Lamb, Hair, McDaniel
MKTG2008-2009
2
CHAPTER
Designed by
Amy McGuire, B-books, Ltd.
Chapter 2
Strategic Planning for
Competitive Advantage
Prepared by
Deborah Baker, Texas Christian University
Copyright ©2009 Cengage Learning Inc. 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
Copyright ©2009 Cengage Learning Inc. All rights reserved.
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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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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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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9
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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10
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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11
LO2
Defining the Business Mission
Develop an
appropriate business
mission statement
Chapter 2
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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
 Strategic Business Units (SBUs)
may also have a mission statement
LO2
Chapter 2
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13
AMA’s Mission Statement
LO2
Chapter 2
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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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15
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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LO3
Setting Marketing
Plan Objectives
Describe the criteria
for stating good
marketing objectives
Chapter 2
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LO3 Marketing Objective
Marketing
Objective
A statement of what is to
be accomplished through
marketing activities.
Chapter 2
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LO3 Marketing Objectives
 Realistic
 Measurable
 Time specific
 Consistent with and indicating
the priorities of the
organization
“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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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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20
LO4 Conducting a Situation Analysis
Explain the
components of a
situation analysis
Chapter 2
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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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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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Biz Flix
LO4
Chapter 2
U-571
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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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25
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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LO4 REVIEW LEARNING OUTCOME
Components of a Situation Analysis

social

demographic

economic

technological

political / legal

competitive
ENVIRONMENT
EXTERNAL
Opportunities
Threats
Chapter 2
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LO5
Competitive Advantage
Identify sources
of competitive
advantage
Chapter 2
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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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LO5 Competitive Advantage
Cost
Types of
Competitive
Advantage
Product/Service
Differentiation
Niche Strategies
Chapter 2
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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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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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32
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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33
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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LO5
Examples of
Product/Service Differentiators
 Brand names
 Strong dealer network
 Product reliability
 Image
 Service
Chapter 2
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Chapter 2
Demand for Nintendo’s game console, the
Wii, has consumers waiting in long lines or
paying premium prices on online auctions for
the console. Rival products, while popular,
haven’t been flying off the shelves. That’s
probably because a unique feature on the Wii
console provides Nintendo a competitive
advantage. That feature, called Mii, is
software that allows users to create online
characters that look like themselves, or
someone else. Fans say they get addicted to
the thrill of seeing themselves running around
the screen, playing tennis or boxing with Mii
characters like George W. Bush or Michael
Jackson.
© 2007 The Associated Press. All rights reserved.
Beyond the Book
LO5 Competitive Advantage – More Fun
SOURCE: Yukari Iwatani Kane, “Look, It’s Mii—on Wii!” Wall Street Journal March 16, 2007 B1
Copyright ©2009 Cengage Learning Inc. All rights reserved
36
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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37
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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38
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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LO5 REVIEW LEARNING OUTCOME
Sources of Competitive Advantage
Sources of
Competitive Advantage
Cost
$
Chapter 2
Product/Service
Differentiation
A vs. B vs. C
Copyright ©2009 Cengage Learning Inc. All rights reserved
Niche
Strategies
40
LO6
Strategic Directions
Identify strategic
alternatives
Chapter 2
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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
Copyright ©2009 Cengage Learning Inc. All rights reserved
42
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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LO6 Portfolio Matrix
Chapter 2
Stars
Problem
Children
Cash Cows
Dogs
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LO6 Portfolio Matrix Strategies
Build
Hold
Harvest
Divest
Chapter 2
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45
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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46
LO7 Describing the Target Market
Discuss target
market strategies
Chapter 2
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47
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.
Copyright ©2009 Cengage Learning Inc. All rights reserved
48
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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49
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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50
LO7 REVIEW LEARNING OUTCOME
Target Market Strategies
Target Market Options
Entire Market
Chapter 2
Multiple Markets
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Single Market
51
LO8
The Marketing Mix
Describe the
elements of the
marketing mix
Chapter 2
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52
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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53
Marketing Mix: The “Four Ps”
Price
Promotion
Place
Product
LO8
Chapter 2
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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
Product
 Products can be…
 Tangible goods
 Ideas
 Services
LO8
Chapter 2
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55
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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56
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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57
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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58
LO8 REVIEW LEARNING OUTCOME
Elements of the Marketing Mix
Chapter 2
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Beyond the Book
LO8 Anatomy of an Ad
Chapter 2
Ads are
types of
promotion
Men =
target
market
Clive Owen
[celebrity endorsement]
= promotion strategy?
Moisturizer =
product
Competitive
Advantage?
Market
development =
sell anti-aging
cream to
men (not
just women)
Copyright ©2009 Cengage Learning Inc. All rights reserved
60
LO9
Following Up on
the Marketing Plan
Explain why
implementation,
evaluation, and control
of the marketing plan
are necessary
Chapter 2
Copyright ©2009 Cengage Learning Inc. All rights reserved
61
Following Up on
the Marketing Plan
 Implementation
 Evaluation
 Control
 Marketing audit is…
 Comprehensive
 Systematic
 Independent
9  Periodic
LO
http://www.youngbiz.com
Online
Chapter 2
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LO9 REVIEW LEARNING OUTCOME
Implementation, Evaluation, and Control
Implementation
Evaluation
Product
Place
Promotion
Price
Objectives met?
Audits
•
•
•
•
Chapter 2
comprehensive
systematic
independent
periodic
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63
LO10
Effective Strategic Planning
Identify several
techniques that help
make strategic
planning effective
Chapter 2
Copyright ©2009 Cengage Learning Inc. All rights reserved
64
LO10 REVIEW LEARNING OUTCOME
Techniques for Effective Strategic Planning
Continual
attention
Creativity
Management
commitment
Effective
Strategic
Planning
Chapter 2
Copyright ©2009 Cengage Learning Inc. All rights reserved
65