BUS M 300 1st Edition Lecture 7 Outline of Last Lecture I Exam Outline of Current Lecture II Planning vs the Plan III Creating Competitive Advantage IV Creating Competitive Advantage V Current Lecture Planning vs the Plan o Strategic Planning is a process where the business determines and documents what its future actions will be Sets goals for the future o The Plan is the document that records what the business will do o Mission statements drive where the company is going Setting Strategic Directions o A company must ask the following questions Where are we now Where do we want to go o To determine where a company is now it must focus on Customers A company must provide genuine value and benefits to present and prospective customers Competencies What are an organization s special capabilities that distinguish it from other organizations Competitors Can be local or global in nature These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Creating Competitive Advantage o A competitive advantage is the ability of a firm to outperform the competition by providing customers with a proprietary benefit the competition can t o How Uniqueness Step 1 Identify core competency an ability that is clearly superior to that of its direct competition Something they know more about or do better Step 2 Turn a core competency into a differential product benefit one that is important to customers and unique to your product creating an urgency for them to buy your product o SETTING STRATEGIC DIRECTIONS Growth Strategies Where do we want to go Knowing where the organization is at the present time enables managers to set a direction for the firm and allocate resources to move in the direction that it wants to go Two techniques to aid in these decisions are 1 business portfolio analysis and 2 market product analysis Business Portfolio Analysis Question Marks o Low profit but potential star or cash cow invest for growth or discontinue o Products can hang around for a long time in this stage o Marketers start new products here o Weak or no cash flow Stars o Produce high profits invest to turn into cash cow o Produces lots of cash for the business Cash Cow o Produces good cash flow use to support question mark or star o Produces the highest cash flow o Stable and strong products Dogs o Produces poor profits make the most of the profits or discontinue o Weak or no cash flow Things to Remember Cows and Stars throw off cash to help question marks grow Many firms use cash to keep Dogs alive Balancing the numbers of SBUs of each type is essential for long term financial health o BCG Matrix is designed to have marketers employ the strategies below for the 4 classes of products A Build Strategy improve market position stars and question marks Increase promotion and adjust price and distribution place to improve performance A Hold Strategy remain with current position cash cow and maintain the marketing effort The goal is to maintain market performance of products A Harvest Strategy sell SBUs to gain a short term increase in cash flow cows and stars This happens when the strategic focus of the company changes A Disinvest Strategy utilize resources better sell dogs and withdraw marketing support o The Strategic Marketing Process The process of engaging in the strategic marketing process whereby an organization allocates its marketing mix resources to reach its target markets OR Engaging in a marketing plan which is a road map for the marketing activities of an organization for a specified future period of time e g 1 year or 5 years This process is divided into 3 phases Planning o A situation analysis involves taking stock of where the firm or product has been recently where it is now and where it is headed in light of the organization s plans and the external factors and trends affecting it o A SWOT analysis studies the 4 areas in Step 1 of the planning phase and it helps to form a firm s marketing program Area 1 Identifying trends in the firm s industry Area 2 Analyzing the firm s competitors Area 3 Assessing the firm itself Area 4 Researching the firm s present and prospective customers o A SWOT analysis helps a firm to identify the strategy related factors that can impact the firm o A SWOT analysis translates the results into specific actions to help the firm grow and succeed Implementation o In this step companies determine which products will be directed toward which customers This decision is often based off of market segmentation tools This step is essential to developing marketing programs aimed at specific target markets o Four steps to effective reaching a company s customer segment or target market Set market and product goals Select target market Find points of difference Position the product o The second phase of the strategic marketing process involves carrying out the marketing plan that emerges from the planning phase o The implementation phase has four components Obtaining Resources A marketing manager must obtain the people and money necessary to succeed Designing the Marketing Organization A marketing program needs a marketing organization to implement it and to convert marketing plans into reality Defining Precise Tasks Responsibilities and DeadlinesEffective implementation requires that team members know their responsibilities goals and deadlines Executing the Marketing Program The effective execution of a marketing plan requires attention to detail for both marketing strategies and marketing tactics Evaluation control o This step is the how aspect of the planning phase developing the marketing program s marketing mix and the budget o Four strategies 4P s that companies consider during this phase Product Strategy How will the product be offered to the consumer Price Strategy How will the product be priced to the consumer Promotion Strategy How will consumers learn about the new product Place Strategy How will the product be distributed to the consumer o The evaluation phase of the strategic marketing process seeks to keep the marketing program moving in the direction set for it It requires the marketing manager to focus on 2 key elements Comparing results with plans to identify deviations Is the plan on track Does a better track exist Acting on deviations A company can discover competitor s weaknesses and exploit them This is an opportunity for the company to find performance gaps in its marketing