1. Strategic Planning for Competitive Advantage
Chapter 2 Strategic Planning for Competitive Advantage
Strategic Planning for Competitive Advantage
A good strategic plan can help protect and grow the firm’s resources.
© AP IMAGES/JENNIFER GRAYLOCK

2. The Nature of Strategic Planning
Chapter 2 Strategic Planning for Competitive Advantage
The Nature of Strategic Planning
Understand the importance of strategic marketing and know a basic outline for a marketing plan
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3. Strategic Planning Strategic Planning is…
Chapter 2 Strategic Planning for Competitive Advantage
Strategic Planning
Strategic Planning is…
the managerial process of creating and maintaining a fit between the organization’s objectives and resources and the evolving market opportunities.
Notes:
Strategic planning creates and maintains a fit between the organization’s resources and objectives and the evolving market opportunities. The goal is to sustain and increase long-run profitability and growth. Strategic decisions require long-term commitments of resources.
Strategic errors can threaten a firm’s survival, but a good plan can help protect and grow the firm.
Examples of strategic decisions: * Macy’s implements an additional beauty sales approach * General Motors sells the Saab nameplate * Asustek begins aggressive R&D on tablet computers
Discussion/Team Activity:
Have students come up with strategic planning decisions of other companies.
Discuss why strategic planning is important for these companies.
The GOAL of strategic planning is long-term profitability and growth.

4. Strategic Marketing Management
Chapter 2 Strategic Planning for Competitive Advantage
Strategic Marketing Management
How do companies go about strategic marketing planning?
How do employees know how to implement the long-term goals of the firm?
How will it reach its goals?
Notes:
How do companies go about strategic marketing planning? How do employees know how to implement the long-term goals of the firm?
The answer is a marketing plan.
THE ANSWER IS A MARKETING PLAN.
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5. What Is a Marketing Plan?
Chapter 2 Strategic Planning for Competitive Advantage
What Is a Marketing Plan?
A Marketing planning delineates a company’s long term goals and the strategies that will be used to achieve those goals. The strategies used will impact product lines, distribution channels, communications and pricing.
Planning /Market Planning
the process of anticipating future events and determining strategies needed to achieve the over all marketing objectives within a changing market environment in the future.
Marketing Plan
– a written document that acts as a guidebook of marketing activities for the marketing manager.
Notes: Marketing planning is the basis for all marketing strategies and decisions. Issues such as product lines, distribution channels, marketing communications, and pricing are all delineated in the marketing plan.

6. Why Write a Marketing Plan?
Writing a marketing plan allows the examination of the marketing environment in conjunction with the inner workings of the businesses. Once written it serves as a reference point for future activities, and allows the marketing manager to enter the marketplace with an awareness of problems and opportunities.
Chapter 2 Strategic Planning for Competitive Advantage
Why Write a Marketing Plan?
Provides a basis for comparison of actual and expected performance
Provides clearly stated activities to work toward common goals
Provides an examination of the marketing environment
Serves as a reference for the success of future activities
Allows entry into the marketplace with awareness
Notes: Writing a marketing plan allows the examination of the marketing environment in conjunction with the inner workings of the businesses. Once written it serves as a reference point for future activities, and allows the marketing manager to enter the marketplace with an awareness of problems and opportunities.

7. Elements of a Marketing Plan
Chapter 2 Strategic Planning for Competitive Advantage
Marketing Strategy
Product
Distribution
Price
Marketing Mix
Business Mission Statement
Situation or SWOT Analysis
Objectives
Target Market Strategy
Implementation Evaluation Control
Promotion
Elements of a Marketing Plan
Are school districts a
Business? Do they use
A marketing plan? What
would a school’s
Marketing plan include?
Notes:
Some elements are common to all marketing plans. These include the business mission and objectives, performing a SWOT analysis, determining a target market, and establishing a marketing mix.
Other elements that may be included are budgets, implementation timetables, required marketing research efforts, or elements of advanced strategic planning.
Exhibit 2.1: Example of marketing plan sketch
The Marketing Plan Appendix contains a Marketing Plan Outline.

