Professional Documents
Culture Documents
CHAPTER OVERVIEW
Today’s marketers face strategic questions every day. Planning strategy is a critical part of their jobs.
The marketplace changes continually in response to shifts in consumer tastes and expectations,
technological developments, competitors’ actions, economic trends, and political and legal events, as
well as product innovations and pressures from suppliers and distributors.
Although the causes of these changes often lie outside a marketer’s control, effective planning can
anticipate many of them. As profiled in this chapter, marketers for Westin Hotels & Resorts noticed a
trend and quickly made changes to accommodate it. They realized that mattresses—and luxury
bedding—mattered a lot to hotel customers, so long-range plans were refocused to put a Heavenly Bed
in every hotel room, and eventually in many guests’ homes.
This chapter talks about why marketers plan, what steps they take in developing strategies, and how
these plans clarify direction in the entire marketing process. It lays a foundation for analyzing all
aspects of marketing by demonstrating the importance of gathering reliable information to create an
effective plan. These activities provide a structure for a firm to use its unique strengths. Marketing
planning identifies the markets a company can best serve as well as the most appropriate mix of
approaches to satisfy the customers in those markets. While this chapter focuses on planning, in later
chapters the task of marketing research and decision making will be explored.
The chapter has been updated and revised, with new features in several areas:
The Opening Vignette and Evolution of a Brand explain how the upgrading of hotel-room
bedding led to the sale of not only the bedding, but the beds, in “Westin Starts the Bed Wars.”
Westin Hotels & Resorts recently took a hard look at the softness of its mattresses. It rolled out
the Heavenly Bed, a combination pillow-top Simmons mattress with 900 coils and luxury linens.
When customers suddenly wanted to buy it, Westin began offering the Heavenly Bed for retail
sale, then partnering with Nordstrom’s to build sales. That one strategic move immediately
made waves in the industry, forcing other hotel chains at all levels to upgrade their mattresses
and bedding.
Solving an Ethical Controversy analyzes the issue of charitable organizations that reach out
to consumers for support. When Target banned the Salvation Army’s bell ringers from the front
of its stores during a recent holiday season, consumers reacted strongly by protesting and
staying away from Target’s doors themselves. The Christian charity said the snub could cost $9
million in donations. The firm said it was merely enforcing company policy. The shoppers
viewed it as corporate thinking gone wrong. The question remains: “Should Retailers Ban the
Salvation Army from Their Sidewalks?”
Marketing Success features “Home Depot versus Lowe’s” in its discussion of these long-time
rivals as the nation’s two biggest hardware and appliance retailers. Lowe’s picked up on survey
results from Sears indicating a growing interest by women tin doing home repair and renovation
2 Part 1 Designing Customer-Oriented Marketing Strategies
projects. So Lowe’s began to target the female segment with wider aisles, brighter lighting,
clearer displays, and seminars geared toward women’s tastes and preferences. Home Depot
didn’t act quite as quickly, but later followed Lowe’s lead with female-oriented classes and
workshops, while other retailers joined in the fun.
Etiquette Tips for Marketing Professionals provides advice on “How to Handle Interruptions”
with tips on office distractions including unexpected visitors, chatty coworkers, office gathering
places, phone calls, and even those pesky bosses who interrupt.
Chapter Case 2.1 features a major shift in aircraft manufacturing as once-popular small
regional jets carrying 50 passengers in a single class give way to larger planes. Not many years
ago, with business travel booming, major carriers were ordering smaller jets. But low-priced
competition along with the September 11th terrorist attacks led to major changes in the airlines
industry. Those that had ordered planes returned or sold most of them, replacing them with
larger and more fuel-efficient versions. But one manufacturer recently launched a new breed of
smaller aircraft that carries up to 100 passengers and offers first-class sections. So the small jet
may not be gone yet. See “A Farewell to Regional Jets?”
Collaborative Learning Exercises are provided in several areas related to strategic planning
and the marketing process—Planning Through the Organization, Defining the Organization’s
Mission and Objectives, Strategic Planning, Formulating a Marketing Strategy, Promotional
Strategy and Marketing Strategy, The Marketing Environment, and BCG Matrix.
Video Case 2.2 Synopsis includes a detailed overview of the video featuring Timbuk2 and its
bags and backpacks for urban living.
LECTURE OUTLINE
Opening Vignette and Evolution of a Brand—Westin Starts the Bed Wars. How did a service business—
Westin Hotels & Resorts—manage to also become a retail business? What steps did Westin take to make
this happen? Can you think of other well-known businesses in various service industries that began
marketing the goods that once were featured only on their premises?
Chapter Objective 2: Explain how marketing plans differ at various levels in an organization.
