Chapter 2 ♦ Strategic Planning for Competitive Advantage 2-1
CHAPTER 2 Strategic Planning for Competitive Advantage
CHAPTER FEATURES
Chapter Features
Key Points
✓ Marketing & You
Students are given a survey to determine the emphasis each places on
planning.
✓ Marketing Metrics
This example demonstrates how to complete a profit scenario
analysis, which shows marketers the affect that various types of
USING THIS MANUAL
Chapter two includes eleven learning outcomes that help students become more familiar with strategic planning for
After completing chapter two, direct students to the Marketing Plan Appendix. It is designed to help
students navigate the various elements of a marketing plan.
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LEARNING OUTCOMES
1 Understand the importance of strategic planning
Strategic planning is the basis for all marketing strategies and decisions. The goal of strategic planning is long-term
profitability and growth.
2 Define strategic business units.
Large companies may manage a number of very different businesses, called strategic business units (SBUs). Each SBU
3 Identify strategic alternatives and know a basic outline for a marketing plan.
The strategic opportunity matrix can be used to help management develop strategic alternatives. The four options are
market penetration, product development, market development, and diversification. In selecting a strategic alternative,
4 Develop an appropriate business mission statement
The mission statement is based on a careful analysis of benefits sought by present and potential customers and analysis
5 Explain 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
6 Identify sources of competitive advantage
A competitive advantage is a set of unique features of a company and its products that are perceived by the target market
as significant and superior to the competition. There are three types of competitive advantages: cost, product/-service
7 Describe the criteria for stating good marketing objectives
Objectives should be realistic, measurable, and time specific. Objectives must also be consistent, and indicate the
priorities of the organization.
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8 Discuss target market strategies
The target market strategy identifies which market segment or segments to focus on. The process begins with a market
9 Describe the elements of the marketing mix
The marketing mix (or four Ps) is a blend of product, place, promotion, and pricing strategies designed to produce
10 Explain why implementation, evaluation, and control of the marketing plan are
necessary
Before a marketing plan can work, it must be implemented; that is, people must perform the actions in the plan. The plan
11 Identify several techniques that help make strategic planning effective
First, management must realize that strategic planning is an ongoing process and not a once-a-year exercise. Second,
CHAPTER OUTLINE
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Strategic Planning
1 Understand the importance of strategic planning
I. The Nature of Strategic Planning
A. Marketing managers must create and maintain a fit between the
organization’s objectives and resources and the evolving market.
1. Strategic planning is the managerial process of creating and
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Strategic Business Units
(SBUs)
Review Question 2.1
2 Define Strategic Business Units (SBUs)
II. Strategic Business Units
A. Large companies often have several different businesses which have their
own return on investment, growth potential, and risks, but are part of the
same parent organization. These are SBUS
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Ansoff’s Strategic
Opportunity Matrix
Strategic Alternatives
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Portfolio Matrix
3 Identify strategic alternatives and know a basic outline for a
marketing plan
III. Strategic Directions
A. To discover a marketing opportunity or strategic window, management must
know how to identify the strategic alternatives. One method is Ansoff’s
strategic opportunity matrix.
1. A firm following a market penetration alternative would try to
increase market share among existing customers.
2. Market development is a strategic alternative that attracts new
3. A product development strategy entails the creation of new
products for present markets. Advantages of this strategy are
4. Diversification refers to a strategy of increasing sales by introducing
B. Selecting a Strategic Alternative
In the Boston Consulting Group’s portfolio matrix, each SBU is classified
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General Electric Model
by its present or forecast growth and market share.
1. A star is a fast-growing market leader.
The next step is to allocate future resources for each SBU:
1. Build if an organization has a current problem child that it believes has
the potential to be a star.
C. The General Electric Model
The General Electric Model for selecting strategic alternatives uses the rich
and complex dimensions of market attractiveness and business position to
determine which actions to take with SBUs.
1. Business Position refers to how well positioned the organization is to
take advantage of marketing opportunities.
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Marketing Plan
D. The Marketing Plan
1. Planning is the process of anticipating future events and determining
strategies to achieve organizational objectives in the future.
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Why Write a Marketing
Plan?
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Marketing Plan Elements
C. Why Write a Marketing Plan?
1. The marketing plan is a written document that acts as a guidebook of
marketing activities for the marketing manager .
D. Marketing Plan Elements
There are elements common to all marketing plans, such as defining the
E. Writing the Marketing Plan
Creating a complete marketing plan is not a simple or quick effort. And the
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Strategic Alternatives
3.2
1. Many of the elements in the plan are decided upon simultaneously and
in conjunction with one another.
4 Develop an appropriate business mission statement
IV. Defining the Business Mission
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Southwest Airlines
Mission Statement
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Business Mission
A. The firm’s mission statement is the long-term vision based on a careful
B. Defining the business in terms of goods and services rather than in terms of
C. The organization may need to define a mission statement and objectives for
a strategic business unit (SBU), which is a subgroup of a single business,
or collection of related businesses within the larger organization.
