Strategic Planning for
Competitive Advantage
Chapter 2
Prepared by
Deborah Baker
Texas Christian University
Chapter 2 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Learning 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 Marketing 7e Lamb Hair McDaniel
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Learning Objectives (continued)
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 Marketing 7e Lamb Hair McDaniel
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Learning Objectives (continued)
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.
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1
On Line
http://www.coach.com
http://www.vuitton.com
http://www.katespade.com
Learning Objective
Understand the
importance of
strategic marketing
and know
a basic outline for a
marketing plan.
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Strategic Planning
On Line
http://www.coke.com
http://www.pepsi.com
The managerial process of
creating and maintaining a
fit between the
organization’s objectives
and resources and evolving
market opportunities.
Chapter 2 Marketing 7e Lamb Hair McDaniel
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Strategic Planning
EVOLVING
MARKET
OPPORTUNITIES
LONG RUN
PROFITABILITY
AND GROWTH
RESOURCES
&
OBJECTIVES
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Strategic Marketing Planning

What is the organization’s main activity?

How will it reach its goals?
The Marketing Plan
Chapter 2 Marketing 7e Lamb Hair McDaniel
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Planning
The process of anticipating
future events and
determining strategies to
achieve organizational
objectives in the future.
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The Marketing Plan
A written document that
acts as a guidebook of
marketing activities for the
marketing manager.
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Why Write a Marketing Plan?

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
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Business Mission
Statement
On Line
http://www.dmusic.com
Marketing Plan
Process
Objectives
Situation or SWOT
Analysis
Marketing Strategy
Target Market
Strategy
Marketing Mix
Product
Distribution
Promotion
Price
Implementation
Evaluation
Control
Chapter 2 Marketing 7e Lamb Hair McDaniel
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Learning Objective
Develop an
appropriate
business mission
statement.
Chapter 2 Marketing 7e Lamb Hair McDaniel
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Defining the Business Mission
On Line
http://www.att.com

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
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AMA’s Mission Statement
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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
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Strategic Business Units (SBUs)
Characteristics
1.
A distinct mission and specific target
market
2.
Control over their resources
3.
Their own competitors
4.
Plans independent of other SBUs
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3
Learning Objective
Describe the criteria
for stating good
marketing objectives.
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3
Marketing Objective
A statement of what is to be
accomplished through
marketing activities.
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Marketing Objectives
Marketing Objectives Must Be:
 Realistic
 Measurable
 Time specific
“Our objective is to
increase market share
by 40% and to obtain
customer satisfaction
ratings of at least 90%
in 2003.”
 Consistent with
Organization’s
Priorities
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Examples of Marketing Objectives
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Marketing Plan Objectives

Communicate marketing
management philosophies

Provide direction

Serve as motivators

Clarify thinking

Provide basis for control
Chapter 2 Marketing 7e Lamb Hair McDaniel
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4
Learning Objective
Explain the
components
of a situation
analysis.
Chapter 2 Marketing 7e Lamb Hair McDaniel
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SWOT Analysis
Identifying
internal strengths (S)
and weaknesses (W)
and also examining
external opportunities (O)
and threats (T)
Chapter 2 Marketing 7e Lamb Hair McDaniel
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SWOT Analysis
S
W
O
T
Things the company does well.
Internal
External
Things the company does not do well.
Conditions in the external environment
that favor strengths.
Conditions in the external environment
that do not relate to existing strengths
or favor
areasCollege
of current
weakness.
©South-Western
Publishing
Chapter 2 Marketing 7e Lamb Hair McDaniel
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SWOT Analysis
Strengths
and
Weaknesses
INTERNAL
 Production
Costs
 Marketing
Skills
 Employee
Capabilities
 Financial
Resources
 Available
Technology
 Company/Brand
Chapter 2 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
Image
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SWOT Analysis
Opportunities
And
Threats
EXTERNAL
Social
Demographic
Economic
Technological
Political/Legal
Competitive
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4
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.
Chapter 2 Marketing 7e Lamb Hair McDaniel
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Environmental Scanning

Examination of macroenvironmental forces
 Social
 Demographic
 Economic
 Technological
 Political / Legal
 Competitive

