Lamb, Hair, McDaniel
MKTG2007-2008
2
CHAPTER
Designed by
Amy McGuire, B-books, Ltd.
Chapter 2
Strategic Planning for
Competitive Advantage
Prepared by
Deborah Baker, Texas Christian University
Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved
1
Learning Outcomes
LO1
Understand the importance of
strategic marketing and know a basic
outline for a marketing plan
LO2
Develop an appropriate business
mission statement
LO3
Describe the criteria for stating good
marketing objectives
Chapter 2
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2
Learning Outcomes
LO4
Explain the components of a situation analysis
LO5
Identify sources of competitive advantage
LO6
Identify strategic alternatives
LO7
Discuss target market strategies
Chapter 2
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3
Learning Outcomes
LO8
Describe the elements of the marketing mix
LO9
Explain why implementation, evaluation, and
control of the marketing plan are necessary
LO10
Identify several techniques that help make
strategic planning effective
Chapter 2
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4
LO1 The Nature of Strategic Planning
Understand the
importance of strategic
marketing and know a
basic outline for a
marketing plan
Chapter 2
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5
Strategic Planning
Strategic
Planning
The managerial process of
creating and maintaining a fit
between the organization’s
objectives and resources and
evolving market opportunities.
The goal is long-term
profitability and growth.
LO1
Chapter 2
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6
Strategic Marketing Management
What is the organization’s main activity?
How will it reach its goals?
THE ANSWER IS A MARKETING PLAN.
LO1
Chapter 2
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7
Planning at Different Levels
Chapter 2
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8
Strategic Planning
Marketing Plan
A written document that acts as a
guidebook of marketing activities
for the marketing manager.
LO1
Chapter 2
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9
PUMA Mission Statement
PUMA has the long-term
mission of becoming the
most desirable
Sportlifestyle company.
Chapter 2
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10
PUMA Corporate Strategy
At the heart of our company strategy is the focus on
continuously pursuing a more flexible and efficient
organization that is fit to thrive in an increasingly
dynamic and fast-paced industry. To this extent, over
the course of the past few years, we have decentralized
our structure on the way to creating the first truly
virtual sports company.
Chapter 2
In 2006 PUMA has launched Phase IV of its long-term
oriented business plan (see "Corporate Development").
To help manage the matrix organizational structure and
as part of PUMA’s company development over the past
years was, we have created the Group Executive
Committee, which incorporates the functions of brand
management, product, finance, growth management, legal
and organizational structure into one core body.
The resulting cross-functional communication has further
enhanced PUMA’s corporate agility. Implementing this
nimble structure enables PUMA to realize efficiencies
in areas such as product lifecycle, management and
sourcing.
The end result helps reduce lead times and costs, while
concurrently fostering improvement in quality. These
advances are part of a constantly evolving process in
by South-Western,
a division of Thomson
All rights reserved
whichCopyright
our ©2008
corporate
strategy
andLearning.
structure
lends us
competitive advantage.
11
PUMA Brand Strategy
The brand is focusing on bringing distinctive
designs and a global outlook to each product
range by blending influences of sport, lifestyle
and fashion.
In order to achieve these goals, our brand template
emphasises PUMA’s distinctiveness, individualism,
spontaneity, internationalism and sporting
heritage.
An important part of our brand strategy is
maintaining vigilant watch over our distribution
channels, ensuring that we maintain the high
level of desirability necessary for sustainable
growth.
Concurrently, in areas where licensee growth is
desired, we will provide solid guidance and
strict alertness to make certain that the brand’s
objectives and direction are maintained.
Chapter 2
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12
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
 Provides an examination of the marketing environment
 Allows entry into the marketplace with awareness
LO1
Chapter 2
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13
Marketing
Plan
Elements
Business Mission
Statement
Objectives
Situation or SWOT
Analysis
Marketing Strategy
Target Market
Strategy
Marketing Mix
LO1
Chapter 2
Product
Distribution
Promotion
Price
Implementation
Evaluation
Control
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14
LO1 REVIEW LEARNING OUTCOME
The Importance of Strategic Marketing
What
Strategic Planning
Why
Long-term profitability and growth
How
Write a marketing plan
http://www.dmusic.com
Online
Chapter 2
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15
LO2
Defining the Business Mission
Develop an
appropriate business
mission statement
Chapter 2
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16
Defining the Business Mission
 Answers the question,
“What business are we in?”
 Focuses on the market(s)
rather than the good or service
 Strategic Business Units (SBUs)
may also have a mission statement
