Strategic Planning

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Chapter 2: Strategic Planning for Competitive Advantage : 

1 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Chapter 2: Strategic Planning for Competitive Advantage 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.

Chapter 2: Objectives (cont’d) : 

2 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 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. Chapter 2: Objectives (cont’d)

Chapter 2: Objectives (cont’d) : 

3 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 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. Chapter 2: Objectives (cont’d)

Strategic Planning : 

4 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Strategic Planning The managerial process of creating and maintaining a fit between the organization’s objectives and resources and evolving market opportunities. 1 http://www.coke.com http://www.pepsi.com

Strategic Planning : 

5 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning LONG RUN PROFITABILITY AND GROWTH Plus Strategic Planning 1

Strategic Planning : 

6 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning What is the organization’s main activity? How will it reach its goals? The Marketing Plan Strategic Planning 1

Strategic Planning : 

7 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning The process of anticipating future events and determining strategies to achieve organizational objectives in the future. Strategic Planning 1

The Marketing Plan : 

8 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning A written document that acts as a guidebook of marketing activities for the marketing manager. The Marketing Plan 1

Why Write a Marketing Plan? : 

9 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 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 Why Write a Marketing Plan? 1

Marketing Plan Process : 

10 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Marketing Strategy Distribution (Place) Marketing Mix ImplementationEvaluationControl Target Market Strategy http://www.dmusic.com Marketing Plan Process 1

Defining the Business Mission : 

11 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Defining 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 http://www.att.com 2

PepsiCo’s Mission Statement : 

12 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 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 2

Strategic Business Units (SBUs) : 

13 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Strategic Business Units (SBUs) A distinct mission and specific target market Control over their resources Their own competitors Plans independent of other SBUs Characteristics 2

Marketing Objective : 

14 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Marketing Objective A statement of what is to be accomplished through marketing activities. 3

Marketing Objectives : 

15 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Marketing Objectives Marketing Objectives Must Be: Realistic Measurable Time specific Consistent with Organization’s Priorities 3

Examples of Marketing Objectives : 

16 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Examples of Marketing Objectives 3

Marketing Plan Objectives : 

17 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Marketing Plan Objectives Communicate marketing management philosophies Provide direction Serve as motivators Clarify thinking Provide basis for control 3

SWOT Analysis : 

18 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning SWOT Analysis Identifying internal strengths (S) and weaknesses (W) and also examining external opportunities (O) and threats (T) 4

SWOT Analysis : 

19 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning SWOT Analysis ©South-Western College Publishing Internal External 4

SWOT Analysis : 

20 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning SWOT Analysis Production Costs Marketing Skills Employee Capabilities Financial Resources Available Technology Company/Brand Image 4

SWOT Analysis : 

21 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning SWOT Analysis Social Demographic Economic Technological Political/Legal Competitive 4

Environmental Scanning : 

22 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 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. 4

Environmental Scanning : 

23 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Environmental Scanning Examination of macroenvironmental forces Social Demographic Economic Technological Political/Legal Competitive Helps identify market opportunities Provides guidelines for design of marketing strategy 4

Competitive Advantage : 

24 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 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. 5

Competitive Advantage : 

25 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Competitive Advantage Niche Strategies Cost Product/Service Differentiation Types of Competitive Advantage http://www.travelocity.com 5

Cost Competitive Advantage : 

26 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Cost Competitive Advantage Being the low-cost competitor in an industry while maintaining satisfactory profit margins. 5

Cost Competitive Advantage : 

27 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Obtain inexpensive raw materials Create efficient operations Design products for manufacture Control overhead costs Avoid marginal customers Cost Competitive Advantage 5

Sources of Cost Reduction : 

28 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Sources of Cost Reduction Experience Curves Efficient Labor No-frills Products Government Subsidies Product Design Reengineering Production Innovations New Delivery Methods 5

Product/Service Differentiation : 

29 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 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. 5

Examples of Product/Service Differentiation : 

30 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Examples of Product/Service Differentiation Brand names Strong dealer network Product reliability Image Service 5

Niche Competitive Advantage : 

31 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Niche Competitive Advantage Advantage achieved when a firm seeks to target and effectively serve a small segment of the market. 5

NicheCompetitive Advantage : 

32 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning NicheCompetitive 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

SustainableCompetitive Advantage : 

33 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning SustainableCompetitive Advantage An advantage that cannot be copied by the competition. 5

Sources of Sustainable Competitive Advantage : 

34 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Sources of Sustainable Competitive Advantage 5

Strategic Alternatives : 

35 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Strategic Alternatives MarketPenetration Market Development Product Development Diversification 6

Strategic Opportunity Matrix (Ansoff’s Growth Model) : 

36 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Strategic Opportunity Matrix (Ansoff’s Growth Model) Present Product New Product New Market Market Penetration Market Development Product Development Diversification Present Market http://www.pg.com 6

BCG Portfolio Matrix : 

37 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning High growth Market leaders Require cash Large profits Low growth High market share High cash flow Low growth Low market share Minimal cash flow High growth Low market share Need cash Poor profit margins $ BCG Portfolio Matrix 6

BCG Portfolio Matrix Example : 

38 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning BCG Portfolio Matrix Example 6

Slide 39: 

G.E Strategic Planning Model Strong Average Weak Business Strength Industry Attractiveness High Medium Low Business Strength Index Industry Attractiveness Index * Market Share * Market size * Price Competitiveness * Market Growth * Product Quality * Industry Profit Margin * Customer Knowledge * Amount of Competition * Sales Force and Effectiveness * Seasonality * Geographic Advantage * Cost Structure * Others * Etc.

Strategies for Resource Allocation : 

40 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Strategies for Resource Allocation 6

Marketing Strategy : 

41 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 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 Strategy 7

Target Market Strategy : 

42 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 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 7

Target Market Selections : 

43 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Appeal to the entire market with one marketing mix Target Market Selections Concentrate on one marketing segment Appeal to multiple marketswith multiple marketing mixes 7

Target Market Strategy : 

44 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Target Market Strategy Product Place PromotionPrice 7

Marketing Mix: The “Four Ps” : 

45 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Price Marketing Mix: The “Four Ps” Promotion Place Product 8

Product Strategies : 

46 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Product Strategies The starting point of the “4 Ps” Includes physical unit, package, warranty, service, brand, image, and value Product 8

Distribution (Place) Strategies : 

47 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Distribution (Place) Strategies Place Product availability where and when customers want them. Involves all activities from raw materials to finished products 8

Promotion Strategies : 

48 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Promotion Strategies Promotion Role is to bring about exchanges with target markets Includes integration of personal selling, advertising, sales promotion, and public relations http://www.paramount.com http://www.warnerbros.com http://www.universalstudios.com 8

Pricing Strategies : 

49 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Pricing Strategies The most flexible of the “4 Ps” Price x # Units Sold = Total Revenue Price 8

Following Up the Marketing Plan : 

50 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Following Up the Marketing Plan Implementation Evaluation Control Marketing Audit Comprehensive Systematic Independent Periodic 9

The Marketing Audit : 

51 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning The Marketing Audit A thorough, systematic, periodic evaluation of the goals, strategies, structure, and performance of the marketing organization. 9

Effective Strategic Planning : 

52 Chapter 2 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Effective Strategic Planning Management Commitment Continual Attention Creativity Requirementsfor Effective Strategic Planning 10