Description
This workbook is designed to help firms and individuals become more familiar with the implications of a strategic marketing management program for their businesses. The workbook provides a basic introduction to marketing and strategic marketing management. Readers will also learn the basics of a marketing plan and why they need one.
FE299
Strategic Marketing Management: Building a
Foundation for Your Future
1
Allen F. Wysocki and Ferdinand F. Wirth
2
1. This document is FE299, one of a series of the Food and Resource Economics Department, Florida Cooperative Extension Service, Institute of Food and
Agricultural Sciences, University of Florida. Original publication date August 2001. Revised September 2008. Reviewed February 2012. Visit the EDIS
website athttp://edis.ifas.uf.edu.
2. Allen F. Wysocki, assistant professor, Department of Food and Resource Economics, University of Florida, Gainesville, FL, and Ferdinand F. Wirth,
assistant professor, Indian River Research and Education Center, Fort Pierce, FL, Florida Cooperative Extension Service, Institute of Food and
Agricultural Sciences, University of Florida, Gainesville, FL.
The use of trade names in this publication is solely for the purpose of providing specifc information. UF/IFAS does not guarantee or warranty the
products named, and references to them in this publication does not signify our approval to the exclusion of other products of suitable composition.
The Institute of Food and Agricultural Sciences (IFAS) is an Equal Opportunity Institution authorized to provide research, educational information and other services only to
individuals and institutions that function with non-discrimination with respect to race, creed, color, religion, age, disability, sex, sexual orientation, marital status, national
origin, political opinions or afliations. U.S. Department of Agriculture, Cooperative Extension Service, University of Florida, IFAS, Florida A&M University Cooperative
Extension Program, and Boards of County Commissioners Cooperating. Millie Ferrer-Chancy, Interim Dean
Abstract
Tis workbook is designed to help frms and individuals
become more familiar with the implications of a strategic
marketing management program for their businesses.
Te workbook provides a basic introduction to marketing
and strategic marketing management. Readers will also
learn the basics of a marketing plan and why they need
one. Included is a detailed introduction to performing an
analysis of the customer, the company, the competition, and
the industry as a whole. A major portion of the workbook
is devoted to carrying out an efective Strengths, Weak-
nesses, Opportunities, and Treats analysis. Tis workbook
illustrates how analysis can be used to form an efective
strategic marketing plan that could increase efciency and
proftability.
Strategic Marketing Management
Quotes
To set the stage for this strategic marketing management
workbook, it is useful to consider what some of the leading
strategic management writers have said about the environ-
ment in which we live and the need for strategic planning.
Please consider the following passages:
“Tere is but one certainty regarding the times ahead, the
times in which managers must work and perform. Tis
certainty is that they will be turbulent times. In turbulent
times, the frst task of management is to make sure of the
frm’s capacity for survival; to make sure of its structural
strength and soundness; and to make sure of its capacity to
survive a blow, to adapt itself to sudden change, and to avail
itself to sudden change and new opportunities.” [Drucker,
1974]
Although this frst Peter Drucker passage is appropriate,
given the environment early in this, the twenty-frst cen-
tury, it is actually more than 20 years old. Many producers
in Florida would agree that these are indeed turbulent times
that require frms to take stock of their strengths and ability
to seize opportunities.
“Tere are no solutions with respect to the future. Tere
are only choices between alternative courses of action, each
imperfect, each risky, each uncertain, and each requiring
diferent eforts and diferent costs. But nothing could help
the manager more than to realize what alternatives are
available to him and what they imply.” [Drucker, 1974]
Te essence of this workbook is to help producers identify
their areas of strengths and weaknesses. Once identifed,
2
the producer should use this information to make choices
between alternative courses of action.
“Truly strategic managers have the ability to capture
essential messages that are constantly being delivered by
the extremely important, yet largely uncontrollable external
forces in the market and using this information as the basis
for altering the important controllable internal factors of
the business to strategically and efectively position the frm
for future success.” [Kepner, 1995-2001]
In addition to identifying strengths and weaknesses, frms
would do well to identify factors outside the direct control
of managers. In this workbook, these are referred to as
opportunities and threats. Careful analysis regarding this
combination of strengths, weaknesses, opportunities, and
threats will help managers position the frm for future
success.
Introduction
Tis workbook is designed to help producers become
more familiar with how to construct a strategic marketing
management program for their business. Originally used
at the Grapefruit Economic Workshop, this material was
presented by the University of Florida’s Florida Cooperative
Extension Service and the Indian River Citrus League. Te
purpose of the workshop was to allow individual producers
an opportunity to focus on grapefruit marketing and
production strategies. Te following workbook has been
modifed to apply to a wide range of producer groups. Te
workbook will provide a basic introduction to marketing
and strategic marketing management. Readers will also
learn the basics of a marketing plan and why they need one.
Te presenters of this workshop challenged producers to
consider what their individual frm’s marketing strategy
was and to identify alternative strategies. Are producers
willing and able to change the way they market to improve
the proftability of their businesses? Included is a detailed
introduction to performing an analysis of the customer,
the company, the competition, and the industry as a whole.
Tis workbook will show how these analyses can be used
to form an efective strategic marketing plan that could
increase efciency and proftability.
What Is Marketing?
Let us begin with a defnition of marketing. Tere are many
diferent defnitions of marketing. For our purposes, we
defne marketing (Wysocki, 2001) as:
Te identifcation of customer wants and needs, and adding
value to products and services that satisfy those wants and
needs, at a proft.
Please note this defnition has three components: (1) the
identifcation of customer wants and needs, as the customer
or end-user of your product or service is perhaps the most
important actor in the marketing drama, (2) one must
add value that satisfes wants and needs to one’s product or
service or the customer will not remain a customer for long,
and (3) frms must make a proft to be sustainable in the
long-run.
Marketing does not just occur between harvesting, packing,
and consumption. Efective marketing in today’s changing
food system demands that producers also take on a “mar-
keting” approach to production and shipping.
What Is a Marketing Plan?
A marketing plan is a written document containing the
guidelines for the organization’s marketing programs and
allocations over the planning period (Cohen, 2001). Please
note that a strategic marketing management plan is written,
not kept in the decision maker’s head. Prior successes or
failures are incorporated into the marketing plan. Tat is,
efective marketing managers learn from past mistakes. A
marketing plan requires communication across diferent
functional areas of the frm such as operations, human
resources, sales, shipping, and administration. Finally,
marketing promotes accountability for achieving results
by a specifed date. Just like an efective goal, an efective
marketing plan will be measurable, specifc, and attainable.
The Goal of Strategic Marketing
Management
Tere are at least four goals of strategic marketing manage-
ment that need to be understood by those wishing to
use strategic marketing management to craf proftable
strategies:
1. To select reality-based desired accomplishments (e.g.,
goals and objectives).
2. To more efectively develop or alter business strategies.
3. To set priorities for operational change.
4. To improve a frm’s performance.
3
Reality-based accomplishments are shaped by the level of
understanding decision makers have regarding the external
factors outside of their control and the internal factors
under their control. Proper use of this newly acquired
knowledge of internal and external factors will lead to more
efective business strategies. Strategy, by defnition, means
decision makers must make choices, and that means setting
priorities for operational change. Conducting a strategic
marketing management planning exercise should be more
than just an exercise. Terefore, the goal of efective mar-
keting management is to improve a frm’s performance.
Figure 1 illustrates the strategic marketing management
model as discussed in this workbook. Tis model is divided
into three levels: external/self analysis, strategic posture,
and market planning. We will explain each of these three
components, beginning with external/self analysis, followed
by strategic posture and market planning. External/self
analysis will receive the majority of our attention in this
workbook, while strategic posture and market planning will
be given a brief overview. Upcoming Food and Resource
Economics Extension reports will focus on strategic posture
and market planning.
Components of External Analysis
External analysis involves an examination of the relevant
elements external to your organization. Tis analysis should
be purposeful, focusing on the identifcation of threats,
opportunities, and strategic questions and choices. Te
danger of being overly descriptive must be guarded against.
It is easy to get caught up in an exhaustive descriptive study,
at considerable expense, with little impact on strategy and
long-run proftability. It is not uncommon to generate
page afer page of strengths, weaknesses, opportunities,
and threats facing your business, especially if management
involves the entire organization in the process. Tis
brainstorming type of activity is useful and may encourage
buy-in by the rank and fle of your organization, but at
some point this list of self (internal) and external factors
must be boiled down to the most important strengths,
weaknesses, opportunities, and threats facing the frm
(Aaker, 1995).
Te components of external analysis include:
• Customer analysis is the identifcation of the market
segments to be considered, as well as the motivations and
unmet needs of potential customers identifed.
• Competitor analysis is the identifcation of strategic
groups and their performance, image, and culture, as
well as the identifcation of competitor strengths and
weaknesses.
• Industry analysis is the uncovering of major market
trends, key success factors, and the identifcation of
opportunities and threats through the analysis of
competitive and change forces (e.g., distribution issues,
governmental factors, economic, cultural, demographic
scenarios, and information needs) [Aaker, 1995].
Output of External Analysis
You might be wondering what kind of information can be
garnered from an external analysis of the factors afecting
your frm. An efective external analysis will lead to
identifcation and understanding of the opportunities and
threats facing the organization arising out of customer,
competitor, and industry analyses. Te following is a
defnition of opportunities and threats:
• Opportunities are those external factors or situations that
ofer promise or potential for moving closer or more
quickly toward the frm’s goals. For example, changing
consumer preference for convenience may be an opportu-
nity for your frm.
• Treats are those external factors or situations that may
limit, restrict, or impede the business in the pursuit of it
goals. For example, new regulations may raise the cost of
production, resulting in a threat to your proftability.
Te most efcient way to assess the external opportunities
and threats facing your organization is to conduct a “brain-
storming” session with people from across your organiza-
tion. You may be surprised at the number of diferent
Figure 1. The Strategic Marketing Management Model.
4
insights that can arise with this type of exercise. Remember,
if the item being considered is beyond the control of
the frm, then it is truly external (e.g., an opportunity or
threat). If the item being considered is under the control
of the frm, then it should not be considered external, but
rather should be considered internal to the frm (e.g., a
strength or a weakness).
Customer Analysis
Customer analysis involves the examination of customer
segmentation, motivations, and unmet needs (Aaker, 1995).
One could argue that the material presented in this section
belongs under the market planning portion of the strategic
marketing management model. Te following components
of customer analysis are discussed here as part of the
“external” analysis component of the model:
• Market segmentation is the identifcation of who your
current and potential customers are (Wedel, 1998). In
today’s food system, market segmentation must include
current and potential ultimate consumers of your
product/service. For example, a fresh grapefruit producer
could identify a number of potential market segments
such as produce wholesalers, food service distributors,
retail grocery buyers, road-side stand customers, and gif
fruit buyers.
• Customer characteristics and purchasing hot buttons
provide the information needed to decide whether
the frm can and should attempt to gain or maintain a
sustainable competitive advantage for marketing to a
particular market segment (Lehmann and Winer, 1994).
For example, retail grocery buyers of fresh grapefruit,
who purchase in large quantities, need grapefruit that are
labeled with UPC codes, and they require a supplier to be
able to meet their supply needs when they order.