LO2
Chapter 2
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17
AMA’s Mission Statement
LO2
Chapter 2
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18
Strategic Business Units (SBUs)
Characteristics:
[SBU HAS…]
 A distinct mission and specific target market
 Control over its resources
 Its own competitors
 Plans independent of other SBUs
LO2
Chapter 2
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19
LO2 REVIEW LEARNING OUTCOME
Business Mission Statement
Q: What business are we in?
A: Business mission statement
Too narrow
Too broad
Just right
Chapter 2
marketing myopia
no direction
focus on markets
served and benefits
customers seek
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20
Sample Mission Statements
MADD: To stop drunk driving, support
the victims of this violent crime, and
prevent underage drinking.
Armour: To find new technology and
enhance the performance of every
athlete and outdoorsman. Lighter.
Faster. Stronger. Better.
Chapter 2
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21
Sample Mission Statements
The following are some examples of mission statements
from real enterprises.
3M
"To solve unsolved problems innovatively"
Mary Kay Cosmetics
"To give unlimited opportunity to women."
Merck
"To preserve and improve human life."
Walt Disney
"To make people happy."
Chapter 2
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22
Disney Mission &
Values
Mission: To make people happy.“
VALUES:
No cynicism
Nurturing and promulgation of "wholesome
American values"
Creativity, dreams and imagination
Fanatical attention to consistency and
detail
Preservation and control of the Disney
"magic"
Chapter 2
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23
Wal-Mart
Wal-Mart's Mission
At Wal-Mart, we are guided by our three
founding basic beliefs, and these include:
Respect for the Individual, Service to Our
Customers, and Strive for Excellence.
We are a global retailer committed to growing
our company by improving the standard of living
for our customers and serving communities
around the world. We earn the trust of our
customers every day by providing a broad
assortment of quality merchandise and services
at every day low prices while fostering a
culture that rewards and embraces mutual
respect, integrity and diversity.
Chapter 2
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24
Target
Philosophy + Values
Expect more of everything: More great design,
more choices, more convenience, more service
and more clothes, housewares and designercreated items that you’ll never find anywhere
else. And pay less. It’s as simple as that.
We team up with world-class designers in home,
fashion, accessories, beauty, furniture and
outdoor living and create exclusive products to
decorate and delight—people like Michael
Graves, Amy Coe, Sonia Kashuk, Liz Lange and
Isaac Mizrahi. And since it’s at Target, you
know you’ll always find it at a reasonable—or
even surprising—price that lets you add highquality design to your life, in every room,
every day.
Chapter 2
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25
LO3
Setting Marketing
Plan Objectives
Describe the criteria
for stating good
marketing objectives
Chapter 2
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26
LO3 Marketing Objective
Marketing
Objective
A statement of what is to
be accomplished through
marketing activities.
Chapter 2
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27
LO3 Marketing Objectives
 Realistic
 Measurable
 Time specific
 Consistent with and indicate
the organization’s priorities
“Our objective is to achieve 10
percent dollar market share in
the cat food market within 12
months of product introduction.”
Chapter 2
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28
LO3 REVIEW LEARNING OUTCOME
Criteria for Good Marketing Objectives
Realistic, measurable, and time-specific objectives
consistent with the firm’s objectives:
1. Communicate marketing management philosophy
2. Provide management direction
3. Motivate employees
4. Force executives to think clearly
5. Allow for better evaluation of results
Chapter 2
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29
LO4 Conducting a Situation Analysis
Explain the
components of a
situation analysis
Chapter 2
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30
SWOT Analysis
SWOT Analysis
Identifying
internal strengths (S)
and weaknesses (W)
and also examining
external opportunities (O)
and threats (T)
LO4
Chapter 2
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31
SWOT Analysis
Internal
External
LO4
Chapter 2
S
W
O
T
Things the company does well.
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
areas of
current
weakness.
©South-Western
College
Publishing
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32
2-8
Sample SWOT: FedEx
Strengths
 FedEx, Kinko’s brands
 Air, ground strength
 Stable workforce
Opportunities
 New markets (China)
Presentation
© 2005 Marian Burk Wood - allservices
rights reserved
 Custom/special
 More channels (Kinko’s)
Chapter 2
Weaknesses
 Possible labor actions
 Slower growth in package
volume
Threats
 Intense competition
 Technology
 Fuel costs
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33
Biz Flix
LO4
Chapter 2
U-571
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34
Environmental Scanning
Environmental
Scanning
The 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.
LO4
Chapter 2
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35
The Dynamic Marketing Environment