Strategic business units will have the following characteristics:
1. A distinct mission and a specific target market
5 Explain the components of a situation analysis
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Conducting a Situation
Analysis
V. Conducting a Situation Analysis
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Environmental Scanning
Review question 5.1
A. A situation analysis is sometimes referred to as a SWOT analysis. That
B. Environmental scanning is the collection and interpretation of information
about forces, events, and relationships in the external environments that
may affect the future of the organization.
Rising gas prices and a weakening dollar have created a complex, possibly
advantageous environment for McDonalds. While increased gas prices may discourage
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Competitive Advantage
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Competitive Advantage
6 Identify the sources of competitive advantage
VI. Competitive Advantage
A. Competitive advantage consists of a set of unique features of a company
and its products that are perceived by the target market as significant and
superior to the competition.
C. The three types of competitive advantages are cost-competitive advantage,
product-service differentiation, and niche competitive advantage.
1. A cost-competitive advantage results from being the low cost
competitor in an industry while maintaining satisfactory profits.
Sources of cost-competitive advantages include:
a. Experience curves tell us that costs decline at a predictable rate
as experience with a product increases.
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Examples of
Product/Service
PowerPoint 2-35: Niche
Competitive Advantage
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Sources of Sustainable
Competitive Advantage
2. Product/service differentiation exists when a firm provides
something unique that is valuable to buyers.
a. Because cost competitive strategies are subject to continual
3. A niche competitive advantage seeks to target and effectively
serve a single segment of the market.
a. Small companies with limited resources can compete with larger
developing a niche strategy.
D. Building Sustainable Competitive Advantage
1. A sustainable competitive advantage is one that cannot be copied by
the competition.
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Marketing Objectives
7 Describe the criteria for stating good marketing objectives
VII. Setting Marketing Plan Objectives
Review Question 7.1
A. A marketing objective is a statement of what is to be accomplished
through marketing activities.
C. .Objectives communicate marketing management philosophies, provide
8 Discuss target market strategies
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VIII. Describing the Marketing Strategy
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Marketing Strategy
Review Question 8.1
Marketing strategy involves selecting and describing one or more target
markets, and developing and maintaining a marketing mix that will produce
mutually satisfying exchanges with target markets.
A. Target Market Strategy
1. A market segment is a group of individuals or organizations that share
one or more characteristics. Market opportunity analysis is the
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The Marketing Mix: The
Four Ps
9 Describe elements of the marketing mix
IX. The Marketing Mix
Introduce each of the four P’s of marketing. Then point out that a coordinated
combination of all four elements is necessary to achieve a successful marketing mix.
The term marketing mix refers to a unique blend of product, distribution,
Example:
Target market: People who commute to work
Product: Hybrid powered cars
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The “Four Ps”: Product
A. Product Strategies
The heart of the marketing mix, the starting point, is the product offering
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The “Four Ps”: Place
(Distribution)
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B. Distribution Strategies
Distribution strategies, which usually involve wholesalers and retailers, are
C. Promotion Strategies
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The “Four Ps”: Promotion
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The “Four Ps”: Price
Marketing Mix
Promotion includes personal selling, advertising, sales promotion, and
D. Pricing Strategies
Price is what a buyer must give up to obtain a product. Price is often the
10 Explain why implementation, evaluation, and control of
the marketing plan are necessary
X. Following Up The Marketing Plan
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Following Up the
Marketing Plan
A. Implementation is the process of gaining the organizational compliance
required to put marketing strategies into action. Brilliant marketing
strategies are doomed to fail if they are not properly implemented.
Review Question 10.1
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RLO: Implementation,
Evaluation, and Control
1. A marketing audit is a thorough, systematic, periodic evaluation of the
goals, strategies, structure, and performance of the marketing
organization.
2. The marketing audit has four characteristics:
Comprehensive – The marketing audit covers all the major marketing
issues facing an organization and not just trouble spots.
Systematic – The marketing audit takes place in an orderly sequence
11 Identify several techniques that help make strategic
planning effective
Chapter 2 ♦ Strategic Planning for Competitive Advantage 2–11
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Effective Strategic
Planning
XI. Effective Strategic Planning
Effective strategic planning requires continual attention, creativity, and
management commitment.
A. It is not an annual but an ongoing process.
TERMS
cash cow
market development
niche competitive advantage
competitive advantage
market opportunity analysis (MOA)
planning
control
market penetration
portfolio model
diversification
marketing mix
product development
environmental scanning
star
evaluation
strategic business unit (SBU)
experience curves
marketing planning
strategic planning
four Ps
marketing strategy
sustainable competitive advantage
implementation
mission statement
SWOT analysis
Suggested Homework:
• The end of each chapter contains numerous questions that can be assigned or used as the basis for longer
investigations into marketing.
REVIEW AND APPLICATIONS
1.1 How are Coke and Pepsi using their Web sites, www.coke.com and www.pepsi.com to promote their newest
product offerings? Do you see hints of any future strategies the companies might implement? Where?
2.1 Research a large company, such as Coca-cola, Nike, or Procter and Gamble to find out what its SBUs are.
3.1 Your cousin wants to start his own business, but 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.