CHAPTER 2 Strategic Planning

CHAPTER 2 Strategic Planning for Competitive Advantage

Chapter Features

Chapter Features

/ /

Key Points

ü  Opening Vignette / Þ / Beacon Street Girls, a line of books and accessories for 9- to 13-year old girls, uses innovative strategic planning to tap into the $40 billion “tween” market.
ü  Ethics in Marketing / Þ / Kraft Foods risked a loss in market share when it quit advertising certain products to kids under 12 in response to research proving that advertising contributes to childhood obesity.
ü  Application Exercise / Þ / Students do an environmental scanning exercise.
ü  Entrepreneurship Case / Þ / How Cirque du Soleil uses a finely tuned strategy to generate revenues far surpassing even the most successful Broadway plays.
ü  Company Clips / Þ / This second Method video reinforces the notion that strategic marketing is an important part of successful marketing—even for cash-strapped start-up companies.
ü  Biz Flix / Þ / A scene from U-571 shows a submarine commander strategically trying to escape the enemy and get away with a stolen encryption device.

**Chapter 2 concludes with a Marketing Plan Appendix to help students navigate the elements of a marketing plan.

This chapter begins with the learning outcome summaries, followed by a set of lesson plans for you to use to deliver the content in Chapter 2.

·  Lecture (for large sections) on page 18.

·  Company Clips (video) on page 19.

·  Biz Flix (video) on page 21.

·  Group Work (for smaller sections) on page 21.

Solution for Review and Applications begin on page 22.

Solution for Entrepreneurship Case begins on page 28.

Great Ideas for Teaching Marketing from faculty around the country begin on page 29.

Learning Outcomes

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

Strategic marketing planning is the basis for all marketing strategies and decisions. The marketing plan is a written document that acts as a guidebook of marketing activities for the marketing manager. By specifying objectives and defining the actions required to attain them, a marketing plan provides the basis on which actual and expected performance can be compared.

Creating a complete marketing plan is not a simple or quick effort. And the plan is only as good as the information it contains and the effort, creativity, and thought that went into its creation. Many of the elements in the plan are decided upon simultaneously and in conjunction with one another. Every marketing plan is unique to the firm for which it was created.

Basic factors that should be covered include business mission, setting objectives, performing a situation analysis, selecting target markets, delineating a marketing mix, and establishing ways to implement, evaluate, and control the plan.

2 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 of existing and anticipated environmental conditions. The firm’s long-term vision, embodied in the mission statement, establishes boundaries for all subsequent decisions, objectives, and strategies. A mission statement should focus on the market or markets the organization is attempting to serve rather than on the good or service offered.

3 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.

4 Explain the components of a situation analysis

The situation analysis is sometimes called a SWOT analysis, because firms identify their strengths, weaknesses, opportunities, and threats. This analysis may help the firm discover a strategic window of opportunity, or a differential advantage. When examining external opportunities and threats, marketing managers must analyze aspects of the marketing environment in a process called environmental scanning. The six most often studied macroenvironmental forces are social, demographic, economic, technological, political and legal, and competitive forces.

5 Identify sources of competitive advantage

Competitive advantage is a set of unique features of a company and its products that are perceived by the target market as superior to the competition. The three types of competitive advantage are cost (being the low cost competitor in an industry), differentiation (providing something unique that is valuable to buyers), and niche (effectively serving a single segment of the market) strategies.

6 Identify strategic alternatives

Firms can use the strategic opportunity matrix to explore four options: market penetration, market development, product development, and diversification. Firms select the alternative that best helps them reach their overall strategic goal of either market share or profit. Corporate culture plays a large role in the selection process.

There are several major techniques for selecting alternatives. The portfolio matrix is a method of determining the profit potential and investment requirements of a firm's SBUs by classifying each as a star, cash cow, dog, or problem child and then determining appropriate resource allocations for each.

7 Discuss target market strategies

The target market strategy identifies which market segment or segments to focus on. The process begins with a market opportunity analysis, or MOA, which describes and estimates the size and sales potential of market segments that are of interest to the firm. In addition, an assessment of key competitors in these market segments is performed. After the market segments are described, one or more may be targeted by the firm.

The three strategies for selecting target markets are appealing to the entire market with one marketing mix, concentrating on one segment, or appealing to multiple market segments using multiple marketing mixes.