8. Create a sample summary marketing plan as graphic shown
Chapter 2 Strategic Planning for Competitive Advantage
Marketing Plan
Go to Dmusic.com
Create a sample summary marketing plan as graphic shown
Dmusic.com, an Internet start-up created by a teenage entrepreneur which offers various professional services for independent musicians
divisionHS division
Online
Have students visit Dmusic.com, an Internet start-up created by a teenage entrepreneur which offers various professional services for independent musicians. Use Exhibit 2.1 to create a sample summary marketing plan for Dmusic.com.

9. Writing the Marketing Plan
Chapter 2 Strategic Planning for Competitive Advantage
Writing the Marketing Plan
A complete marketing plan can allow an organization to achieve marketing objectives…
HOWEVER
the marketing plan is only as good as the information, effort, creativity and thought put into it.
Note that the overall structure of the marketing plan should not be viewed a s a series of sequential planning steps. Many of the marketing plan elements are decided on simultaneously.
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10. Defining the Business Mission
Chapter 2 Strategic Planning for Competitive Advantage
Defining the Business Mission
Develop an appropriate business mission statement
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11. Defining the Business Mission
Chapter 2 Strategic Planning for Competitive Advantage
Defining the Business Mission
Answers the question, “What business are we in?”
Focuses on the market(s) rather than the good or service
Individual department within a major company, called Strategic Business Units (SBUs) may also have their own mission statement
Notes:
The foundation of any marketing plan is the firm’s mission statement. The mission statement is based on an analysis of benefits sought by present and potential customers and an analysis of existing and anticipated environmental conditions. The mission statement establishes boundaries for all subsequent decisions, objectives, and strategies.
Discussion/Team Activity:
Find the mission statements for various organizations. Compare the mission statements with the markets served and the products sold by these organizations.
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12. Mission Statement: Ben & Jerry’s
Chapter 2 Strategic Planning for Competitive Advantage
Mission Statement: Ben & Jerry’s
Product
To make, distribute and sell the finest quality all natural ice cream and related products in a wide variety of innovative flavors made from Vermont Dairy products.
Economic
To operate the company on a sound financial basis of profitable growth, increasing value for our shareholders, and creating career opportunities and financial rewards for our employees.
Social
To operate the company in a way that actively recognizes the central role that business plays in the structure of society by initiating innovative ways to improve the quality of life of a broad community—local, national, and international.
Notes:
The mission statement for Ben & Jerry’s is shown here.

13. Conducting a Situation Analysis
Chapter 2 Strategic Planning for Competitive Advantage
Conducting a Situation Analysis
Describe the components of a situation analysis
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14. S W O T SWOT Analysis LO3 Internal External
Chapter 2 Strategic Planning for Competitive Advantage
SWOT Analysis
©South-Western College Publishing S W O T
Strengths - things the company does well.
Weaknesses - things the company does not do well.
Opportunities - conditions in the external environment that favor strengths.
Threats - conditions in the external environment that do not relate to existing strengths or favor areas of current weakness.
Internal
External
Notes:
Performance of a situation (SWOT) analysis helps firms identify their competitive advantage.
Strengths and Weaknesses are an internal assessment. Opportunities and Threats are an external environment assessment.
Discussion/Team Activity:
Perform a SWOT analysis for companies within the same industry. How could you use this information if you worked for a particular company or for a competitive company?
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15. Components of a SWOT Analysis
Chapter 2 Strategic Planning for Competitive Advantage
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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16. SWOT
Internal strengths and weaknesses focus on production costs, financial resources brand image, technology, employee capabilities.
Ex. Dell ‘s stock has fallen 42% SINCE 2007, so what should management look at? What are Dell’s strengths? It’s weakness?
Look at their strength and weakness in the company and its competition

17. Dell has a $6 billion server business STRENGHT
But the shrinking PC part of their business accounts for 24% of their sales revenue
this is a WEAKNESS part of the company
Were will Dell find growth opportunities for the compay?