• Unmet needs may represent opportunities for dislodging
entrenched competitors (Aaker, 1995). For example,
fresh fruit processors may be looking for efective ways
to create whole-peeled grapefruit in order to utilize more
grapefruit in their overall fruit purchasing program.
In Table 1, you are asked to take a few minutes to identify
as many customer market segments as you can for your
particular industry. For each customer market segment,
state the customer characteristics and their purchasing hot
buttons. Indicate whether the characteristics represent an
opportunity (O) or threat (T) to your frm. Cite evidence
why the characteristic is an opportunity or a threat to your
organization.
Components of Competitor
Analysis
Competitor analysis can include a multitude of parts. We
will limit our competitor focus to the following:
1. Who are your competitors? Competitors may be frms
in your same industry or they could be frms in other
industries that your customers view as providing accept-
able alternatives for your product or service.
2. What does each competitor do well? How about your
competitors’ image and personality? Tat is, how are your
competitors positioned and perceived in the marketplace?
What about your competitors’ cost structures? Do
competitors have a cost advantage? Finally, what is the
marketing attitude of competitors (e.g., least cost, dif-
ferentiated product, niche market)?
3. What does each competitor do poorly? Tis might
provide insight into areas that your company might
exploit.
4. What can you learn from your competitors? Consider
current and past strategies and anticipated future moves
by competitors. Where does your frm have a competitive
advantage (a strength that clearly places a frm ahead of
its competition)? Where is your frm at a competitive
disadvantage (a weakness that clearly places a frm
behind its competition)?
Please use Table 2 to take a few minutes to identify and
to describe the competitors in your industry. For each
competitor state what he does well and what he could do
better. Indicate whether your competitors’ skills represent
an opportunity (O) or threat (T) to your frm. Cite evidence
why the skills are an opportunity or a threat to your organi-
zation. For example, a competitor might be very efcient at
distribution. Tis may mean that competing against them
on the basis of distribution systems may be unwise. Tis
same competitor may have a reputation for below average
delivery of customer service. If your frm is well known for
customer service or has the potential to deliver superior
customer service, this may be an area for your organization
to concentrate on to gain competitive advantage.
5
Industry Analysis
Industry analysis has two primary objectives:
1. To determine the attractiveness of various markets (i.e.,
Will competing frms, on average, earn attractive profts
or will they lose money?).
2. To better understand the dynamics of the market so that
opportunities and threats can be detected and strategies
adopted (Aaker, 1995).
A thorough industry analysis will include the following four
components:
1. Major market trends. Events or patterns that are especially
useful if focused on what is changing in the marketplace
(Naisbitt, 1970) such as the increasing consumer need for
convenience. For example, consider the long-term decline
in per-capita consumption of grapefruit juice and fresh
grapefruit facing grapefruit producers.
2. Key success factors. Tose factors that are the building
blocks for success in your industry (Tompson and
Strickland, 2001). Key success factors arise out of strategic
necessities and strategic strengths. For example, a mini-
mum requirement for being in the grapefruit business is
to be skilled at all aspects of producing a grapefruit crop.
3. Competitive forces. Tese forces help to explain the po-
tential for proft (or lack thereof) in a particular industry.
Tese are based on the work of Michael Porter. Tey
include the threat of entry, supplier and buyer power,
the availability of substitutes, and the intensity of rivalry
within the industry. For a more complete explanation of
these competitive forces, refer to “Competitive Strategy:
Techniques for Analyzing Industries and Competitors” by
Michael Porter, published in 1980.
4. Change forces. Change forces are events outside your
organization that shape the way you conduct business.
Tese include government regulations, product and
marketing innovations, economic issues, consumer
trends, and information needs (Lehmann and Winer,
1994).
Please take a few minutes to identify trends and key suc-
cess factors for your industry in Table 3. For each trend
or key success factor, indicate whether it represents an
opportunity (O) or threat (T) to your frm. Cite evidence
why the characteristic is an opportunity or a threat to your
organization.
Competitive Forces Analysis
We have organized Porter’s Five Forces model in such a
way that you should be able to assess the strength of each
of the fve forces in your particular industry. For each
item in Table 4, circle the number on the scale that best
corresponds to your honest assessment of the external
situation faced by your frm. Numbers to the lef on the
scales correspond to situations with greater threats, while
numbers to the right correspond to situations with greater
opportunities.
How many components of the fve forces did you assess as
opportunities? How many as threats? Later in this strategic
marketing management workbook, we will compare
internal strengths to external opportunities and internal
weaknesses to external threats to establish areas of competi-
tive advantage and competitive disadvantage, respectively.
Change Forces Analysis
For each item in Table 5, circle the number on the scale
that best corresponds to your honest assessment of the
external situation faced by your frm. Ten in the space
provided, list specifc key changes infuencing your frm.
Less change corresponds to less threatening, but probably
fewer opportunities. Greater change corresponds to more
threatening, but probably more opportunities. Later in this
analysis, we will compare internal strengths to external
opportunities and internal weaknesses to external threats
to establish areas of competitive advantage and competitive
disadvantage, respectively.
Components of Self Analysis
Having completed a detailed external analysis, one must
look inward. Self analysis seeks to provide a detailed
understanding of aspects internal to your organization of
strategic importance. Components of self-analysis include
assessing the internal strengths and weaknesses of your
organization, as well as identifying strategic problems,
organizational capabilities, and constraints your frm brings
to the strategic marketing management process (Aaker,
1995).
We will utilize the analysis of the internal strengths and
weaknesses to identify strategic problems, organizational
competencies (Prahalad and Hamel, 1990) and constraints.
At this time, it is appropriate to defne what is meant by a
strength and a weakness:
• Strength. Something a company does well, or a charac-
teristic that gives it an important capability. For example,
6
one of Wal-Mart’s strengths is its cost-efcient distribu-
tion system.
• Weakness. Something a company does poorly, or a
characteristic that puts it at a disadvantage. For example,
one of Wal-Mart’s weaknesses could be its infexibility to
respond to changes in the marketplace at the local level.
Self Analysis Checklist
We will utilize a series of checklists to allow you to identify
internal strengths and weaknesses, just like we did for
external opportunities and threats. For each item in Table 6,
circle the number on the scale that best corresponds to your
honest assessment of your frm’s strength or weakness in the
indicated area.
We hope this extensive list helps you to identify internal
strengths and weaknesses you may not have thought
about in the past. Te real value of this analysis takes place
when strengths are compared to opportunities and weak-
nesses compared to threats. Tis forms the basis of SWOT
analysis.
SWOT Analysis
SWOT is an acronym that is widely used in the strategic
planning literature. SWOT has been so widely and
extensively used, that it is difcult, if not impossible, to
give credit to any one person for its origination. Each letter
of the acronym stands for a diferent component of this
internal/external interface: S=Strengths, W=Weaknesses,
O=Opportunities, and T=Treats.
Strengths and weaknesses are internal, while opportunities
and threats are external to the frm. Te goals of SWOT
analysis are twofold:
1. To determine your frm’s competitive advantages and
disadvantages. In what areas do your strengths clearly
distance you from your competition? In what areas do
your weaknesses clearly put you behind?
2. To prioritize the frm’s opportunities and threats. In what
areas do your strengths match or mismatch your op-
portunities? In what areas do your weaknesses make you
increasingly vulnerable to threats?
A competitive advantage is created by the interface of your
most important strengths matching with the most viable
opportunities. A competitive disadvantage is created by the
interface where your most pronounced threats make you
even more vulnerable to the most serious threats facing
your organization.
To summarize, SWOT analysis generally follows a four-step
process. Please note that steps one and two are inter-
changeable. Tat is, you can begin the analysis on either
an external or internal focus. Te key point is that both
external and internal analyses need to be done for efective
strategic marketing management to take place. Tis process
is listed below:
• Step 1: Conduct competitive and change analyses to
uncover potential opportunities and threats.
• Step 2: Make an honest assessment of your frm’s strengths
and weaknesses in Marketing, Production, Personnel,
Information Systems, Finance, Management/Leadership,
and Organizational Resources.
• Step 3: Determine your competitive advantages and
disadvantages.
• Step 4: Prioritize the opportunities and threats.
To make the most out of SWOT analysis, please consider
the following statements of fundamental strategic truths, in
priority order:
1. Use competitive advantages to seize opportunities.
2. Afer exhausting the chances to use competitive
advantages, develop internal strengths that give your frm
competitive advantages.
3. Afer exhausting “1” and “2” above, work to eliminate
competitive disadvantages (Peterson, 2001).
Opportunities and Threats
Analysis
Table 7 provides you with a worksheet to assess your frm’s
fve most important opportunities and threats from your
own beliefs and from those you identifed as part of the
external analysis worksheets (Tables 3, 4, and 5). In the
fnal column, cite specifc evidence that supports your belief
that the item is an opportunity or a threat. Remember, an
“opportunity” is any external factor or situation that ofers
promise or potential for moving closer or more quickly
toward the frm’s goals. A “threat” is any external factor or
situation that may limit, restrict, or impede the business in
the pursuit of its goals.
7
Strengths and Weaknesses
Analysis
Table 8 provides you with a worksheet to assess your frm’s
fve most important strengths and weaknesses from your
own beliefs and from those you identifed as part of the
self-analysis worksheets (Table 6). In the column marked
Rank, provide a numerical ranking of the top fve strengths
and weaknesses. Place a “1” besides the top-priority
strength and top-priority weakness. In the fnal column,
cite specifc evidence that supports your belief that the item
is a strength/competitive advantage or weakness/competi-
tive disadvantage.
Concluding the Strategic
Marketing Management Analysis
“Te fnal analytical task is to zero in on the strategic issues
that management needs to address in forming an efective
strategic action plan. Here, managers need to draw upon
all prior analysis, put the company’s overall situation into
perspective, and get a lock on exactly where they need to
focus their strategic attention” (Tompson and Strickland,
1995). Having gathered all this data, it is now time to put
the analysis together in a way that will help your frm craf
a long-term strategy. In Table 9, you are asked to answer
a series of fve questions that rely on your ability to use
information obtained from earlier analysis. Please take a
moment to answer the questions in Table 9.
Although this SWOT process was quite detailed, and at
times repetitive, we hope you found the process insightful
and useful. Having completed a thorough SWOT analysis,
it is time to use this information to begin crafing a strategic
posture.
Components of a Strategic Posture
SWOT provides the foundation for an efective Strategic
Posture. A strategic posture is a set of decisions that:
• Expresses how management intends to achieve a frm’s
long-term mission, vision, and objectives.
• Commits management to a way of achieving competitive
advantage.
• Springs from awareness of the frm’s internal strengths
and weaknesses, and its external opportunities and
threats.
• Unifes short-term operational plans and decisions.
A fair question to ask would be why should one care about
strategic posture? A strategic posture:
• Creates a bridge between the broad intentions of long-
term vision and objectives and the specifc actions needed
for implementation.
• Demands that you make choices about what you plan to
do—you cannot be all things to all people.
• Requires diferent capabilities and resources for diferent
postures. Tere are a lot of strategic combinations to
choose from; and strategic postures can be developed for
the whole frm, a business unit, or for a department.