Key Terms: organizational levels
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Etiquette Tips for 1. Planning at different organizational levels
Marketing 2. Managers at all organizational levels devote some of their attention to
Professionals—How to planning activities
Handle Interruptions.
Think of office and a. The amount of time spent on planning activities and the types of
business situations planning vary by organizational level.
that might occur in 3. Top managers (CEO and functional vice-presidents)
various industries. a. Spend more of their time on planning than do lower-level
How might these managers
concrete suggestions b. Usually focus more on strategic planning
apply?
4. Middle managers
a. Tend to focus on operational planning, which includes creating and
Table 2.1 Planning at implementing tactical plans for their own departments
Different Managerial
Levels. Which b. Supervisors often engage in developing specific programs to meet
managers focus most goals in their areas of responsibility
on broad goals and c. To be most effective, the planning process includes input from a
long-term planning? wide range of sources, including suppliers and customers
Which managers
focus most on
Assessment check questions
planning for day-to-
day tasks?
1. How do marketing plans differ at different levels of the organization? Top
managers usually focus their planning activities on long-range strategic issues. In
4 Part 1 Designing Customer-Oriented Marketing Strategies
Note: Discuss how two contrast, middle-level managers focus on operational planning, which includes
companies creating and implementing tactical plans for their own units. Supervisors develop
approached a similar specific programs to meet goals in their areas of responsibility.
problem differently,
with different results. 2. Why is it important to get input from others when planning? Input from a variety
How Target and Kmart of sources—other employees, suppliers, or customers—helps insure that many
approached ideas are considered. Involving those people in planning can also turn them into
competing against advocates for the plan.
Wal-Mart is one good Give an example of strategic planning and tactical planning.
example.
IBM’s decision to focus more on business services was the result of strategic
planning; its decision to exit the desktop PC business was a result of tactical
planning.
Chapter Objective 3: Identify the steps in the marketing planning process.
Key Terms: mission, mission statement, objectives, marketing strategy
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Figure 2.1 The 1. Steps in the marketing planning process
Marketing Planning a. Define the mission
Process. Which step
b. Determine objectives
might be more difficult
than it seems? Which c. Assess resources
step do you think can d. Evaluate environmental risks and opportunities
be easily overlooked? e. Formulate a marketing strategy
f. Implement the strategy through marketing plans
g. Gather feedback to monitor and adapt strategies when necessary
2. Defining the organization’s mission and objectives
a. The organizational mission
i. The mission is the essential purpose that differentiates the
organization from others
Note: Choose a ii. The mission statement specifies the organization’s overall
couple of local goals and operational scope and provides general
organizations and use guidelines for future management actions
their mission
b. The organizational objectives
statements as class
examples. i. The basic objectives in a firm’s mission statement guide
the development of supporting marketing goals and plans
ii. Objectives should state specific intentions and specify a
time period for specific achievements
c. .Assessing organizational resources and evaluating environmental
risks and opportunities
d. This consists of an assessment of an organization’s strengths,
weaknesses, and available opportunities
e. Organizational resources also need to be considered in areas
such as production, marketing, finance, technology, and
employees
3. Formulating, implementing and monitoring a marketing strategy
a. A marketing strategy is an overall, company-wide program for
selecting a target market and satisfying customers in that market
through the elements in the marketing mix—product, distribution,
and price
b. The strategy must be monitored to ensure that objectives are
being met
Chapter 2 Strategic Planning and the Marketing Process 5
2. What is the importance of the final step in the marketing planning process? In
the final step of the marketing planning process, managers monitor performance to
ensure that objectives are being achieved.
Chapter Objective 4: Describe successful planning tools and techniques, including Porter’s Five
Forces model, first and second mover strategies, SWOT analysis, and the strategic window.
Key Terms: sustainable competitive advantage, Porter’s Five Forces, first mover strategy, second mover
strategy, SWOT analysis, core competencies, strategic window
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1. Successful strategies: tools and techniques
a. Four tools for marketing planning include Porter’s Five Forces
model, first and second mover strategies, SWOT analysis, and the
strategic window
b. All of these planning strategies have the goal of creating a
sustainable competitive advantage for a firm, meaning that other
companies cannot provide the same value
Figure 2.2 Porter’s 2. Porter’s Five Forces
Five Forces Model.
