Chapter 2 ♦ Strategic Planning for Competitive Advantage 13
optimal conditions for the traditional case study approach to learning.
In addition to the individual courses’ objectives, we are bound to meet college wide program objectives. As with many
other schools of business, DePaul’s College of Commerce has made “the development of both oral and written
communication skills” a primary educational outcome and instituted a program of “writing across the curriculum” as a
means of achieving enhanced communication skills. What we needed was a means of assessing our college course
objectives, which converged with the program objective of the college. The adoption of what we have called
environmental scan reports provided us with a method for satisfying both our course and program objectives.
As can be seen in the instructions that follow, the environmental scan reports serve to reinforce students’ understanding
of terminology and strategy. The reports provide a bridge between the text and contemporary events. To paraphrase our
instructions, we want students to see that text concepts are dynamic and contemporary in their application.
Our experience with using the environmental scan reports over the past several years has been positive in a number of
ways. We’ve found that the reports allow us to determine whether or not students are developing a working knowledge
of marketing principles and are able to communicate this knowledge effectively. We’ve also found that the skills
enhanced by the preparation of the environmental scan reports transfer quite well to the traditional case studies
encountered in advanced classes. In addition, the written comments on the students’ course evaluation forms quite
frequently cite the environmental scan reports as one of the aspects of the course they found most beneficial.
What follows are the instructions for preparing environmental scan reports. These instructions are included in the course
syllabus. We invite our teaching colleagues to experiment with environmental scan reports using the instructions
provided or modifying them to meet their own course and program objectives.
14 Chapter 2 ♦ Strategic Planning for Competitive Advantage
Handout
ENVIRONMENTAL SCAN ASSIGNMENT
Each student will do this assignment three times per term. It will be worth 90 points (3 30).
The assignment involves finding a current article of substance in the business press (the Wall Street Journal, Bloomberg
Businessweek, Fortune, etc.). Find something about a company or industry, which discusses topics in your marketing
text (text name).
The objectives of these reports include the following:
1. To guide you in discovering that marketing is not simply a collection of static terms and dated theories. Rather,
as you’ll find in reading the articles and preparing your reports, both corporate and social organizations are
living the principles you are learning.
2. To assure that you effectively communicate the important points of the articles on which you’ve chosen to
report.
You will be assigned, with other students, a group number. Check the list that will be distributed to see when your
number comes due. We will discuss these articles during the week. Expect to be called upon to discuss your report; I will
call on some of the students in the group throughout the week. You must be prepared to hand in your assignment when
requested. Late assignments will receive only half credit.
Format
Reports are to be typed, double spaced, on 2 (MAXIMUM) sheets of 8 ½” x 11” paper, stapled together, with no plastic
bindings. I expect that these reports will represent your best presentation quality.
Include the following headings: I. Introduction, II. Environment, III. Marketing Mix Variables, and IV. Questions.
At the top of page 1, include the following:
Your name, group number
Mkt. 301
Use the following citation format:
Author’s last name, first name, “Title of the article,” in Periodical, (dates), page numbers.
Follow this outline for your report:
I. Introduction: This is three paragraphs long.
1. In your own words, provide a one-paragraph summary of key points of the article.
2. List and provide definitions of terms or concepts critical to understanding the key points of the article.
3. Relate the key points, terms, and concept to the material in your textbook. Cite the appropriate chapters and
page numbers.
II. Environment:
Explain which of the “environments” are relevant to the situation discussed in the article. Refer to Chapter 4 of the
text for a complete discussion of environments. Pay special attention to the competitive environment and issues
bearing on competitive advantage.
III. Marketing Mix Variables
Explain the relevance of the strategy elements (target market and marketing mix) and especially changes in the
strategy elements dictated by the situation discussed in the article.
Presentation
I expect to ask students who submit particularly relevant reports to summarize these reports in class.
Chapter 2 ♦ Strategic Planning for Competitive Advantage 15
ETHICS EXERCISE
Abercrombie & Fitch, a retail clothing chain based in New Albany, Ohio, launched a line of thong underwear for preteen
girls. Words like “eye candy” and “wink wink” were printed on the front of the skimpy underwear that some argued
would fit girls aged 5 to 10. Abercrombie is known for its provocative ads and sexually oriented catalogs. Supporters of
the strategy claim that producing thong-style underwear for 10- to 16- year olds is a good move; critics think that the line
is tasteless and that marketing it to young girls is contemptuous.