A complete strategic posture includes decisions in at least
four areas: primary competitive strategy, competitive
role, priority strategic initiative, and vertical coordination
strategy. Each of these areas is discussed in upcoming
sections of this workbook.
Primary Competitive Strategy
Firms can chose from four generic primary competitive
strategies. Tese strategies are adapted from the work of
Michael Porter (1980), David Aaker (1995), and others:
1. Price Advantage (overall cost leadership) is a price-driven
strategy based on basic products/services ofered to a
broad market (e.g., Sam’s Club).
2. Quality/Features Advantage (broad diferentiation) is a
quality-driven strategy based on specialized products and
services ofered to a broad market (e.g., Publix).
3. Market Focus Advantage (focused low cost and focused
diferentiation) is a customer-driven strategy based on
specialized products and services ofered to a specially
targeted (niche) market (e.g., Sav-A-Lot stores).
4. Total Quality Management (TQM) Advantage (best cost
provider) is a value-driven strategy based on continual
innovation in product, price, and process (e.g., Saturn)
It is rare that a frm excels at more than one of the primary
competitive strategies. Te characteristics that make one
of the above strategies efective are likely to reduce the
efectiveness of another primary competitive strategy.
Remember, it is hard to be all things to all people.
8
Competitive Role Strategy
Once a frm has decided to pursue a primary competitive
strategy based on overall cost leadership, broad diferen-
tiation, focused diferentiation, or best cost provider, a
competitive role strategy must be chosen. Tat is, a decision
must be made how to best position the frm, given the
primary competitive strategy that has been chosen. Tere
are four competitive role strategies that can be chosen:
1. Leader. Te largest market share and/or initiator of
change that causes others to respond and follow their lead
(e.g., McDonald’s).
2. Follower. An adopter and adapter of successful strategies
from others (e.g., A&W restaurants).
3. Challenger. An innovator of strategies that challenge
the industry and its normal way of doing business (e.g.,
Chik-Fil-A).
4. Loner. A provider of products/services that fll gaps in the
marketplace (e.g., “mom and pop” restaurants).
Just as in primary competitive strategy, it is difcult for a
frm to be all things to all people. For example, under Jack
Welsh’s leadership, General Electric made a commitment
to only stay in markets where General Electric would be
either frst or second in market share. Tis is an example of
a “leader” competitive role strategy.
Priority Strategic Initiative
Te next step in developing an efective strategic posture
takes place afer the primary competitive strategy and the
competitive role strategies have been identifed. Tis step
is labeled the priority strategic initiative. Tere are fve
possible strategic initiatives that frms should consider
(Aaker, 1995):
1. Grow. Expand the size or scope of your business (e.g.,
Subway has been attempting this for a number of years)
2. Maintain/Defend. Keep what the frm has achieved in
size and scope (e.g., in many ways, McDonald’s has been
doing this, since same-store sales have been fat).
3. Reposition. Maintain the frm’s size or scope while chang-
ing key elements of market position (e.g., IBM has been
doing this since the 1990s).
4. Retrench. Reduce the size and scope of the business
(e.g., RJR Nabisco’s decision to spin of foreign cigarette
manufacturing).
5. Exit. Leave the market (e.g., this is what the original
owners of Boston Market were forced to do when they
sold the company to McDonald’s).
Each of these strategic initiatives demands a singleness
of purpose like the primary competitive strategies and
competitive role strategies.
Vertical Coordination Strategies
Te fnal decision to be made concerning a frm’s strategic
posture is which vertical coordination strategy to choose?
Vertical coordination strategies are perhaps best thought
of as decisions of how to best handle the “buy” and “sell”
interface that takes place across the entire food system from
input supplies to fnal consumer purchases (Peterson and
Wysocki, 2001). Te decision maker must consider fve
possible vertical coordination strategies:
Spot/Cash Market is the traditional way agricultural
products have been sold in the United States. Spot markets
rely on external control mechanisms, price, and broadly
accepted performance standards to determine the nature of
exchange. Neither party can infuence price or the generic
standards (e.g., selling grapefruit to citrus packers on the
open market) (Lehmann and Winer, 1994):
1. Contracting. Marketing contracts are legally enforce-
able agreements of specifc and detailed conditions of
exchange. Each participant must agree on specifcations
that are ultimately enforced by a third party (e.g., a
production contract with a citrus processor).
2. Relation-Based Alliance. An informal agreement between
parties designed for the mutual beneft of both parties.
Both parties retain separate, external identity where
formal joint-management structure is not present to
allow for strong internal control. However, enforcement
mechanisms are developed internal to the relationship
(e.g., an agreement between a citrus producer cooperative
and a citrus processor whereby the cooperative’s members
agree to sell their entire production to the citrus proces-
sor in exchange for prices that average above the spot
market average).
3. Equity-Based Alliance. Catch-all of many organizational
forms, including joint ventures and cooperatives, that
involve some level of equity (money, sweat, or emotional).
9
One distinguishing feature is the presence of a formal
organization that has an identity distinct from the mem-
bers, with decentralized control. Owners still maintain
a separate identity that allows them to walk away (e.g., a
citrus producer cooperative).
4. Vertical Integration. Having control or ownership of
multiple stages of production/distribution (e.g., Tyson
Foods in the poultry industry).
All four of these strategic posture decisions must be made
for each major strategic direction in which the company
embarks. It should be apparent that there are many strategy
decisions to be made when designing a strategic posture.
Tere are approximately (4x4x5x5) = 400 choices for
selecting a primary competitive strategy, competitive
role, priority strategic initiative, and vertical coordination
strategy combination.
Te fnal part of this workbook will look at the relationship
between strategic marketing management and three critical
marketing concepts. Tese will only be given superfcial
treatment in this workbook. Upcoming publications will
explore these concepts in greater detail.
The Changing Consumer
It is important to understand the changing needs of
consumers when designing your strategic marketing
management plan (Kepner, 2001). For each of the following
changing consumer needs, please consider their potential
impact (positive or negative) on your frm (Lehmann and
Winer, 1994).
1. Overriding desire for quality. Today’s consumers demand
quality and they are willing to pay for it.
2. Bargain hunting by the afuent. Just because the afuent
have money does not mean that they are not bargain
hunters.
3. Te buying guideline is selectivity. Consumers demand a
multitude of choices, varieties, etc.
4. Traditional brand loyalty is fading. Tis is, in part, due to
the increase in the quality of store brands such as Publix
brand products.
5. Te middle line is dropping out. Tere has been a squeez-
ing out of middle management in corporate America over
the last decade or so. Increasingly, our society is becom-
ing bi-polar. Tat is, a nation of haves and have-nots
(Stevens, Loudon, and Warren, 1991).
6. Consumers want it now! Convenience and immediate
gratifcation fuel many of today’s consumer goods
purchases.
7. Home entertainment is in style. Consumers are not
motivated by price alone. Many of us are willing to spend
more for products and services if we can be entertained
along the way.
8. It’s back to the way we were. Tere is a growing segment
of the population that craves life the way it used to be,
with simplicity and value being paramount.
9. Staying alive. Tis phrase describes those consumers who
are health conscious.
10. Cashing out. Consumers who are tired of the “rat
race” and want to take up a simpler life.
11. Small indulgences. Many consumers are willing to
treat themselves to small rewards for accomplishments
and milestones reached in their lives.
12. Customization. Wanting quality, and wanting it
now, in the sense that U.S. consumers, in particular, want
products and services that fll very specifc needs.
13. S.O.S., or Save Our Society. S.O.S. refers to consum-
ers who make purchasing decisions based, in part, on
social concerns or causes they support (Lehmann and
Winer, 1994).
Te purpose of looking at the changing consumer is to
encourage you to consider the consumer more directly
when crafing a strategic marketing management plan.
Three Critical Marketing Concepts
Te strategic marketing plan is built around three critical
marketing concepts. Tese concepts are represented by the
following acronyms and are discussed briefy at the end of
this workbook:
• TLC (Tink Like Customers).
• CMSQ (Critical Marketing Strategy Question).
• STP (Segment, Target, and Position).
10
Think Like Customers
“Tink Like Customers” (TLC) is a plea for businesses to
remember the customer in their decision making process.
To think like a customer is consistent with the viewpoint
that “marketing is the whole business as seen from the
viewpoint of the customer.” Experience and research
indicate that all frms have the opportunity to do better
at TLC. We are sure you would be able to cite numerous
examples from your own life when frms did not practice
thinking like their customers. Can you list examples of
frms that think like customers? Can you list examples of
frms that do not think like customers?
Critical Marketing Strategy
Question
In its simplest form, the “critical marketing strategy ques-
tion” (CMSQ) is: “Why should customers purchase your
frm’s products/services over those of your competitors?”
(Kepner, 2001). Tis may sound like a simple question.
You may be surprised at how difcult it can be to come
up with good reasons (reasons that diferentiate you from
your competition) why people/frms should purchase your
products/services. Table 10 asks you to list all the reasons
why you believe customers should buy products/services
from your frm.
Based on the list above, select the frst and second most
important reasons why customers buy from you. Tat is,
in essence, your answer to the critical marketing strategy
question.
1. ______________________________
2. ______________________________
Segment, Target, and Position
“Segment, Target, and Position” (STP) is one of the basic
building blocks of modern marketing (U.S. Small Business
Administration, 1980). STP strategies should complement
a frm’s overall generic strategies, consisting of a primary
competitive strategy, competitive role strategy, strategic
initiative, and vertical coordination strategy.
Market Segmentation is the basic recognition that every
market is made up of distinguishable segments consisting
of buyers with diferent needs, buying styles and responses.
In essence, this is the process of identifying all possible
markets to which your product or service could be ofered.
Although there are many ways to segment a market, these
are beyond the scope of this workbook.
No single ofer or approach will appeal to all buyers. Tis
means that companies must make a choice regarding which
markets, out of all the possibilities, they wish to serve.
Target market selection is the act of developing measures
of segment attractiveness and selecting one or more of the
identifed segments to enter and emphasize. Table 11 asks
you to make a list of all the possible target markets for your
product or service that you would consider entering.
Based on the list in Table 11, select the two most attractive
market segments to serve. Keep in mind your frm’s com-
petitive advantages and disadvantages when stating your
answer. Tese will become your target markets.
1. ____________________________________
2. ____________________________________
Te fnal step of the STP strategy involves the establishment
of a positioning strategy. Positioning includes decisions in
product, price, distribution, and promotion. Each of these
is the subject of a workbook unto itself. Remember, once
you have determined the one or two markets you want to
target, you need to decide how to position your product or
service in the minds of potential customers, relative to your
competitors.
Conclusion
We hope you have enjoyed the strategic marketing
management process as identifed in this workbook. Please
remember that the strategic marketing management
process is not meant to be used once every fve years, only
to collect dust on some manager’s shelf. To be efective, this
process requires the support of upper management and the
involvement and commitment of the entire company.
Readers interested in applying the analysis contained in this
workbook are encouraged to contact Dr. Allen F. Wysocki
at [email protected] or Dr. Ferdinand F. Wirth at fwirth@
gnv.ifas.uf.edu. Drs. Wysocki and Wirth are happy to lead
workshops on this material tailored to your specifc needs.
