Lamb, Sharma, Hair,

McDaniel

CHAPTER 2
Strategic Planning for
Competitive Advantage

© AP IMAGES/JENNIFER GRAYLOCK
The Nature of Strategic
Planning

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

The GOAL of strategic planning is long-term

profitability and growth.
Strategic Marketing
Management

What is the organization’s main activity?

How will it reach its goals?

THE ANSWER IS A MARKETING PLAN.

 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.
 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

 Business Mission

Exhibit 2.1
Statement

Elements of a
Situation or SWOT
Analysis

Marketing Plan Objectives

Marketing Strategy
Target Market
Strategy

Marketing Mix
Product Distribution

Promotion Price

Implementation
Evaluation
Control
Defining the Business Mission

Develop an
appropriate business
mission statement
 Defining the Business

Mission
Answers the question,
“What business are we in?”

 Focuses on the market(s)

rather than the good or service

Business mission statements that are stated

too narrowly suffer from marketing myopia—defining
a business in terms of goods and services rather than in
terms of the benefits customers seek. In this context,
myopia means narrow, short-term thinking.
 Mission Statement:
Royal Orchid Hotels
1. To the guests
Royal Orchid Hotels is in the hospitality business to
provide superior service with competitive pricing. We
are committed to offer quality accommodation and
services to our guests. We strive to achieve
Excellence in Service and Standards.
2. To the employees
To provide all employees with a fair package of
employment and a conducive working environment.
This is done by recruiting and training employees
who are keen to progress, willing to learn new skills
and accept greater responsibilities.
3. To the community
To ensure each hotel recognizes its responsibilities
and contribution to the community.
Conducting a Situation Analysis

Describe the
components of a
situation analysis
 SWOT Analysis

S Strengths
Strengths--things
well.
well.
thingsthe
thecompany
companydoes
does

Internal

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

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

T environment
environment that
existing
existing
thatdo
strengths
strengths
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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
Environmental Scanning
Helps identify opportunities and threats.
When examining external opportunities and threats, marketing managers
must analyze aspects of the marketing environment. This process is
called environmental scanning—the collection and interpretation of
information about forces, events, and relationships in the external
environment that may affect the future of the organization or the
implementation of the marketing plan.
Designing a marketing strategy is based on six major environmental forces:
• Social
• Demographic

© AP IMAGES/PRNEWSFOTO/PEPSICO
• Economic
• Technological
• Political/Legal
• Competitive
Setting Marketing
Plan Objectives

Explain the criteria

for stating good
marketing objectives
 Marketing Objectives
 Realistic

 Measurable

 Time specific

 Compared to a benchmark

A marketing objective is a
statement of what is to be accomplished
through marketing activities.
 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

Competitive Advantage

Identify sources
of competitive
advantage
Competitive Advantage

Competitive
Competitive The set of unique features of a
Advantage
Advantage company and its products that are
perceived by the target market as
significant and superior to the
competition.
Competitive Advantage

Cost
Cost

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

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

Experience
Experience Curves
Curves Product
Product Design
Design

Efficient
Efficient Labor
Labor Reengineering
Reengineering

No-frills
No-frills Products
Products Production
Production Innovations
Innovations

New
New Service
Service
Government
Government Subsidies
Subsidies Delivery
Delivery Methods
Methods
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.
Examples of Product/Service
Differentiators
 Brand names
 Strong dealer network
 Product reliability
 Image
 Service
 Niche Competitive
Advantage
 Used by small companies with limited resources

 May be used in a limited geographic market

 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.
 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
Strategic Directions

Identify strategic
alternatives
LO6
Strategic Alternatives
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
Exhibit 2.2
Ansoff’s
Strategic
Opportunity
Matrix

Present Product New Product

Present Market Market Penetration Product Development
Amul selling milk to Amul develops
existing customer base. flavoured yogurt.
New Market Market Development Diversification
Amul enters markets Amul enters pizza and
such as Mauritius, UAE, quick service
Australia and Singapore. restaurant businesses.
Selecting a Strategic
Alternative

Star
Star

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

Dog
Dog
Exhibit 2.3
Portfolio Matrix for a Large
Computer Manufacturer
Portfolio Matrix
Strategies
Build

Hold

Harvest

Divest
 Describing
the Target Market

Discuss target
market strategies
 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.
 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

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
The Marketing Mix

Describe the
elements of the
marketing mix
 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”
 Marketing Mix:
The “Four Ps”
The starting point of
the “4 Ps” Includes: Product
Physical unit
Products can be…
Package
 Tangible goods
Warranty  Ideas
Service  Services
Brand
Image
Value
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
 Marketing Mix:
The “Four Ps”
Includes integration of:
Promotion
Advertising
Public relations
 Role is to bring about
exchanges with target
Sales promotion
markets by: Personal selling
 Informing
 Educating
 Persuading
 Reminding
Marketing Mix:
The “Four Ps”
Price

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
 Following Up on
the Marketing Plan

Explain why
implementation,
evaluation, and control
of the marketing plan
are necessary
 Following Up on
the Marketing Plan
 Implementation

 Evaluation and Control

• Marketing audit is thorough, systematic, periodic evaluation of the objectives,

• strategies, structure, and performance of the marketing organization.
 Comprehensive
 Systematic
 Independent
 Periodic
Effective Strategic Planning

Identify several
techniques that help
make strategic
planning effective
Techniques for Effective
Strategic Planning

Continual
Continual Management
Management
Creativity
Creativity
attention
attention commitment
commitment

Effective
Effective
Strategic
Strategic
Planning
Planning