Choose one of the a. Porter’s Five Forces is a model which identifies five competitive
forces and think of the forces that influence planning strategies
ways it relates to a b. They are:
real-world marketing i. The threat of new entrants
situation.
ii. The threat of substitute products
iii. Rivalry among competitors
iv. Bargaining power of buyers
v. Bargaining power of suppliers
3. First mover and second mover strategies
a. A first mover strategy advocates that a company that is first to
offer a product will be the long-term market winner
b. A second mover strategy advocates close observation of the
innovations of first movers and then improving on them to gain
market advantage
Figure 2.3 SWOT 4. SWOT analysis
Analysis. Think of a a. SWOT analysis helps planners compare internal organizational
well-known product
strengths and weaknesses with external opportunities and threats
and its possible
weaknesses and b. “SWOT” stands for strengths, weaknesses, opportunities, and
threats. Then consider threats.
its strengths and c. This is an important strategic planning tool.
opportunities.
d. SWOT – strengths
i. A set of core competencies—what the organization does
well
ii. Often .consist of capabilities that customers value and
competitors find difficult to duplicate
6 Part 1 Designing Customer-Oriented Marketing Strategies
ThThe main benefits of being a first mover strategy include is a greater chance of
being able to capture the greatest market share. Being first, however, also carries
more risk. and develop long-term relationships with customers. Disadvantages
include the possibility that companies that follow can learn from mistakes by first
movers.
3. What are the four components of the SWOT analysis? SWOT analysis helps
planners compare internal organizational strengths and weaknesses with external
opportunities and threats. SWOT is an acronym for strengths, weaknesses,
opportunities, and threats. What is a strategic window? A strategic window defines
the limited periods during which the key requirements of a market and the
particular competencies of a firm best fit together.
5. Promotion strategy
a. Promotion strategy refers to the communication link between
sellers and buyers
b. In developing a promotion strategy, marketers blend the various
elements of promotion to communicate most effectively with their
target markets
c. Integrated marketing communication coordinates all promotional
activities so that the consumer receives a unified and consistent
message
6. Pricing strategy
a. Pricing strategy deals with the methods of setting profitable and
justifiable prices
b. It is one of the most difficult areas in marketing decision making
i. Pricing is often closely regulated
ii. Pricing is subject to considerable public scrutiny
c. One factor that influences a marketer’s pricing strategy is
competition
1. What are the two components of every marketing strategy? The basic elements
of a marketing strategy are: 1) the target market and (2) the marketing mix
variables.
2. Identify the four strategic elements of the marketing mix. The marketing mix
consists of product, distribution, promotion, and price strategies.
Chapter Objective 6: Describe the environmental characteristics that influence strategic decisions.
Key Term: rule of three
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Solving an Ethical 1. The marketing environment
Controversy: Should a. Marketing decisions aren’t made in a vacuum
Retailers Ban the
b. They must take into account the five dimensions of the marketing
Salvation Army from
environment (discussed earlier in the chapter)
Their Sidewalks?
Discuss the benefits 2. Marketers make decisions about target markets and marketing mix
(to charitable variables by taking into account the dynamic nature of these five
organizations and dimensions of the marketing environment:
retailers as well as a. Competitive
consumers) when b. Political-legal
these groups are
c. Economic
allowed to solicit
donations on retailer d. Technological
property or in malls. e. Social-cultural
What are the possible 3. Some recent trends in the marketing environment:
drawbacks?
a. Expanding into foreign markets
b. Technology—especially the Internet
c. The rule of three means that in any industry, the three strongest,
most efficient companies dominate between 70 and 90 percent of
the market
d. The importance of understanding cultural diversity
Chapter 2 Strategic Planning and the Marketing Process 9
1. What are the five dimensions of the marketing environment? The five
dimensions of the marketing environment are competitive, political-legal,
economic, technological, and socio-cultural factors.
2. How does technology influence the marketing environment? The Internet and
other technological developments continuously alter how firms do business. And
as technology forces these changes, other aspects of the environment must
respond.
Chapter Objective 7: Describe the methods for marketing planning, including business portfolio
analysis and the BCG matrix.
Key Terms; portfolio analysis, strategic business unit (SBU) or category, market share/market growth
matrix (BCG matrix), stars, cash cows, question marks, dogs
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1. Methods for marketing planning
a. Many firms have developed planning methods to help with marketing
decisions
b. Two of these types of methods: the strategic business unit concept,
and the market share/market growth matrix
2. Business portfolio analysis
a. Managers at larger firms need a method for spotting product lines
that deserve greater investment as well as lines that aren’t living up
to expectations
b. Portfolio analysis attempts to determine which product lines are the
strongest and which are the weakest
c. Strategic business units
i. A strategic business unit (SBU) is a key business element
within a diversified firm
ii. Each SBU has its own managers, resources, objectives, and
competitors
iii. Divisions, products lines, or even a single product may
constitute a strategic business unit
iv. An SBU, also called a category, can focus attention of
company managers so that they can respond effectively to
changes within limited markets
Figure 2.5 BCG d. Market share/market growth matrix (BCG matrix)
Market Share/Market e. The market share/market growth matrix (or BCG matrix) places
Growth Matrix. Think SBUs in a four-quadrant chart that plots market share—the
of a past or present percentage of a market that a firm controls—against market growth
product or service, a potential.