11
References
Aaker, David A. Strategic Market Management, Fourth
edition. New York, NY: John Wiley & Sons, Inc. 1995.
Cohen, William A. Te Marketing Plan. New York, NY:
Wiley. 2001.
Drucker, Peter F. Management, Tasks, Responsibilities, and
Practices. New York, NY: Harper and Row. 1974.
Kepner, Karl W. Presentations made to extension audiences
by this Distinguished Professor representing the University
of Florida 1975-2001.
Lehmann, Donald R. and Russell S. Winer. Analysis for
Marketing Planning, Tird Edition. Burr Ridge, IL: Richard
D. Irwin, Inc. 1994.
Naisbitt, John. Megatrends: Ten Directions Transforming
Our Lives. New York, NY: Warner Books. 1982.
Peterson, H. Christopher and Allen F. Wysocki. “Strategic
Choice Along the Vertical Coordination Continuum.”
Staf Paper 98-16. Department of Agricultural Economics,
Michigan State University, East Lansing, MI. 1998.
Peterson, H. Christopher. Class presentations made to
students at Michigan State University, 1992-2001.
Porter, Michael E. Competitive Strategy: Techniques for
Analyzing Industries and Competitors. New York, NY: Free
Press. 1980.
Prahalad, C.K. and G. Hamel “Te Core Competence of the
Corporation” Harvard Business Review (May-June 1990):
79-91.
Stevens, Robert E., David L. Loudon, and William E.
Warren. Marketing Planning Guide. Binghamton, NY: Te
Haworth Press, Inc. 1991.
Tompson, Arthur A. and A.J. Strickland. Crafing and
Executing Strategy: Text and Readings, Twelfh Edition. New
York, NY: McGraw-Hill. 2001.
Tompson, Arthur A. and A.J. Strickland. Crafing and
Executing Strategy: Text and Readings, Sixth Edition. New
York, NY: McGraw-Hill. 1995.
U.S. Small Business Administration, Ofce of Management
Assistance. Marketing Strategy. Washington, DC: US Small
Business Administration. 1980.
Wedel, Michel and Wagner A. Kamakura. Market Segmen-
tation: Conceptual and Methodological Foundations. Boston,
MA: Kluwer Academic. 1998.
Wysocki, Allen F. Class presentations made to students at
Michigan State University, 1998-2001.
Wysocki, Allen F. and Ferdinand F. Wirth. Assessing the
Strengths, Weaknesses, Opportunities, and Treats Involving
Your Business. Workbook prepared for the Grapefruit
Economic Workshop, University of Florida, Indian River
Research and Education Center, Fort Pierce, Florida. March
24, 1999.
12
Table 1. Identifcation of Customer Segments and Their Marketing Characteristics.
Customer Segment Characteristics, Hot Buttons, and Unmet Needs (O) or (T)* Evidence
Source: Wysocki and Wirth, 1999.
* (O) = Opportunity, (T) = Threat.
Table 2. Competitor Analysis.
Competitor Examples of Competitor Skill (O) or (T)* Evidence
Done Well
Could Be Better
Done Well
Could Be Better
Done Well
Could Be Better
Source: Wysocki and Wirth, 1999.
* (O) = Opportunity, (T) = Threat
Table 3. Industry Analysis Worksheet.
Major Market Trend (O) or (T)* Evidence
Key Success Factor (O) or (T)* Evidence
Source: Wysocki and Wirth, 1999.
(O) = Opportunity, (T) = Threat.
13
Table 4.
Competivive Force Threat-
based
1 2 3 4 5 Opportununity-
based
1. Potential Entry
How difcult is it for frms to enter your market? Easy 1 2 3 4 5 Difcult
How many options exist for discouraging new frms from entering
your market?
Few 1 2 3 4 5 Many
2. Supplier Power
How much bargaining power do your suppliers have? Much 1 2 3 4 5 Little
How many options exist for lessening supplier power? Few 1 2 3 4 5 Many
3. Buyer Power
How much bargaining power do your buyers have? Much 1 2 3 4 5 Little
How many options exist for lessening buyer power? Few 1 2 3 4 5 Many
4. Potential Substitutes
How many alternatives do buyers have for getting the benefts of
your products or services in some other way?
Much 1 2 3 4 5 Few
How many ways exist for improving your value to customers? Few 1 2 3 4 5 Many
How many options exist for increasing customer loyalty? Few 1 2 3 4 5 Many
5. Rivalry
What level of intensity exists in the rivalry between you and your
direct competitors?
High 1 2 3 4 5 Low
How strong are these direct competitors relative to your frm? Weak 1 2 3 4 5 Strong
How many options exist for taking on these competitors head-to-
head?
Few 1 2 3 4 5 Many
How many options exist for selecting areas of the market that are
not so competitive?
Few 1 2 3 4 5 Many
Source: Wysocki and Wirth (1999); Porter (1980).
14
Table 5.
Competitive Force Less Threatening/ Fewer
Opportunities
1 2 3 4 5 More Threatening/
More Opportunities
1. Changes in buyer demand (i.e., wheat buyers want and
need)
Little change 1 2 3 4 5 Much change
Consider changes in tastes, lifestyle, family
income, preferences for uniqueness, etc.
List key changes List key changes
2. Changes in long-term market growth rate Little change Much change
Consider changes in industry growth,
population growth, product/service
attractiveness to customers, market
saturation, etc.
List key changes 1 2 3 4 5 List key changes
3. Product and marketing innovations Little change 1 2 3 4 5 Much change
Consider innovations in product/service
features, quality, packaging, promotion,
advertising, distribution, etc. (e.g., fresh cut
fruit and heart-healthy labeling)
List key changes List key changes
4. Technological change and the speed with which it
spreads
Little change 1 2 3 4 5 Much change
Consider changes in equipment, production
methods, biotechnology, computers,
information systems, and the speed with
which industry competitors or customers
adopt these changes.
List key changes List key changes
5. Regulatory infuences and government policy changes Little change 1 2 3 4 5 Much change
Consider changes in environmental
regulations, food safety regulations, etc.
List key changes List key changes
6. Changes in uncertainty and business risk Little change 1 2 3 4 5 Much change
Consider changes in business liability,
volatility of markets, ability to forecast
efectively, etc.
List key changes List key changes
7. Major changes in the economy Little change 1 2 3 4 5 Much change
Consider changes in the availability of skilled
laborers, investment, interest rates, etc.
List key changes List key changes
8. Increasing globalization of your industry Little change 1 2 3 4 5 Much change
Consider changes in imports, exports,
international frms, entering US markets, etc.
List key changes List key changes
15
Table 6. Self Analysis Checklist to Assess Strengths and Weaknesses.
Resources Weakness* Strength*
I. Marketing Resources
1. Customer satisfaction with products/services 1 2 3 4 5
2. Ability to gain customers versus competition 1 2 3 4 5
3. In-depth knowledge of product/service line 1 2 3 4 5
4. Product/service quality (function, image, place, possession, ease of
use)
1 2 3 4 5
5. Advertising and promotion activities 1 2 3 4 5
6. Product/service pricing 1 2 3 4 5
7. Facilities/methods used to sell to customers 1 2 3 4 5
II. Financial Resources
1. Strong and recurring operating profts 1 2 3 4 5
2. Strong and recurring cash fow 1 2 3 4 5
3. Strong and recurring return on investment 1 2 3 4 5
4. Strong and recurring return on equity 1 2 3 4 5
5. Efcient asset management 1 2 3 4 5
6. Proper balance of debt and equity 1 2 3 4 5
7. Ready access to outside/new funds 1 2 3 4 5
8. Well-managed customer credit 1 2 3 4 5
9. Well-managed supplier credit 1 2 3 4 5
III. Human Resources
1. Adequate number of people to do the work 1 2 3 4 5
2. Adequate quality of people to do the work 1 2 3 4 5
3. Personnel plans 1 2 3 4 5
4. Job design and description 1 2 3 4 5
5. Performance standards/evaluation procedures 1 2 3 4 5
6. Training programs 1 2 3 4 5
7. Good morale as evidenced by absenteeism, turnover, tardiness,
complaints, bickering, and employee growth and development
1 2 3 4 5
8. Compensation system that promotes performance and satisfaction 1 2 3 4 5
9. Equitable and competitive pay 1 2 3 4 5
10. Equitable and competitive fringe benefts 1 2 3 4 5
11. Appropriate use of terms 1 2 3 4 5
12. Work ethic of individuals and teams 1 2 3 4 5
IV. Operations/Production Resources
1. Quality of facilities to serve customers 1 2 3 4 5
2. Capacity of facilities to serve customers 1 2 3 4 5
3. Up-to-date, appropriate technology 1 2 3 4 5
4. Efective and efcient physical plant 1 2 3 4 5
5. Efective and efcient work fow 1 2 3 4 5
6. Efective and efcient inventory control 1 2 3 4 5
7. Efective and efcient purchasing practices 1 2 3 4 5
8. Efective and efcient production practices 1 2 3 4 5
V. Management/Leadership Resources
1. Efective management style 1 2 3 4 5
2. Timely decision making 1 2 3 4 5
16
Resources Weakness* Strength*
3. Efective delegation 1 2 3 4 5
4. Efective participation 1 2 3 4 5
5. Efective risk taking 1 2 3 4 5
6. Efective leadership 1 2 3 4 5
VI. Organizational Resources
1. Appropriate mix of resources (people, money, equipment)
available
1 2 3 4 5
2. Resources properly placed to do the job 1 2 3 4 5
3. Efective interdepartmental communications 1 2 3 4 5
4. Efective reporting relationships 1 2 3 4 5
5. Firm’s public image 1 2 3 4 5
6. Strong organizational culture (productivity, honesty, dispute
handling, tolerance of change)
1 2 3 4 5
VII. Information Resources
1. Appropriate fnancial/cost accounting systems 1 2 3 4 5
2. Planning system appropriate for internal analysis (assessing
strengths and weaknesses)
1 2 3 4 5
3. Planning system appropriate for external analysis (assessing
opportunities and threats)
1 2 3 4 5
4. Control system that highlights problems and generates corrective
action
1 2 3 4 5
5. Information systems that use the best technology (computers, etc.)
available
1 2 3 4 5
6. Efective information for strategic decision making 1 2 3 4 5
7. Efective information for operation of decision making 1 2 3 4 5
* Rated on a scale of 1 to 5, with 1=greatest weakness and 5=greatest strength
Source: Wysocki and Wirth (1999), adapted from class discussions led by H. Christopher Peterson, Michigan State University.
17
Table 8. Strengths and Weaknesses Analysis.
Strengths Rank Evidence
Weaknesses Rank Evidence
Source: Wysocki and Wirth, 1999.
Table 7. Opportunities and Threats Analysis.
Opportunities Evidence
Threats Evidence
Source: Wysocki and Wirth, 1999.
Table 9. Putting the SWOT Analysis Altogether.
Where do your company’s strengths and opportunities reinforce each other, suggesting competitive advantage?
Where do your company’s weaknesses and threats reinforce each other, suggesting competitive disadvantage?
What are the key success factors that must be addressed to assure a successful future?
Are your company’s current vision, mission, goals, and objectives (this is another whole workshop) adequate? How much change is needed?