18. Environmental forces that
Chapter 2 Strategic Planning for Competitive Advantage
Environmental forces that
Help identify opportunities and threats before starting
Designing a marketing strategy is based on six major environmental forces:
Social
Demographic
Economic
Technological
Political/Legal
Competitive
© AP IMAGES/PRNEWSFOTO/PEPSICO
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19. How many of you drink vitamin water, owned by Coca-cola?
Pepsi trying to break into the water market with Sobe lifewater had to hire Tom Silk a web savvy
Marketer who make Guitar Hero famous, refocused Lifewater marketing to target the youth who love viral marketing, Sobe water tests
Television ads on Youtube before airing them.
The strategy worked and doubled Sobe lifewater market share

20. Setting Marketing Plan Objectives
Chapter 2 Strategic Planning for Competitive Advantage
Setting Marketing Plan Objectives
Explain the criteria for stating good marketing objectives
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21. Marketing Objectives should be:
Chapter 2 Strategic Planning for Competitive Advantage
Marketing Objectives should be:
Realistic
Measurable
Time specific
Compared to a benchmark
“Our objective is to achieve 10 percent dollar market share in the cat food market within 12 months of product introduction.”
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22. Criteria used when developing Good Marketing Objectives
Chapter 2 Strategic Planning for Competitive Advantage
Criteria used when developing Good Marketing Objectives
Ask your self if the following statements are true about your company objectives:
1. Marketing management philosophy is communicated
2. Management direction is outlined
3. Provision for Employee Motivation is included
4. Force executives to clarify their thinking
5. Form a basis for control
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23. Competitive Advantage
Chapter 2 Strategic Planning for Competitive Advantage
Competitive Advantage
Identify sources
of competitive advantage
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24. Competitive Advantage or edge
Chapter 2 Strategic Planning for Competitive Advantage
Competitive Advantage or edge
Competitive Advantage
The set of unique features of a company and its products that are perceived by the target market as significant and superior to the competition.
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25. Areas of Competitive Advantage
Chapter 2 Strategic Planning for Competitive Advantage
Areas of Competitive Advantage
What makes your
Product better
Or different
So customers
Keep buying
Niche
Cost
Product/Service Differentiation
Types of Competitive Advantage
Notes:
A firm’s competitive advantage is the reason or reasons that cause customers to patronize that firm and not the competition.
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26. Cost Competitive Advantage is achieved by:
Chapter 2 Strategic Planning for Competitive Advantage
Cost Competitive Advantage is achieved by:
Inexpensive raw materials
Creating efficient scale of plant operations
Design products for ease of manufacturing
Control overhead costs
Avoid marginal customers
Notes:
Having a cost competitive advantage means being the low-cost competitor in an industry while maintaining satisfactory profit margins. This enables a firm to deliver superior customer value.
Cost leadership can result from the reasons listed on this slide.
Cost competitive advantages are subject to continual erosion.
Discussion/Team Activity:
Identify firms that have a cost competitive advantage and describe how they deliver superior value. Examples: DuPont Dell Computers Wal-Mart Corporation Southwest Airlines Nike General Electric
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27. Areas where Cost Reduction can be made
Chapter 2 Strategic Planning for Competitive Advantage
Areas where Cost Reduction can be made
Experience with a product
Brings cost down, in mkt, manuft.
And administration
Experience Curves
Product Design
Reengineering
Reducing product line
Production Innovations
New Service Delivery Methods-
medical field, on-line magazines
Outsourcing to???
Efficient Labor
No-frills Products
Notes: Sources of Cost Reduction
Experience Curves: Costs decline as experience with a product increases, and encompasses marketing, manufacturing, and administration costs.
Efficient Labor: Labor costs in low-skill, labor-intensive industries can be reduced by going offshore or by outsourcing.
No-frills Products: Removing frills and options can reduce costs.
Government subsidies: Governments may provide grants and interest-free loans for target industries.
Product design: Cutting-edge design and reverse engineering can offset costs.
Reengineering: Reengineering in the form of pruning product lines, closing obsolete factories, or renegotiating supplier contracts can make firms more efficient.
