Chapter 2: Strategic Planning for Competitive Advantage
1
Chapter 2
Strategic Planning for Competitive Advantage
This chapter begins with the learning outcome summaries followed by a set of lesson plans for
instructors to use to deliver the content.
• Lecture (for large sections) on page 5
• Company Clips (video) on page 7
• Group Work (for smaller sections) on page 10
Review and Assignments begin on page 10
Review questions
Application questions
Application exercise
Ethics exercise
Video assignment
Case assignment
Great Ideas for Teaching Marketing from faculty around the country begin on page 28
Chapter 2: Strategic Planning for Competitive Advantage
2
Learning Outcomes
2-1 Understand the importance of strategic planning
Strategic planning is the managerial process of creating and maintaining a fit between the
2-2 Define strategic business units (SBUs)
Each SBU has its own rate of return on investment, growth potential, and associated risks, and
2-3 Identify strategic alternatives and know a basic outline for a marketing plan
Ansoff’s opportunity matrix presents four options to help management develop strategic
alternatives: market penetration, market development, product development, and diversification.
The layout of the innovation matrix demonstrates that as a company moves away from its core
capabilities (the lower left) it traverses across a range of change and innovation rather than
2-4 Develop an appropriate business mission statement
The firm’s mission statement establishes boundaries for all subsequent decisions, objectives, and
Chapter 2: Strategic Planning for Competitive Advantage
3
2-5 Describe the components of a situation analysis
In the situation (or SWOT) analysis, the firm should identify its internal strengths (S) and
weaknesses (W) and also examine external opportunities (O) and threats (T). When examining
2-6 Identify sources of competitive advantage
There are three types of competitive advantage: cost, product/service differentiation, and niche.
Sources of cost competitive advantage include experience curves, efficient labor, no-frills goods
2-7 Explain the criteria for stating good marketing objectives
Objectives should be realistic, measurable, time-specific, and compared to a benchmark. They
2-8 Discuss target market strategies
Targeting markets begins with a market opportunity analysis, or MOA, which describes and
2-9 Describe the elements of the marketing mix
The marketing mix is a blend of product, place, promotion, and pricing strategies (the four Ps)
Chapter 2: Strategic Planning for Competitive Advantage
4
designed to produce mutually satisfying exchanges with a target market. The starting point of the
2-10 Explain why implementation, evaluation, and control of the marketing plan are
necessary
Before deciding on whether a marketing plan can work, it must be implemented—that is, people
2-11 Identify several techniques that help make strategic planning effective
First, management must realize that strategic planning is an ongoing process and not an annual
Key Terms
Cash cow
Market development
Niche competitive advantage
Competitive advantage
Market opportunity analysis
(MOA)
Planning
Control
Market penetration
Portfolio matrix
Cost competitive advantage
Marketing audit
Problem child (question mark)
Diversification
Marketing mix (four Ps)
Product development
Dog
Marketing myopia
Product/service differentiation
competitive advantage
Environmental scanning
Marketing objective
Evaluation
Marketing plan
Star
Experience curves
Marketing planning
Strategic business unit (SBU)
Implementation
Marketing strategy
Strategic planning
Mission statement
Sustainable competitive
advantage
SWOT analysis
Chapter 2: Strategic Planning for Competitive Advantage
5
Lesson Plan for Lecture
Brief Outline and Suggested PowerPoint Slides
Learning Outcomes and Topics
PowerPoint Slides
LO1 Understand the importance of strategic
planning
2-1 The Nature of Strategic Planning
1. Strategic Planning For Competitive
Advantage
2. Learning Outcomes
3. Learning Outcomes (continued)
4. The Nature of Strategic Planning
5. Strategic Planning
LO2 Define strategic business units (SBUs)
2-2 Strategic Business Units
6. Strategic Business Units
7. Characteristics of Strategic Business
Units (SBUs)
LO3 Identify strategic alternatives and know
a basic outline for a marketing plan
2-3 Strategic Alternatives
8. Strategic Alternatives
9. Exhibit 2.1: Ansoff’s Opportunity
Matrix
10. Exhibit 2.2: Innovation Matrix
11. Boston Consulting Group’s Portfolio
Matrix
12. Exhibit 2.3: Portfolio Matrix for a Large
Computer Manufacturer
13. Strategies Used to Allocate Future
Resources
14. Exhibit 2.4: General Electric Model
15. Marketing Plan
16. Objectives of a Marketing Plan
17. Exhibit 2.5: Elements of a Marketing
Plan
LO4 Develop an appropriate business
mission statement
2-4 Defining the Business Mission
18. Defining the Business Mission
19. Mission Statement
Chapter 2: Strategic Planning for Competitive Advantage
6
Learning Outcomes and Topics
PowerPoint Slides
LO5 Describe the components of a situation
analysis
2-5 Conducting a Situation Analysis
20. Conducting a Situation Analysis
21. SWOT Analysis
LO6 Identify sources of competitive
advantage
