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Strategic Planning for Competitive Advantage

Enduring Understandings for

Market Planning Unit• Marketing is customer focused.

• Marketing is much more than advertising and selling.

• A marketing plan is a roadmap for all companies' business efforts.

Essential Questions for Market Planning Unit

• What is marketing?• How do marketers find their customers?

•  What makes marketing dynamic?

• What causes a business to "close its doors"?

The Importance of Strategic Marketing

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

GE, Toys R Us, McDonalds

Strategic Marketing Management

THE ANSWER IS A MARKETING PLAN.

What is the organization’s main activity?

How will it reach its goals?

Marketing Planning

Marketing Plan- A written documentthat acts as a guidebook for the

marketing manager.

Building a marketing plan is more than just meeting and knocking around ideas

haphazardly…

And it’s DEFINITELY more than adopting a strategy just because “all of a sudden” you

decided it seemed like a good idea…

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)

Marketing Plan Elements

Marketing Strategy

Product Distribution

Price

Marketing Mix

Business Mission Statement

Situation or SWOT Analysis

Objectives

Target Market Strategy

ImplementationEvaluation

Control

Promotion

Business Mission Statement

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

Star Trek EnterpriseWhy is a mission statement important?

Starbucks Mission Statement

Our mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.

DECA Mission Statement

DECA prepares emerging leaders and entrepreneurs for careers in

marketing, finance, hospitality and management in high schools and

colleges around the globe.

Nike Mission Statement

Find a sample to shareParkway Mission statement

Our mission for the Nike brand is:

To bring inspiration and innovation to every athlete* in the world. *"If you have a body, you are an athlete."

Samples

• 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

Strategic Business Unit (SBU)

• Company division or a• Product line within a division or a• Single product or company brand

that has an objective and mission different from other company business

• Can be marketed independently from the rest of the company.

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)

Boeing SBU’s

Marketing Plan Elements

Marketing Strategy

Product Distribution

Price

Marketing Mix

Business Mission Statement

Situation or SWOT Analysis

Objectives

Target Market Strategy

ImplementationEvaluation

Control

Promotion

Conducting a Situation Analysis

LO3

SWOT Analysis- Identifying internalstrengths and weaknesses and also

examining externalopportunities and threats.

SWOT Analysis

©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

THE STRATEGIC MARKETING PROCESSTHE PLANNING PHASE

Analyze Competitors

Identify Industry Trends

Research Present and Prospective Customers

Assess the Organization

• SWOT Analysis Study

Step 1: Situation (SWOT) Analysis

Ben & Jerry’s SWOT analysis

Components of a Situation Analysis

production costs

marketing skills

financial resources

image

technology

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Environmental Scanning

Environmental Scanning- The collectionand interpretation of information aboutforces, events, and relationships in the

external environment that may affect the future of the organization or the

implementation of the marketing plan.

Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Marketing Objective

A statement of what is

to be accomplished

through marketing activities.

Marketing Objectives

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.”

Criteria for Good Marketing ObjectivesRealistic, 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

1.Profitability ObjectivesTo achieve a 20% return on capital by August 2019.

2. Market Share ObjectivesTo gain 25% of the market for sports shoes by September 2019.

3. Promotional ObjectivesTo increase trail of X washing powder from 2% to 5% of our target group by January 2019.

Examples of Smart Objectives

. Examples of Smart Objectives

4. Objectives for SurvivalTo survive the current double-dip recession.

5. Objectives for GrowthTo increase the size of our Brazilian operation from $200,000 in 2017 to $400,000 in 2018.

6. Objectives for BrandingTo make Y brand of bottled beer the preferred brand of 21-28 year old females in North America by February 2017.

Marketing Plan Elements

Marketing Strategy

Product Distribution

Price

Marketing Mix

Business Mission Statement

Situation or SWOT Analysis

Objectives

Target Market Strategy

ImplementationEvaluation

Control

Promotion

Describing the Target Market

Discuss target market strategies.

