources of Sustainable Competitive Advantage Patents Patents Copyrights Copyrights Locations Locations Equipment Equipment Technology Technology Skills and Assets Skills and Assets of an of an Customer Service Customer Service Organization Organization Promotion Promotion Copyright ©2009 by Cengage Learning Inc. All rights reserved 37
  • 38. LO5 REVIEW LEARNING OUTCOME Sources of Competitive Advantage Sources of Sources of Competitive Advantage Competitive Advantage Product/Service Product/Service Cost Cost Niche Niche Differentiation Differentiation $$ Strategies Strategies A vs. B vs. C A vs. B vs. C Copyright ©2009 by Cengage Learning Inc. All rights reserved 38
  • 39. LO6 Strategic Directions Identify strategic alternatives Copyright ©2009 by Cengage Learning Inc. All rights reserved 39
  • 40. LO6 Strategic Alternatives Market Increase market share among Penetration existing customers Market Attract new customers to Development existing products Create new products for Product Development present markets Introduce new products Diversification into new markets 40 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  • 41. Ansoff’s Strategic Opportunity Matrix Present Product New Product Present Market Product Market Penetration Development New Market Diversification Market Development LO6 Copyright ©2009 by Cengage Learning Inc. All rights reserved 41
  • 42. Portfolio Matrix Problem Stars Children Cash Cows Dogs LO6 42 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  • 43. Portfolio Matrix Strategies Build Hold Harvest Divest LO6 43 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  • 44. LO6 REVIEW LEARNING OUTCOME Strategic Alternatives Identify strategic alternatives Market development = customers Market penetration = share Product development = products new products + Diversification = new markets Copyright ©2009 by Cengage Learning Inc. All rights reserved 44
  • 45. LO7 Describing the Target Market Discuss target market strategies Copyright ©2009 by Cengage Learning Inc. All rights reserved 45
  • 46. LO7 Marketing Strategy Marketing Marketing The activities of selecting and Strategy Strategy describing one or more target markets and developing and maintaining a market mix that will produce mutually satisfying exchanges with target markets. Copyright ©2009 by Cengage Learning Inc. All rights reserved 46
  • 47. LO7 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 47 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  • 48. LO7 Target Market Strategy Appeal to the entire market Appeal to the entire market with one marketing mix with one marketing mix Concentrate on one Concentrate on one marketing segment marketing segment Appeal to multiple markets Appeal to multiple markets with multiple marketing mixes with multiple marketing mixes 48 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  • 49. LO7 REVIEW LEARNING OUTCOME Target Market Strategies Target Market Options Entire Market Multiple Markets Single Market Copyright ©2009 by Cengage Learning Inc. All rights reserved 49
  • 50. LO8 The Marketing Mix Describe the elements of the marketing mix Copyright ©2009 by Cengage Learning Inc. All rights reserved 50
  • 51. LO8 The Marketing Mix Marketing Mix Marketing Mix A unique blend of product, distribution, promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market. Copyright ©2009 by Cengage Learning Inc. All rights reserved 51
  • 52. Marketing Mix: The “Four Ps” Price Promotion Place Product LO8 52 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  • 53. Marketing Mix: The “Four Ps” The starting point of the “4 Ps” Product Includes Physical unit Products can be… Package Tangible goods Warranty Ideas Service Services Brand Image Value LO8 53 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  • 54. Marketing Mix: The “Four Ps” Product availability where and when customers want them Place All activities from raw materials to finished products Ensure products arrive in usable condition at designated places when needed LO8 54 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  • 55. Marketing Mix: The “Four Ps” Role is to bring about exchanges with target Promotion markets by: Informing Includes integration of: Educating Personal selling Persuading Reminding Advertising Sales promotion Public relations LO8 55 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  • 56. Marketing Mix: The “Four Ps” Price is what a buyer must give up to obtain a product. Price The most flexible of the “4 Ps”-- quickest to change Competitive weapon Price x Units Sold = Total Revenue LO8 56 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  • 57. LO8 REVIEW LEARNING OUTCOME Elements of the Marketing Mix Copyright ©2009 by Cengage Learning Inc. All rights reserved 57
  • 58. LO9 Following Up on the Marketing Plan Explain why implementation, evaluation, and control of the marketing plan are necessary Copyright ©2009 by Cengage Learning Inc. All rights reserved 58
  • 59. LO9 Following Up the Marketing Plan • Implementation • Evaluation • Control • Marketing audit is… • Comprehensive • Systematic • Independent • Periodic 59 Copyright ©2009 by Cengage Learning Inc. All rights reserved
  • 60. LO9 REVIEW LEARNING OUTCOME Implementation, Evaluation, and Control Implementation Evaluation Product Product Place Place Met Met Promotion Promotion objectives? objectives? Price Price Audits Audits •• comprehensive comprehensive •• systematic systematic •• independent independent •• periodic periodic Copyright ©2009 by Cengage Learning Inc. All rights reserved 60
  • 61. LOIO Effective Strategic Planning Identify several techniques that help make strategic planning effective Copyright ©2009 by Cengage Learning Inc. All rights reserved 61
  • 62. LOIO REVIEW LEARNING OUTCOME Techniques for Effective Strategic Planning Continual Continual Management Management Creativity Creativity attention attention commitment commitment Effective Effective Strategic Strategic Planning Planning Copyright ©2009 by Cengage Learning Inc. All rights reserved 62
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