8 Describe the elements of the marketing mix

The term marketing mix refers to a unique blend of product, distribution, promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market. Distribution is often referred to as place, thus giving the "four Ps" of marketing: product, place, promotion, and price. Products can be tangible goods, ideas, or services. Distribution strategies are concerned with making products available when and where customers want them. Promotion includes personal selling, advertising, sales promotion, and public relations. Price is what the buyer must give up to obtain a product.

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

After selecting strategic alternatives, plans should be implemented, that is, put into action. The plan should be evaluated to see if it has achieved its objectives. The final step in the strategic planning process, control, is the alteration of plans, if necessary. A marketing control system ensures that marketing goals are achieved within guidelines.

10 Identify several techniques that help make strategic planning effective

Effective strategic planning should be treated as an ongoing process, not an annual exercise. Effective planning requires creativity and should challenge existing assumptions about the firm and the environment. Perhaps the most critical element is the support and participation of top management. Their involvement in planning must be sincere and ongoing.

Terms

cash cow / market opportunity analysis (MOA) / portfolio matrix
competitive advantage / market penetration / problem child (question mark)
control / marketing audit / product development
cost competitive advantage / marketing mix / product/service
differentiation competitive advantage
Diversification / marketing myopia / star
dog / marketing objective / strategic business unit (SBU)
environmental scanning / marketing plan / strategic planning
evaluation / marketing planning / sustainable competitive advantage
experience curves / marketing strategy / SWOT analysis
four Ps / mission statement
implementation / niche competitive advantage
market development / planning

Lesson Plan For Lecture

Brief Outline and Suggested PowerPoint Slides:

An “H” appears next to slides with hyperlinks to the “On-Line” activities in the text margins.

Slides are available without videos on the Essentials of Marketing 6e Web site.

Learning Outcomes and Topics / PowerPoint Slides
1  Understand the importance of strategic marketing and know a basic outline for a marketing plan.
1.1  The Nature of Strategic Planning
1.2  What Is a Marketing Plan?
1.3  Writing the Marketing Plan / 1: Strategic Planning for Competitive Advantage
2: Learning Outcomes
3: Learning Outcomes (continued)
4: Learning Outcomes (continued)
5: Learning Outcome 1
6: Strategic Planning
7: Strategic Marketing Management
8: Strategic Planning
9: Why Write a Marketing Plan?
10: Marketing Plan Elements
11: Review Learning Outcome 1 (H)
2  Develop an appropriate business mission statement.
2.1  Defining the Business Mission / 12: Learning Outcome 2
13: Defining the Business Mission
14: AMA’s Mission Statement
15: Strategic Business Units (SBUs)
16: Review Learning Outcome 2
3  Describe the criteria for stating good marketing objectives.
3.1  Setting Marketing Plan Objectives / 17: Learning Outcome 3
18: Marketing Objective
19: Marketing Objectives
20: Review Learning Outcome 3
4  Explain the components of a situation analysis.
4.1  Conducting a Situation Analysis / 21: Learning Outcome 4
22: SWOT Analysis
23: SWOT Analysis
24: Biz Flix – U-571
25: Environmental Scanning
26: Review Learning Outcome 4 - Internal
27: Review Learning Outcome 4 - External
5  Identify sources of competitive advantage.
5.1  Competitive Advantage / 28: Learning Outcome 5
29: Competitive Advantage
30: Competitive Advantage
31: Cost Competitive Advantage
32: Cost Competitive Advantage
33: Sources of Cost Reduction
34: Product/Service Differentiation
35: Examples of Product/Service Differentiation
36: Niche Competitive Advantage
37: Niche Competitive Advantage
38: Sources of Sustainable Competitive Advantage
39: Review Learning Outcome 5
6  Identify strategic alternatives.
6.1 Strategic Directions / 40: Learning Outcome 6
41: Strategic Alternatives
42: Strategic Opportunity Matrix (H)
43: Portfolio Matrix
44: Portfolio Matrix Strategies
45: Review Learning Outcome 6
7  Discuss target market strategies.
7.1 Describing the Marketing Strategy / 46: Learning Outcome 7
47: Marketing Strategy
48: Target Market Strategy
49: Target Market Strategies
50: Review Learning Outcome 7
8  Describe the elements of the marketing mix / 51: Learning Outcome
52: The Marketing Mix
53: Marketing Mix: The “Four Ps”
54: Product Strategies
55: Distribution (Place) Strategies
56: Promotion Strategies (H)
57: Pricing Strategies
58: Review Learning Outcome 8
9  Explain why implementation, evaluation, and control of the marketing plan are necessary.
9.1 Following Up the Marketing Plan / 59: Learning Outcome 9
60: Following Up the Marketing Plan
61: Review Learning Outcome 9
10  Identify several techniques that help make strategic planning effective.
10.1 Effective Strategic Planning / 61: Learning Outcome 10
62: Effective Strategic Planning
63: Review Learning Outcome 10