Questions
1. Is marketing adult-styled undergarments to a younger audience unethical?
Abercrombie, a company known for using sex as a primary advertising tool, has attracted younger ages to its lines
2. Would Abercrombie have been in the spotlight had the sexy words been omitted from the product?
The parental backlash may not have been so strong if the sexy words had been omitted. Without the phrases, the
VIDEO ASSIGNMENT: The Nederlander Organization
The Nederlander Organization is a global theatre management company that backs productions, rents, and manages
Broadway style theatres. In this video, major managers discuss the strategic decisions behind the development of a
separate company to manage a loyalty program for theatre-goers. This company, Audience Rewards, allows a number of
theatre management companies to pursue strategic growth and other market opportunities.
1. The audience rewards program is a
a. Pricing strategy
b. Promotion strategy
c. Distribution Strategy
d. Product strategy
2. When Josh Lesnick describes the Nederlander Organization’s demographic as skewing female, 30-59, and with a
household income of over $200,000, that indicates:
a. that the Nederlander Organization is implementing information from a marketing audit.
b. that the Nederlander Organization has discovered a sustainable competitive advantage.
c. that the Nederlander Organization has compared its rewards program to a benchmark.
d. that the Nederlander Organization has conducted a market opportunity analysis.
16 Chapter 2 ♦ Strategic Planning for Competitive Advantage
3. When the Nederlander Organization developed the audience rewards program, they were pursuing which option
from Ansoff’s opportunity matrix?
a. Market Penetration
b. Market Development
c. Product Development
d. Diversification
4. As the Nederlander Organization develops Broadway-wide gift cards and credit cards that allow customers to
accumulate points towards show tickets they are:
a. implementing a diversification strategy by leveraging mailing lists provided by partners such as Delta Airlines.
b. practicing adjacent innovation by leveraging their audience rewards network of partners.
c. experiencing transformational innovation by partnering with companies who can guide them in developing new
products.
d. harvesting from their cash cow, Evita.
5. What type of competitive advantage does Nederlander Organization have?
a. Cost Competitive Advantage
b. Product/Service Differentiation Competitive Advantage
c. Niche Competitive Advantage
d. Loyalty Competitive Advantage
6. Understanding that theatre-goers would be interested in furthering the “Broadway Experience” by redeeming points
for events such as walking the red carpet suggests that Nederlander Organization
a. divested its dogs and built up some dogs.
b. developed new ideas through Ansoff’s Opportunity Matrix.
c. discovered marketing opportunities through environmental scanning.
d. performed a marketing audit and implemented action items.
7. Audience Rewards developed relationships with Nederlander Organization other theatre owners to create the loyalty
program that spans most Broadway shows. In a SWOT, this is
a. A threat, because the Nederlander Organization is a major backer, but competes with the other theatres.
b. An opportunity, because Audience Rewards can use these relationships to force other theatre companies to
become part of the loyalty program.
c. A weakness, because Audience rewards has to rely on these theatre companies to always get along and support
the rewards company.
d. A strength, because partnering with these theatre companies allows Audience Rewards to have a competitive
advantage against other, smaller loyalty programs.
Chapter 2 ♦ Strategic Planning for Competitive Advantage 17
8. Shows are produced by a large and variable number of different producers and backers. Customers who go to the
theatre (no matter the show) are not typically considered a market because the shows belong to many different
people. However, The Nederlander Organization performed an implementation analysis and realized that this group
is a strong market, if they had the correct method of reaching it.
True
False
9. One reason Nederlander Organization wanted to find a way to incentivize its customers that wasn’t through
discounts was because:
a. discounting is a hard way to make money, particularly in Broadway.
b. they already had a niche competitive advantage.
c. it is too easy to lose the cost competitive advantage to the next low price.
d. they depended on backing the best plays to provide the competitive advantage they needed.
10. An example of a marketing objective for Audience Rewards might be: “To establish a system of rewards that will
encourage customers to purchase at least two more tickets this year than last year.”
