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Chapter 2 Instructor Shan A. Garib, Fall 2012

Market:Any place where buyers and sellers can

exchange goods and services

Eg. Ebay, supermarket, classroom

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Strategic Planning: creating and maintaining a fit between organizational objective, resources and market opportunities

-long term profitability and growth

-commit resources

-wrong decisions threaten survival

Questions:

1. What is the main activity?

2. How reach goals?

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Planning: anticipating future events and determining strategies to reach objectives

Marketing Plan: document guidebook for marketing activities

Why Write a Marketing Plan?-define objectives, identify actions needed to reach

goals-common goals for managers and workers-compare actual and expected performance-anticipate problems

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Defined:

1.Mission2.Objectives3.Situation Analysis – SW/OT4.ID Target Market5.ID Marketing Mix (Product, Place/Distribution, Promotion, Price)6.Implementation7.Other: Budgets (time, money), research

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Mission Statment: what business are we in??-analysis of benefits sought by customers-focuss on markets served

Sales oriented vs. Market oriented

Marketing Myopia: defining business interms of goods and services not, customer wants

Also want to define things interms of business within company – strategic business units

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Marketing Objective: statement of what is to be accomplished through marketing

Should:1. realisitc, measurable, time specific

“Achieve 10% of market share with in 12 months”

2. Indicate priorities of business

“...and introduce 5 new products in the next year”

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Marketing Objective: statement of what is be to accomplished through marketing

Serve Several Functions:

1.Communicate management philisophies -provide direction for marketing

managers2.Motivation to strive3.Used for control

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Before marketing activities are defined, marketers must understand the current and potential environment internally and externally

Internal: organizational resourcesStrengths Weakens

eg. Costs, skills budget

External: environmental scanningOpportunityThreatseg. Social, demographic, technological

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Use SWOT to identify your...

Competitve Advantage: unique features make product superior to competitors

TypesA. CostB. Product/Service differentiationC. Niche strategies

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Competitive Advantage: unique features make product superior to competitors

A. Cost Competitive Advantage – getting low cost raw materials, efficiently produce item, having easily manufactured products

Cost Competitive Advantage: being a low cost compeitor in the industry while making a profit leasing to superior customer value

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Cost advantage – getting low cost raw materials, efficiently produce item, having easily manufactured products

Costs reduced through:

1. Experience curves – costs go down as experience with a product increases

-reflect learning by doing, technological advances eg. Salad making

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Cost advantage – getting low cost raw materials, efficiently produce item, having easily manufactured products

Costs reduced through:

2. Efficient Labour – outsourceing

3. No-frills goods and services – eg WestJet no meals

4. Government Subsidies – no interest loans

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Cost advantage – getting low cost raw materials, efficiently produce item, having easily manufactured products

Costs reduced through:

5. Product Design – make product easy to produce

6. Re-engineering – rethink and redesign processes

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Cost advantage – getting low cost raw materials, efficiently produce item, having easily manufactured products

Costs reduced through:

7. Product Innovations – make production easier

8. New Methods of Service Delivery – online ordering

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Competitive Advantage: unique features make product superior to competitors

B. Product /Service Differentiation Competitive Advantage – longer lasting advantage, providing value beyond low price eg. Brand names based on quality

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Competitve Advantage: unique features make product superior to competitors

C. Niche Competitive Advantage – target and serve single market

-usually for smaller companies with limited not able to compete with larger competitorseg. Serve only certain age group, geographical area

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Competitve Advantage: unique features make product superior to competitors

A Sustainable Competitive Advantage – cannot be copied by competitors, consumers have no reason why to patronize competitors eg. Rolex

-created through:1. skills – superior customer service 2. assets – patents, superior

-imitation by competitors indicates lack of competitive advantage

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Result of SWOT and identification of a Competitive Advantage is ability of evaluate strategic direction of firm◦ Next step in marketing planning is selecting a

strategic alternative

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Selecting a strategic alternatives

To discover marketing opportunities management must identify alternatives

Ansoff Matrix develops alternatives by matching products with markets through four options:

1.Market penetration – increase market share among EXISTING CUSTOMERS2.Market development – attracting NEW CUSTOMERS3.Product development – create new products for existing customers eg. Green cars4.Diversification – introducing new products into new markets eg. Davidoff cigarettes makes cologne

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Selecting a strategic alternatives

Threats: External threats arise from political, economic, social, technological (PEST) forces. Technological developments may make your offerings obsolete. Market changes may result from the changes in the customer needs, competitors' moves, or demographic shifts. The political situation determines government policy and taxation structure.

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Marketing Strategy involves selecting and describing market segments

Market Segment: group sharing characteristics with similar product needs eg. Students

A target marketing strategy involves using a market opportunity analysis which is the description and estimation of size of market and sales potential, assessment of competitors in segment

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Marketing Mix: blend of product, place/distribution, promotion, pricing (four P’s) to bring about maximal value of exchange

-use to gain advantages over competitors

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Marketing Mix:

Product – package, warranty, after sales support, image

Place – making products available when and where customers want them

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Marketing Mix:

Promotion – advertising, public relations, sales promotion, personal selling

– informing, education and persuading

Pricing – what buyer must give up to get product

- quickest to change

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Implimentaition: turns marketing plan into action to accomplish plan’s objectives-involves:

-detailed job assignments-timelines-budgets

Evaluation and Control – after marketing plan implimentation

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Evaluation: gauging the extent to which marketing objectives have been achieved

Common reasons for failing to achieve objectives:

1.Unrealistic objectives2.Inappropriate marketing strategies3.Poor implimentation4.Changes in the environment

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Control: correcting actions that do not help organization help achieve objectives

done through...Marketing Audit: periodic

evaluation of the objectives and performance of organization

-manage marketing resources

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Marketing Audit characteristics:

a) comprehensive coverage of marketing issues, good and bad

b) Systematic and orderly

c)Independantly conducted to be objective

d)Periodicly carried out on a scheduled timeline not only during crisis

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Strategic planning: requires continual attention, creativity, and management’s commitment

-should be an ongoing process because environment is continually changing and resources continually evolving

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