The total business and social environment that a company operates in
Two main aspects to the marketing environment
– Macro influences
• External forces largely beyond the control of a firm that
influence the marketing opportunities and activities of all firms.
– Firms can influence this but have no direct control over it
– Micro influences
• External forces that affect a particular firm.
– Help shape its marketing activities.
Chapter 2
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36
Demographics
 The characteristics of the human population
– age
– income
– occupation
– education
– gender
– marital status
– race
– religion.
Chapter 2
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37
Demographic changes
 Average age is increasing
 Number of households are increasing by 16%
 Cultural shifts growing faster than the rest of the
population
– Hispanic community
– African American community
– Asian community.
Chapter 2
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38
Economic Conditions
 Stage of the Business Cycle
– prosperity
– recession
– recovery
 Inflation
 Interest rates.
Chapter 2
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39
Competition
 Rivals for Customers’ Limited
Buying Power
– brand competition
– substitute products
– general competition (limited resource spending).
Chapter 2
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40
Social and Cultural Forces
• Characteristics of society
• Characteristics of people in that society
• Cultural values beliefs and lifestyles
• Socio-cultural Patterns Changing
quickly
Chapter 2
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41
Social & Cultural Forces




Shift toward environmental concerns
Blurring of gender roles
Time premium (stresses convenience)
Concern for physical fitness & health.
Chapter 2
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42
Political & Legal Forces
 Monetary and Fiscal Policies
– taxes
 Social Legislation and Regulation
– Protect consumers
– Regulate competition
 Law suits.
Chapter 2
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43
Legislation Affecting Marketing
Regulate Competition
 Sherman Antitrust Act
 Federal Trade Commission
Act
 Clayton Antitrust Act
 State Unfair Trade
Practices Acts
 Robinson-Patman Act
Chapter 2
 Wheeler-Lea Act
 Lanham Trademark
 Consumer Goods Pricing
Act
 Various deregulation laws
pertaining to specific
industries
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44
Legislation Affecting Marketing
Protect Consumers






Pure Food and Drug Act
Automobile Disclosure Act
Kefauver-Harris Drug
Amendments
National Traffic and Motor
Vehicle Safety Act
Fair Packaging and Labeling Act
Cigarette Labeling and
Advertising Acts
Chapter 2






Consumer Credit Protection Act
Consumer Product Safety Act
Consumer Product Warranty Act
FTC Improvement Act
Nutritional Labeling and
Education Act
Children’s Television Act
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45
The Technological Environment
 Technology is an investment
a firm must make to succeed
 Patents protect inventions
Chapter 2
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46
Technology
 Impacts lifestyles, consumption patterns, economic
well-being
– Affects how marketing is carried out
– Starting new industries
– Altering existing industries
– Stimulates markets and other industries
– Create new ways of doing business
– Creates/destroys industries.
Chapter 2
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47
Micro-Environment
 Forces controllable by management
– Suppliers
– Marketing intermediaries
– Internal environment
• Production, personnel, finance….
Chapter 2
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48
LO4 REVIEW LEARNING OUTCOME
Components of a Situation Analysis