True
False
CASE ASSIGNMEN T: Ni nt endo
In the early days of video games, gaming wasn’t exactly a social affair. Sure, you could spend hours playing the same
game, but it was with two or three other players at most. And of course, the earliest consoles were great at video games,
but there were no other social features built into them. Now, gaming has been completely transformed by online
networks and social media. The video game market is filled with smartphones, tablets, laptops, social networking Web
sites, and other highly connected ways to play.
Within this evolving marketplace—where success is seen by companies that emphasize mobility and multi–
connectivity—Nintendo adapted a seemingly outdated strategy with the release of the Wii U, which focuses primarily on
games. Instead of selling its new console as a multimedia device that gives users a wide range of entertainment options
18 Chapter 2 ♦ Strategic Planning for Competitive Advantage
and a high level of social connectivity, Nintendo is hoping to reestablish its competitive advantage by leaning on users’
love of The Legend of Zelda, Super Mario Bros., Donkey Kong, Metroid, and other first-party franchises. According to
Nintendo of America President Reggie Fils-Aime, this strategy is based on the company’s belief that what consumers
want is games, not all of the other trappings: “When you talk to players and understand what they want, it can only be
delivered through a dedicated gaming device.” Early Wii U sales indicate otherwise, however. Only 64,000 Wii Us were
sold in February 2013, compared to 302,000 sales of Microsoft’s nearly ten-year-old Xbox 360 console.
Jamin Warren, “Not Your Childhood’s Video–Game System,” Fast Company, November 2012, 70-72; Matt
Peckham, “What’s Going On with Nintendo’s Wii U?” TIME, March 15, 2013,
http://techland.time.com/2013/03/15/whats-going-on-with-nintendos-wii-u (Accessed March 25, 2013).
TRUE/FALSE
1. If Nintendo feels at any time that its strategic decision to focus on games was a mistake, it could switch immediately to
focus on multimedia and connectivity.
2. The Wii U, like the 3DS handheld console and Entertainment Analysis & Development software division, is an SBU of
Nintendo.
3. The Wii U is a cash cow for Nintendo.
4. Nintendo of America President Reggie Fils–Aime’s statement, “When you talk to players and understand what they want,
it can only be delivered through a dedicated gaming device,” helps explain Nintendo’s mission statement.
5. Nintendo’s $299.00 price point for the Wii U is a sustainable competitive advantage over Sony’s $399.00 PlayStation 4
and Microsoft’s $499.00 Xbox One.
Chapter 2 ♦ Strategic Planning for Competitive Advantage 19
MULTIPLE CHOICE
1. Based on the case and the chapter text, which option from Ansoff’s strategic opportunity matrix did Nintendo engage in
when it launched the Wii U?
a.
Market penetration.
b.
Market development.
c.
Product development.
d.
Diversification.
e.
Innovation.
2. Nintendo’s beloved video game franchises, such as Zelda, Mario, Donkey Kong, and Metroid, are examples of this
element of a situation analysis:
a.
Strengths.
b.
Weaknesses.
c.
Opportunities.
d.
Threats.
e.
None of these.
3. Which of the following is a useful marketing objective for Nintendo?
a.
We want to become the most popular video game console ever.
b.
We want to garner 90 percent of the video game market share over the next year.
c.
We want to increase the number of Wii U sales from 64,000 in February 2013 to 256,000 in February
2015.
d.
We want to make sure people are having 200 percent more fun when they play the Wii U.
e.
We want our competitors to make so many mistakes that the Wii U overtakes them in total annual
sales.
4. If Nintendo decided to develop a wholly redesigned Wii U console and then double its advertising efforts worldwide,
which two elements of the marketing mix would it be utilizing?
a.
Product and promotion.
20 Chapter 2 ♦ Strategic Planning for Competitive Advantage
b.
Place and pricing.
c.
Promotion and place.
d.
Place and product.
e.
Pricing and promotion.
5. If Nintendo wanted to adjust the Wii U’s marketing mix as quickly as possible, which of the following strategies would
it pursue?
a.
Start selling Wii U consoles in specially designed vending machines.
b.
