Lamb, Hair, McDaniel
2011-2012
CHAPTER 2
Chapter 2
Copyright ©2012 by Cengage Learning Inc. All rights reserved
1
© AP IMAGES/JENNIFER GRAYLOCK
Strategic Planning for
Competitive Advantage
Learning Outcomes
LO 1 Understand the importance of strategic marketing
and know a basic outline for a marketing plan
LO 2 Develop an appropriate business mission statement
LO 3 Describe the components of a situation analysis
LO 4 Explain the criteria for stating good marketing
objectives
LO 5 Identify sources of competitive advantage
Chapter 2
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Learning Outcomes
LO 6 Identify strategic alternatives
LO 7 Discuss target market strategies
LO 8 Describe the elements of the marketing mix
LO 9 Explain why implementation, evaluation, and control
of the marketing plan are necessary
LO 10 Identify several techniques that help make
strategic planning effective
Chapter 2
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3
The Nature of Strategic
Planning
Understand the
importance of strategic
marketing and know a
basic outline for a
marketing plan
LO1
Chapter 2
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Strategic Planning
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.
LO1
Chapter 2
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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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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.
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
 Provides an examination of the marketing environment
 Serves as a reference for the success of future activities
 Allows entry into the marketplace with awareness
LO1
Chapter 2
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Exhibit 2.1
Elements of a
Marketing Mix
Business Mission
Statement
Situation or SWOT
Analysis
Objectives
Marketing Strategy
Target Market
Strategy
Marketing Mix
LO1
Chapter 2
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
LO1
Chapter 2
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.
LO1
Chapter 2
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Defining the Business Mission
Develop an
appropriate business
mission statement
LO2
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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Mission Statement:
Ben & Jerry’s
1.
2.
3.
LO2
Chapter 2
Product
To make, distribute and sell the finest
quality all natural ice cream and related products in a
wide variety of innovative flavors made from Vermont
Dairy products.
Economic To operate the company on a sound
financial basis of profitable growth, increasing value for
our shareholders, and creating career opportunities
and financial rewards for our employees.
Social To operate the company in a way that
actively recognizes the central role that business plays
in the structure of society by initiating innovative ways
to improve the quality of life of a broad community—
local, national, and international.
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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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Conducting a Situation Analysis
Describe the
components of a
situation analysis
LO3
Chapter 2
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SWOT Analysis
Internal
External
LO3
Chapter 2
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
LO3
Chapter 2
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Environmental Scanning
Helps identify opportunities and threats.
Designing a marketing strategy is based
on six major environmental forces:
• Social
© AP IMAGES/PRNEWSFOTO/PEPSICO
• Demographic
• Economic
• Technological
• Political/Legal
LO3
Chapter 2
• Competitive
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Beyond the Book
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.
Chapter 2
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Setting Marketing
Plan Objectives
Explain the criteria
for stating good
marketing objectives
LO4
Chapter 2
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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.”
LO4
Chapter 2
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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
LO4
Chapter 2
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Competitive Advantage
Identify sources
of competitive
advantage
LO5
Chapter 2
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Competitive Advantage
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.
LO5
Chapter 2
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Competitive Advantage
Cost
Types of
Competitive
Advantage
Product/Service
Differentiation
Niche
LO5
Chapter 2
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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
LO5
Chapter 2
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Sources of Cost
Reduction
Experience Curves
Product Design
Efficient Labor
Reengineering
No-frills Products
Production Innovations
Government Subsidies
New Service
Delivery Methods
LO5
Chapter 2
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Product/Service Differentiation
Competitive Advantage
A Product/Service Differentiation
Competitive Advantage is…
the provision of something that is
unique and valuable to buyers beyond
simply offering a lower price than that
of the competition.
LO5
Chapter 2
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Examples of Product/Service
Differentiators
 Brand names
 Strong dealer network
 Product reliability
 Image
 Service
LO5
Chapter 2
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Niche Competitive
Advantage
 Used by small companies with limited resources
 May be used in a limited geographic market
LO5
Chapter 2
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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.
LO5
Chapter 2
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Sources of Sustainable
Competitive Advantage
Patents
Copyrights
Locations
Equipment
Technology
Skills and Assets
of an
Organization
Customer Service
LO5
Chapter 2
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Promotion
33
Strategic Directions
Identify strategic
alternatives
LO6
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
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Exhibit 2.2
Ansoff’s
Strategic
Opportunity
Matrix
LO6
Chapter 2
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Selecting a Strategic
Alternative
Star
Cash Cow
Portfolio
Matrix
Question Mark
LO6
Chapter 2
Dog
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Exhibit 2.3
Portfolio Matrix for a Large
Computer Manufacturer
LO6
Chapter 2
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Portfolio Matrix
Strategies
Build
Hold
Harvest
Divest
LO6
Chapter 2
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Describing
the Target Market
Discuss target
market strategies
LO7
Chapter 2
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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…
LO7
Chapter 2
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
LO7
Chapter 2
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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
LO7
Chapter 2
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The Marketing Mix
Describe the
elements of the
marketing mix
LO8
Chapter 2
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The Marketing Mix
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”
LO8
Chapter 2
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Marketing Mix:
The “Four Ps”
The starting point of
the “4 Ps” Includes:
LO8
Chapter 2
Physical unit
Package
Warranty
Service
Brand
Image
Value
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
LO8
Chapter 2
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
LO8
Chapter 2
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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
LO8
Chapter 2
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Beyond the Book
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
Chapter 2
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Following Up on
the Marketing Plan
Explain why
implementation,
evaluation, and control
of the marketing plan
are necessary
LO9
Chapter 2
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Following Up on
the Marketing Plan
 Implementation
 Evaluation and Control
 Marketing audit is…




Comprehensive
Systematic
Independent
Periodic
LO9
Chapter 2
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Effective Strategic Planning
Identify several
techniques that help
make strategic
planning effective
LO10
Chapter 2
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Techniques for Effective
Strategic Planning
Continual
attention
LO10
Chapter 2
Creativity
Management
commitment
Effective
Strategic
Planning
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Beyond the Book
Chapter 2 Videos
Chapter 2
Method – Strategic Planning for
Competitive Advantage
Based on what you heard in the video, does
method have a marketing plan?
http://www.cengage.com/marketing/boo
k_content/1439039429_lamb/company_c
lips/ch02.html
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