well-known f. The quadrants are labeled stars, cash cows, question marks, and
business, or even a dogs
broad industry that
might fit into each g. Each of the four quadrants requires a unique marketing strategy
quadrant. Stars:
i. Stars represent units with high market shares in high-growth
markets
10 Part 1 Designing Customer-Oriented Marketing Strategies
1. What are SBUs? Strategic business units (SBUs) are key business units within
diversified firms. Each SBU has its own managers, resources, objectives, and
competitors.
2. Identify the four quadrants in the BCG matrix. The BCG matrix labels SBUs
stars, cash cows, question marks, and dogs.
1. State whether each of the following illustrates strategic or tactical planning: Wal-Mart decides to
enter the Japanese market. A local bakery decides to add coffee to its list of offerings.
2. Summarize in one or two sentences a strategic plan that a top manager in a business unit might be
involved with. Now state in a sentence or two a tactical plan that a middle-level manager might focus
on.
Top managers are involved in the strategic planning process, developing an organization’s primary
objectives and the courses of action that will achieve these objectives, then creating fundamental
strategies to accomplish these goals while reviewing the entire budget. (Example: executives of a large
department store chain make a plan to expand, so rather than opening new stores or constructing new
buildings, they decide to buy out smaller department stores in various cities.) Middle managers deal
12 Part 1 Designing Customer-Oriented Marketing Strategies
with short-term operational planning that addresses action and focuses on current and upcoming
activities in support of the overall strategic planning laid out by company executives. They set these
plans in motion by developing quarterly and semi-annual plans, policies and procedures, and divisional
budgets. (Example: middle managers of the same large department store chain review the budget and
develop plans for ordering inventory, hiring new staff, and opening various departments at new
locations.)
A firm’s mission is the essential purpose and philosophy that differentiates it from other companies. A
firm’s objectives are its organizational goals, including specific intentions that guide development of
marketing objectives and plans, often stated in the company’s mission statement.
Marketing strategy is a firm’s broad program for selecting a particular target market and then satisfying
consumers in that market. This is done through a careful blending of elements of the marketing mix—
product, distribution, promotion, and price—each of which is a subset of the overall marketing strategy.
5. Over which of Porter’s Five Forces do consumers have the greatest influence?
The greatest influence comes from the bargaining power of buyers and the threat of substitutes.
6. Cite examples of firms that have succeeded with first and second mover strategies.
Several examples of first movers include eBay (for its entire site), Wal-Mart (for its inventory and pricing
strategies), and Apple (for its Mac, iPod and iTunes). Examples of second movers include Target
(which often reflects the moves of Wal-Mart) and Microsoft (after observing IBM, Apple, and other
computer pioneers).
7. When using the strategic window, what three factors must marketers analyze?
They need to look at the current and projected external environment; the current and projected internal
company capabilities; plus how, whether, and when the firm can feasibility reconcile environmental
conditions and company capabilities.
The target market is the group of people toward whom the firm decides to direct its marketing effort and
ultimately its merchandise. It is important because the target market ultimately defines exactly where,
and to whom, the firm will direct its goods and services. Though the idea of dividing markets into
segments is also critical to success, the overall target market must be understood in order to have a
clear idea of who the broad base of potential customers are, what they want, and what a company can
do to provide it.
The marketing mix is a blend of multiple variables that can be categorized into four strategies: product,
price, distribution, and promotion. One example: Dell Computer is a direct seller (distribution) of
personal computers (product) which follows a competitive pricing strategy (price) and gets out its
message (promotion) using a mix of advertising media through television, radio, print, and online ads.
Chapter 2 Strategic Planning and the Marketing Process 13
10. Identify a major way in which technology has changed the marketing environment in the last five
years.
Technology has allowed for faster and more efficient communication, data collection, analysis of
marketing research, and even the creation and review of budgets and financial statements. It has had a
profound effect on the ways products and services are marketed through traditional channels such as
television, radio, and print media with its increased sophistication of graphics, photo, film, and audio.
The Internet in particular has vastly changed the face of marketing as it has erased geographic
limitations and time restrictions, virtually making every marketer a global marketer—around the clock. It
has also lowered some barriers to entry, increased potential competition, leveled the playing field in
some ways, informed consumers, allowed for comparison shopping, ultimately strengthened the
bargaining power of buyers—and even boosted the package delivery business.