Product innovations: New technology and simplified production techniques can reduce production costs.
New methods of service delivery: Examples include: * Outpatient surgery and walk-in clinics in the medical industry * Online-only magazines can help save on material and shipping costs.
Government Subsidies
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28. Product/Service Differentiation Competitive Advantage
Chapter 2 Strategic Planning for Competitive Advantage
Do on line vocabulary
Product/Service Differentiation Competitive Advantage
A Product/Service Differentiation Competitive Advantage is…
the provision of something that is unique and valuable to buyers beyond simply offering a lower price than that of the competition.
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29. How do you create product differentiation through?
Chapter 2 Strategic Planning for Competitive Advantage
How do you create product differentiation through?
Lexus
Product/service
Differentiation provides
Longer lasting
Competitive advantage
long term
Than cost competitive
advantage
Brand names
Strong dealer network
Product reliability
Image
Service
Caterpillar-construction
Maytag
BMW
Fed-ex
Notes:
Product/Service Differentiation tends to provide a longer lasting competitive advantage than does cost competitive advantage. As a result, this strategy is more attractive to many top managers.
Discussion/Team Activity:
Discuss companies that have a product/service differentiation for:
Brand name: Lexus
Strong dealer network: Caterpillar
Product reliability: Maytag
Image: Neiman Marcus
Service: FedEx
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30. Niche Competitive Advantage
Chapter 2 Strategic Planning for Competitive Advantage
Niche Competitive Advantage
Used by small companies with limited resources
May be used in a limited geographic market
Identify a product or products that you feel have a “niche” market
How can a small bookstore compete with Barnes & Noble or Amazon.com?
Discussion/Team Activity:
Discuss how a small firm serving a particular niche market can successfully compete against larger, global firms with greater resources. (For example, how might a small bookstore owner compete with Barnes & Noble and Amazon.com?)
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31. Building Sustainable Competitive Advantage
Chapter 2 Strategic Planning for Competitive Advantage
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.
Netflix over blockbuster, Tylenol over detail
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32. Sources of Sustainable Competitive Advantage
Chapter 2 Strategic Planning for Competitive Advantage
Sources of Sustainable Competitive Advantage
How long can a
Company maintain
A competitive
Advantage?
Patents
Copyrights
Locations
Equipment
Technology
Customer Service
Promotion
Skills and Assets of an Organization
Notes:
A sustainable competitive advantage lasts only as long as the time it takes a competitor to imitate the strategy and plans.
Marketing managers should continually look for skills and assets that create and sustain competitive advantage.
A sustainable competitive advantage is a function of the speed with which competitors can imitate a company’s strategy and plans. Imitation requires a competitor to identify the leader’s competitive advantage, determine how it is achieved, and learn how to duplicate it.
Discussion/Team Activity:
Discuss examples of firms that have sustainable competitive advantage in each skill and asset source listed.
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33. Identify strategic alternatives
Chapter 2 Strategic Planning for Competitive Advantage
Strategic Directions
Identify strategic alternatives
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34. Strategic Alternatives to gain competitive advantage
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Strategic Alternatives to gain competitive advantage
Chapter 2 Strategic Planning for Competitive Advantage
Ex. Manufacturers
use coupons
Market Penetration
Increase market share among
existing customers
Expansion into global mkts.
McDonalds, Coco-cola,
Pepsi
Market
Development
Attract new customers to
existing products
McDonald’s introduces yogurt
parfaits,
salads, and fruit to offer customers more
healthy options.
Product Development
Create new
products for
present markets
Notes:
Examples of Strategic Alternatives
Market Penetration: Manufacturer cents-off coupons
Market Development: Expansion into global markets by companies such as McDonald’s, Coca-Cola, and Pepsi
Product development: McDonald’s introduces yogurt parfaits, salads, and fruit to offer customers more healthy options.
Diversification: CVS, Avon, Coca-Cola
Diversification
Introduce new products
into new markets
CVS, launched Beauty 360
Stores premium cosmetics