Vals Study

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.

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

Target Market Strategy

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

The Concept of Market Segmentation

Bases for Segmenting Consumer Markets

Geography Demographics Psychographics Benefits Usage Rate

• Region• Market size• Market

density• Climate

• Age• Gender• Income• Race/ethnicity• Family life

cycle

• Personality• Motives• Lifestyle• Geodemo-

graphics

• Benefitssought

• Former• Potential• 1st time• Light or

irregular• Medium• Heavy

Family Life Cycle

Segmentation ExampleMacy’s Department store: 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.

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.

Who’s Who?

1.Fashion Statement2.Family Values3. Wanna Buy’s4. Matriarch5.Down-to-Basics

Who’s Who?

Wanna Buy’s

Down-to-BasicsMatriach

Fashion Statement

Family Values

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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

Marketing Plan Elements

Marketing Strategy

Product Distribution

Price

Marketing Mix

Business Mission Statement

Situation or SWOT Analysis

Objectives

Target Market Strategy

ImplementationEvaluation

Control

Promotion

Strategic Directions

Identify strategic alternatives.

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

Cost Competitive Advantage

Cost Competitive Advantage- Being thelow-cost competitor in an industry

while maintaining satisfactoryprofit margins.

Examples:Obtain inexpensive raw materialsDesign products for ease of manufactureControl overhead costs

Product differentiation

• Brand Names –Lexus• Product Reliability -Maytag• Strong Dealer Network -

Harley Davidson • Service -Fed Ex• Image –

Neiman Marcus• Product Innovation - -Nike

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:

Party Pastry’s Cupcakes

Fleet Feet

Fro Yo

SETTING STRATEGIC DIRECTIONSWHERE DO WE WANT TO GO?

Business Portfolio Analysis (BCG) Boston Consulting Group

Mar

ket

Gro

wth

Rat

e

Stars

Cash Cows Dogs

Question Marks

Relative Market Share

High

High Low

Low

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

BCG Portfolio MatrixBoston Consulting Group

StarsNotebooks

Cash CowsLaptops/Personal computer

ProblemChildren/Question

MarksPalm Pilots

DogsMainframe computer

Computer Example

Assignment

• Select a partner• Select a business of interest to research• Design a BCG (Boston Consulting Group) Model Matrix for the business using one

PowerPoint slide• Include the company Stars, Cash Cows,

Problem Children/Question Marks and Dogs

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 marketsTaco Bell Fresco Style

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 McWater

Diversification

McDonalds introducesLine of children’s

clothing

Present Market

Online

Strategic Alternatives

Identify strategic alternativesIdentify strategic alternatives

Diversification =

Product development = products

Market development = customers

Market penetration = share

new products +new markets

Portfolio Matrix Strategies

Build

Hold

Harvest

Divest

Pringles

Bisquick/GeneralMills

Lever Brothers/Lifebuoy

Marketing Plan Elements

Marketing Strategy

Product Distribution

Price

Marketing Mix

Business Mission Statement

Situation or SWOT Analysis

Objectives

Target Market Strategy

ImplementationEvaluation

Control

Promotion

Marketing Mix: The “Four Ps”

Price

Promotion

Place

Product

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

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

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

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

The elements of the marketing mix must be blended to produce a cohesive marketing program

Following Up the Marketing Plan

• Implementation

• Evaluation

• Control

• Marketing audit is…• Comprehensive• Systematic• Independent• Periodic

Product PlacePromotionPrice

Product PlacePromotionPrice

Met objectives?

Met objectives?

Implementation Evaluation

Audits• comprehensive• systematic• independent• periodic

Audits• comprehensive• systematic• independent• periodic

Implementation, Evaluation, and Control

Techniques for Effective Strategic Planning

Effective Strategic Planning

Effective Strategic Planning

Continualattention

Continualattention CreativityCreativity Management

commitment

Managementcommitment