12. Describe the characteristics of each of the four quadrants in the BCG matrix.
The market share/market growth matrix places the firm’s market share on one axis and the market’s
growth potential on the other axis. The resulting four quadrants are labeled: stars (high market share,
high-growth market), cash cows (high market share, low-growth market), question marks (low market
share, high-growth market), and dogs (low market share, low-growth market).
1. When students choose a company whose goods and services are familiar to them and create a
mission statement, they might start with companies they particularly admire and check their Web sites
for mission statement ideas. When formulating a mission statement, they should make sure that the
company’s overall broad objectives are spelled out, its philosophy is stated, and its intentions are listed
in a clear-cut and straightforward way.
2. Again, students may want to begin by viewing the Web sites of several businesses they admire.
What are their objectives? How specific are these objectives in relation to the products or services
offered by the firm? This may help them identify at least five objectives based on the mission
statement they created. An Internet search might start with posted mission statements by FedEx,
Microsoft, and Amazon, for starters. Also have them check out www.global100.org for a discussion of
mission statements and what it considers the most sustainable companies.
3. “SWOT” stands for strengths, weaknesses, opportunities, and threat—so a SWOT analysis looks at
internal strengths and weaknesses and compares them with external opportunities and threats. To
create their own SWOT analysis, students should begin by brainstorming the four categories and
coming up with four lists. Then they can review the traits they’ve listed. They might start with the “bad
news” first by looking at their weaknesses and the threats out there that might take advantage of these.
Point out that they can limit their weak tendencies by anticipating what might hit them—thereby
protecting themselves and reducing the chance of outside forces hurting them. Next they can turn to
the “good news” and look at the positive side. What are their core competencies (what are they good
at)? What opportunities do they see out there? Remind them that they can match one of their internal
strengths to an opportunity, creating some leverage for themselves. What have they learned about their
own qualities and shortcomings in planning for their future through SWOT?
14 Part 1 Designing Customer-Oriented Marketing Strategies
4. A strategic window is a limited period when the key requirements of a market and the particular
competencies of a firm best fit together. ABC’s decision to make certain shows—”Lost” and “Desperate
Housewives”—available for downloading demonstrates a strategic window because it chose shows that
are popular now and have wide audiences, bringing together the wants of a target market with the
solution of easy access to these broadcasts.
5. In creating marketing strategies, a firm decides to direct its efforts toward a particular group of
consumers called a target market. Students will need to narrow their marketing strategy to fit certain
specific groups of people, keeping in mind demographics, geographical location, lifestyle, etc. Remind
them that their proposed marketing strategy should have three elements—it should reach the right
buyers at the right time, persuade them to buy the product, and lead to strong customer relationships
over time. Some possible target markets for the given firms are suggested below, though the class will
certainly come up with additional ideas.
6. Have students share the two ads created for a chosen company’s products or product lines. Remind
them that one ad should highlight the product itself—in some way stressing its features, packaging, or
brand name. How can they get the word out on the unique traits of this product? What is unusual or
eye-catching about the product that can be played up in an ad? The second ad should focus on
pricing. How can price, value, quality, or other features be presented in a way that will encourage
potential buyers to notice the product and consider purchasing it? After the demonstrations, start a
class discussion on which ads were most effective in informing and persuading.
7. Students can get quite a bit of information from researching a mature company and its evolution
over the years. They should have come up with an outline of technological changes and development
of products over time, or even a timeline showing technological advances and their impact on the firm’s
marketing over the decades. A few suggestions on the firms given based on quick searches of their
Web sites:
a. Ford—the Model T design, the assembly line, mass production, technology for the Lincoln
luxury line, Mercury mid-priced division, Thunderbird sporty line, eventually Mazda, Mazda,
Jaguar, Land Rover, Aston Martin, and Volvo, plus newer technology in fuel efficiency and
emissions has been incorporated in many models, and new hybrid technology is seen in the
Ford Escape and Mercury Mariner.
c. DuPont—chemicals and energy-based materials used in products and services for markets in
agriculture, nutrition, electronics, communications, safety and protection, home and
construction, transportation and apparel, including materials such as cellophane, nylon, plastics,
and trademarked goods such as Pioneer® brand seeds, Teflon® fluoropolymers, films, fabric
Chapter 2 Strategic Planning and the Marketing Process 15
protectors, fibers, and dispersions; Corian® solid surfaces; Kevlar® high strength material, and
Tyvek® protective material.
