Chapter 2: Strategic Marketing in the Business Environment

A company’s overall strategic direction drives its marketing strategy.

strategy
A plan or outlook guided by questions about future achievement

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

Companies can better work out the source of their competitive advantage by using models such
as

 SWOT(Strengths, Weaknesses, Opportunities and Threats (see the visual in Concept 2.1)
 theProduct-Market Growth Matrix, also known as Ansoff’s Strategic Opportunity Matrix,
a “2 × 2” template that helps to determine ways in which to grow a business through
(1) existing or new customers and (2) existing or new products

SWOT
An analysis that helps planners compare internal organizational strengths and weaknesses with
external opportunities and threats

Product-Market Growth Matrix

A template to determine ways in which to grow a business; also known as Ansoff’s Strategic
Opportunity Matrix

Once a company has identified its competitive advantage, it can communicate the source of
differentiation through its mission statement and its vision statement.

mission statement
A statement of the firm’s business based on a careful analysis of benefits sought by present and
potential customers and an analysis of existing and anticipated environmental conditions

vision statement
A statement that outlines what an organization would like to achieve or accomplish in the short
and long term

For a strategy to succeed, it must resonate with everyone working in the firm. It must also
provide clear direction on how the organization will manage the hostile and challenging external
market. This focus can help to solidify the competitive advantage, the unique aspect of the
company that the firm can take advantage of.
Porter’s Three Competitive Strategies can reveal the different ways to go about determining
competitive advantage.

SWOT, of course, stands for

 Strengths
 Weaknesses
 Opportunities
 Threats

external environment
Conditions, events, and factors outside the organization which can affect the way it functions

Opportunities
External trends and market forces that are positive for the company

An internal analysis of an organization helps to identify strengths and weaknesses. But

understanding the external environment clearly poses a challenge. You may be confused by the
meaning of “Opportunities,” which doesn’t imply what the company should do, but rather looks
at external trends and market forces that are positive for the company. These same external
forces can also be seen as potentially damaging, which would place them in the category of
Threats. (See Figure 2.1 for an overview of the elements of a SWOT.)

Done properly, a SWOT can be much more than a heap of information. It can help identify a
company’s competitive advantage. Working out the firm’s competitive advantage is an essential
part of establishing overall and marketing strategies, because it boils down to recognizing the
key attribute that puts the company ahead of its competitors.