CHAPTER 2

Strategic Planning for

Competitive Advantage

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 Chapter 2 Video
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 Audience Rewards, a loyalty program
for theatre-goers.
CLICK TO PLAY VIDEO

2 © 2015 Cengage Learning Inc. All Rights Reserved.

 Strategic Planning is…
the managerial process of creating
and maintaining a fit between the
organization’s objectives and
resources and the evolving market
opportunities.
Strategic marketing management
addresses two questions:
•What is the organization’s main activity at a particular
time?
•How will it reach its goals?
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 Characteristics of
Strategic Business Units
(SBUs)
An SBU has…
 A distinct mission and specific target market
 Control over its resources
 Its own competitors
 A single business or a collection of related
businesses
 Plans independent of other SBUs

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 Ansoff’s Opportunity Matrix

Market Increase market share among

Penetration existing customers

Market Attract new customers to

Development existing products

Product Create new products for

Development present markets

Introduce new products

Diversification into new markets

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 Ansoff’s Strategic Opportunity Matrix

Present Product New Product

Present Market Penetration Product Development

Market Starbucks sells more coffee to Starbucks develops
customers who register their powdered instant coffee
reloadable Starbucks cards. called Via.

New Market Development Diversification

Market Starbucks opens stores in Starbucks launches Hear
Brazil and Chile Music and buys Ethos Water.

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 Innovation Matrix

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 Boston Consulting Group
Portfolio Matrix
Star
Star

Cash
Cash Cow
Cow
Portfolio
Portfolio
Matrix
Matrix
Question
Question Mark
Mark

Dog
Dog
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Portfolio Matrix for a Large Computer
Manufacturer

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 Portfolio Matrix Strategies

Build
Build

Hold
Hold

Harvest
Harvest

Divest
Divest
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 General Electric Model
Market attractiveness
High

Cautiously Invest Invest/Grow Invest/Grow

Medium

Harvest/Divest Cautiously Invest Invest/Grow

Low

Harvest/Divest Harvest/Divest Cautiously Invest

Low Medium High

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Business Position
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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.

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 Why Write a Marketing Plan?
The creation and implementation of a
complete marketing plan will allow the
organization to achieve marketing
objectives and succeed.

However, the marketing plan is only as

good as the information it contains and
the effort, creativity, and thought that
went into its creation.

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 Business Mission
Statement

Situation or SWOT

Marketing Plan
Elements of a Analysis

Objectives

Marketing Strategy
Target Market
Strategy

Marketing Mix
Product Distribution

Promotion Price

Implementation
3 Evaluation
Control
 Defining the Business
Mission
 Answers the question,
“What business are we in?”

 The business mission profoundly

affects the firm’s long-run resource
allocation, profitability, and survival

 Business mission statements that

are stated too narrowly suffer from
4 marketing myopia
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 SWOT Analysis

S Strengths
Strengths-- things
well.
well.
things the
thecompany
company does
does

Internal

W Weaknesses
Weaknesses-- things
does
doesnot
notdo
thingsthe
dowell.
well.
thecompany
company

O
Opportunities
Opportunities-- conditions
conditionsin in the
the
external
externalenvironment
environmentthat
that favor
favor
strengths.
strengths.
External Threats
Threats--conditions
conditionsin inthe
theexternal
external

T environment
environment that
existing
existing
thatdo
strengths
strengths
©South-Western
current
currentweakness.
weakness.
donot
Collegeor
not relate
favor
relateto
orPublishing
favor areas
to
areasofof
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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
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 Environmental Scanning
Helps identify
opportunities and threats.
Designing a marketing strategy is based on
six major environmental forces:
• Social
• Demographic
• Economic
• Technological
• Political/Legal
• Competitive
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 Competitive Advantage

Cost
Cost

Types
Typesof
of Product/Service
Product/Service
Competitive
Competitive Differentiation
Advantage Differentiation
Advantage

Niche
Niche

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 Cost 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 those of the
competition.
Having a cost competitive advantage means
being the low-cost competitor in an industry
while maintaining satisfactory profit margins.

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 Sources of Cost Reduction

Experience
Experience Curves
Curves Product
Product Design
Design

Efficient
Efficient Labor
Labor Reengineering
Reengineering

Production
Production
No-frills
No-frills Products
Products Innovations
Innovations
Government
Government New
New Service
Service
Subsidies
Subsidies Delivery
Delivery Methods
Methods

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 Examples of Product/Service
Differentiators
A product/service differentiation competitive advantage
exists when a firm provides something that is unique
and valuable to buyers beyond simply offering a lower
price than that of the competition. Examples include:
Brand names
Strong dealer network
Product reliability
Image
Service

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 Niche Competitive Advantage
A niche competitive advantage seeks to
target and effectively serve a single
segment of the market. A nice competitive
advantage:

Is used by small companies with limited

resources

May be used in a limited geographic market

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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.

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Sources of Sustainable Competitive Advantage
Patents
Patents
Copyrights
Copyrights
Locations
Locations
Equipment
Equipment
Technology
Technology
Skills
Skills and
and Assets
Assets
of
of an
an Customer
Customer Service
Service
Organization
Organization
Promotion
Promotion
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 Marketing Objectives
A marketing objective is a statement of
what is to be accomplished through
marketing activities. To be useful, stated
objectives should be:

Realistic
Measurable
Time specific
Compared to a benchmark

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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

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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…
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
8 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

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 Target Market Strategy

Appeal
Appeal to
to the
the entire
entire market
market
with
with one
one marketing
marketing mix
mix

Concentrate
Concentrate on
on one
one
marketing
marketing segment
segment

Appeal
Appeal to
to multiple
multiple markets
markets
with
with multiple
multiple marketing
marketing mixes
mixes

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 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”

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 Marketing Mix:
The “Four Ps”
The starting point of the “4
Ps” Includes:
Physical unit
Package Product
Warranty
Service Products can be…
 Tangible goods
Brand
 Ideas
Image  Services
9 Value
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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

Ensure products arrive in usable

condition at designated places when
needed
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 Marketing Mix:
The “Four Ps”

Promotion

Role is to bring about Includes integration of:

exchanges with target  Advertising
markets by:  Public relations
 Informing  Sales promotion
 Educating  Personal selling
 Persuading
 Reminding

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 Marketing Mix:
Price
The “Four Ps”
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
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 Following Up on the
Marketing Plan
 Implementation

 Evaluation and Control

 A marketing audit is…

 Comprehensive
 Systematic
 Independent
 Periodic
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 Postaudit Tasks

After the audit, three tasks remain:

1.Profile and make recommendations
about weaknesses and inhibiting factors as
well as strengths and new opportunities.
2.Ensure that the role of the audit has been
clearly communicated.
3.Make someone accountable for
implementing recommendations.

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Techniques for Effective Strategic Planning

Continual
Continual Management
Management
Creativity
Creativity
attention
attention commitment
commitment

Effective
Effective
Strategic
Strategic
Planning
Planning
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