Are your company’s current strategies adequate? How much change is needed?
Source: Wysocki and Wirth, 1999.
18
Table 11. Identifying Possible Target Markets.
Make a list of all the possible markets that exist for your product or service.
1. ___________________________________________________________________
2. ___________________________________________________________________
3. ___________________________________________________________________
4. ___________________________________________________________________
5. __________________________________________________________________
6. ___________________________________________________________________
7. ___________________________________________________________________
8. ___________________________________________________________________
9. __________________________________________________________________
10. ___________________________________________________________________
Source: Wysocki and Wirth, 1999.
Table 10. Answering the Critical Marketing Strategy Question.
Based on your experience and beliefs, make a “grocery” list of all the reasons why customers buy from you.
1. ____________________________________________________________________
2. ____________________________________________________________________
3. ___________________________________________________________________
4. ____________________________________________________________________
5. ____________________________________________________________________
6. ____________________________________________________________________
7. ____________________________________________________________________
8. ____________________________________________________________________
9. ____________________________________________________________________
10. ____________________________________________________________________
Source: Wysocki and Wirth, 1999.
doc_279203166.pdf
This workbook is designed to help firms and individuals become more familiar with the implications of a strategic marketing management program for their businesses. The workbook provides a basic introduction to marketing and strategic marketing management. Readers will also learn the basics of a marketing plan and why they need one.
FE299
Strategic Marketing Management: Building a
Foundation for Your Future
1
Allen F. Wysocki and Ferdinand F. Wirth
2
1. This document is FE299, one of a series of the Food and Resource Economics Department, Florida Cooperative Extension Service, Institute of Food and
Agricultural Sciences, University of Florida. Original publication date August 2001. Revised September 2008. Reviewed February 2012. Visit the EDIS
website athttp://edis.ifas.uf.edu.
2. Allen F. Wysocki, assistant professor, Department of Food and Resource Economics, University of Florida, Gainesville, FL, and Ferdinand F. Wirth,
assistant professor, Indian River Research and Education Center, Fort Pierce, FL, Florida Cooperative Extension Service, Institute of Food and
Agricultural Sciences, University of Florida, Gainesville, FL.
The use of trade names in this publication is solely for the purpose of providing specifc information. UF/IFAS does not guarantee or warranty the
products named, and references to them in this publication does not signify our approval to the exclusion of other products of suitable composition.
The Institute of Food and Agricultural Sciences (IFAS) is an Equal Opportunity Institution authorized to provide research, educational information and other services only to
individuals and institutions that function with non-discrimination with respect to race, creed, color, religion, age, disability, sex, sexual orientation, marital status, national
origin, political opinions or afliations. U.S. Department of Agriculture, Cooperative Extension Service, University of Florida, IFAS, Florida A&M University Cooperative
Extension Program, and Boards of County Commissioners Cooperating. Millie Ferrer-Chancy, Interim Dean
Abstract
Tis workbook is designed to help frms and individuals
become more familiar with the implications of a strategic
marketing management program for their businesses.
Te workbook provides a basic introduction to marketing
and strategic marketing management. Readers will also
learn the basics of a marketing plan and why they need
one. Included is a detailed introduction to performing an
analysis of the customer, the company, the competition, and
the industry as a whole. A major portion of the workbook
is devoted to carrying out an efective Strengths, Weak-
nesses, Opportunities, and Treats analysis. Tis workbook
illustrates how analysis can be used to form an efective
strategic marketing plan that could increase efciency and
proftability.
Strategic Marketing Management
Quotes
To set the stage for this strategic marketing management
workbook, it is useful to consider what some of the leading
strategic management writers have said about the environ-
ment in which we live and the need for strategic planning.
Please consider the following passages:
“Tere is but one certainty regarding the times ahead, the
times in which managers must work and perform. Tis
certainty is that they will be turbulent times. In turbulent
times, the frst task of management is to make sure of the
frm’s capacity for survival; to make sure of its structural
strength and soundness; and to make sure of its capacity to
survive a blow, to adapt itself to sudden change, and to avail
itself to sudden change and new opportunities.” [Drucker,
1974]
Although this frst Peter Drucker passage is appropriate,
given the environment early in this, the twenty-frst cen-
tury, it is actually more than 20 years old. Many producers
in Florida would agree that these are indeed turbulent times
that require frms to take stock of their strengths and ability
to seize opportunities.
“Tere are no solutions with respect to the future. Tere
are only choices between alternative courses of action, each
imperfect, each risky, each uncertain, and each requiring
diferent eforts and diferent costs. But nothing could help
the manager more than to realize what alternatives are
available to him and what they imply.” [Drucker, 1974]
Te essence of this workbook is to help producers identify
their areas of strengths and weaknesses. Once identifed,
2
the producer should use this information to make choices
between alternative courses of action.
“Truly strategic managers have the ability to capture
essential messages that are constantly being delivered by
the extremely important, yet largely uncontrollable external
forces in the market and using this information as the basis
for altering the important controllable internal factors of
the business to strategically and efectively position the frm
for future success.” [Kepner, 1995-2001]
In addition to identifying strengths and weaknesses, frms
would do well to identify factors outside the direct control
of managers. In this workbook, these are referred to as
opportunities and threats. Careful analysis regarding this
combination of strengths, weaknesses, opportunities, and
threats will help managers position the frm for future
success.
Introduction
Tis workbook is designed to help producers become
more familiar with how to construct a strategic marketing
management program for their business. Originally used
at the Grapefruit Economic Workshop, this material was
presented by the University of Florida’s Florida Cooperative
Extension Service and the Indian River Citrus League. Te
purpose of the workshop was to allow individual producers
an opportunity to focus on grapefruit marketing and
production strategies. Te following workbook has been
modifed to apply to a wide range of producer groups. Te
workbook will provide a basic introduction to marketing
and strategic marketing management. Readers will also
learn the basics of a marketing plan and why they need one.
Te presenters of this workshop challenged producers to
consider what their individual frm’s marketing strategy
was and to identify alternative strategies. Are producers
willing and able to change the way they market to improve
the proftability of their businesses? Included is a detailed
introduction to performing an analysis of the customer,
the company, the competition, and the industry as a whole.
Tis workbook will show how these analyses can be used
to form an efective strategic marketing plan that could
increase efciency and proftability.
What Is Marketing?
Let us begin with a defnition of marketing. Tere are many
diferent defnitions of marketing. For our purposes, we
defne marketing (Wysocki, 2001) as:
Te identifcation of customer wants and needs, and adding
value to products and services that satisfy those wants and
needs, at a proft.
Please note this defnition has three components: (1) the
identifcation of customer wants and needs, as the customer
or end-user of your product or service is perhaps the most
important actor in the marketing drama, (2) one must
add value that satisfes wants and needs to one’s product or
service or the customer will not remain a customer for long,
and (3) frms must make a proft to be sustainable in the
long-run.
Marketing does not just occur between harvesting, packing,
and consumption. Efective marketing in today’s changing
food system demands that producers also take on a “mar-
keting” approach to production and shipping.
What Is a Marketing Plan?
A marketing plan is a written document containing the
guidelines for the organization’s marketing programs and
allocations over the planning period (Cohen, 2001). Please
note that a strategic marketing management plan is written,
not kept in the decision maker’s head. Prior successes or
failures are incorporated into the marketing plan. Tat is,
efective marketing managers learn from past mistakes. A
marketing plan requires communication across diferent
functional areas of the frm such as operations, human
resources, sales, shipping, and administration. Finally,
marketing promotes accountability for achieving results
by a specifed date. Just like an efective goal, an efective
marketing plan will be measurable, specifc, and attainable.
The Goal of Strategic Marketing
Management
Tere are at least four goals of strategic marketing manage-
ment that need to be understood by those wishing to
use strategic marketing management to craf proftable
strategies:
1. To select reality-based desired accomplishments (e.g.,
goals and objectives).
2. To more efectively develop or alter business strategies.
3. To set priorities for operational change.
4. To improve a frm’s performance.
3
Reality-based accomplishments are shaped by the level of
understanding decision makers have regarding the external
factors outside of their control and the internal factors
under their control. Proper use of this newly acquired
knowledge of internal and external factors will lead to more
efective business strategies. Strategy, by defnition, means
decision makers must make choices, and that means setting
priorities for operational change. Conducting a strategic
marketing management planning exercise should be more
than just an exercise. Terefore, the goal of efective mar-
keting management is to improve a frm’s performance.
Figure 1 illustrates the strategic marketing management
model as discussed in this workbook. Tis model is divided
into three levels: external/self analysis, strategic posture,
and market planning. We will explain each of these three
components, beginning with external/self analysis, followed
by strategic posture and market planning. External/self
analysis will receive the majority of our attention in this
workbook, while strategic posture and market planning will
be given a brief overview. Upcoming Food and Resource
Economics Extension reports will focus on strategic posture
and market planning.
Components of External Analysis
External analysis involves an examination of the relevant
elements external to your organization. Tis analysis should
be purposeful, focusing on the identifcation of threats,
opportunities, and strategic questions and choices. Te
danger of being overly descriptive must be guarded against.
It is easy to get caught up in an exhaustive descriptive study,
at considerable expense, with little impact on strategy and
long-run proftability. It is not uncommon to generate
page afer page of strengths, weaknesses, opportunities,
and threats facing your business, especially if management
involves the entire organization in the process. Tis
brainstorming type of activity is useful and may encourage
buy-in by the rank and fle of your organization, but at
some point this list of self (internal) and external factors
must be boiled down to the most important strengths,
weaknesses, opportunities, and threats facing the frm
(Aaker, 1995).
Te components of external analysis include:
• Customer analysis is the identifcation of the market
segments to be considered, as well as the motivations and
unmet needs of potential customers identifed.
• Competitor analysis is the identifcation of strategic
groups and their performance, image, and culture, as
well as the identifcation of competitor strengths and
weaknesses.
• Industry analysis is the uncovering of major market
trends, key success factors, and the identifcation of
opportunities and threats through the analysis of
competitive and change forces (e.g., distribution issues,
governmental factors, economic, cultural, demographic
scenarios, and information needs) [Aaker, 1995].
Output of External Analysis
You might be wondering what kind of information can be
garnered from an external analysis of the factors afecting
your frm. An efective external analysis will lead to
identifcation and understanding of the opportunities and
threats facing the organization arising out of customer,
competitor, and industry analyses. Te following is a
defnition of opportunities and threats:
• Opportunities are those external factors or situations that
ofer promise or potential for moving closer or more
quickly toward the frm’s goals. For example, changing
consumer preference for convenience may be an opportu-
nity for your frm.
• Treats are those external factors or situations that may
limit, restrict, or impede the business in the pursuit of it
goals. For example, new regulations may raise the cost of
production, resulting in a threat to your proftability.
Te most efcient way to assess the external opportunities
and threats facing your organization is to conduct a “brain-
storming” session with people from across your organiza-
tion. You may be surprised at the number of diferent
Figure 1. The Strategic Marketing Management Model.
4
insights that can arise with this type of exercise. Remember,
if the item being considered is beyond the control of
the frm, then it is truly external (e.g., an opportunity or
threat). If the item being considered is under the control
of the frm, then it should not be considered external, but
rather should be considered internal to the frm (e.g., a
strength or a weakness).
