Lamb, Hair, McDaniel
2012-2013
CHAPTER 2
Copyright ©2012 by Cengage Learning Inc. All rights reserved
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Chapter 1
© AP IMAGES/JENNIFER GRAYLOCK
Strategic Planning for
Competitive Advantage
Learning Outcomes
1
Understand the importance of strategic planning
2
Define strategic business units (SBUs)
3
Identify strategic alternatives and know a basic
outline for a marketing plan
4
Develop an appropriate business mission statement
5
Describe the components of a situation analysis
6
Identify sources of competitive advantage
2
Learning Outcomes
7
Explain the criteria for stating good marketing
objectives
8
Discuss target market strategies
9
Describe the elements of the marketing mix
10
Explain why implementation, evaluation, and control
of the marketing plan are necessary
11
Identify several techniques that help make strategic
planning effective
3
The Nature of Strategic Planning
Understand the
importance of strategic
marketing and know
a basic outline for
a marketing plan
1
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4
Strategic Marketing Management
What is the organization’s main activity?
How will it reach its goals?
The answer is by examining:
• SBUs
• Marketing Plan
• Strategic Alternatives
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Strategic Planning is…
the managerial process of
creating and maintaining a fit
between the organization’s
objectives and resources and the
evolving market opportunities.
The GOAL of strategic planning is long-term
profitability and growth.
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1
Strategic Business Units
Define Strategic
Business Units
(SBUs)
2
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Characteristics of
Strategic Business Units (SBUs)
An SBU HAS…
 A distinct mission and specific
target market
 Control over its resources
 Its own competitors
 Plans independent of other SBUs
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2
Strategic Alternatives
Identify strategic
alternatives and
know a basic
outline for a
marketing plan
3
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Ansoff’s Opportunity Matrix
Market
Penetration
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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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3
Exhibit 2.1
Ansoff’s Strategic Opportunity Matrix
Present Product
New Product
Present
Market
Market Penetration
Product Development
Starbucks sells more coffee to
customers who register their
reloadable Starbucks cards.
Starbucks develops
powdered instant coffee Via.
New
Market
Market Development
Diversification
Starbucks opens stores in
Brazil and Chile
Starbucks launches Hear
Music and buys Ethos Water.
3
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Boston Consulting Group
Portfolio Matrix
Star
Cash Cow
Portfolio
Matrix
Question Mark
Dog
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Exhibit 2.2
Portfolio Matrix for a Large Computer Manufacturer
3
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Portfolio Matrix Strategies
Build
Hold
Harvest
Divest
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Exhibit 2.3
High
Cautiously Invest
Invest/Grow
Invest/Grow
Medium
Harvest/Divest
Cautiously Invest
Invest/Grow
Low
Market attractiveness
Portfolio Matrix for a Large Computer Manufacturer
Harvest/Divest
Harvest/Divest
Cautiously Invest
Low
Medium
High
Business Position
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3
What Is a Marketing Plan?
 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.
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3
Why Write a Marketing Plan?
 Provides a basis for comparison of actual and expected
performance
 Provides clearly stated activities to work toward common
goals
 Provides an examination of the marketing environment
 Serves as a reference for the success of future activities
 Allows entry into the marketplace with awareness
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3
Business Mission
Statement
Exhibit 2.4
Elements of a
Marketing Mix
Situation or SWOT
Analysis
Objectives
Marketing Strategy
Target Market
Strategy
Marketing Mix
Product
Distribution
Promotion
Price
Implementation
Evaluation
Control
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Marketing Plan Elements
Selecting which alternative to
pursue depends on:
1. Philosophy and culture
2. Decision making tools
The most common
decision making tool is
the matrix form.
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Writing the Marketing Plan
A complete marketing plan can allow an
organization to achieve marketing
objectives…
HOWEVER
the marketing plan is only as good as the
information, effort, creativity and thought
put into it.
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3
Defining the Business Mission
Develop an
appropriate business
mission statement
4
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Defining the Business
Mission
 Answers the question,
“What business are we in?”
 Focuses on the market(s)
rather than the good or service
 SBUs may also have a mission
statement
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4
Conducting a Situation Analysis
Describe the
components of a
situation analysis
5 3
LO
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SWOT Analysis
Internal
External
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S
W
O
T
Strengths - things the company does
well.
Weaknesses - things the company
does not do well.
Opportunities - conditions in the
external environment that favor
strengths.
Threats - conditions in the external
environment that do not relate to
existing
strengths or favor areas of
©South-Western College Publishing
current weakness.
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Components of a SWOT Analysis
Examining internal strengths and weaknesses.
Focus on organizational resources:
• Production costs
• Marketing skills
• Financial resources
• Company or brand image
• Employee capabilities
• Technology
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5
Environmental Scanning
Helps identify opportunities and threats.