Release a new Wii U bundle that comes with a popular game.
c.
Launch a viral video marketing campaign.
d.
Implement a $50 price cut for the Wii U.
e.
Change the name of the Wii U console to something more appealing.
GREAT IDEAS FOR TEACHING CHAPTER 2
James S. Cleveland, Sage College of Albany
DISCUSSION BOARD TOPICS TO ENCOURAGE PARTICIPATION
Discussion board questions provided to students to encourage them to engage in thinking and writing about the content
of the Principles of Marketing course usually take the form of a provocative statement to which students are asked to
respond. An example of this would be “All PR is good PR.”
Discussion topics such as this one are abstract and often require that the instructor provide an initial reply to show
students what is expected of them in their own replies. For students with limited work experience, this approach may be
quite appropriate. For adult students with extensive experience as employees and consumers, however, the abstract
nature of such topics can be frustrating.
I have developed, therefore, a series of discussion board questions to use with experienced, adult students. These
questions are designed to encourage them to use their experiences as employees and consumers as doorways to better
understand the course material, and to make their own responses more interesting to themselves and to the other students
in the class who will read and comment on them.
Each question has three parts:
Chapter 2 ♦ Strategic Planning for Competitive Advantage 21
1. First, there is a sentence or two from the students’ textbook introducing the topic. By using the text author’s own
words, students are enabled to locate relevant material in the text more easily, the text content is reinforced, and
confusion resulting from use of variant terms or expressions is minimized.
2. Second, there is a reference to text pages the students should review before proceeding. Since the goal of the
exercise is for students to apply the course content to their own experiences, reviewing the content first is important.
3. Third, there is a request for the students to think about or remember some specific situations in their experiences to
which they can apply the text material, and a question or questions for them to address in their replies.
The following example is for Chapter 2 of MKTG10. The three parts have been separated here so they are more readily
visible.
1. The term marketing mix refers to a unique blend of product, distribution, promotion, and pricing strategies designed
to produce mutually satisfying exchanges with a target market.
2. Review the four parts of the marketing mix from section 2–10 of your text.
3. Then choose an idea, good, or service with which you are familiar and describe its marketing mix and how it
resulted (or did not result) in a satisfying exchange for you.
22 Chapter 2 ♦ Strategic Planning for Competitive Advantage
Martha E. Hardesty, The College of St. Catherine
BUYING AN EDUCATION: THE FOUR Ps ON DAY ONE
Students enrolled in my two-credit Introduction to Marketing course may be freshmen exploring a business major,
sophomores fulfilling a requirement for the accounting degree, or even senior English majors taking the “something!”
their parents urged to helped them get a job. From the first day I must get students to recognize the experiential base of
marketing, and I must create class norms of participation.
I begin the first class by asking students to break into small buzz groups. I then pass out a sheet with the question, “Why
are you buying your education at The College of St. Catherine?” Students typically look surprised—they have not
regarded their college choice as a consumer purchase. I mention that there are well over a dozen other options for taking
an Introduction to Marketing course for college credit within this term within this metropolitan area. Students are
instructed to spend at least 20 minutes recalling absolutely every influence that caused them to come to this college.
Another question on the same sheet asks them “What do you have in common with the other students in your group?”
They spend about five minutes discussing this.
Typical answers for the first question might be “Small class size,” “Financial aid package,” etc. As I collect their
responses on the board, I discuss items as choices made by them or by the institution. They gradually notice that I am
listing their comments deliberately in one of four columns. They note as well that I am keeping a separate list of other
colleges they mention that they had also considered. Inevitably, the discussion produces the four Ps of the marketing mix
and gives the foundation of our course. Typical inputs are:
• Product: specific major, class size, academic reputation . . .
• Price: actual costs, financial aid, scholarships . . .
• Place: near/far from home, in an urban area where jobs are plentiful, the beauty of the campus . . .
• Promotion: campus recruiting officers, relatives or friends who have attended, high school counselors . . .
• The list of other colleges generates the Competition.
The profile of the Customer, “What you have in common,” is much less obvious to them. At this private women’s
college, gender and religion are sometimes mentioned; more often students think about academic major or hometown.
