MKTG Chapter 2: Strategic Planning for Competitive Advantage

Flashcards covering key terms and definitions from Chapter 2 on 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 environment.

Goal of Strategic Planning

Long-run profitability and growth.

Strategic Business Unit (SBU)

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

Characteristics of an SBU

Includes having a distinct mission, a specific target market, control over its resources, its own competitors, a single business or collection of related businesses, and plans independent of other SBUs.

PepsiCo SBU Portfolio

Includes Frito-Lay brands, Quaker brands, Gatorade brands, and Pepsi-Cola brands.

Amazon SBU Portfolio

Includes Amazon.com, AWS, Whole Foods, Amazon Fresh, and Amazon Prime.

Ansoff's Strategic Opportunity Matrix

A framework that matches products with markets using four strategic options: market penetration, market development, product development, and diversification.

Market Penetration

A strategy that tries to increase market share among existing customers.

Market Development

A strategy that entails attracting new customers to existing products.

Product Development

A strategy that entails the creation of new products for present markets.

Diversification

A strategy of increasing sales by introducing new products into new markets.

Starbucks Market Penetration Example

Starbucks sells more coffee to customers who register their reloadable Starbucks cards.

Starbucks Product Development Example

Starbucks expands its menu with cold brew options and energy beverages.

Starbucks Market Development Example

Starbucks opens new stores in Brazil and Chile.

Starbucks Diversification Example

Starbucks launches Ethos Water.

Portfolio Matrix

A technique which uses market growth rate and relative market share to identify what combination of SBUs will generate the best long-term performance.

Market Growth Rate

The annual sales growth rate of the SBU's industry.

Relative Market Share

The ratio between the company's market share and the share of the largest competitor.

Star (BCG Model)

A business unit that is a fast-growing market leader.

Cash Cow (BCG Model)

A business unit that generates more cash than it needs to maintain its market share.

Question Mark (BCG Model)

A business unit that shows rapid growth but poor profit margins.

Dog (BCG Model)

A business unit that has low growth potential and a small market share.

Build Strategy (BCG)

A resource allocation strategy appropriate if an SBU has the potential to be a star (probably a question mark at present).

Hold Strategy (BCG)

A resource allocation strategy aimed at preserving market share if an SBU is a successful cash cow.

Harvest Strategy (BCG)

A strategy appropriate for all SBUs except stars with the basic goal of increasing short-term cash return without much concern for the long-run impact.

Divest Strategy (BCG)

Getting rid of SBUs with low shares of low-growth markets, suitable for question marks and dogs.

Marketing Plan

A written document that acts as a guidebook of marketing activities for the marketing manager.

Purpose of a Written Marketing Plan

Provides clearly stated activities for common goals, serves as a reference point for future success, and allows awareness of marketplace possibilities and problems.

Mission Statement

Defines the core purpose of the organization, why it exists, and answers the question, 'What business are we in?'

Red Cross Mission Statement

'To prevent and alleviate human suffering in the face of emergencies by mobilizing the power of volunteers and the generosity of donors.'

Harley Davidson Mission Statement

'We fulfill dreams through the experience of motorcycling, by providing an expanding line of motorcycles and branded products and services in selected market segments.'

Nike Mission Statement

'To bring inspiration and innovation to every athlete in the world.'

McDonald's Mission Statement

'To be the world's best quick service restaurant experience.'

Google Mission Statement

'To organize the world's information and make it universally accessible and useful.'

SWOT Analysis

Identifying internal strengths (S) and weaknesses (W) and also examining external opportunities (O) and threats (T).

Strengths (SWOT)

Things the company does well (internal factor).

Weaknesses (SWOT)

Things the company does not do well (internal factor).

Opportunities (SWOT)

Conditions in the external environment that are favorable for the company.

Threats (SWOT)

Conditions in the external environment that are unfavorable for the company.

Internal Organizational Resources (SWOT)

Organizational focus areas examined during SWOT including production costs, marketing skills, financial resources, company or brand image, employee capabilities, and technology.

External Environmental Forces (SWOT)

Six major forces examined during external analysis: social, demographic, economic, technological, political/legal, and competitive.

Competitive Advantage

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

Cost Competitive Advantage

The ability to cut costs and pass the savings on to customers in the form of lower prices.

Product/Service Differentiation Competitive Advantage

The provision of something that is unique and valuable to buyers beyond simply offering a lower price than that of the competition.

Niche Competitive Advantage

The advantage achieved when a firm seeks to target and effectively serve a small segment of the market.

Marketing Objective

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

Marketing Objective Criteria

Marketing objectives should be Specific, Measurable, Attainable, Relevant, and Time-bound.

Marketing Strategy

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.

Target Market

A group of people or organizations for which an organization designs, implements, and maintains a marketing mix intended to meet the needs of that group.

Marketing Mix (Four Ps)

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