35. Ansoff’s Strategic Opportunity Matrix
Chapter 2 Strategic Planning for Competitive Advantage
Starbucks
Market Penetration Increase market share among existing customers
Market Development Attract new customers to existing products
Product Development Create new products for present markets
Diversification Introduce new products into new markets
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36. Product classifications
Chapter 2 Strategic Planning for Competitive Advantage
Selecting a Strategic Alternative by product
Problem child
Star
Cash Cow
Product classifications
Notes:
The Portfolio Matrix from Boston Consulting Group classifies each SBU by its present or forecast growth and market share. The assumption is that market share and profitability are strongly linked. The four classifications are Stars, Problem Child (Question Mark), Cash Cows, and Dogs.
Dog
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37. A star is a fast-growing market leader
A star is a fast-growing market leader. Stars usually have large profits but need cash to finance growth.
A cash cow generates more cash than it needs to maintain market share. It is in a low-growth market, but the product has dominant market share
A problem child shows rapid growth but poor profit margins. It has a low market share in a high-growth industry. It needs a great deal of cash to prevent conversion to dog status.
A dog has low growth potential and a small market share. Most dogs leave the market. The strategy options are to divest or harvest.

38. Strategies LO6 Build Hold Harvest Divest
Chapter 2 Strategic Planning for Competitive Advantage
Strategies
If a product has the potential to be a star,
building would be an appropriate goal
Build
Hold
If a product is a cash cow goal is to
Preserve market share
Take the money and run not
Used for stars
Harvest
Note:
Build: If an SBU has the potential to be a star, building would be an appropriate goal.
Hold: If an SBU is a successful cash cow, a goal would be to hold or preserve market share.
Harvest: This is an appropriate strategy for all SBUs except stars. The basic goal is to increase short-term cash return without much concern for the long-run impact.
Divest: Getting rid of SBUs with low shares of low-growth markets is often appropriate. Problem children and dogs are suitable for this strategy.
Divest
Get rid of your problem children
And dogs
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39. Describing the Target Market
Chapter 2 Strategic Planning for Competitive Advantage
Describing the Target Market
Discuss target market strategies
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40. Describing the Target Market
Chapter 2 Strategic Planning for Competitive Advantage
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 market segments.
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41. Target Market Strategy
Chapter 2 Strategic Planning for Competitive Advantage
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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42. Target Market Strategy
Chapter 2 Strategic Planning for Competitive Advantage
Target Market Strategy
Appeal to the entire market with one marketing mix
Concentrate on one marketing segment
Appeal to multiple markets with multiple marketing mixes
Notes:
Three strategies for selecting target markets are shown here. These strategies are discussed in detail in Chapter 8.
Discussion/Team Activity:
1. Discuss the differences in the target markets for McDonald’s, Burger King’s, and Wendy’s.
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43. Describe the elements of the marketing mix
Chapter 2 Strategic Planning for Competitive Advantage
The Marketing Mix
Describe the elements of the marketing mix
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44. The Marketing Mix The Marketing Mix is… LO8
Chapter 2 Strategic Planning for Competitive Advantage
The Marketing Mix
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”
Notes:
The marketing manager can control each component of the marketing mix, but the strategies for all four components must be blended to achieve optimal results.
Discussion/Team Activity:
The best promotion and lowest price cannot save a poor product. Similarly, excellent products with poor placing, pricing, or promotion will likely fail. Identify several firms that might have used a marketing mix in which some components were particularly strong but others were particularly weak.
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45. Marketing Mix: The “Four Ps”
Chapter 2 Strategic Planning for Competitive Advantage
Marketing Mix: The “Four Ps”
The starting point of the “4 Ps” Includes:
Physical unit
Package
Warranty
Service
Brand
Image
Value
Product