They rarely generate other demographics like income and almost never get near psychographics (which, at our particular
campus, is the most significant variable besides gender!). Yet when competitor colleges are mentioned, they are all able
to paint an instant portrait of the student at each of these institutions.
Within the first class, then, we have generated the fundamental concepts of the course. Students begin to differentiate the
four Ps and to recognize the influence of competition on managing the marketing mix. They begin to explore the
complexities of market segmentation and the significance of knowing your target market fully. They know as well that
their contribution to the class is necessary and valuable. Throughout the term I refer to this day’s discussion at the
introduction of any new concept. Student feedback has been that this beginning adds significant coherence to a brief yet
broad-ranging course.
Paul LeMay Burr, University of Incarnate Word
Richard M. Burr, Trinity University
ANALYZING COMPANY STRATEGY VIA MULTIPLE RESOURCES
Beyond basic marketing courses, students can be expected to analyze marketing strategy of companies by building a
“data base” using widely available sources.
1. Encourage students to choose for a class project a publicly traded company. Owners of privately held firms can
never be expected to divulge confidential data for a class project, even to a friend of a close family member.
2. Students should immediately request via the firm’s 1-800 shareholder relations number annual and quarterly reports,
10-K and 10-Q reports, and a student press kit. Some companies need repeated requests and follow-up. Call 1-800–
Chapter 2 ♦ Strategic Planning for Competitive Advantage 23
555-1212 (the 800 information operator), or try an “800” Web site database to get the shareholder relations 1-800
number. Students can then follow steps 3–9.
3. Search the company’s Web site for annual and quarterly reports and press releases of strategic decisions. Be aware
of key-word search opportunities at the company’s Web site.
4. Utilize the EDGAR Web site, the Security and Exchange Commission’s database of filings by public companies, to
analyze 10K and 10Q reports. The reports are voluminous. Use the “print page” options for printing ONLY the page
needed.
5. Analyze Value Line’s one–page profile of highly useful data about the company, an industry overview, and
comparisons of the company to its competitors.
6. Study page B-2 of the Monday through Friday Wall Street Journal for daily alphabetical lists of all companies
mentioned in that day’s newspaper. A student individual subscription is useful for cutting and filing daily.
7. Search ABI/Inform, a database of over 1,000 publications that allows key word subjects and is updated monthly.
The Web site is updated daily.
8. Analyze Hoover’s Handbook of American Business, which profiles publicly traded companies, listing information
that might not be found elsewhere.
9. Finally, give students specific heading areas to look for in their analysis of the firm’s strategy, including the
following: pricing and margin, concept differentiation and clarity, positioning and repositioning, branding, trade
dress, customer profile, location strategy, distribution, turnover, strategic alliances. Presentation of findings, along
with graph support, will spur class discussion.
P.J. Forrest, Mississippi College
MARKETING MIX REPORTS
One of the most helpful projects I’ve ever assigned in Principles of Marketing is Marketing Mix Reports. The students
pick a good or a service at the beginning of class and throughout the semester use that good or service as a reference and
an example for each topic we cover. In addition, they prepare a report on the marketing mix actually used for that
product.
At the beginning of the semester, the students are required to choose a product by brand name. Many popular brands
such as Tommy Hilfiger, Nike, and Coke are chosen, but also some lesser-known brands such as Louisville Slugger,
Peavey, or Furby are chosen. Some students choose familiar products such as soft drinks, automobiles, backpacks, sports
equipment, and computers; others choose a special-interest item that is less familiar to most of us such as deer stands,
paint ball equipment, or a musical group. I must approve the choice, and my criterion is whether there is enough
marketing information readily available on the good or service. I put the brand names of the products the students have
chosen on the seating chart next to their respective names, which allows me to use their products as examples during
lectures.
In the past I’ve had them hand in a single report after we had covered product, place, promotion, and price, but at present
I break it down into four separate reports. These one– or two-page reports are easy to prepare, but it forces the student to
apply and properly use marketing terms and concepts. As we cover each of the four Ps, the student has to prepare a
report, which is handled in or presented at the last class meeting before the exam on that topic. Every semester I get
numerous comments on my teaching evaluation from students about how much doing the report helped in preparing for
the exam and in learning the course material.