2-6 Competitive Advantage
22. Competitive Advantage
23. Competitive Advantage
24. Cost Competitive Advantage
25. Product/Service Differentiation
Competitive Advantage
26. Niche Competitive Advantage
27. Sustainable Competitive Advantage
LO7 Explain the criteria for stating good
marketing objectives
2-7 Setting Marketing Plan Objectives
28. Setting Marketing Plan Objectives
29. Marketing Objectives
30. Effective Marketing Objectives
LO8 Discuss target market strategies
2-8 Describing the Target Market
31. Describing the Target Market
32. Target Market Strategy
33. Strategies for Selecting Target Markets
LO9 Describe the elements of the marketing
mix
2-9 The Marketing Mix
34. The Marketing Mix
35. The Marketing Mix
36. Marketing Mix: The “Four Ps”
37. Marketing Mix: The “Four Ps”
(continued)
LO10 Explain why implementation,
evaluation, and control of the
marketing plan are necessary
2-10 Following Up on the Marketing Plan
38. Following Up on the Marketing Plan
39. Steps Involved in Following up on the
Marketing Plan
40. Steps Involved in Following up on the
Marketing Plan (continued)
41. Post-Audit Tasks
Chapter 2: Strategic Planning for Competitive Advantage
7
Learning Outcomes and Topics
PowerPoint Slides
LO11 Identify several techniques that help
make strategic planning effective
2-11 Effective Strategic Planning
42. Effective Strategic Planning
43. Techniques for Effective Strategic
Planning
44. Key Terms
45. Key Terms
46. Key Terms
47. Summary
48. Summary
Suggested Homework
• This instructor manual contains assignments on the Nederlander Organization video and
the Nintendo case.
• This chapter’s online study tools include flashcards, visual summaries, practice quizzes,
and other resources that can be assigned or used as the basis for longer investigations into
marketing.
Lesson Plans for Video
Company Clips
Segment Summary: The Nederlander Organization
The Nederlander Organization is a global theater management company that backs productions
and rents and manages Broadway style theaters. In this video, major managers discuss the
strategic decisions behind the development of a separate company to manage a loyalty program
for theater-goers. Audience Rewards allows a number of theater management companies to
pursue strategic growth and other market opportunities.
These teaching notes combine activities that you can assign students to prepare before class, that
you can do in class before or while watching the video, and that you can assign students to
complete as assignments after watching the video.
During the viewing portion of the teaching notes, stop the video periodically when appropriate to
ask students the questions or perform the activities listed on the grid. You may even want to give
the students the questions before starting the video and have them think about the answer while
viewing the segment. That way, students will be engaged in active rather than passive viewing.
Chapter 2: Strategic Planning for Competitive Advantage
8
Pre-Class Prep for You
• Preview the Company Clips video
segment for Chapter 2. This exercise
reviews concepts for LO1, LO6, LO9,
and LO10.
• Review your lesson plan.
• Make sure you have all of the
equipment needed to show the video to
the class, including the DVD and a way
to project the video.
• You can also stream the video HERE
Video Review Exercise
Activity
Teaching Method
Warm Up
Begin by asking students, “What is the goal of strategic planning?” (On
the board, write “long-term profitability and growth.”)
In-Class Preview
• Segue into a discussion of the elements that make up a marketing
plan. Copy Exhibit 2.5 onto the board. Briefly explain each of the
elements as you write them if students have not become familiar
with them from previous reading.
• Remind students to keep the marketing plan elements in mind as
they review the video.
• Compare the concepts of market strategy and market mix. Ask
students to predict the Nederlander Organization’s target market
strategy from what they learned in the first video.
Viewing
(solutions below)
1. Based on what you heard in the video, what was the Nederlander
Organization’s marketing objective in creating Audience
Rewards?
2. Describe an element that makes up a competitive advantage for
Audience Rewards. Is it sustainable?
3. What drives the Nederlander’s market strategy, and which
element(s) of the marketing mix does it rely upon?
Chapter 2: Strategic Planning for Competitive Advantage
9
Follow-up
• Send students back to www.audiencerewards.com. Have students
write a brief paragraph about how the website identifies its target
market segment.
• Have students break into groups of four students each, and have
each group write a mission statement for the Nederlander
Organization. When students finish, discuss how the mission
statement supports what you saw in the video.
• Ask students, “How can Audience Rewards sustain its competitive
advantage?” The question can be discussed by the class as a whole,
within the small groups with professor supervision, or assigned as an
out-of-class exercise.
Solutions for Viewing Activities
1. Based on what you heard in the video, what was the Nederlander Organization’s
marketing objective in creating Audience Rewards?
