Lamb, Hair, McDaniel

CHAPTER 2
Strategic Marketing Planning for
Competitive Advantage

AP IMAGES/JENNIFER GRAYLOCK
iStockphoto.com/Dem10
Chapter 1 Copyright 2012 by Cengage Learning Inc. All rights reserved 11
 Learning Outcomes

1 Understand the importance of strategic planning

2 Define strategic business units (SBUs)

3 Identify strategic alternatives and know a basic

outline for a marketing plan
4
Develop an appropriate business mission statement
5 Describe the components of a situation analysis

6
2 Identify sources of competitive advantage
 Learning Outcomes

7 Explain the criteria for stating good marketing

objectives
8 Discuss target market strategies

9 Describe the elements of the marketing mix

10
Explain why implementation, evaluation, and control
of the marketing plan are necessary

11
Identify several techniques that help make strategic
3 planning effective
 The Nature of Strategic Planning

Understand the
importance of strategic
planning and know
a basic outline for
a marketing plan

1
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Strategic Management
Defined

Art & science of formulating,

implementing, and evaluating,
cross-functional decisions that
enable an organization to achieve its
objectives

Copyright 2007 Prentice Hall Ch 1 -5

 Strategic Planning is
the managerial process of
creating and maintaining a fit
between the organizations
objectives and resources and the
evolving market opportunities.

The GOAL of strategic planning is long-term

profitability and growth.

6 2013 by Cengage Learning Inc. All Rights Reserved.

1
 External Triggering Events
The ever changing market conditions essentially driven
by supply and demand situations, business strategists
are obligated to changing market scenario. (Intensity of
competition)
The changing taste of the market the taste and
preferences of the consumers change over time thereby
compelling businesses to make appropriate changes.
(needs, wants, changes over time)
The Macro-environment changes it cannot be denied
that these macro-environment forces are affecting the
conduct of business for a lot of organizations.
Impact of global developments vis--vis the local
markets world of business is getting smaller and
borderless on account of globalized scheme of doing
business.
Ch 1 -7 Copyright 2007 Prentice Hall
 Internal Triggering Events
New CEO/President new leadership in any business organization
generally results to some changes.
Performance gap a performance gap exists when performance
does not meet expectations. Sales are no longer increasing or may
even be falling.
Change in ownership change in ownership either by way of
acquisition, sellout, or merger, or changes in majority of ownership
can trigger or may result to new set of strategies.
New product or services change in products or services offered by
the firm may also trigger or result to an enhanced strategy given
new type pf product or services offered by the company.
Management team shake up an incumbent president or CEO may
opt to form a new management team comprising of middle and
senior level managers because he cannot do it alone and needs
people he is comfortable working with.

Ch 1 -8 Copyright 2007 Prentice Hall

 Strategic Business Units

Define Strategic
Business Units
(SBUs)

2
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Strategic Business Units (SBUs)

A Strategic Business Unit (SBU) is a

subgroup of a single business or a
collection of related businesses within the
larger organization
Ex. General Electric has 49 SBUs in such
markets as appliances, aerospace,
electronics, and so on. LG operates along
the same lines, with SBUs competing in
electronics and appliances, among others.
2013 by Cengage Learning Inc. All Rights Reserved. 10
 Characteristics of
Strategic Business Units (SBUs)

An SBU HAS
u A distinct mission and specific
target market
u Control over its resources
u Its own competitors
u Plans independent of other SBUs

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2
 Strategic Alternatives

Identify strategic
alternatives and
know a basic
outline for a
marketing plan

3
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 What Is a Marketing Plan?

u Planning the process of anticipating future events and

determining strategies to achieve organizational objectives in
the future.

u Marketing Planning designing activities relating to

marketing objectives and the changing marketing
environment.

u Marketing Plan a written document that acts as a guidebook

of marketing activities for the marketing manager.

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3
 Why Write a Marketing Plan?

u Provides a basis for comparison of actual and expected

performance

u Provides clearly stated activities to work toward common

goals

u Provides an examination of the marketing environment

u Serves as a reference for the success of future activities

u Allows entry into the marketplace with awareness

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3
 Business Mission
Statement

Exhibit 2.4 Situation or SWOT

Analysis

Elements of a Objectives

Marketing Plan
Marketing Strategy
Target Market
Strategy

Marketing Mix
Product Distribution

Promotion Price

Implementation
Evaluation
Control
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 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.

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3
 Defining the Business Mission

Develop an
appropriate business
mission statement

4
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 Defining the Business
Mission
u Answers the question,
What business are we in?

u Focuses on the market(s)

rather than the good or service

u SBUs may also have a mission

statement

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4
 Conducting a Situation Analysis

Describe the
components of a
situation analysis

5 3
LO
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 SWOT Analysis

S Strengths - things the company does

well.
Internal

W Weaknesses - things the company

does not do well.

O
Opportunities - conditions in the
external environment that favor
strengths.
External Threats - conditions in the external

T environment that do not relate to

existing strengths or favor areas of
South-Western College Publishing
current weakness.