Customer Analysis
Customer analysis involves the examination of customer
segmentation, motivations, and unmet needs (Aaker, 1995).
One could argue that the material presented in this section
belongs under the market planning portion of the strategic
marketing management model. Te following components
of customer analysis are discussed here as part of the
“external” analysis component of the model:
• Market segmentation is the identifcation of who your
current and potential customers are (Wedel, 1998). In
today’s food system, market segmentation must include
current and potential ultimate consumers of your
product/service. For example, a fresh grapefruit producer
could identify a number of potential market segments
such as produce wholesalers, food service distributors,
retail grocery buyers, road-side stand customers, and gif
fruit buyers.
• Customer characteristics and purchasing hot buttons
provide the information needed to decide whether
the frm can and should attempt to gain or maintain a
sustainable competitive advantage for marketing to a
particular market segment (Lehmann and Winer, 1994).
For example, retail grocery buyers of fresh grapefruit,
who purchase in large quantities, need grapefruit that are
labeled with UPC codes, and they require a supplier to be
able to meet their supply needs when they order.
• Unmet needs may represent opportunities for dislodging
entrenched competitors (Aaker, 1995). For example,
fresh fruit processors may be looking for efective ways
to create whole-peeled grapefruit in order to utilize more
grapefruit in their overall fruit purchasing program.
In Table 1, you are asked to take a few minutes to identify
as many customer market segments as you can for your
particular industry. For each customer market segment,
state the customer characteristics and their purchasing hot
buttons. Indicate whether the characteristics represent an
opportunity (O) or threat (T) to your frm. Cite evidence
why the characteristic is an opportunity or a threat to your
organization.
Components of Competitor
Analysis
Competitor analysis can include a multitude of parts. We
will limit our competitor focus to the following:
1. Who are your competitors? Competitors may be frms
in your same industry or they could be frms in other
industries that your customers view as providing accept-
able alternatives for your product or service.
2. What does each competitor do well? How about your
competitors’ image and personality? Tat is, how are your
competitors positioned and perceived in the marketplace?
What about your competitors’ cost structures? Do
competitors have a cost advantage? Finally, what is the
marketing attitude of competitors (e.g., least cost, dif-
ferentiated product, niche market)?
3. What does each competitor do poorly? Tis might
provide insight into areas that your company might
exploit.
4. What can you learn from your competitors? Consider
current and past strategies and anticipated future moves
by competitors. Where does your frm have a competitive
advantage (a strength that clearly places a frm ahead of
its competition)? Where is your frm at a competitive
disadvantage (a weakness that clearly places a frm
behind its competition)?
Please use Table 2 to take a few minutes to identify and
to describe the competitors in your industry. For each
competitor state what he does well and what he could do
better. Indicate whether your competitors’ skills represent
an opportunity (O) or threat (T) to your frm. Cite evidence
why the skills are an opportunity or a threat to your organi-
zation. For example, a competitor might be very efcient at
distribution. Tis may mean that competing against them
on the basis of distribution systems may be unwise. Tis
same competitor may have a reputation for below average
delivery of customer service. If your frm is well known for
customer service or has the potential to deliver superior
customer service, this may be an area for your organization
to concentrate on to gain competitive advantage.
5
Industry Analysis
Industry analysis has two primary objectives:
1. To determine the attractiveness of various markets (i.e.,
Will competing frms, on average, earn attractive profts
or will they lose money?).
2. To better understand the dynamics of the market so that
opportunities and threats can be detected and strategies
adopted (Aaker, 1995).
A thorough industry analysis will include the following four
components:
1. Major market trends. Events or patterns that are especially
useful if focused on what is changing in the marketplace
(Naisbitt, 1970) such as the increasing consumer need for
convenience. For example, consider the long-term decline
in per-capita consumption of grapefruit juice and fresh
grapefruit facing grapefruit producers.
2. Key success factors. Tose factors that are the building
blocks for success in your industry (Tompson and
Strickland, 2001). Key success factors arise out of strategic
necessities and strategic strengths. For example, a mini-
mum requirement for being in the grapefruit business is
to be skilled at all aspects of producing a grapefruit crop.
3. Competitive forces. Tese forces help to explain the po-
tential for proft (or lack thereof) in a particular industry.
Tese are based on the work of Michael Porter. Tey
include the threat of entry, supplier and buyer power,
the availability of substitutes, and the intensity of rivalry
within the industry. For a more complete explanation of
these competitive forces, refer to “Competitive Strategy:
Techniques for Analyzing Industries and Competitors” by
Michael Porter, published in 1980.
4. Change forces. Change forces are events outside your
organization that shape the way you conduct business.
Tese include government regulations, product and
marketing innovations, economic issues, consumer
trends, and information needs (Lehmann and Winer,
1994).
Please take a few minutes to identify trends and key suc-
cess factors for your industry in Table 3. For each trend
or key success factor, indicate whether it represents an
opportunity (O) or threat (T) to your frm. Cite evidence
why the characteristic is an opportunity or a threat to your
organization.
Competitive Forces Analysis
We have organized Porter’s Five Forces model in such a
way that you should be able to assess the strength of each
of the fve forces in your particular industry. For each
item in Table 4, circle the number on the scale that best
corresponds to your honest assessment of the external
situation faced by your frm. Numbers to the lef on the
scales correspond to situations with greater threats, while
numbers to the right correspond to situations with greater
opportunities.
How many components of the fve forces did you assess as
opportunities? How many as threats? Later in this strategic
marketing management workbook, we will compare
internal strengths to external opportunities and internal
weaknesses to external threats to establish areas of competi-
tive advantage and competitive disadvantage, respectively.
Change Forces Analysis
For each item in Table 5, circle the number on the scale
that best corresponds to your honest assessment of the
external situation faced by your frm. Ten in the space
provided, list specifc key changes infuencing your frm.
Less change corresponds to less threatening, but probably
fewer opportunities. Greater change corresponds to more
threatening, but probably more opportunities. Later in this
analysis, we will compare internal strengths to external
opportunities and internal weaknesses to external threats
to establish areas of competitive advantage and competitive
disadvantage, respectively.
Components of Self Analysis
Having completed a detailed external analysis, one must
look inward. Self analysis seeks to provide a detailed
understanding of aspects internal to your organization of
strategic importance. Components of self-analysis include
assessing the internal strengths and weaknesses of your
organization, as well as identifying strategic problems,
organizational capabilities, and constraints your frm brings
to the strategic marketing management process (Aaker,
1995).
We will utilize the analysis of the internal strengths and
weaknesses to identify strategic problems, organizational
competencies (Prahalad and Hamel, 1990) and constraints.
At this time, it is appropriate to defne what is meant by a
strength and a weakness:
• Strength. Something a company does well, or a charac-
teristic that gives it an important capability. For example,
6
one of Wal-Mart’s strengths is its cost-efcient distribu-
tion system.
• Weakness. Something a company does poorly, or a
characteristic that puts it at a disadvantage. For example,
one of Wal-Mart’s weaknesses could be its infexibility to
respond to changes in the marketplace at the local level.
Self Analysis Checklist
We will utilize a series of checklists to allow you to identify
internal strengths and weaknesses, just like we did for
external opportunities and threats. For each item in Table 6,
circle the number on the scale that best corresponds to your
honest assessment of your frm’s strength or weakness in the
indicated area.
We hope this extensive list helps you to identify internal
strengths and weaknesses you may not have thought
about in the past. Te real value of this analysis takes place
when strengths are compared to opportunities and weak-
nesses compared to threats. Tis forms the basis of SWOT
analysis.
SWOT Analysis
SWOT is an acronym that is widely used in the strategic
planning literature. SWOT has been so widely and
extensively used, that it is difcult, if not impossible, to
give credit to any one person for its origination. Each letter
of the acronym stands for a diferent component of this
internal/external interface: S=Strengths, W=Weaknesses,
O=Opportunities, and T=Treats.
Strengths and weaknesses are internal, while opportunities
and threats are external to the frm. Te goals of SWOT
analysis are twofold:
1. To determine your frm’s competitive advantages and
disadvantages. In what areas do your strengths clearly
distance you from your competition? In what areas do
your weaknesses clearly put you behind?
2. To prioritize the frm’s opportunities and threats. In what
areas do your strengths match or mismatch your op-
portunities? In what areas do your weaknesses make you
increasingly vulnerable to threats?
A competitive advantage is created by the interface of your
most important strengths matching with the most viable
opportunities. A competitive disadvantage is created by the
interface where your most pronounced threats make you
even more vulnerable to the most serious threats facing
your organization.
To summarize, SWOT analysis generally follows a four-step
process. Please note that steps one and two are inter-
changeable. Tat is, you can begin the analysis on either
an external or internal focus. Te key point is that both
external and internal analyses need to be done for efective
strategic marketing management to take place. Tis process
is listed below:
• Step 1: Conduct competitive and change analyses to
uncover potential opportunities and threats.
• Step 2: Make an honest assessment of your frm’s strengths
and weaknesses in Marketing, Production, Personnel,
Information Systems, Finance, Management/Leadership,
and Organizational Resources.
• Step 3: Determine your competitive advantages and
disadvantages.
• Step 4: Prioritize the opportunities and threats.
To make the most out of SWOT analysis, please consider
the following statements of fundamental strategic truths, in
priority order:
1. Use competitive advantages to seize opportunities.
2. Afer exhausting the chances to use competitive
advantages, develop internal strengths that give your frm
competitive advantages.
3. Afer exhausting “1” and “2” above, work to eliminate
competitive disadvantages (Peterson, 2001).
Opportunities and Threats
Analysis
Table 7 provides you with a worksheet to assess your frm’s
fve most important opportunities and threats from your
own beliefs and from those you identifed as part of the
external analysis worksheets (Tables 3, 4, and 5). In the
fnal column, cite specifc evidence that supports your belief
that the item is an opportunity or a threat. Remember, an
“opportunity” is any external factor or situation that ofers
promise or potential for moving closer or more quickly
toward the frm’s goals. A “threat” is any external factor or
situation that may limit, restrict, or impede the business in
the pursuit of its goals.
7
Strengths and Weaknesses
Analysis
Table 8 provides you with a worksheet to assess your frm’s
fve most important strengths and weaknesses from your
own beliefs and from those you identifed as part of the
self-analysis worksheets (Table 6). In the column marked
Rank, provide a numerical ranking of the top fve strengths
and weaknesses. Place a “1” besides the top-priority
strength and top-priority weakness. In the fnal column,
cite specifc evidence that supports your belief that the item
is a strength/competitive advantage or weakness/competi-
tive disadvantage.
Concluding the Strategic
Marketing Management Analysis
“Te fnal analytical task is to zero in on the strategic issues
that management needs to address in forming an efective
strategic action plan. Here, managers need to draw upon
all prior analysis, put the company’s overall situation into
perspective, and get a lock on exactly where they need to
focus their strategic attention” (Tompson and Strickland,
1995). Having gathered all this data, it is now time to put
the analysis together in a way that will help your frm craf
a long-term strategy. In Table 9, you are asked to answer
a series of fve questions that rely on your ability to use
information obtained from earlier analysis. Please take a
moment to answer the questions in Table 9.