8. As marketer for a large U.S. toy manufacturer looking to expand overseas and particularly into India,
you would want to do some quick research. An Internet search shows more than 800 toy and game
manufacturers within the country, plus the competition of three giants—Mattel Toys, Funskool and
Lego—who are the biggest international players there. Apparently soft toys, computer games, dolls,
electronic games are available, and not surprisingly, kids want “fun” toys while parents prefer
“educational” toys. Ask students about the research they did on the cultural and social factors affecting
consumer behavior and eventual purchase decisions in this nation, and how these elements impacted
their memo on a marketing strategy.
9. A strategic business unit (SBU) is a key business element within a diversified firm. Remind students
that a division, a product line, or even a single product may act as an SBU. If students chose L.L.
Bean’s outdoor gear and apparel section, a good example of an SBU, their ads should reflect its target
market of females, the products and product features that might appeal to this audience, and the
specific advantages of these items over those of competitors.
10. Students should be able to create a unique BCG matrix for any of the firms suggested in Question
5. For any of these firms, they should be able to identify at least one star (high market share, high-
growth market), cash cow (high market share, low-growth market), question mark (low market share,
high-growth market), and, though it may take a bit more research, dog (low market share, low-growth
market).
Critical-Thinking Exercises
1. Why is it important from a marketing standpoint for an organization to define its goals and
objectives?
Marketing planning cannot get started until an organization defines its goals and objectives.
2. What are the potential benefits and drawbacks if a firm strays from its core competencies?
A company’s strengths reflect its core competencies—what it does well. They are capabilities that
customers value and competitors find difficult to duplicate. Straying from core competencies may have
potential rewards, such as expanding into more attractive markets, but are also risky.
3. Describe a consumer product that you think is particularly vulnerable to substitution. If you were a
marketer for that product, what steps might you take to defend your product’s position?
This exercise asks students for an opinion but suggest that students think about products that they use.
Defending a product from competition might include adding features, improving product quality, or
lowering prices.
4. Suppose you were a marketer for a luxury skin-care line. What factors in the marketing environment
might affect your marketing strategy and why?
Students may argue that all five dimensions of the marketing environment will affect the product’s
marketing strategy but ask students to focus on the dimension (or dimensions) that will likely have the
greatest impact. Students should identify competitive (barriers to entry aren’t that high), economic
(slower or faster economic growth may affect consumer demand), and perhaps socio-cultural (changes
in consumer tastes and preferences in the target market).
16 Part 1 Designing Customer-Oriented Marketing Strategies
5. Suppose you were a marketer for a small firm trying to enter one of the dominant industries
illustrating the rule of three. Which marketing strategy might you select and why?
The “rule of three” posits that in any industry, the three strongest, most efficient companies dominate
between 70 and 90 percent of the market. Trying to enter that kind of market is difficult, especially for a
small company with limited resources. Some strategies include lower prices (greater value) or new
features. In addition to the airline industry, described in the text, have students think about the banking
industry. While large banks, such as Bank of America, dominate the industry, small community banks
are thriving. These banks offer many of the same services as the giant banks, but often charge lower
fees and offer higher levels of customer service.
Ethics Exercises
Suppose you work for a company that makes surfboards. As part of the marketing team, you have
helped create a SWOT analysis for the company and have discovered some good and not-so-good
things about your employer. You are concerned about the firm’s weaknesses—the product line is
narrow, you suspect the company doesn’t have the financial resources to expand right now, and the
owner keeps a tight rein on everything.
1. Should you speak to your manager about your concerns or keep quiet? Why?
2. Would you look for a job at another firm or remain loyal to the one you work for? Why?
The exercise raises some important issues. Many will feel as though an employee should never
hesitate to discuss concerns about perceived firm weaknesses with his or her management. If it’s done
in the right way, many companies value this kind of input. The exercise also raises the issue of
employee loyalty. Loyalty is a touchy subject in today’s work environment. Some question whether
anyone—employees or employers—has, or even should have, loyalty today
Internet Exercises
a. The decision by Airbus (http://www.airbus.com) to proceed with the launch of the A380, the
world’s largest commercial airliner
Wal-Mart’s plan to expand internationally is the clearest example of a strategic plan. Because
of the long-term nature of the Airbus and Kodak examples—these can also be argued as being
strategic plans. However, they could also be considered tactical plans because they support
the overall strategic plans being pursued by these organizations.
a. Go to the Web site of 3M (http://www.mmm.com). Based on the information you find, divide
3M into its main strategic business units.
Chapter 2 Strategic Planning and the Marketing Process 17
c. It is not uncommon for companies to sell individual products, or even complete product lines,
to other companies. Using Google or another Internet search engine, identify a recent product
sale. Using business portfolio analysis or the BCG matrix, prepare a brief report discussing why
the seller sold the product and why the buyer purchased it.