The marketing objective was to offer a more complete Broadway experience by
2. Describe an element that makes up a competitive advantage for Audience Rewards. Is
it sustainable?
The element that contributes to Audience Reward’s competitive advantage is the
partnership with several major theater houses, production companies, and other arts
3. What drives the Nederlander’s market strategy, and which element(s) of the
marketing mix does it rely upon?
The Nederlander Organization’s market strategy is driven by the fact that they have a very
Chapter 2: Strategic Planning for Competitive Advantage
10
© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Nederlander Organization relies on providing its productions companies that rent the
theater great promotion technology through Audience Rewards.
Lesson Plan for Group Work
In most cases, group activities should be completed after some chapter content has been covered,
probably in the second or third session of the chapter coverage. (See the “Lesson Plan for
Lecture” above.) For the “Class Activity: Marketing Strategy Analysis, “ divide the class into
small groups of four or five people each, and provide the information and the questions asked by
the class activity, as described later in this chapter.
Class Activity—Marketing Strategy Analysis
In this exercise, students are asked to brainstorm with you, using an overhead projector or
blackboard. Let the students select several high-profile goods and services. Then get the class to
help analyze the marketing strategy by answering the questions given below.
1. What is the product?
2. Who is the target market?
3. On what criteria is this market segmented?
4. What demographic factors affected the choice of this target?
5. What is the price strategy, promotion strategy, and distribution strategy?
6. How is the product packaged? Why?
7. Who is the direct competition and indirect competition? Which firms would be appropriate
benchmarks for this firm? What competitive advantage does this product have?
8. How are environmental factors affecting the marketing of this product? Consider social,
demographic, legal, political, economic, technological, and competitive factors.
9. Is the purchase of this product affected by psychological or social needs and situational
factors?
10. Is the marketer attempting market penetration, market development, product development,
and/or diversification strategy?
11. Does this company appear to have a total quality management orientation? What is its
reputation on overall quality when compared to the competition?
12. Is this firm known for being responsive to customers? Brainstorm a list of adjectives that
describe this firm and its products. How does this list fit with the concept of value?
Review and Assignments for Chapter 2
Review Questions
Chapter 2: Strategic Planning for Competitive Advantage
11
1. Your cousin wants to start his own business, and he is in a hurry. He has decided not
to write a marketing plan because he thinks that preparing such a document would
take too long. He says he doesn’t need a formal proposal because he has already
received funding from your uncle. Explain why it is important for him to write a plan
anyway.
Strategic marketing planning is the basis for all marketing strategies and decisions. The
2. After graduation, you decide to take a position as the marketing manager for a small
manufacturer of snack foods. The company, Shur Snak, is growing, and this is the
first time that the company has ever employed a marketing manager. As such, there
is no marketing plan in place for you to follow. Outline a basic marketing plan for
your boss to give her an idea of the direction you want to take the company.
Students’ answers will vary, but the marketing plan should contain the following sections:
a. Business mission statement
3. You are given the task of deciding the marketing strategy for a transportation
company. How do the marketing mix elements change when the target market is (a)
low-income workers without personal transportation, (b) corporate international
business travelers, or (c) companies with urgent documents or perishable materials to
deliver to customers?
Target Market: Low-income workers without personal transportation
Chapter 2: Strategic Planning for Competitive Advantage
12
© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Product: Bus or light rail service
• Price: Inexpensive or free
• Place: Inner city
• Promotion: Billboards
Target Market: Corporate international business travelers
Target Market: Companies with urgent documents or perishable materials to deliver to
customers
4. What techniques can make your school enrollment marketing plan more effective?
The effectiveness of the plan depends on the following factors: (1) the extent to which the
Application Questions
1. How are Coke and Pepsi using their websites, http://www.coke.com and
http://www.pepsi.com, to promote their newest product offerings? Do you see hints of
any future strategies the companies might implement? Where?
Students’ answers will vary.
2. How can a new company best define its business mission statement? Can you find
examples of good and bad mission statements on the Internet? How might you
improve the bad ones?
Chapter 2: Strategic Planning for Competitive Advantage
13
The mission statement is based on a careful analysis of benefits sought by present and
3. Thinking back to review question 2, write a business mission statement for Shur
Snak. What elements should you include? Evaluate the mission you wrote against
some of the mission statements you found online in question 2.
The mission statement should focus on the market(s) that the organization is trying to serve
4. Building on our Shur Snak example, imagine that your boss has stated that the
marketing objective of the company is to do the best job of satisfying the needs and
wants of the customer. Explain that although this objective is admirable, it does not
meet the criteria for good objectives. What are these criteria? What is a specific
example of a better objective for Shur Snak?