Products can be…
Tangible goods
Ideas
Services
Notes:
The product is the starting point of the marketing mix. It is difficult to decide on a promotion campaign, determine a price, or design a distribution strategy until the product offering and product strategy are defined.
The product is not only the physical unit but also the packaging, warranty, after-sale service, brand name, company image, value, and other factors.
Products may be tangible goods, services, and ideas.
Product decisions are discussed in Chapter 10 and 11, services marketing in Chapter 12.
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46. Marketing Mix: The “Four Ps”
Chapter 2 Strategic Planning for Competitive Advantage
Place
Marketing Mix: The “Four Ps”
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
Notes:
The goal of distribution is to ensure products arrive in usable condition at the right place when customers need them.
Place strategies are covered in Chapters 14 and 15.
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47. Marketing Mix: The “Four Ps”
Chapter 2 Strategic Planning for Competitive Advantage
Marketing Mix: The “Four Ps”
Promotion
Includes integration of:
Advertising
Public relations
Sales promotion
Personal selling
Role is to bring about exchanges with target markets by:
Informing
Educating
Persuading
Reminding
Notes:
Promotion includes personal selling, advertising, sales promotion, and public relations.
Each element of the promotion mix is coordinated with the others to create a promotional blend. Integrated Marketing Communications is discussed in Chapters 16, 17, and 18. Technology-driven aspects of promotional marketing are covered in Chapter 21.
A good promotion strategy can increase sales, but does not guarantee success.
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48. Marketing Mix: The “Four Ps”
Chapter 2 Strategic Planning for Competitive Advantage
Price
Marketing Mix: 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
Notes:
Price is an important competitive weapon and is often the most flexible of the marketing mix. Of the four Ps, it can be changed most quickly.
Price multiplied by the number of units sold equals total revenue for the firm.
Pricing decisions are discussed in Chapters 19 and 20.
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49. Following Up on the Marketing Plan
Chapter 2 Strategic Planning for Competitive Advantage
Following Up on the Marketing Plan
Explain why implementation, evaluation, and control of the marketing plan are necessary
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50. Following Up on the Marketing Plan
Chapter 2 Strategic Planning for Competitive Advantage
Following Up on the Marketing Plan
Implementation
Evaluation and Control
Marketing audit is…
Comprehensive
Systematic
Independent
Periodic
Notes:
Implementation is the process that turns marketing plans into action assignments. These activities may involve job assignments, activity descriptions, timelines, budgets, and lots of communication.
Implementation is essentially “doing what you said you were going to do.” However, many organizations repeatedly experience failures in strategy implementation.
The marketing audit provides the mechanisms for evaluating marketing results compared to the plan’s goals.
Online
Youngbiz.com
Visit the YoungBiz Web site’s list of Top 100 entrepreneurs. Select one of the entrepreneurial ventures listed and create a marketing plan for it using the concepts and strategies discussed in this chapter. How would you implement, evaluate, and control the plan?
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51. Effective Strategic Planning
Chapter 2 Strategic Planning for Competitive Advantage
Effective Strategic Planning
Identify several techniques that help make strategic planning effective
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52. Techniques for Effective Strategic Planning
Chapter 2 Strategic Planning for Competitive Advantage
Techniques for Effective Strategic Planning
Effective Strategic Planning
Continual attention
Creativity
Management
commitment
Notes:
Strategic planning is not an annual event, but an ongoing process. The environment is continually changing, and the firm’s internal resources and capabilities are continually evolving.
Strategic planning is based on creativity. Assumptions about the firm and the environment should be challenged and new strategies established to sustain competitive advantage.
Management support and participation are critical to the success of strategic planning.
Discussion/Team Activity:
Discuss strategic planning decisions of other companies.
Discuss why strategic planning is important for these companies.
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