Designing a marketing strategy is based
on six major environmental forces:
• Social
• Economic
• Technological
• Political/Legal
• Competitive
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© AP IMAGES/PRNEWSFOTO/PEPSICO
• Demographic
Opportunities in Education
• Grockit and DreamBox develop integrated
web-based educational tools.
• Technology-based education solutions offer
interactive instruction for less than a private
tutor.
• Companies like these can use their
technological expertise to create and take
advantage of opportunities in the recession
environment.
Source: Joseph De Avila, "Pursuing an Academic Edge at Home," The Wall Street Journal, July 23, 2009, D1-D2.
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Competitive Advantage
Identify sources
of competitive
advantage
6
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Competitive Advantage
Cost
Types of
Competitive
Advantage
Product/Service
Differentiation
Niche
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Cost Competitive
Advantage
 Obtain inexpensive raw materials
 Create efficient scale of plant operations
 Design products for ease of manufacture
 Control overhead costs
 Avoid marginal customers
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Sources of Cost Reduction
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Experience Curves
Product Design
Efficient Labor
Reengineering
No-frills Products
Production Innovations
Government Subsidies
New Service
Delivery Methods
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Examples of Product/Service
Differentiators
 Brand names
 Strong dealer network
 Product reliability
 Image
 Service
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Niche Competitive
Advantage
 Used by small companies with limited
resources
 May be used in a limited geographic market
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Building Sustainable
Competitive Advantage
 Sustainable competitive advantage is an
advantage that cannot be copied by the
competition.
 A firm that has successfully achieved a
competitive advantage will stake out a
position unique in some manner from its
rivals.
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Sources of Sustainable
Competitive Advantage
Patents
Copyrights
Locations
Equipment
Technology
Skills and Assets
of an
Organization
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Customer Service
Promotion
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6
Setting Marketing Plan Objectives
Explain the criteria
for stating good
marketing objectives
7
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Marketing Objectives
 Realistic
 Measurable
 Time specific
 Compared to a benchmark
“Our objective is to achieve 10
percent dollar market share in
the cat food market within 12
months of product introduction.”
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Criteria for Good Marketing
Objectives
Carefully specified objectives serve several functions:
1. Communicate marketing management philosophy
2. Provide management direction
3. Motivate employees
4. Force executives to clarify their thinking
5. Form a basis for control
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Describing the Target Market
Discuss target
market strategies
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Describing the Target Market
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.
Marketing Opportunity Analysis
(MOA) involves…
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.
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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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Target Market Strategy
Appeal to the entire market
with one marketing mix
Concentrate on one
marketing segment
Appeal to multiple markets
with multiple marketing mixes
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8
The Marketing Mix
Describe the
elements of the
marketing mix
9
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43
The Marketing Mix is…
a unique blend of product, place (distribution),
promotion, and pricing strategies designed to
produce mutually satisfying exchanges with a
target market.
The elements of the marketing mix
are often referred to as the
“Four Ps”
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Marketing Mix:
The “Four Ps”
The starting point of
the “4 Ps” Includes:
Physical unit
Package
Warranty
Service
Brand
Image
Value
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Product
Products can be…
 Tangible goods
 Ideas
 Services
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Marketing Mix:
The “Four Ps”
Place
Product availability where and
when customers want them
All activities from raw materials to
finished products
Ensure products arrive in usable
condition at designated places
when needed
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Marketing Mix:
The “Four Ps”
Includes integration of:
Promotion
Advertising
Public relations
 Role is to bring about
Sales promotion
exchanges with target
Personal selling
markets by:
 Informing
 Educating
 Persuading
 Reminding
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Marketing Mix:
The “Four Ps”
Price
Price is what a buyer must give up to
obtain a product.
The most flexible of the
“4 Ps”—quickest to change
Competitive weapon
Price x Units Sold = Total Revenue
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Whole Foods Changes Its Pricing
Strategy
• As customers face financial struggles,
Whole Foods is changing its pricing
strategy by:
– highlighting deals and sales
– pricing items individually instead of per pound
– bundle items in bulk discounts
Source: Katy McLaughlin and Timothy Martin, "As Sales Slip, Whole Foods Tries Health Push," Wall Street Journal, August 5, 2009, B1
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Following Up on
the Marketing Plan
Explain why
implementation,
evaluation, and control
of the marketing plan
are necessary
10
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50
Following Up on
the Marketing Plan
 Implementation
 Evaluation and Control
 Marketing audit is…




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Comprehensive
Systematic
Independent
Periodic
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Effective Strategic Planning
Identify several
techniques that help
make strategic
planning effective
11
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Techniques for Effective Strategic
Planning
Continual
attention
Creativity
Management
commitment
Effective
Strategic
Planning
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Chapter 2 Video
Recycline
CA Webb discusses Recycline’s strategic decisions that help
the company have a sustainable competitive advantage—
giving customers sustainable, environmentally friendly
products without sacrificing any features of the traditional
product. CA Webb also discusses her use of SWOT, and how
it helps Recycline make strong choices for the new brand.
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