Although this SWOT process was quite detailed, and at
times repetitive, we hope you found the process insightful
and useful. Having completed a thorough SWOT analysis,
it is time to use this information to begin crafing a strategic
posture.
Components of a Strategic Posture
SWOT provides the foundation for an efective Strategic
Posture. A strategic posture is a set of decisions that:
• Expresses how management intends to achieve a frm’s
long-term mission, vision, and objectives.
• Commits management to a way of achieving competitive
advantage.
• Springs from awareness of the frm’s internal strengths
and weaknesses, and its external opportunities and
threats.
• Unifes short-term operational plans and decisions.
A fair question to ask would be why should one care about
strategic posture? A strategic posture:
• Creates a bridge between the broad intentions of long-
term vision and objectives and the specifc actions needed
for implementation.
• Demands that you make choices about what you plan to
do—you cannot be all things to all people.
• Requires diferent capabilities and resources for diferent
postures. Tere are a lot of strategic combinations to
choose from; and strategic postures can be developed for
the whole frm, a business unit, or for a department.
A complete strategic posture includes decisions in at least
four areas: primary competitive strategy, competitive
role, priority strategic initiative, and vertical coordination
strategy. Each of these areas is discussed in upcoming
sections of this workbook.
Primary Competitive Strategy
Firms can chose from four generic primary competitive
strategies. Tese strategies are adapted from the work of
Michael Porter (1980), David Aaker (1995), and others:
1. Price Advantage (overall cost leadership) is a price-driven
strategy based on basic products/services ofered to a
broad market (e.g., Sam’s Club).
2. Quality/Features Advantage (broad diferentiation) is a
quality-driven strategy based on specialized products and
services ofered to a broad market (e.g., Publix).
3. Market Focus Advantage (focused low cost and focused
diferentiation) is a customer-driven strategy based on
specialized products and services ofered to a specially
targeted (niche) market (e.g., Sav-A-Lot stores).
4. Total Quality Management (TQM) Advantage (best cost
provider) is a value-driven strategy based on continual
innovation in product, price, and process (e.g., Saturn)
It is rare that a frm excels at more than one of the primary
competitive strategies. Te characteristics that make one
of the above strategies efective are likely to reduce the
efectiveness of another primary competitive strategy.
Remember, it is hard to be all things to all people.
8
Competitive Role Strategy
Once a frm has decided to pursue a primary competitive
strategy based on overall cost leadership, broad diferen-
tiation, focused diferentiation, or best cost provider, a
competitive role strategy must be chosen. Tat is, a decision
must be made how to best position the frm, given the
primary competitive strategy that has been chosen. Tere
are four competitive role strategies that can be chosen:
1. Leader. Te largest market share and/or initiator of
change that causes others to respond and follow their lead
(e.g., McDonald’s).
2. Follower. An adopter and adapter of successful strategies
from others (e.g., A&W restaurants).
3. Challenger. An innovator of strategies that challenge
the industry and its normal way of doing business (e.g.,
Chik-Fil-A).
4. Loner. A provider of products/services that fll gaps in the
marketplace (e.g., “mom and pop” restaurants).
Just as in primary competitive strategy, it is difcult for a
frm to be all things to all people. For example, under Jack
Welsh’s leadership, General Electric made a commitment
to only stay in markets where General Electric would be
either frst or second in market share. Tis is an example of
a “leader” competitive role strategy.
Priority Strategic Initiative
Te next step in developing an efective strategic posture
takes place afer the primary competitive strategy and the
competitive role strategies have been identifed. Tis step
is labeled the priority strategic initiative. Tere are fve
possible strategic initiatives that frms should consider
(Aaker, 1995):
1. Grow. Expand the size or scope of your business (e.g.,
Subway has been attempting this for a number of years)
2. Maintain/Defend. Keep what the frm has achieved in
size and scope (e.g., in many ways, McDonald’s has been
doing this, since same-store sales have been fat).
3. Reposition. Maintain the frm’s size or scope while chang-
ing key elements of market position (e.g., IBM has been
doing this since the 1990s).
4. Retrench. Reduce the size and scope of the business
(e.g., RJR Nabisco’s decision to spin of foreign cigarette
manufacturing).
5. Exit. Leave the market (e.g., this is what the original
owners of Boston Market were forced to do when they
sold the company to McDonald’s).
Each of these strategic initiatives demands a singleness
of purpose like the primary competitive strategies and
competitive role strategies.
Vertical Coordination Strategies
Te fnal decision to be made concerning a frm’s strategic
posture is which vertical coordination strategy to choose?
Vertical coordination strategies are perhaps best thought
of as decisions of how to best handle the “buy” and “sell”
interface that takes place across the entire food system from
input supplies to fnal consumer purchases (Peterson and
Wysocki, 2001). Te decision maker must consider fve
possible vertical coordination strategies:
Spot/Cash Market is the traditional way agricultural
products have been sold in the United States. Spot markets
rely on external control mechanisms, price, and broadly
accepted performance standards to determine the nature of
exchange. Neither party can infuence price or the generic
standards (e.g., selling grapefruit to citrus packers on the
open market) (Lehmann and Winer, 1994):
1. Contracting. Marketing contracts are legally enforce-
able agreements of specifc and detailed conditions of
exchange. Each participant must agree on specifcations
that are ultimately enforced by a third party (e.g., a
production contract with a citrus processor).
2. Relation-Based Alliance. An informal agreement between
parties designed for the mutual beneft of both parties.
Both parties retain separate, external identity where
formal joint-management structure is not present to
allow for strong internal control. However, enforcement
mechanisms are developed internal to the relationship
(e.g., an agreement between a citrus producer cooperative
and a citrus processor whereby the cooperative’s members
agree to sell their entire production to the citrus proces-
sor in exchange for prices that average above the spot
market average).
3. Equity-Based Alliance. Catch-all of many organizational
forms, including joint ventures and cooperatives, that
involve some level of equity (money, sweat, or emotional).
9
One distinguishing feature is the presence of a formal
organization that has an identity distinct from the mem-
bers, with decentralized control. Owners still maintain
a separate identity that allows them to walk away (e.g., a
citrus producer cooperative).
4. Vertical Integration. Having control or ownership of
multiple stages of production/distribution (e.g., Tyson
Foods in the poultry industry).
All four of these strategic posture decisions must be made
for each major strategic direction in which the company
embarks. It should be apparent that there are many strategy
decisions to be made when designing a strategic posture.
Tere are approximately (4x4x5x5) = 400 choices for
selecting a primary competitive strategy, competitive
role, priority strategic initiative, and vertical coordination
strategy combination.
Te fnal part of this workbook will look at the relationship
between strategic marketing management and three critical
marketing concepts. Tese will only be given superfcial
treatment in this workbook. Upcoming publications will
explore these concepts in greater detail.
The Changing Consumer
It is important to understand the changing needs of
consumers when designing your strategic marketing
management plan (Kepner, 2001). For each of the following
changing consumer needs, please consider their potential
impact (positive or negative) on your frm (Lehmann and
Winer, 1994).
1. Overriding desire for quality. Today’s consumers demand
quality and they are willing to pay for it.
2. Bargain hunting by the afuent. Just because the afuent
have money does not mean that they are not bargain
hunters.
3. Te buying guideline is selectivity. Consumers demand a
multitude of choices, varieties, etc.
4. Traditional brand loyalty is fading. Tis is, in part, due to
the increase in the quality of store brands such as Publix
brand products.
5. Te middle line is dropping out. Tere has been a squeez-
ing out of middle management in corporate America over
the last decade or so. Increasingly, our society is becom-
ing bi-polar. Tat is, a nation of haves and have-nots
(Stevens, Loudon, and Warren, 1991).
6. Consumers want it now! Convenience and immediate
gratifcation fuel many of today’s consumer goods
purchases.
7. Home entertainment is in style. Consumers are not
motivated by price alone. Many of us are willing to spend
more for products and services if we can be entertained
along the way.
8. It’s back to the way we were. Tere is a growing segment
of the population that craves life the way it used to be,
with simplicity and value being paramount.
9. Staying alive. Tis phrase describes those consumers who
are health conscious.
10. Cashing out. Consumers who are tired of the “rat
race” and want to take up a simpler life.
11. Small indulgences. Many consumers are willing to
treat themselves to small rewards for accomplishments
and milestones reached in their lives.
12. Customization. Wanting quality, and wanting it
now, in the sense that U.S. consumers, in particular, want
products and services that fll very specifc needs.
13. S.O.S., or Save Our Society. S.O.S. refers to consum-
ers who make purchasing decisions based, in part, on
social concerns or causes they support (Lehmann and
Winer, 1994).
Te purpose of looking at the changing consumer is to
encourage you to consider the consumer more directly
when crafing a strategic marketing management plan.
Three Critical Marketing Concepts
Te strategic marketing plan is built around three critical
marketing concepts. Tese concepts are represented by the
following acronyms and are discussed briefy at the end of
this workbook:
• TLC (Tink Like Customers).
• CMSQ (Critical Marketing Strategy Question).
• STP (Segment, Target, and Position).
10
Think Like Customers
“Tink Like Customers” (TLC) is a plea for businesses to
remember the customer in their decision making process.
To think like a customer is consistent with the viewpoint
that “marketing is the whole business as seen from the
viewpoint of the customer.” Experience and research
indicate that all frms have the opportunity to do better
at TLC. We are sure you would be able to cite numerous
examples from your own life when frms did not practice
thinking like their customers. Can you list examples of
frms that think like customers? Can you list examples of
frms that do not think like customers?
Critical Marketing Strategy
Question
In its simplest form, the “critical marketing strategy ques-
tion” (CMSQ) is: “Why should customers purchase your
frm’s products/services over those of your competitors?”
(Kepner, 2001). Tis may sound like a simple question.
You may be surprised at how difcult it can be to come
up with good reasons (reasons that diferentiate you from
your competition) why people/frms should purchase your
products/services. Table 10 asks you to list all the reasons
why you believe customers should buy products/services
from your frm.
Based on the list above, select the frst and second most
important reasons why customers buy from you. Tat is,
in essence, your answer to the critical marketing strategy
question.
1. ______________________________
2. ______________________________
Segment, Target, and Position
“Segment, Target, and Position” (STP) is one of the basic
building blocks of modern marketing (U.S. Small Business
Administration, 1980). STP strategies should complement
a frm’s overall generic strategies, consisting of a primary
competitive strategy, competitive role strategy, strategic
initiative, and vertical coordination strategy.
Market Segmentation is the basic recognition that every
market is made up of distinguishable segments consisting
of buyers with diferent needs, buying styles and responses.
In essence, this is the process of identifying all possible
markets to which your product or service could be ofered.
Although there are many ways to segment a market, these
are beyond the scope of this workbook.
No single ofer or approach will appeal to all buyers. Tis
means that companies must make a choice regarding which
markets, out of all the possibilities, they wish to serve.
Target market selection is the act of developing measures
of segment attractiveness and selecting one or more of the
identifed segments to enter and emphasize. Table 11 asks
you to make a list of all the possible target markets for your
product or service that you would consider entering.
