MARKETING Exam I - Chp. 2

Strategic Planning for Competitive Advantage

Strategic Planning + goal?

managerial process of creating and maintaining a fit between the organization’s objectives and resources and the evolving market opportunities

Goal:

• long-run profitability and growth

(affect the allocation of resources and company’s financial success.)

Marketing Plan Building Process order

Business mission

SWOT analysis

strategy formulation

objective formulation

marketing mix formulation

implementation

Evaluation and control

Strategy Formulation

Competitive advantage - Unique features of a company and its products perceived by target market as significant and superior to competition.

• three strategies: cost, product/service diff, niche

Why plans fail?

- Unrealistic marketing objectives

- Inappropriate marketing strategies in plan

- Poor implementation

- Changes in environment after objectives and strategies

Strategic Business Units (SBU) + characteristics

a subgroup of a single business or collection of related businesses within the larger organization

• distinct mission and a specific target market

• control over its resources

• separate competitors

• a single business

• plans independently from other SBUs in the organization

• own rate of ROI, growth potential, associated risks

• requires its own es strategic funding

Ansoff’s Opportunity Matrix (4)

4 options to help management develop strategic alternatives:

1. Market Penetration

2. Market Development

3. Product Development

4. Diversification

Components of a Marketing Plan?

1. define business mission (broad/general)

2. perform situational analysis (SWOT common)

3. define objectives (specific)

4. delineate a target market (identify precisely)

5. establish components of the marketing mix (4 P’s)

Market Penetration (ANSOFF)

a marketing strategy that tries to increase market share among existing customers

Market Development (ANSOFF)

a marketing strategy that entails attracting new customers to existing products

Product Development (ANSOFF)

a marketing strategy that entails the creation of new products for present markets

Diversification (ANSOFF)

a strategy of increasing sales by introducing new products into new markets

Portfolio Matrix (aka BCG)

a tool for allocating resources among products or strategic business units (SBUs) on the basis of relative market share and market growth rate

Boston Consulting Group (BCG) Growth Share Matrix

1. Star

2. Cash Cows

3. Problem Child (question mark)

4. Dog

Star (BCG)

in the portfolio matrix, a business unit that is a fast-growing market leader

• high growth, high share

Cash Cow (BCG)

cow in the portfolio matrix, a business unit that generates more cash than it needs to maintain its market share

• low growth, high share

Problem Child (?) (BCG)

in the portfolio matrix, a business unit that shows rapid growth but poor profit margins

• high growth, low share

Dog (BCG)

in the portfolio matrix, a business unit that has low growth potential and a small market share

• low growth, low share

planning

the process of anticipating future events and determining strategies to achieve organizational objectives in the future

marketing planning

designing activities relating to marketing objectives and the changing marketing environment

marketing plan

a written document that acts as a guidebook of marketing activities for the marketing manager

Mission Statement elements

Is the foundation of any marketing plan.

• answers question: “what business are we in?”

• affects the firm’s long-run resource allocation, profitability, and survival

• establishes boundaries for all subsequent decisions, objectives, and strategies.

SWOT Analysis

(S)trengths - internal

(W)eaknesses - internal

(O)pportunities - external

(T)hreats - external

• When examining external opportunities and threats, marketing managers must analyze aspects of the marketing environment in a process called environmental scanning.

Competitive Advantage (3 Types)

a set of unique features of a company and its products that are perceived by the target market as significant and superior to those of the competition

1. cost

2. product/service differentiation

3. niche

(4. sustainable)

Cost C.A.

being the low-cost competitor in an industry while maintaining satisfactory profit margins
- Sources: experience curves, efficient labor, no-frills goods and services, govt. subsidies, product design, reengineering, production innovations, and new methods of service delivery

Product/Service Differentiation C.A.

the provision of something that is unique and valuable to buyers beyond simply offering a lower price than that of the competition

Niche C.A.

the advantage achieved when a firm seeks to target and effectively serve a small segment of the market

Marketing Opportunity Analysis (MOA)

the description and estimation of the size and sales potential of market segments that are of interest to the firm and the assessment of key competitors in these market segments

• assessment of key competitors

Marketing Objective

a statement of what is to be accomplished through marketing activities

• Realistic, Measurable, Time-Specific, Compared to a Benchmark

- consistent & indicate priorities of org.

- communicate marketing philosophies + provide direction management, motivate employees, get executives to think clearly, form basis for control

Marketing Mix (4 Ps)

a unique blend of product, place (distribution), promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market

1. Product (starting point: product offering)

2. Place (making products available when and where customers want them.)

3. Promotion (advertising, public relations, sales promotion, and personal selling.)

4. Pricing Strategies (what a buyer must give up in order to obtain a product.)

Last steps of Marketing Plan:

• Implementation (ppl perform actions in plan)

• Evaluation (has it achieved its objectives?)

Poor implementation can be a major factor in a plan’s failure; working to gain acceptance can be accomplished with task forces.

Once implemented, one major aspect of control is conducting and following through on a marketing audit.

Marketing Myopia

defining a business in terms of goods and services rather than in terms of the benefits customers seek

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 implementation of the marketing plan

Cost Curves (Cost C.A.)

curves that show costs declining at a predictable rate as experience with a product increases

Sustainable C.A.

an advantage that cannot be copied by the competition

Marketing Strategy

the activities of selecting and describing one or more target markets and developing and maintaining a marketing mix that will produce mutually satisfying exchanges with target markets

Target Market

a group of people or organizations for which an organization designs, implements, and maintains a marketing mix intended to meet the needs of that group, resulting in mutually satisfying exchanges

Implementation

process that turns marketing plan into action assignments and ensures execution to accomplish the plan’s objectives.

Requires:

- Delegating authority and responsibility

- Determining a time frame for completing tasks

- Allocating resources

- Task force management

- Gaining acceptance

Evaluation

gauging extent to which marketing objectives have been

achieved during the specified time period

Control

mechanism for evaluating and correcting action, based on

objectives, within budget guidelines

Market Audit

thorough, systematic, periodic evaluation of objectives,

strategies, structure, and performance of marketing organization.

Marketing Audit

a thorough, systematic, periodic evaluation of the objectives, strategies, structure, and performance of the marketing organization