While identifying a firm’s major divisions and product lines is relatively easy, classifying the
divisions in terms of market attractiveness and business strengths is much more difficult—and
subjective. Additional insight (beyond the company Web site) will likely be necessary.
1. What are some strengths, weaknesses, opportunities, and threats that face the aircraft
manufacturing industry, as represented by Bombardier and Embraer?
Weakness—These companies deal with a narrow product line that has a long selling/production
cycle.
Threats—Airlines face volatile environments and changing demands and so the demands of the
airplane industry are also changing.
2. Which elements of the marketing mix have airlines emphasized in their battle to retain their business
passengers? Do you think they have chosen the most effective strategies? Why or why not?
These companies have emphasized the product element of the marketing mix. They have monitored
events in the travel industry and have altered their product accordingly.
Purpose:
To highlight a key challenge in gathering information for strategic planning
Background:
The research is clear: When your entire organization gathers and shares information, the
planning process is more effective and better integrated into the organizational culture. But the
best way to achieve full employee participation is much less clear. This exercise is designed to
help students explore potential approaches to achieve more widespread information sharing.
18 Part 1 Designing Customer-Oriented Marketing Strategies
Relationship to Text:
Planning at Different Organization Levels
Preparation/Materials
None needed
Exercise:
Ask your class why they think it is so difficult to achieve a free flow of information and ideas in
most companies. As they share their thoughts, you may want to point out that money isn’t
always the answer; in fact, offering money in exchange for ideas can spawn a
counterproductive, competitive dynamic among employees at all levels. Ironically, technology
doesn’t always help either. Joseph Priestley, a pioneer of modern science, summed up a
common issue by observing, “The more elaborate our means of communication, the less we
communicate.”
After a brief discussion, break your class into small teams and give about five minutes to
brainstorm possible solutions. When you reconvene as a class, ask each group to share their
best idea (possibilities usually range from hosting weekly planning lunches with all employees,
to engaging Intranet approaches, to raising overall pay). This often leads to a helpful and
spontaneous discussion about which method works the best in which situation, and why.
Purpose:
To give students a personal perspective on mission statements
Background:
This exercise is designed to explore and articulate their personal “mission statements.”
Typically it is both interesting and inspiring, and helps students understand at a more visceral
level how organizations use their mission statements to differentiate themselves and to guide
their decision-making.
Relationship to Text:
Defining the Organization’s Mission and Objectives
Preparation/Materials:
Each student will need paper and pencil or pen.
Exercise:
Chapter 2 Strategic Planning and the Marketing Process 19
Ask each student to spend a few moments writing a personal mission statement for his or her
life. Try to smile at the groans and resist the temptation to give too much further direction. After
about five minutes, ask for volunteers to share their statements. If no one volunteers, start by
calling on a few people who tend to be articulate in class. The results can be staggering. And
the discussion is typically spontaneous and lively—but if not, ask students to identify similarities
and differences in their statements, possibly across gender, age, hometown, college major, or
other demographic traits and lifestyle characteristics. What do their statements say about ethics,
values, and locus of control? How do their personal missions influence their actions and
decisions on a day-to-day basis? You may want to close by calling their attention to the obvious
parallels between personal and organizational missions.
Strategic Planning
Purpose:
To give your students hands-on experience with basic strategic planning for a very familiar
entity—themselves!
Background:
Attempting to implement strategic planning, students often struggle to find the balance between
an approach that’s too narrow and an approach that’s too broad. This exercise is designed to
help students achieve the right balance by examining their personal strategic plans and zeroing
in on both wide-range and detailed issues (while receiving some unexpected guidance from
their peers about their careers).
Relationship to Text:
Strategic Planning
Preparation/Materials:
Each student will need paper and a pencil or pen
Exercise:
Ask students to write down a brief strategic mission for their careers, looking at the five-year
horizon. What do they aspire to be doing from a professional standpoint in five years? Collect
the papers, shuffle them, and redistribute them to the class. Ask each student to write a five-
point strategic plan for the person whose paper he or she received. Each point in the plan
should be no more than a sentence or two. Remind the class to be sure that all of their points
are specific and measurable, and most importantly, will bring the student closer to the overall
strategic goal. After about ten minutes, call on a handful of students and ask them to share their
classmate’s goal and the five-step plan that they created.
