Strategic Planning for
Competitive Advantage
chapter
2
Prepared by
Deborah Baker
Texas Christian University
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Learning Objectives
1. Understand the importance of strategic
marketing and know a basic outline for a
marketing plan.
chapter
2
2. Develop an appropriate business mission
statement.
3. Describe the criteria for stating good
marketing objectives.
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Learning Objectives (continued)
4. Explain the components of a situation
analysis.
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2
5. Identify sources of competitive advantage.
6. Identify strategic alternatives and describe
tools used to help select alternatives.
7. Discuss target market strategies.
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Learning Objectives (continued)
8. Describe elements of the marketing mix.
chapter
2
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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Learning Objective
Understand the importance of
strategic marketing and know
a basic outline for a marketing plan.
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Strategic Planning
The managerial process of
creating and maintaining a
fit between the
organization’s objectives
and resources and evolving
market opportunities.
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Strategic Planning
EVOLVING
MARKET
OPPORUNITIES
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
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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
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Marketing Plan Elements
Business Mission
Statement
Objectives
Situation or
SWOT Analysis
Marketing Strategy
Target Market
Strategy
Marketing Mix
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Product
Distribution
Promotion
Price
Implementation
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Evaluation
Control
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2
Learning Objective
Develop an appropriate
business mission statement.
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Defining the Business Mission

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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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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Learning Objective
Describe the criteria for stating
good marketing objectives.
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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

Consistent with
Organization’s Priorities
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“Our objective is to
increase market
share by 40% and to
obtain customer
satisfaction ratings of
at least 90% in 2001.”
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Marketing Plan Objectives

Communicate marketing
management philosophies

Provide direction

Serve as motivators

Clarify thinking

Provide basis for control
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Learning Objective
Explain the components
of a situation analysis.
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SWOT Analysis
Identifying
internal strengths (S)
and weaknesses (W)
and also examining
external opportunities (O)
and threats (T)
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SWOT Analysis
S
W
O
T
Things the company does well.
Internal
External
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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.
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Publishing
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SWOT Analysis
Strengths and Weaknesses
INTERNAL






Production Costs
Marketing Skills
Employee Capabilities
Financial Resources
Available Technology
Company/Brand Image
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SWOT Analysis
Opportunities and Threats
EXTERNAL
Social
Technological
Demographic
Political/Legal
Economic
Competitive
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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.
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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
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5
Learning Objective
Identify sources of
competitive advantage
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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.
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Competitive Advantage
Cost
Types of
Competitive
Advantage
Product/Service
Differentiation
Niche Strategies
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Cost Leadership





Obtain inexpensive raw materials
Create efficient operations
Design products for manufacture
Control overhead costs
Avoid marginal customers
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Cost Competitive Advantage
Being the low-cost competitor
in an industry while
maintaining satisfactory
profit margins.
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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
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Differentiation
Competitive Advantage
5
Advantage achieved when a
firm provides something that
is unique and valuable to
buyers beyond simply
offering a lower price
than the competition.
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Common Differential Advantages
 Brand names
 Strong dealer network
 Product reliability
 Image
 Service
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Sources of Differential
Competitive Advantage
5
Value impressions
Augmented products
 Features of a
product that
signal value
 Features of a
product that are
not expected by
the customer
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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.
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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
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Sustainable
Competitive Advantage
5
A differential 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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Strategic Windows
The limited period during
which the “fit” between
the key requirements
of a market and the
particular competencies
of a firm are at an optimum.
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6
Learning Objective
Identify strategic alternatives
and describe tools used
to help select alternatives.
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Strategic Windows
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 Alternatives
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
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
6
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
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LOW
?
$
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BCG Portfolio Matrix
HIGH
HIGH
LOW
MARKET GROWTH RATE
MARKET SHARE DOMINANCE
High growth
Market leaders
Require cash
LOW
High growth
Low market share
Need cash
Poor profit margins
$
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Low growth
High market share
High cash flow
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Low growth
Low market share
Minimal cash flow
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Portfolio Matrix Example
MARKET SHARE DOMINANCE
HIGH
LOW
MARKET GROWTH RATE
HIGH
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LOW
Palmtop
(PROBLEM
CHILD)
Notebook
Computer
(STAR)
Personal
Computer
(CASH COW)
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
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Increase short-term cash return.
Appropriate for all SBUs except Stars.
Get rid of SBUs with low shares in
low-growth markets.
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Market Attractiveness Matrix
Tool for allocating resources
among strategic business
units on the basis of market
attractiveness and firm’s
positioning.
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Market Attractiveness Matrix (GE)
BUSINESS POSITON
HIGH
MEDIUM
MEDIUM
WEAK
High Attractiveness
Medium Attractiveness
Low Attractiveness
LOW
MARKET ATTRACTIVENESS
STRONG
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Market Attractiveness
Attributes of an
Attractive Market






High profitability
Rapid growth
Lack of government regulation
Insensitivity to price increase
Lack of competition
Availability of technology
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Learning Objective
Discuss target market strategies.
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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.
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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

Develop a marketing mix that will produce
satisfying exchanges with target markets
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Learning Objective
Describe elements of the marketing mix.
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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.
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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
 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
Promotion
 Role is to bring about
exchanges with target
markets
 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
Explain why implementation, evaluation,
and control of the
marketing plan are necessary.
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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.
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Learning Objective
10
Identify several techniques that help
make strategic planning effective.
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Effective Strategic Planning
10
Ongoing
Process
Requirements
Creativity
Management
Support
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