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5
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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5
 Environmental Scanning
Helps identify opportunities and threats.

Designing a marketing strategy is based

on six major environmental forces:
Social
Demographic

AP IMAGES/PRNEWSFOTO/PEPSICO
Economic
Technological
Political/Legal
Competitive
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5
 Exhibit 3.6 Examples of SWOT Factors

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reserved.
 Competitive Advantage

Identify sources
of competitive
advantage

6
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 Competitive Advantage

Cost

Types of Product/Service
Competitive Differentiation
Advantage

Niche

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6
 Cost Competitive
Advantage
u Obtain inexpensive raw materials
u Create efficient scale of plant operations
u Design products for ease of manufacture
u Control overhead costs
u Avoid marginal customers

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6
 Sources of Cost Reduction

Experience Curves Product Design

Efficient Labor Reengineering

No-frills Products Production Innovations

New Service
Government Subsidies
Delivery Methods

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 Examples of Product/Service
Differentiators

u Brand names
u Strong dealer network
u Product reliability
u Image
u Service

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6
 Niche Competitive
Advantage
u Used by small companies with limited
resources

u May be used in a limited geographic market

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6
 Building Sustainable
Competitive Advantage
u Sustainable competitive advantage is an
advantage that cannot be copied by the
competition.

u 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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6
 Sources of Sustainable
Competitive Advantage
Patents

Copyrights

Locations

Equipment

Technology
Skills and Assets
of an Customer Service
Organization
Promotion

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6
 Describing the Target Market

Discuss target
market strategies

8
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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 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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8
 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

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8
 The Marketing Mix

Describe the
elements of the
marketing mix

9
2013 by Cengage Learning Inc. All Rights Reserved. 36
 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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9
 Marketing Mix:
The Four Ps
uThe starting point of
the 4 Ps Includes: Product
uPhysical unit
uProducts can be
uPackage
u Tangible goods
uWarranty
u Ideas
uService u Services
uBrand
uImage
uValue
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9
 Marketing Mix:
The Four Ps Price

uPrice is what a buyer must give up to

obtain a product.
uThe most flexible of the
4 Psquickest to change
uCompetitive weapon
uPrice x Units Sold = Total Revenue

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9
 Marketing Mix:
The Four Ps Place

uProduct availability where and

when customers want them

uAll activities from raw materials to

finished products

uEnsure products arrive in usable

condition at designated places
when needed
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9
 Marketing Mix:
The Four Ps
uIncludes integration of:
Promotion
uAdvertising
uPublic relations
u Role is to bring about
exchanges with target
uSales promotion
markets by: uPersonal selling
u Informing
u Educating
u Persuading
u Reminding

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9
 Effective Strategic Planning

Identify several
techniques that help
make strategic
planning effective

11
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 Techniques for Effective Strategic
Planning

Continual Management
Creativity
attention commitment

Effective
Strategic
Planning

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11
Setting Marketing Plan Objectives

Explain the criteria

for stating good
marketing objectives

7
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 What are Considered Good Objectives?
A good objective be a SMART objective. The word SMART is
described as follows:
Specific objective must be concrete and specific to the last detail
and is quantifiable
Measurable objective must be tied up or related to the mission
statement and should be measurable
Achievable objective should not be a dream or desire but should
be something achievable or attainable
Realistic or resource oriented objective must be realistic and
based on the firms resource capabilities both human and other form
of capital or financial resources
Time-bound there must be a time frame or period and limit as to
how soon the objectives can be achieved.

Ch 1 -45 Copyright 2007 Prentice Hall

 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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7
 Examples of Strategic Objectives
Increase firms market share
Attain lower overall costs
Increase net income
Increase sales
Decrease costs
Decrease receivables
Capture attractive growth opportunities

Ch 1 -47 Copyright 2007 Prentice Hall

 What are Considered Bad Objectives?
To identify factors that affected the profitability of Bestware
To establish a stronger positioning for Bestware products
To introduce Boo Rock Caf and its offerings to potential customers
by end of 2016
To increase sales and make the business profitable
To gain back investment of the firm by December 2017
To grow profit year on year from 2015-2017

Ch 1 -48 Copyright 2007 Prentice Hall

 What are Considered Good Objectives?
The specific objective of the study is to escalate the number of
customers of Lots a Pizza RFC Branch by 10% every year from
year 2016 to 2018.
To increase its annual average client of 7% to 12% in the year 2016
to 2018.
To increase the sales of R Systems by a rate of 5% annually for the
next three years starting 2015-2017.
To increase net income by 12% in 2016, 15% in 2017, and 20% in
year 2018.

Ch 1 -49 Copyright 2007 Prentice Hall

 Format of Case Problem
I. Statement of the Problem
II. Case Facts / Background
III. Situational Analysis
IV. Objectives
V. Alternative Courses of Action (at least 3)
VI. Discussion and Analysis of Each Alternative (Pros &
Cons)
VII. Decision made / Recommendation
VIII.Action Plan (what are the next steps?)

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