production costs

marketing skills

financial resources

image

technology
ENVIRONMENT
INTERNAL
Strengths
Weaknesses
Chapter 2
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49
LO4 REVIEW LEARNING OUTCOME
Components of a Situation Analysis

social

demographic

economic

technological

political / legal
ENVIRONMENT
EXTERNAL
Opportunities

competitive
Threats
Chapter 2
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50
LO5
Competitive Advantage
Identify sources
of competitive
advantage
Chapter 2
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51
LO5 Competitive Advantage
Competitive
Advantage
Chapter 2
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.
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52
LO5 Competitive Advantage
Cost
Types of
Competitive
Advantage
Product/Service
Differentiation
Niche Strategies
Chapter 2
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53
LO5
Cost Competitive
Advantage
Cost
Competitive
Advantage
Chapter 2
Being the low-cost
competitor in an industry
while maintaining
satisfactory profit
margins.
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54
LO5
Cost Competitive
Advantage
 Obtain inexpensive raw
materials
 Create efficient plant
operations
 Design products for ease
of manufacture
 Control overhead costs
 Avoid marginal customers
Chapter 2
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55
LO5 Sources of Cost Reduction
Experience Curves
Product Design
Efficient Labor
Reengineering
No-frills Products
Production Innovations
Government Subsidies
New Service
Delivery Methods
Chapter 2
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56
LO5 Product/Service Differentiation
Product/Service
Differentiation
Competitive
Advantage
Chapter 2
The provision of
something that is unique
and valuable to buyers
beyond simply offering a
lower price than the
competition’s.
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57
LO5
Examples of
Product/Service Differentiation
 Brand names
 Strong dealer network
 Product reliability
 Image
 Service
Chapter 2
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58
LO5
Niche Competitive
Advantage
Niche
Competitive
Advantage
Chapter 2
The advantage achieved
when a firm seeks to
target and effectively
serve a small segment of
the market.
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59
LO5
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 category
Chapter 2
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60
LO5
Sources of Sustainable
Competitive Advantage
Patents
Copyrights
Locations
Equipment
Technology
Skills and Assets
of an
Organization
Chapter 2
Customer Service
Promotion
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61
LO5 REVIEW LEARNING OUTCOME
Sources of Competitive Advantage
Sources of
Competitive Advantage
Cost
$
Chapter 2
Product/Service
Differentiation
A vs. B vs. C
Niche
Strategies
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62
LO6
Strategic Directions
Identify strategic
alternatives
Chapter 2
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63
LO6 Strategic Alternatives
Market
Penetration
Chapter 2
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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64
LO6
Ansoff’s Strategic
Opportunity Matrix
Present Product
New Product
Present
Market
Market
Penetration
Product
Development
New
Market
Market
Development
Diversification
http://www.pg.com
Online
Chapter 2
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65
Where do Starbucks’ initiatives fit?
•New stores in
the US
•New stores
globally
•Tea beverages
and products
•Grocery store
and bookstore
beverage sales
•Music and
entertainment
Chapter 2
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66
LO6 Portfolio Matrix
Chapter 2
Stars
Problem
Children
Cash Cows
Dogs
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67
BCG Matrix
 Method focuses on the potential of a firm’s existing
successful products to generate cash that the firm can
then use to invest in new products
 New products are chosen for their potential to become
future cash generators
 Two dimensions:
– Market growth rate
– Relative market share
Chapter 2
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68
BCG Matrix: Stars
 SBUs with dominant market share in high-growth
markets
– requires funding to keep up with production
and promotion demands
– strategies seek to maximize market share in
the face of increasing competition
Chapter 2
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69
BCG Matrix: Cash Cows
 SBUs with dominant market share in a lowgrowth potential market
– product is well established and market share can be
maintained with minimal funding
– firms milk cows of profits to fund growth of other
products in portfolio
– too many cows can become a liability due to the lack of
growth potential
Chapter 2
