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Chapter 2: Strategic Planning for Competitive Advantage
17
These are not optimal conditions for the traditional case study approach to learning.
In addition to the objectives of individual courses, 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 it can be seen in the instructions that follow, the environmental scan reports serve to reinforce
students’ understanding of marketing 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 by modifying them to meet their
own course and program objectives.
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.
Chapter 2: Strategic Planning for Competitive Advantage
18
The objectives of these reports are useful in the ways detailed below:
1. They 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. The objectives assure that you effectively communicate the important points of the articles
on which you’ve chosen to report.
You will be assigned, along with other students, a group number. Check the list that will be
distributed to see when your number comes up. 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” × 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
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.
Chapter 2: Strategic Planning for Competitive Advantage
19
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.
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” 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
© 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.
3. When the Nederlander Organization developed the Audience Rewards program, which
option were they pursuing 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 toward 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 the Nederlander Organization have?
a. Cost competitive advantage
b. Product/service differentiation competitive advantage
c. Niche competitive advantage
d. Loyalty competitive advantage
© 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.
6. Understanding that theater-goers would be interested in furthering the “Broadway
Experience” by redeeming points for events such as walking the red carpet suggests that
the 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 the Nederlander Organization and other
theater 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 theaters.
b. an opportunity, because Audience Rewards can use these relationships to force other
theater companies to become part of the loyalty program.
c. a weakness, because Audience Rewards has to rely on these theater companies to
always get along and support the rewards company.
d. a strength, because partnering with these theater companies allows Audience
Rewards to have a competitive advantage against other, smaller loyalty programs.
8. Shows are produced by a large and variable number of different producers and backers.
Customers who go to the theater (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.
a. True
b. False
Chapter 2: Strategic Planning for Competitive Advantage
23
© 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.
ANS: B
The bulk of this statement is true, but the Nederlander Organization performed a SWOT
analysis and realized they had a potentially strong strategic opportunity if they could create
the right kind of system to pull the various markets and shows together.
9. One reason the 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.”
a. True
b. False
Case Assignment: McDonald’s
For years and years, McDonald’s stopped serving breakfast at 10:30 a.m. And for years,
McDonald’s number one request from customers was for breakfast to be available later into the
day. McDonald’s listened, and by 2015 the first steps were underway.
In April 2015, McDonald’s began testing a limited all-day breakfast menu in San Diego.
It did not include McGriddles or biscuits but did include Steak, Egg & Cheese Bagels and
Cinnamon Coffee Cake. By July, an internal memo suggested franchisees and operators should
prepare for a potential all-day breakfast menu as soon as October.
Chapter 2: Strategic Planning for Competitive Advantage
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Then October 2015 came, and McDonald’s did indeed launch all-day breakfast
nationwide. Customers were ecstatic, but some of the initial excitement faded when the actual
menu was announced. Due to limited kitchen space, stores would offer either biscuits or
McMuffins, but not both. And fans were very disappointed that McGriddles were not available.
Some franchisees reported chaos in the kitchens as they adjusted to serving breakfast and lunch
items simultaneously.
Due to the popularity of the item, McDonald’s began testing all-day McGriddle sales at
stores in Tulsa, Oklahoma in January 2016. By March, they began testing an expanded all-day
breakfast menu including McGriddles, biscuit sandwiches, and McMuffins and locations in
Tulsa and North Carolina.
After almost a full year of watching sales, listening to customers, and testing new
markets, in September 2016, McDonald’s announced their shift to one national all-day breakfast
menu. This will give customers more of their favorite breakfast items any time of day, no matter
where they are in the country.
Chapter 2: Strategic Planning for Competitive Advantage
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© 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.
McDonald’s made other changes recently in addition to expanding breakfast. They
switched from margarine to real butter in 2015 and announced they would fully transition to
using cage-free eggs in nearly 16,000 restaurants in the United States and Canada by 2025.