Based on the list in Table 11, select the two most attractive
market segments to serve. Keep in mind your frm’s com-
petitive advantages and disadvantages when stating your
answer. Tese will become your target markets.
1. ____________________________________
2. ____________________________________
Te fnal step of the STP strategy involves the establishment
of a positioning strategy. Positioning includes decisions in
product, price, distribution, and promotion. Each of these
is the subject of a workbook unto itself. Remember, once
you have determined the one or two markets you want to
target, you need to decide how to position your product or
service in the minds of potential customers, relative to your
competitors.
Conclusion
We hope you have enjoyed the strategic marketing
management process as identifed in this workbook. Please
remember that the strategic marketing management
process is not meant to be used once every fve years, only
to collect dust on some manager’s shelf. To be efective, this
process requires the support of upper management and the
involvement and commitment of the entire company.
Readers interested in applying the analysis contained in this
workbook are encouraged to contact Dr. Allen F. Wysocki
at [email protected] or Dr. Ferdinand F. Wirth at fwirth@
gnv.ifas.uf.edu. Drs. Wysocki and Wirth are happy to lead
workshops on this material tailored to your specifc needs.
11
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Wysocki, Allen F. Class presentations made to students at
Michigan State University, 1998-2001.
Wysocki, Allen F. and Ferdinand F. Wirth. Assessing the
Strengths, Weaknesses, Opportunities, and Treats Involving
Your Business. Workbook prepared for the Grapefruit
Economic Workshop, University of Florida, Indian River
Research and Education Center, Fort Pierce, Florida. March
24, 1999.
12
Table 1. Identifcation of Customer Segments and Their Marketing Characteristics.
Customer Segment Characteristics, Hot Buttons, and Unmet Needs (O) or (T)* Evidence
Source: Wysocki and Wirth, 1999.
* (O) = Opportunity, (T) = Threat.
Table 2. Competitor Analysis.
Competitor Examples of Competitor Skill (O) or (T)* Evidence
Done Well
Could Be Better
Done Well
Could Be Better
Done Well
Could Be Better
Source: Wysocki and Wirth, 1999.
* (O) = Opportunity, (T) = Threat
Table 3. Industry Analysis Worksheet.
Major Market Trend (O) or (T)* Evidence
Key Success Factor (O) or (T)* Evidence
Source: Wysocki and Wirth, 1999.
(O) = Opportunity, (T) = Threat.
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Table 4.
Competivive Force Threat-
based
1 2 3 4 5 Opportununity-
based
1. Potential Entry
How difcult is it for frms to enter your market? Easy 1 2 3 4 5 Difcult
How many options exist for discouraging new frms from entering
your market?
Few 1 2 3 4 5 Many
2. Supplier Power
How much bargaining power do your suppliers have? Much 1 2 3 4 5 Little
How many options exist for lessening supplier power? Few 1 2 3 4 5 Many
3. Buyer Power
How much bargaining power do your buyers have? Much 1 2 3 4 5 Little
How many options exist for lessening buyer power? Few 1 2 3 4 5 Many
4. Potential Substitutes
How many alternatives do buyers have for getting the benefts of
your products or services in some other way?
Much 1 2 3 4 5 Few
How many ways exist for improving your value to customers? Few 1 2 3 4 5 Many
How many options exist for increasing customer loyalty? Few 1 2 3 4 5 Many
5. Rivalry
What level of intensity exists in the rivalry between you and your
direct competitors?
High 1 2 3 4 5 Low
How strong are these direct competitors relative to your frm? Weak 1 2 3 4 5 Strong
How many options exist for taking on these competitors head-to-
head?
Few 1 2 3 4 5 Many
How many options exist for selecting areas of the market that are
not so competitive?
Few 1 2 3 4 5 Many
Source: Wysocki and Wirth (1999); Porter (1980).
14
Table 5.
Competitive Force Less Threatening/ Fewer
Opportunities
1 2 3 4 5 More Threatening/
More Opportunities
1. Changes in buyer demand (i.e., wheat buyers want and
need)
Little change 1 2 3 4 5 Much change
Consider changes in tastes, lifestyle, family
income, preferences for uniqueness, etc.
List key changes List key changes
2. Changes in long-term market growth rate Little change Much change
Consider changes in industry growth,
population growth, product/service
attractiveness to customers, market
saturation, etc.
List key changes 1 2 3 4 5 List key changes
3. Product and marketing innovations Little change 1 2 3 4 5 Much change
Consider innovations in product/service
features, quality, packaging, promotion,
advertising, distribution, etc. (e.g., fresh cut
fruit and heart-healthy labeling)
List key changes List key changes
4. Technological change and the speed with which it
spreads
Little change 1 2 3 4 5 Much change
Consider changes in equipment, production
methods, biotechnology, computers,
information systems, and the speed with
which industry competitors or customers
adopt these changes.
List key changes List key changes
5. Regulatory infuences and government policy changes Little change 1 2 3 4 5 Much change
Consider changes in environmental
regulations, food safety regulations, etc.
List key changes List key changes
6. Changes in uncertainty and business risk Little change 1 2 3 4 5 Much change
Consider changes in business liability,
volatility of markets, ability to forecast
efectively, etc.
List key changes List key changes
7. Major changes in the economy Little change 1 2 3 4 5 Much change
Consider changes in the availability of skilled
laborers, investment, interest rates, etc.
List key changes List key changes
8. Increasing globalization of your industry Little change 1 2 3 4 5 Much change
Consider changes in imports, exports,
international frms, entering US markets, etc.
List key changes List key changes
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Table 6. Self Analysis Checklist to Assess Strengths and Weaknesses.
Resources Weakness* Strength*
I. Marketing Resources
1. Customer satisfaction with products/services 1 2 3 4 5
2. Ability to gain customers versus competition 1 2 3 4 5
3. In-depth knowledge of product/service line 1 2 3 4 5
4. Product/service quality (function, image, place, possession, ease of
use)
1 2 3 4 5
5. Advertising and promotion activities 1 2 3 4 5
6. Product/service pricing 1 2 3 4 5
7. Facilities/methods used to sell to customers 1 2 3 4 5
II. Financial Resources
1. Strong and recurring operating profts 1 2 3 4 5
2. Strong and recurring cash fow 1 2 3 4 5
3. Strong and recurring return on investment 1 2 3 4 5
4. Strong and recurring return on equity 1 2 3 4 5
5. Efcient asset management 1 2 3 4 5
6. Proper balance of debt and equity 1 2 3 4 5
7. Ready access to outside/new funds 1 2 3 4 5
8. Well-managed customer credit 1 2 3 4 5
9. Well-managed supplier credit 1 2 3 4 5
III. Human Resources
1. Adequate number of people to do the work 1 2 3 4 5
2. Adequate quality of people to do the work 1 2 3 4 5
3. Personnel plans 1 2 3 4 5
4. Job design and description 1 2 3 4 5
5. Performance standards/evaluation procedures 1 2 3 4 5
6. Training programs 1 2 3 4 5
7. Good morale as evidenced by absenteeism, turnover, tardiness,
complaints, bickering, and employee growth and development
1 2 3 4 5
8. Compensation system that promotes performance and satisfaction 1 2 3 4 5
9. Equitable and competitive pay 1 2 3 4 5
10. Equitable and competitive fringe benefts 1 2 3 4 5
11. Appropriate use of terms 1 2 3 4 5
12. Work ethic of individuals and teams 1 2 3 4 5
IV. Operations/Production Resources
1. Quality of facilities to serve customers 1 2 3 4 5
2. Capacity of facilities to serve customers 1 2 3 4 5
3. Up-to-date, appropriate technology 1 2 3 4 5
4. Efective and efcient physical plant 1 2 3 4 5
5. Efective and efcient work fow 1 2 3 4 5
6. Efective and efcient inventory control 1 2 3 4 5
7. Efective and efcient purchasing practices 1 2 3 4 5
8. Efective and efcient production practices 1 2 3 4 5
V. Management/Leadership Resources
1. Efective management style 1 2 3 4 5
2. Timely decision making 1 2 3 4 5
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Resources Weakness* Strength*
3. Efective delegation 1 2 3 4 5
4. Efective participation 1 2 3 4 5
5. Efective risk taking 1 2 3 4 5
6. Efective leadership 1 2 3 4 5
VI. Organizational Resources
1. Appropriate mix of resources (people, money, equipment)
available
1 2 3 4 5
2. Resources properly placed to do the job 1 2 3 4 5
3. Efective interdepartmental communications 1 2 3 4 5
4. Efective reporting relationships 1 2 3 4 5
5. Firm’s public image 1 2 3 4 5
6. Strong organizational culture (productivity, honesty, dispute
handling, tolerance of change)
1 2 3 4 5
VII. Information Resources
1. Appropriate fnancial/cost accounting systems 1 2 3 4 5
2. Planning system appropriate for internal analysis (assessing
strengths and weaknesses)
1 2 3 4 5
3. Planning system appropriate for external analysis (assessing
opportunities and threats)
1 2 3 4 5
4. Control system that highlights problems and generates corrective
action
1 2 3 4 5
5. Information systems that use the best technology (computers, etc.)
available
1 2 3 4 5
6. Efective information for strategic decision making 1 2 3 4 5
7. Efective information for operation of decision making 1 2 3 4 5
* Rated on a scale of 1 to 5, with 1=greatest weakness and 5=greatest strength
Source: Wysocki and Wirth (1999), adapted from class discussions led by H. Christopher Peterson, Michigan State University.
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Table 8. Strengths and Weaknesses Analysis.
Strengths Rank Evidence
Weaknesses Rank Evidence
Source: Wysocki and Wirth, 1999.
Table 7. Opportunities and Threats Analysis.
Opportunities Evidence
Threats Evidence
Source: Wysocki and Wirth, 1999.
Table 9. Putting the SWOT Analysis Altogether.
Where do your company’s strengths and opportunities reinforce each other, suggesting competitive advantage?
Where do your company’s weaknesses and threats reinforce each other, suggesting competitive disadvantage?
What are the key success factors that must be addressed to assure a successful future?
Are your company’s current vision, mission, goals, and objectives (this is another whole workshop) adequate? How much change is needed?
Are your company’s current strategies adequate? How much change is needed?
Source: Wysocki and Wirth, 1999.
18
Table 11. Identifying Possible Target Markets.
Make a list of all the possible markets that exist for your product or service.
1. ___________________________________________________________________
2. ___________________________________________________________________
3. ___________________________________________________________________
4. ___________________________________________________________________
5. __________________________________________________________________
6. ___________________________________________________________________
7. ___________________________________________________________________
8. ___________________________________________________________________
9. __________________________________________________________________
10. ___________________________________________________________________
Source: Wysocki and Wirth, 1999.
Table 10. Answering the Critical Marketing Strategy Question.
Based on your experience and beliefs, make a “grocery” list of all the reasons why customers buy from you.
1. ____________________________________________________________________
2. ____________________________________________________________________
3. ___________________________________________________________________
4. ____________________________________________________________________
5. ____________________________________________________________________
6. ____________________________________________________________________
7. ____________________________________________________________________
8. ____________________________________________________________________
9. ____________________________________________________________________
10. ____________________________________________________________________
Source: Wysocki and Wirth, 1999.
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