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70
BCG Matrix: Question Marks
 SBUs with low market shares in fast-growth
markets
– sometimes called problem children
– the firm has failed to compete effectively
 The dilemma? Investing more money into the
SBU may:
– improve market share in a high potential market OR
– result in negative cash flow and failure
Chapter 2
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71
BCG Matrix: Dogs
 SBUs with small market share in a slow-growth
market
– specialized products in limited markets
unlikely to grow
– firms may sell dogs to smaller firms or
eliminate product from market
Chapter 2
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72
Disney’s Touchstone
Disney
emphasizes
its movie
brand for
grownups as
a star
Chapter 2
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73
LO6 Portfolio Matrix Strategies
Build
Hold
Harvest
Divest
Chapter 2
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74
LO6 REVIEW LEARNING OUTCOME
Strategic Alternatives
Identify strategic alternatives
Market development
=
customers
Market penetration
=
share
Product development
=
products
=
new products +
new markets
Diversification
Chapter 2
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75
LO7 Describing the Target Market
Discuss target
market strategies
Chapter 2
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76
Marketing Strategy
Marketing
Strategy
LO7
Chapter 2
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.
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77
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
LO7
Chapter 2
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78
Target Market Strategy
Appeal to the entire market
with one marketing mix
Concentrate on one
marketing segment
LO7
Chapter 2
Appeal to multiple markets
with multiple marketing mixes
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79
LO7 REVIEW LEARNING OUTCOME
Target Market Strategies
Target Market Options
Entire Market
Chapter 2
Multiple Markets
Single Market
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80
LO8
The Marketing Mix
Describe the
elements of the
marketing mix
Chapter 2
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81
The Marketing Mix
Marketing Mix
A unique blend of product,
distribution, promotion, and
pricing strategies designed to
produce mutually satisfying
exchanges with a target market.
LO8
Chapter 2
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82
Marketing Mix: The “Four Ps”
Price
Promotion
Place
Product
LO8
Chapter 2
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83
Marketing Mix: The “Four Ps”
 The starting point of the
“4 Ps”
 Includes
 Physical unit
 Package
 Warranty
 Service
 Brand
 Image
 Value
Product
 Products can be…
 Tangible goods
 Ideas
 Services
LO8
Chapter 2
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84
Marketing Mix: The “Four Ps”
 Product availability
where and when
customers want them
Place
 All activities from raw
materials to finished
products
 Ensure products arrive
in usable condition at
designated places when
needed
LO8
Chapter 2
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85
Marketing Mix: The “Four Ps”
 Role is to bring about
exchanges with target
markets by:
 Informing
 Educating
 Persuading
 Reminding
LO8
Chapter 2
 Includes integration of:
 Personal selling
 Advertising
 Sales promotion
 Public relations
Promotion
http://www.paramount.com
http://www.warnerbros.com
http://www.universalstudios.com
Online
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86
Marketing Mix: The “Four Ps”
 Price is what a buyer
must give up to obtain a
product.
Price
 The most flexible of the
“4 Ps”-- quickest to
change
 Competitive weapon
 Price x Units Sold =
Total Revenue
LO8
Chapter 2
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87
LO8 REVIEW LEARNING OUTCOME
Elements of the Marketing Mix
Chapter 2
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LO9
Following Up on
the Marketing Plan
Explain why
implementation,
evaluation, and control
of the marketing plan
are necessary
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Following Up on
the Marketing Plan
 Implementation
 Evaluation
 Control
 Marketing audit is…
 Comprehensive
 Systematic
 Independent
LO9  Periodic
http://www.youngbiz.com
Online
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LO9 REVIEW LEARNING OUTCOME
Implementation, Evaluation, and Control
Implementation
Evaluation
Product
Place
Promotion
Price
Met
objectives?
Audits
•
•
•
•
Chapter 2
comprehensive
systematic
independent
periodic
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91
LO10 Effective Strategic Planning
Identify several
techniques that help
make strategic
planning effective
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LO10 REVIEW LEARNING OUTCOME
Techniques for Effective Strategic Planning
Continual
attention