Sources: “McDonald’s USA Expands its Popular All Day Breakfast Menu This Fall,”
McDonald’s Newsroom, July 6, 2016, accessed October 20, 2016,
http://news.mcdonalds.com/US/news-stories/2016/McDonald-s-USA-Expands-its-Popular-All-
Day-Breakfa; S. Whitten, “McDonald’s expands all-day breakfast menu,” CNBC, July 6, 2016,
accessed October 20, 2016, http://www.cnbc.com/2016/07/06/mcdonalds-expands-all-day-
breakfast-menu.html; W. Filloon, “McDonald’s Expanding All-Day Breakfast Menu to Include,
Well, Everything,” Eater, July 6, 2016, accessed October 20, 2016,
http://www.eater.com/2016/7/6/12106268/mcdonalds-all-day-breakfast-expansion.
TRUE/FALSE
1. McDonald’s pressed on with the strategic plan of offering all-day breakfast in spite of initial
struggles because strategic decisions require long-term commitment.
2. The dessert menu, like the breakfast menu, is a strategic business unit (SBU) of McDonald’s.
3. The foundation of any marketing plan is the firm’s mission statement, which defines a
business in terms of goods and services rather than in terms of the benefits customers seek.
© 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.
4. By extending their breakfast menu to all-day, McDonald’s now has a competitive advantage
over Jack In The Box.
5. After their initial offering and then expansion of the menu for all-day breakfast, McDonald’s
can now move forward to the next idea and leave that strategic plan behind.
MULTIPLE CHOICE
1. The breakfast menu is the __________ in McDonald’s portfolio.
a. star
b. cash cow
c. problem child
d. dog
2. McDonald’s would have conducted a(n) __________ to identify the strength of the breakfast
menu and the potential revenue increase by extending its offerings to all-day.
a. competitive advantage
b. marketing myopia
c. SWOT analysis
d. environmental scanning
© 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.
3. Marketing objectives should be all of the following EXCEPT:
a. realistic
b. measurable
c. time specific
d. abstract
e. comparable against a benchmark
f. Marketing objectives should be all of these.
4. Which of the following is NOT one of the four Ps of the marketing mix?
a. product
b. planning
c. place (distribution)
d. promotion
e. pricing strategies
5. By extending breakfast menu hours and launching a campaign to advertise this, McDonald’s
began the __________ of the marketing plan.
a. evaluation
b. implementation
c. control
d. audit
Great Ideas for Teaching Chapter 2
Chapter 2: Strategic Planning for Competitive Advantage
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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 responses. 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.
1. First, there is a sentence or two from the students’ textbooks 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 responses.
The following example is for Chapter 2 of MKTG11. 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.
Chapter 2: Strategic Planning for Competitive Advantage
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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 listed below.
• Product (specific major, class size, academic reputation, etc.)
• Price (actual costs, financial aid, scholarships, etc.)
• Place (near/far from home, in an urban area where jobs are plentiful, the beauty of the
campus, etc.)
• Promotion (campus recruiting officers, relatives or friends who have attended, high school
counselors, etc.)
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 an academic major or a 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.
Chapter 2: Strategic Planning for Competitive Advantage
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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 the marketing strategies 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 1-800-555-1212 (the 800
information operator), or try an “800” website database to get the shareholder relations 1-
800 number. Students can then follow steps 3–9.
3. Search the company’s website for annual and quarterly reports and press releases of
strategic decisions. Be aware of key-word search opportunities at the company’s website.
4. Utilize the EDGAR website and the Security and Exchange Commission’s database of
filings by public companies to analyze 10-K and 10-Q 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 editions of the 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 keyword subjects
and is updated monthly. The website 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
Chapter 2: Strategic Planning for Competitive Advantage
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strategy, including the following: pricing and margin, concept differentiation and clarity,
positioning and repositioning, branding, trade dress, customer profile, location strategy,
distribution, turnover, and 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, they 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 Coca-Cola 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, paintball 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 students to apply and properly use marketing terms
and concepts. As we cover each of the four Ps, the students have 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.