Suggested Homework:

·  If you have adopted CengageNOW for Essential of Marketing 6e you can assign homework on the method video, the Cirque du Soleil case, or even on the Biz Flix clip from U-571.

·  The end of each chapter contains numerous questions that can be assigned or used as the basis for longer investigations into marketing.

Lesson Plan for Video

Company Clips: Method – Healthy Home

Segment Summary:

Cash-strapped startup companies generally do not spend a great deal of time and money on planning. Founders are so busy with the rudiments of business – finding customers and creating, manufacturing, and delivering the product – that they may even forget important things, like invoicing. Eric Lowry reinforces this notion in the opening of the second method video segment. Nonetheless, strategic planning is an important part of successful marketing. Listen closely to the segment, which introduces method’s CEO, Alastair Dorward, and gauge for yourself how much planning you think this innovative startup did before launching its brand.

These teaching notes combine activities that you can assign students to prepare before class, that you can do in-class before watching the video, that you can do in-class while watching the video, and that you can assign students to complete as assignments after the video class.

During the viewing portion of the teaching notes, stop the tape periodically where appropriate to ask students the questions or perform the activities listed on the grid. You may even want to give the students the questions before starting the tape and have them think about the answer while viewing the segment. That way, students will be engaged in active viewing rather than passive viewing.

PRE-CLASS PREP FOR YOU: / PRE-CLASS PREP FOR YOUR STUDENTS:
·  Preview the Company Clips video segment for Chapter 2. This exercise reviews concepts for LO1, LO2, LO5, LO7, and LO8.
·  Review your lesson plan.
·  Make sure you have all of the equipment needed to show the video to the class, including the DVD and a way to project the video. / ·  Have students familiarize themselves with the following terms and concepts: competitive advantage, marketing mix, target market strategy, mission statement, product/service differentiation, strategic planning, and sustainable competitive advantage.
·  Review Web site with those concepts in mind: http://www.methodhome.com
VIDEO REVIEW EXERCISE
ACTIVITY
Warm Up / Begin by asking students: “What is the goal of strategic planning?” [on the board, write “long-term profitability and growth”]
In-class Preview / Segue into a discussion of the elements that make up a marketing plan. Copy Exhibit 2.1 onto the board. Briefly explain each of the elements as you write them if students have not become familiar with them from previous reading.
Remind students to keep the marketing plan elements in mind as they review the video.
Compare the concepts of market strategy and market mix. Ask students to predict method’s target market strategy from what they learned in the first video.
Ask students to review the Company Clips questions below (same as textbook) and to be prepared to answer them after viewing the video.
Viewing(solutions below) / 1.  Based on what you heard in the video, does method have a marketing plan?
2.  Explain the elements that make up method’s competitive advantage. Is it sustainable?
3.  What are the elements in method’s marketing mix?
4.  What are method’s target market strategies and how does it use them in its operations?
Follow-up / Send students back to method’s Web site at http://www.methodhome.com. Have students write a brief paragraph about how method’s Web site identifies its target market segment.
Have students break into groups of up to four students and have each group write a mission statement for method. When students finish, discuss how the mission statement supports method’s marketing plan.
Ask: “How can method sustain its competitive advantage?” The question can be discussed by the class as a whole, within the small groups with professor supervision, or assigned as an out-of-class exercise.

Solutions for Viewing Activities (same as for the Company Clips questions in the textbook):

1.  Founder Eric Ryan and CEO Alastair Dorward describe in detail the plan they put in place for marketing the method brand: