Strategic Planning for Competitive Advantage LO1 The Nature of Strategic Planning Strategic planning the managerial process of creating and maintaining a fit between the organizations objectives and resources and the evolving market opportunities o Addresses 2 questions What is the organizations main activity at a particular time How will it reach its goals What is a market plan o Planning the process of anticipating future events and determining strategies to achieve organizational objectives in the future o Marketing planning designing activities relating to marketing objectives and the changing marketing environment o Marketing plan a written document that acts as a guidebook of marketing activities for the marketing manager Why write a marketing plan o Provide a basis by which actual and expected performance can be compared o Allows you to examine the marketing environment in conjunction with the inner workings of the business o Allows the marketing manager to enter the marketplace with an awareness of possibilities and problems Marketing plan elements o Written o Defining the business mission performing a situation analysis defining objectives delineating a target market establishing components of the marketing mix o Budgets implementation timetables required marketing research efforts elements of advanced strategic planning Writing the marketing plan o Managers must weight any information against its accuracy and their own judgment when making a marketing decision o Should be viewed as a series of sequential planning steps o Unique to the firm for which it is created LO2 Defining the Business Mission The foundation of any marketing plan is the firm s mission statement are we in Mission statement answers the question what business o Based on a careful analysis of benefits sought by present and potential customers and an analysis of existing and anticipated environmental conditions o Should be focused on markets trying to serve not good or service offered Marketing myopia defining a business in terms of goods and services rather than in terms of the benefits customers seek myopia means narrow short term thinking Strategic business unit SBU a subgroup of a single business or collection of related businesses within the larger organization o Should have a distinct mission and specific target market control over its resources its own competitors and plans independent of other SBU s in the organization Marketers must understand the current and potential environment in which the product or service will be marketed SWOT analysis the firm should identify its internal strengths S and weaknesses W and also examine external opportunities O and threats T o Examine internal strengths and weaknesses by looking at organizational resources ex Production costs marketing skills financial resources company or brand image etc Environmental scanning the collection and interpretation of information about forces and events and relationships in the external environment that may affect the future of the organization or the implementation of the marketing plan o Helps identify market opportunities and threats LO3 Conducting a situation analysis LO4 Setting a Marketing Plan Objective Before the details of a marketing plan can be developed objectives for the plan must be stated Marketing objective statement of what is to be accomplished through marketing activities o Realistic o Measurable o Time specific o Compared to a benchmark o Provide direction for lower level marketing managers o Efforts are integrated and pointed in a consistent LO5 Competitive Advantage directions Performing a SWOT analysis allows firms to identify their competitive advantage Competitive advantage a set of unique features of a company and its products that are perceived by the target market as a significant and superior to the competition Cost competitive advantage o Cost competitive advantage being the low cost competitor in an industry while maintaining satisfactory profit margins o Costs can be reduced in a variety of ways Experience curves tell us that costs decline at a predictable rate as experience with a product increases Efficient labor No frills goods and services Government subsidies Product design Reengineering Production innovations New methods of service delivery o Product Service differentiation competitive advantage P S differentiation competitive advantage exists when a firm provides something unique and valuable to buyers beyond simply offering a lower price than that of the competition o Niche competitive advantage Niche competitive advantage seeks to target and effectively serve a single segment of the market Small companies with limited resources that face giant competitors o Building sustainable competitive advantage Sustainable competitive advantage one that cannot be copied by the competition A function of the speed with which competitors can imitate a leading company s strategy and plans LO6 Strategic directions The end result of the SWOT analysis and identification of a competitive advantage is to evaluate the strategic direction of the firm Strategic Alternatives o One method for developing alternatives is Ansoff s strategic opportunity matrix which matches products with markets Selecting a strategic alternative Market penetration a firm would try to increase market share among existing customers Market development attracting new customers to existing products Product development entails the creation of new products for present markets Diversification strategy of increasing sales by introducing new products into new markets o Portfolio matrix classifies each SBU by its present or forecast growth and market share o Relative market share the ratio between the company s share and the share of the largest competitor o Portfolio matrix breaks SBUs into 4 categories Star fast growing market leader Cash cow an SBU that generates more cash than it needs to maintain its market share Problem child question mark shows rapid growth but poor profit margins Dog low growth potential and a small market share Four basic strategies to allocate future resources to each Build Hold Harvest Divest LO7 Describing the Target Market LO8 The Marketing Mix Marketing strategy involves 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 Strategy o Market segment a group of
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