Ch.2: Strategic Planning for Competitive Advantage

strategic planning

the managerial process of creating and maintaining a fit between the organization's objectives and resources and the evolving market opportunities.

goal of strategic planning

It is long-run profitability and growth.

what does strategic marketing management address

What is the organization's main activity at a particular time and how will it reach its goals

strategic business units (SBUs)

A subgroup of a single business or collection of related businesses within the larger organization

characteristics of an SBU

1) a distinct mission and a specific target market

2) control over its resources

3) its own competitors

4) a single business or a collection of related businesses

5) plans independent of the other SBUs in the total organization

which are the three most common tools used to manage the strategic direction of its portfolio of business?

Ansoff's strategic opportunity matrix, the Boston Consulting group model, and the General Electric model

what does the Ansoff's opportunity matrix do?

it matches products with markets

market penetration

a marketing strategy that tries to increase market share among existing customers

example of market penetration

Amazon.com offering its Amazon Prime customers its new streaming service to stream movies and TV service instead of Netflix

market development

means attracting new customers to existing products

product development

entails the creation of new products for present markets

example of product development

Reckitt Benckiser Group, a home and personal care oriented company, developed Suboxone, a drug that helps heroin addicts manage their habit

diversification

a strategy of increasing sales by introducing new products into new markets

example of diversification

UGGs has now introduced an upscale men's footwear collection inspired by rock'n'roll legends

Which are the three levels in the innovation matrix ranges?

core innovation, adjacent innovation, and transformational innovation

innovation matrix

it is a system that enables a company to see exactly what types of markets are possible to grow into (or create) based on the company's core capabilities

What does core innovation entail?

these decisions implement changes that use existing assets to provide added convenience to existing customers and potentially entice customers from other brands

Packaging changes, such as Tide's laundry detergent Pods, are an example of _____.

core innovation

What is adjacent innovation?

These decisions are designed to take company strengths into new markets; uses existing abilities in new ways.

Botox use in cosmetic surgery rather than to treat intestinal problems and crossed eyes in an example if ______.

adjacent innovation

Transformational innovation is:

decisions that result in brand-new markets, products and often new businesses where the company relies on new unfamiliar assets to develop

_______ is an example of transformational innovation.

iTunes

what does the portfolio matrix do?

Classifies each SBU by its present or forecast growth and market share.

The portfolio matrix is part of the____.

Boston Consulting Group Model

true or false: the measure of relative market share is the ratio between the company's share and the share of the largest competitor.

true

Name the four categories in which SBUs are split into in the portfolio matrix.

cash cows, dogs, stars and question marks/problem children

What is a star?

a fast-growing market leader; usually have large profits but need lots of cash to finance rapid growth

What is a cash cow?

an SBU that generates more cash than it needs to mantain its market share.

To mantain market dominance by being the price leader and making technological improvements in the product is _____.

the basic strategy for a cash cow

A ____ shows rapid growth but poor profit margins.

problem children

A ___ has a low growth potential and a small market share.

dog

The four basic strategies used to allocate future resources for each SBUs are to:

build, hold, harvest and divest

T/F: The General Electric Model uses market attractiveness and company strength.

true

In the GE model, what does business position refer to?

To how well positioned the organization is to take advantage of market opportunities.

What are the attributes of an attractive market?

high profitability, rapid growth, a lack of government regulation, consumer insensitivity to price increase a lack of competition and availability of technology

What is marketing planning?

It involves designing activities relating to marketing objectives and the changing marketing environment; it is the basis for all marketing strategies and decisions

What is the marketing plan?

A written document that acts as a guide book of marketing activities for the marketing manager

Why write a marketing plan?

Provides clearly stated activities that help employees and managers understand and work towards a common goal; serves as a reference point for the success of future activities

List the elements of a marketing plan.

business mission statement, SWOT analysis, objectives, target market, marketing mix

The mission statement answers _____.

"What business are we in?"

What should a mission statement focus on?

On the market or markets the organization is attempting to serve rather tham on the good or service offered.

Marketing myopia

defining a business in terms of goods and services rather than in terms of the benefits customers seek

what does SWOT analysis stand for?

Strengths, Weaknesses, Opportunities and Threats

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

The six most often studied macro-environmental forces

social, demographic, economic, technological, political and legal, and competitive

T/F: Performing a SWOT analysis does nothing to identify a company's competitive advantage.

False

What does having a cost-competitive advantage mean?

Means being the low-cost competitor in an industry while maintaining satisfactory profit margins.

How can cost be reduced?

experience curves, efficient labor, no-frills goods and services, government subsidies, product design, re-engineering, production innovations and new methods of service delivery

What do experience curves tell us?

that costs decline at a predictable rate as experience with a product increases.

When is a product/service differentiation competitive advantage present?

It exists when a firm provides something that is unique and valuable to buyers beyond simply offering a lower price than that of the competition.

What does a niche competitive advantage seek?

to target and effectively serve a single segment of the market

T/F: A sustainable competitive advantage is one that can be copied by competitors.

False

What does imitation require?

to identify the leader's competitive advantage, determine how it is achieved, and then learn how to duplicate it

What is a marketing objective?

a statement of what is to be accomplished through marketing activities

Characteristics of an obejctive

realistic, measurable, time specific and be able to be compared to a benchmark

MOA-Market Opportunity Analysis

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

marketing mix

refers to a unique blend of product, place(distribution), promotion and pricing strategies designed to produce mutually satisfying exchanges with a target market

What is being referred to with "product"?

the physical unit, package, warranty, after-sale service, brand name, company image, value,etc

Place Strategies are concerned with ____.

making products available when and where customers want them

T/F: Promotion strategies include advertising, public relations, sales promotion and personal selling.

True

Which is the most flexible of the four Ps?

pricing

Implementation

the process that turns a marketing plan into action assignments and ensures that these assignments are executed in a way that accomplishes the plan's objectives

task force

a tightly organized unit under the direction of a manager who usually has broad authority

evaluation

it entails gauging the extent to which marketing objectives have been achieved during the specified time period.

control

provides the mechanisms for evaluating marketing results in light of the plan's objectives and for correcting actions that do not help the organization reach those objectives within budget guidelines

marketing audit

a thorough, systematic, periodic evaluation of the objectives, strategies, structure and performance of the marketing organization

the audit's main role:

to address the question "where are we now?" and to suggest ways to improve what the firm already does

Characteristics of a marketing audit

comprehensive, systematic, independent and periodic