Creativity
Management
commitment
Effective
Strategic
Planning
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93
Starbuck’s Mission
Establish Starbucks as the premier purveyor of the
finest coffee in the world while maintaining our
uncompromising principles while we grow.
The following six guiding principles will help us measure the
appropriateness of our decisions:
Provide a great work environment and treat each other with
respect and dignity.
Embrace diversity as an essential component in the way we do
business.
Apply the highest standards of excellence to the purchasing,
roasting and fresh delivery of our coffee.
Develop enthusiastically satisfied customers all of the time.
Contribute positively to our communities and our environment.
Recognize that profitability is essential to our future success.
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Starbucks’ fiscal 2006
objectives
Objectives
The Company is targeting total net revenue growth of
approximately 20 percent on a quarterly and full year
basis.
Starbucks expects comparable store sales growth in the
range of three percent to seven percent
Strategy
Starbucks continues to target opening at least 1,800 new
stores on a global basis in fiscal 2006.
Continued innovation
New formats
Entertainment
Tactics
In the United States, Starbucks plans to open
approximately 700 Company-operated locations and 600
licensed locations.
In International markets, Starbucks plans to open
approximately 150 Company-operated stores and 350 licensed
stores;
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Starbucks Entertainment
Starbucks Coffee Company launched Starbucks
Entertainment in 2004 to help customers
discover quality entertainment options as part
of their daily coffee routines.
Acquired Hear Music in 1999 to become
Starbucks Hear Music, the sound of music at
Starbucks
Starbucks Entertainment extended beyond
music and announced a unique partnership
with Lionsgate to market and distribute the
inspirational film “Akeelah and the Bee.”
The company expects the film to be the first
of many such partnerships that help
customers discover unique and rewarding
entertainment.
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Starbuck’s Hear Music
Starbucks Hear Music™ Coffeehouse
This innovative retail store blends the classic
Starbucks coffeehouse experience with an
extensive selection of physical CDs and the next
generation of the Hear Music™ media bars which
provide customers with an easy, fun, self-service
way to discover and customize music on CDs
drawing from more than 1 million digital tracks –
offering a fully integrated coffee and music
experience.
Selection criteria include location, foot
traffic, the music culture of the city,
population of tourists and residents, and
visibility for these unique stores.
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Starbucks and Lionsgate
Lionsgate is the leading independent filmed
entertainment studio
The Lionsgate brand name is synonymous with
original, daring, quality entertainment in
markets around the globe.
We are excited about extending our powerful
marketing and distribution reach to the
movie industry and feel very confident that
our customers will appreciate the
recommendation.”
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98
Akeelah and the Bee
Promotion
Unique, Experiential Promotion Designed to
Enhance the Starbucks Experience and
Broaden Film’s Reach by Introducing it to
Millions More Movie-goers
Through a fun, innovative and
unprecedented experiential marketing
campaign, Starbucks will provide
customers the opportunity to interact
with key aspects of the story
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99
Akeelah and the Bee
Promotion
Rather than featuring the standard movie poster used in
more traditional promotional campaigns, the Starbucks
campaign builds on the movie’s theme of the power of
words by leveraging unique in-store placements and
techniques that have not been implemented before.
Customers will be invited to step inside Akeelah's
journey as part of their daily coffee routine.
The campaign will drive buzz and challenge customers to
expand their vocabulary and spelling prowess with
difficult-to-spell and exotic words printed on a wide
variety of collateral such as flash cards, magnets, instore signage, coasters, and cup sleeves.
In addition, beginning April 17, travel-sized
SCRABBLE® will be sold in all Starbucks locations in
the U.S. and Canada, further supporting the central
theme of the campaign: “Changing the World One Word at
a Time.”
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Where do Starbucks’
initiatives fit?
•New stores in
the US
•New stores
globally
•Tea beverages
and products
•Grocery store
and bookstore
beverage sales
•Music and
entertainment
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