Students’ answers will vary, but the objectives that students write should meet the
5. Competition in the private courier sector is fierce. Companies like UPS and FedEx
dominate, but others, like Airborne, Emery, and even the United States Postal
Service, still have a decent chunk of the express package delivery market. Perform a
mini situation analysis on one of the companies listed by stating one strength, one
weakness, one opportunity, and one threat. You may want to consult the following
websites as you build your grid:
United Parcel Service (UPS): http://www.ups.com FedEx: http://www.fedex.com
USPS: http://www.usps.gov DHL: http://www.dhl-usa.com
Students’ answers will vary, but the situation analysis (SWOT analysis) should include the
Chapter 2: Strategic Planning for Competitive Advantage
14
following:
6. Based on your SWOT analysis, decide what the strategic growth options are for the
company you chose in question 5.
Students’ answers will vary, but their strategic growth options should be chosen from the
7. Divide the class into small groups, and have them discuss examples (at least two per
person) of the last few products they have purchased. What specific strategies were
used to achieve competitive advantage? Is that competitive advantage sustainable
against the competitors?
To have a successful marketing plan, one must seek a differential advantage over the
competition when examining internal strengths and external marketplace opportunities. A
8. Choose three or four other students, and form a team. Create a marketing plan to
increase enrollment in your school. Describe the four marketing mix elements that
make up the plan.
Students’ answers will vary, but they should provide details for the following elements of
the marketing plan:
• Business mission statement
Chapter 2: Strategic Planning for Competitive Advantage
15
© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Place/distribution strategies
• Promotion strategies
• Pricing strategies
• Implementation, evaluation, and control
9. Have your school enrollment marketing plan team (from question 8 above) develop a
plan to implement, evaluate, and control the marketing strategy.
Students’ answers will vary. This section can use a number of formats, but a suggested
format for the implementation plan is a Gantt chart or any other scheduling chart that
Application Exercise
As you now know from reading the chapter, an important part of the strategy-making process
involves scanning the environment for changes that affect your marketing efforts. This exercise
is designed to introduce you to the business press and to help you make the connection between
the concepts you learn in the classroom and real-world marketing activities.
Activities
1. Find a current article of substance in the business press (The Wall Street Journal, the
Financial Times, Fortune, Bloomberg Businessweek, Inc., etc.) that discusses topics you
have covered in this course. Although this is only Chapter 2, you will be surprised by the
amount of terminology you have already learned. If you have trouble finding an article,
read through the table of contents at the beginning of the book to familiarize yourself with
the names of concepts that will be presented later in the course. Read your article carefully,
and make notes about relevant content.
2. Write a one-paragraph summary of the key points in your article; then write a list of the
terms or concepts critical to understanding the article. Provide definitions of those terms. If
you are unfamiliar with a term or concept that is central to the article, look it up in your
textbook or see your professor during office hours. Relate these key points to the concepts
Chapter 2: Strategic Planning for Competitive Advantage
16
in your text by citing page numbers.
3. Explain the environments that are relevant to the situation presented in the article.
4. How are the strategic elements of target market and marketing mix relevant to the article?
Purpose: The purpose of this application is to demonstrate the importance and the energy it
takes for good environmental scanning. This exercise will introduce students to the business
press and so help make the connection from the classroom to the real world.
Setting it up: The exercise is best used as an assignment. It could also work as an in-class group
activity by asking students to each bring a business article of interest to class, dividing the class
into groups, and having each group select one of its member’s articles as the basis for the
activity. Groups would do the scan together and report their findings to the class.
This exercise was inspired by the following Great Ideas for Teaching Marketing:
Robert D. O’Keefe, DePaul University
Philip R. Kemp, DePaul University
J. Steven Kelly, DePaul University
Principles of Marketing: Using Environmental Scan Reports as a Means of Assessing
Student Learning
Two of the several objectives we’ve set for our Principles of Marketing (Mkt 301) course are
common to all principles courses. We want students to (1) develop an understanding of the
fundamental concepts involved in marketing and (2) develop skills in analyzing marketing
strategies. In other words, we want students to leave the class understanding both the definition
and the application of marketing terminology and theoretical concepts.
We’ve found that we can assess a student’s knowledge of terminology and even very basic
applications of these terms via objective tests. Assessing our expectation that students, even at
the introductory level, will develop a deeper and more sophisticated understanding of
terminology and strategy requires an alternative method of assessment. Case study and case
reports, both written and oral, are widely agreed to be an optimal method for assessing student
performance. Our teaching environment, however, presented problems that are not uncommon to
business programs. For a number of reasons, our class sizes have often increased to between 80
and 100 students, and we have had to conduct classes in an auditorium setting with row upon
row of fixed graduated seats. Apart from the physical conditions, recent curriculum revisions
required that we add significant content to the principles course over the 10-week-long quarter.