20 Part 1 Designing Customer-Oriented Marketing Strategies
Purpose:
To help students explore strategic solutions for a contemporary marketing issue
Background:
Not surprisingly, fast-food restaurants are feeling under siege. The studies keep coming out
highlighting health hazards across the U.S. and citing rampant obesity, child obesity, the
dangers of trans fats, and more. As low-carb diets became popular, retail sales of french fries—
a staple of fast-food restaurants—plummeted, dropping 2.9% in 2001, 3.3% in 2002, and 10% in
2003 (www.whybiotech.com). From a PR perspective, the documentary Super Size Me fanned
the flames. This exercise is designed to help students explore potential solutions—and ethical
implications—for this strategic challenge from the fast-food industry perspective.
Relationship to Text:
Formulating, Implementing, and Monitoring a Marketing Strategy
Preparation/Materials:
You may want to copy the background and the case situation for each student.
Exercise:
Divide your class into small groups and share with them the following case. Situation: You and
your teammates are partners in the ownership of a medium-sized fast-food chain in the
Midwest. You own 41 outlets, most of them in small towns. The mainstay of your menu is
hamburgers and french fries, although you also offer a couple of sandwiches, chips, soft-serve
ice cream, and sodas. Your most important customers are men aged 18-34 (they account for
about 20 percent of your customers and about 55 percent of your sales), but since restaurant
options are limited in most of the towns where you operate, you serve customers across a wide
demographic range. Sales in the past two years have been dropping at an accelerating rate, so
you are now meeting with your partners to discuss potential solutions. Give your class about 10
minutes to brainstorm options. Encourage them to consider all the possibilities, including doing
nothing (“This will all blow over . . .”). Then, direct each group to choose their best option, and
to identify the potential risks and benefits (e.g., if they made changes to attract new customers,
will they alienate their current customers?). Reconvene as a class, and ask each group to
report briefly to their peers. Which solution does the class like best? Why?
Purpose:
To explore the relationship between the promotional and pricing strategies
Background:
Clearly, all elements of the marketing mix are interrelated, so this exercise is designed to
highlight the links between promotion and pricing.
Relationship to Text:
Promotional Strategy and Pricing Strategy
Preparation/Materials:
Each student needs to have unlined paper and a pencil or pen
Exercise*:
Break your class into small groups. Ask each group to choose a good or a service that they all
know and like, and to create two ads for that product: one that focuses on price, the other on the
features and benefits of the product itself. (They can do print, radio, TV, or Internet ads, as long
as both ads are designed for the same media.) Let them know upfront that they’ll need to
present their ads to the class. When the teams present their ads, conduct a quick vote to see
which ad the class liked better for each product. Keep a tally on the board showing each of the
products and the winning type of ad. Results will vary significantly based on the product
categories (and, of course, the creativity of the students). Follow-up discussion can be
interesting, surprising, and fun. What type of ads worked best, and why? How did the product
category and price affect the promotional strategy? Does the broader market reflect the findings
of the class? Why or why not?
Purpose:
To highlight the importance of the marketing environment
Background:
This quick, discussion-based exercise is designed to help students better understand the impact
of the external environment on marketing decisions
Relationship to Text:
The Marketing Environment
About 10 minutes
Materials/Preparation:
None needed
Exercise:
Choose a branded product that your students seem to all know and enjoy. Higher-end
products, such as an Apple iPod or a Burton snowboard seem to work especially well for this
exercise. Guide your students in a discussion of how each element of the external environment
—competitive, political-legal, economic, technological, and social-cultural—could influence the
success of their product over the next five years. Encourage them to consider factors beyond
the obvious (e.g., the emerging development of year-round snow-makers, or virtual reality
snowboarding games). As you develop your list, you may want to also remind them that a
marketer cannot control the external environment, but he or she must respond to it effectively.
BCG Matrix
Purpose:
To help students gain a fuller understanding of the BCG matrix as a planning tool
Background:
While the concept of the BCG matrix is straightforward, many students have trouble
understanding how it applies to actual situations as an investment tool. This exercise is
designed to foster a deeper understanding through a hands-on case study approach.
Relationship to Text:
BCG Matrix
Materials/Preparation:
None needed
Exercise:
Announce to your class that they will do a case study on the talent agency business (which
most of them find more glamorous and exciting than it really is). Begin by brainstorming a list of
movie stars, celebrities, and entertainers. Encourage the class to include a wide variety, from
current box office draws, to over-the-hill talents, to emerging stars. Then, divide your students
into small groups and tell them that each group represents a small talent agency. Their roster
includes the stars that you listed on the board. Give them each a hypothetical $10 million to
invest in marketing the personalities in their stable of stars, and direct them to use the BCG
Matrix to make their investment choices. Ask each group to present their allocation and
Chapter 2 Strategic Planning and the Marketing Process 23
rationale in terms of the matrix. You will probably find that they were tempted to invest big
dollars in their “cash cows,” which makes for an interesting discussion.