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MARKETING STRATEGY

O.C. FERRELL • MICHAEL D. HARTLINE
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SWOT Analysis
A Framework for Developing
Marketing Strategy
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SWOT Analysis
• “A widely used framework for organizing
and utilizing the pieces of data and
information gained from the situation
analysis…”
• Encompasses both internal and external
environments
• One of the most effective tools in the
analysis of environmental data and
information
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Effectiveness of Analysis Tools
Exhibit 4.1
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Major Benefits of SWOT Analysis
• Simplicity
• Lower Costs
• Flexibility
• Integration and Synthesis
• Collaboration


From Exhibit 4.2
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Directives for a Productive
SWOT Analysis
• Stay Focused
• Search Extensively for Competitors
• Collaborate with other Functional Areas
• Examine Issues from the Customers’
Perspective
• Look for Causes, Not Characteristics
• Separate Internal Issues from External Issues
From Exhibit 4.3
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Stay Focused
• It is a mistake to complete one generic
SWOT analysis for the entire
organization or business unit.
• When we say SWOT analysis, we mean
SWOT analyses.

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Search Extensively for Competitors
• Information on competitors is an
important aspect of a SWOT analysis.
• Look for all four types of competition:
– Brand competitors
– Product competitors
– Generic competitors
– Total budget competitors
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• This 2002 ad for Fruitopia, a
fruit drink by the makers of
Coke, shows that even the soft
drink giants have had to
respond to other sources of
competition than traditional
brand competitors.
• Can you think of other
products that illustrate the
effects of competition other
than the effects of brand
competitors?
Marketing Strategy in Action
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Collaborate with Other
Functional Areas
• Information generated from the SWOT
analysis can be shared across functional
areas.
• SWOT analysis can generate
communication between managers that
ordinarily would not communicate.
– Creates and environment for creativity and
innovation.
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Examine Issues from
the Customers’ Perspective
• To do this, the analyst should ask:
– What do customers (and non-customers) believe
about us as a company?
– What do customers (and non-customers) think of
our product quality, customer service, price,
overall value, convenience, and promotional
messages in comparison to our competitors?
– What is the relative importance of these issues as
customers see them?
• Taking the customers’ perspective is the
cornerstone of a well done SWOT analysis.
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Look for Causes, Not Characteristics
• Causes for each issue in a SWOT
analysis can often be found in the firm’s
and competitors’ resources.
• Major types of resources:
-Financial -Organizational
-Intellectual -Informational
-Legal -Relational
-Human -Reputational
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Separate Internal from
External Issues
• Failure to understand the difference between
internal and external issues is one of the
major reasons for a poorly conducted SWOT
analysis.
• Socratic Advice:
– “Know thyself”
– “Know thy customer”
– “Know thy competitors”
– “Know thy environment”
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• Why are industries and firms often so
reluctant to adapt to changes in their
external environments? Other than the
music recording industry, what other
industries or firms seem to be slow to
change? Why?
Discussion Question
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The Elements of a SWOT Analysis
• Strengths and Weaknesses
– Scale and Cost Economies
– Size and Financial Resources
– Intellectual, Legal, and Reputational Resources
• Opportunities and Threats
– Trends in the Competitive Environment
– Trends in the Technological Environment
– Trends in the Sociocultural Environment
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The Starbucks Experience
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SWOT-Driven Strategic Planning
• Four issues the marketing manager must recognize:
– (1) The assessment of strengths and weakness should look beyond
products and resources to examine processes that meet customer
needs. Offer solutions to customer problems instead of specific
products.
– (2) Achieving goals and objectives depends on transforming
strengths into capabilities by matching them with opportunities.
– (3) Weaknesses can be converted into strengths with strategic
investment. Threats can be converted into opportunities with
the right resources.
– (4) Weaknesses that cannot be converted become limitations which
must be minimized if obvious or meaningful to customers.

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• SWOT Matrix:
– A four-cell array used to categorize information at the
conclusion of a SWOT analysis.
• Should be based on customer perceptions, not the
perceptions of the analyst.
• Elements with the highest total ratings should
have the greatest influence in marketing strategy.
• Focus on competitive advantages by matching
strengths with opportunities.
Analysis of the SWOT Matrix
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The SWOT Matrix
Exhibit 4.6
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Quantitative Assessment of
Elements Within the SWOT Matrix
Exhibit 4.7
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• Strengths, weaknesses, opportunities, and
threats: Which is the most important? Why?
How might your response change if you
were the CEO of a corporation? What if
you were a customer of the firm? An
employee? A supplier?
Discussion Question
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• Competitive advantages can arise from many
external or internal sources.
• Competitive advantages refer to real differences
between competing firms.
• Three basic strategies for competitive advantage:
– (1) Operational Excellence
– (2) Product Leadership
– (3) Customer Intimacy
Leveraging Competitive Advantages
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Common Sources
of Competitive Advantage
From Exhibit 4.8
· Relational Advantages · Product Advantages
· Legal Advantages · Pricing Advantages
· Organizational Advantages · Promotion Advantages
· Human Resources Advantages · Distribution Advantages
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• Support or contradict this statement: “Given
the realities of the new economy and the
rapid changes occurring in business
technology, all competitive advantages are
short lived. There is no such thing as a
sustainable competitive advantage that lasts
over the long term.” Defend your position.
Discussion Question
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• Four major directions for strategic efforts:
– Aggressive (many internal strengths / many external
opportunities)
– Diversification (many internal strengths / many external
threats)
– Turnaround (many internal weaknesses / many external
opportunities)
– Defensive (many internal weaknesses / many external threats)
• These are the most common, but other combinations of
strengths and weaknesses are possible.
Establishing a Strategic Focus
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Strategic Turnaround at Chrysler
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• Developing Marketing Goals
– Attainability
– Consistency
– Comprehensiveness
– Intangibility
• Developing Marketing Objectives
– Attainability
– Continuity
– Time Frame
– Assignment of Responsibility
• Moving Beyond Goals and Objectives
Developing Marketing
Goals and Objectives
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Exhibit 4.10
2003 Baldrige Award Criteria
for Performance Excellence