Helps identify market
opportunities

Provides guidelines for
design of marketing strategy
Chapter 2 Marketing 7e Lamb Hair McDaniel
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5
Learning Objective
Identify sources of
competitive
advantage
Chapter 2 Marketing 7e Lamb Hair McDaniel
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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.
Chapter 2 Marketing 7e Lamb Hair McDaniel
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Competitive Advantage
On Line
http://www.travelocity.com
Cost
Types of
Competitive
Advantage
Product/Service
Differentiation
Niche Strategies
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Cost Competitive Advantage
Being the low-cost competitor
in an industry while
maintaining satisfactory
profit margins.
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Cost Competitive Advantage
 Obtain inexpensive raw materials
 Create efficient operations
 Design products for manufacture
 Control overhead costs
 Avoid marginal customers
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Sources of Cost Reduction
Experience Curves
Product Design
Efficient Labor
Reengineering
No-frills Products
Production Innovations
Government Subsidies
New Delivery Methods
Chapter 2 Marketing 7e Lamb Hair McDaniel
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5
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.
Chapter 2 Marketing 7e Lamb Hair McDaniel
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Examples of
Product/Service Differentiation
5
 Brand names
 Strong dealer network
 Product reliability
 Image
 Service
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Niche
Competitive Advantage
5
Advantage achieved when a
firm seeks to target and
effectively serve a small
segment of the market.
Chapter 2 Marketing 7e Lamb Hair McDaniel
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Niche Competitive 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
Chapter 2 Marketing 7e Lamb Hair McDaniel
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Sustainable
Competitive Advantage
5
An advantage
that cannot be copied
by the competition.
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Sources of Sustainable
Competitive Advantage
5
Patents
Copyrights
Locations
Equipment
Technology
Organization’s
Skills and Assets
Customer Service
Promotion
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Learning Objective
Identify strategic
alternatives and
describe tools used
to help select
alternatives.
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Strategic Alternatives
6
Market
Penetration
Increase market share among
existing customers
Market
Development
Attract new customers to
existing products
Product
Development
Create new products for
present markets
Diversification
Introduce new products
into new markets
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Strategic Opportunity Matrix
On Line
http://www.pg.com
Present Product
New Product
Present
Market
Market
Penetration
Product
Development
New
Market
Market
Development
Diversification
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Selecting a Strategic Alternative
Common Tools
Philosophy
Profitability
Portfolio Matrix
$
Market Share
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Portfolio Matrix
Tools for allocating resources
among products or strategic
business units on the basis of
relative market share and
market growth rate.
$
?
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BCG Portfolio Matrix
HIGH
HIGH
LOW
MARKET GROWTH RATE
MARKET SHARE DOMINANCE
Chapter 2 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
LOW
?
$
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BCG Portfolio Matrix
MARKET SHARE DOMINANCE
High growth
Market leaders
Require cash
Large profits
HIGH
LOW
MARKET GROWTH RATE
HIGH
LOW
High growth
Low market share
Need cash
Poor profit margins
$
Low growth
High market share
High cash flow
Chapter 2 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
Low growth
Low market share
Minimal cash flow
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BCG Portfolio Matrix Example
MARKET SHARE DOMINANCE
HIGH
SubNotebooks
and Hand-Held
Computer
STAR
LOW
MARKET GROWTH RATE
HIGH
Laptop and
Personal
Computers
CASH
COW
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LOW
Integrated
phone/Palm
devices
PROBLEM
CHILD
Mainframe
Computer
DOG
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Strategies for Resource Allocation
Build
Provide financial resources if SBU
(Problem Child) has potential to be a Star.
Hold
Preserve market share if SBU is a successful
Cash Cow. Use cash flow for other SBUs.
Harvest
Divest
Increase short-term cash return.
Appropriate for all SBUs except Stars.
Get rid of SBUs with low shares in
low-growth markets.
Chapter 2 Marketing 7e Lamb Hair McDaniel
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Learning Objective
Discuss target
market strategies.
Chapter 2 Marketing 7e Lamb Hair McDaniel
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Marketing Strategy
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.
Chapter 2 Marketing 7e Lamb Hair McDaniel
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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
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©2004 South-Western/Thomson Learning
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Target Market Selections
Appeal to the entire market
with one marketing mix
Concentrate on one
marketing segment
Appeal to multiple markets
with multiple marketing mixes
Chapter 2 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Target Market Strategy
Develop a marketing mix that will
produce satisfying exchanges with
target markets
Product
Place
Promotion
Price
Chapter 2 Marketing 7e Lamb Hair McDaniel
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Learning Objective
Describe elements of
the marketing mix.
Chapter 2 Marketing 7e Lamb Hair McDaniel
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The Marketing Mix
A unique blend of product,
distribution, promotion, and
pricing strategies designed to
produce mutually satisfying
exchanges with a target
market.
Chapter 2 Marketing 7e Lamb Hair McDaniel
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Marketing Mix: The “Four Ps”
Price
Promotion
Place
Product
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Product Strategies
 The starting point of
the “4 Ps”
Product
Chapter 2 Marketing 7e Lamb Hair McDaniel
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 Includes physical unit,
package, warranty,
service, brand, image,
and value
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Distribution (Place) Strategies
Place
 Product availability
where and when
customers want them.
 Involves all activities
from raw materials to
finished products
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Promotion Strategies
On Line
http://www.paramount.com
http://www.warnerbros.com
http://www.universalstudios.com
 Role is to bring about
exchanges with target
markets
Promotion
 Includes integration of
personal selling,
advertising, sales
promotion, and public
relations
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Pricing Strategies
 The most flexible of
the “4 Ps”
Price
 Price X Units Sold =
Total Revenue
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Learning Objective
On Line
http://www.youngbiz.com
Explain why
implementation,
evaluation, and
control of the
marketing plan
are necessary.
Chapter 2 Marketing 7e Lamb Hair McDaniel
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Following Up the Marketing Plan

Implementation

Evaluation

Control
 Marketing Audit
Comprehensive
Systematic
Independent
Periodic
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The Marketing Audit
A thorough, systematic,
periodic evaluation of the
goals, strategies, structure,
and performance of the
marketing organization.
Chapter 2 Marketing 7e Lamb Hair McDaniel
©2004 South-Western/Thomson Learning
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Learning Objective
Identify several
techniques that help
make strategic
planning effective.
Chapter 2 Marketing 7e Lamb Hair McDaniel
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Effective Strategic Planning
Continual
Attention
Requirements
for Effective
Strategic
Planning
Creativity
Management
Commitment
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