Marketing Project Part 1 ONLY ON Situation Analysis, SWOT, Competitive Advantage, Strategic Focus, Strategic Alternatives and Marketing Goals and ObjectivesThe project is an individual assignment. pl

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Karen

Readings in Marketing

Strategy

Karen James, Janice Edwards, Dave Ketchen, Jeremy Short, David Try, and Authors who wish to remain anonymous.

Copyright 2018

Readings in Marketing Strategy was adapted from an adaptation of Principles of Marketing, a work produced and distributed under a Creative Commons license (CC BY-NC-SA) in 2010 and updated in 2017 by a publisher who has requested that they and the original author not receive attribution. The original edition is produced by the University of Minnesota Libraries Publishing through the eLearning Support Initiative.

This adaptation has reformatted the original text and replaced some images and figures to make the resulting whole more shareable. The content was rearranged, and multiple chapters were deleted.  Dr. Karen James has also added additional content not present in the original textbook. This work is made available under the terms of a Creative Commons Attribution-NonCommercial-ShareAlike license.

Mastering Strategic Management was adapted by Janice Edwards from Dave Ketchen's textbook Mastering Strategic Management. The content was adapted, and Karen James integrated new content.

Chapter 4
SWOT Analysis, Strategic Focus, Competitive Analysis and Marketing Goals and Objectives

Following a thorough situation analysis, many organizations conduct multiple SWOT analyses at the Corporate, SBU levels, and product-market levels.  Information developed using a product-market SWOT analysis will be most helpful when developing marketing plans because it is more specific than that found at higher levels of the strategic planning process.

Proponents of SWOT analysis cite five key benefits1.

1. Simplicity.  SWOT analysis is easy to understand and has been used successfully by many organizations.   SWOT analysis is simplistic from the perspective that the individual performing the SWOT only needs an in-depth understanding of his or her firm, and the industries and markets in which the business competes.  Specialized training or technical skills are not necessary.

2. Cost Savings.  Many firms which adopted the SWOT process have historically lowered their labor costs by downsizing their strategic planning department.  Downsizing occurs in part due to the lack of specialized training and technical skills on the part of those conducting the SWOT analysis.

3. Higher Quality Strategic Planning Outcomes.  Many forms of strategic planning require extensive information systems to track and feed data.  When used properly, SWOT analysis can improve the quality of strategic planning even when no information systems are available.   However, the presence of a marketing information system can make the SWOT analysis process move faster and more efficiently.

4. Internal Collaboration.  As a thorough SWOT analysis examines strengths and weaknesses throughout the organization, internal collaboration and sharing of information among departments within the firm is a key benefit, assuming all departments embrace the SWOT process and participate fully in the planning process.  Marketing planners use the information to understand what other functional areas do best and what knowledge they have and can share, and then apply that information in creating the marketing plan.  Information from other departments can help marketers understand how to take advantage of new opportunities and how to solve problems.  Having input from all functional areas can also assist in working through internal disputes before the marketing plan is implemented.

5. Information Synthesis. A properly executed SWOT analysis integrates and synthesizes information from a variety of sources, including the most currently available facts and future-oriented forecasts.  The integration and synthesis of information in a coherent fashion that aids the strategic planning process is a key benefit.

While the benefits of SWOT analysis may seem attractive, some inherent dangers occur when the process is incorrectly applied.  Unfortunately, the simplicity that makes the process easy to do can also result in superficial SWOT analyses that focus on lists of strengths, weaknesses, opportunities, and threats without adequate evaluation of the resources possessed by the firm or its competition that make the corresponding internal strengths (firm) or competitive threat possible. When this happens, the resulting strategies may not correlate well with the firm's strengths, capabilities or the competitive landscape. Additionally, the SWOT analysis may ignore potential opportunities that could provide growth for the firm, or may strategically error by attempting to capitalize upon an opportunity that makes little sense had the competitive environment been examined in more detail.  Superficial SWOT analyses that fail to recognize key weaknesses within the firm or potential threats stemming from current or future changes in the competitive or PESTEL environments can result in poor planning that damages the firm.

To avoid these pitfalls, firms must guard against developing a culture that treats SWOT merely as a process for classifying information.  Instead, firms must strive to use the data developed the via the SWOT process in a productive manner within the overall planning process.

The most productive SWOT  analyses for marketing planning purposes are those that that take the customer's perspective. Earlier readings related to the situation analysis discussed the customer analysis, competitive analysis, internal analysis, and PESTEL analysis.  During the SWOT, it is also important to determine what customers and noncustomers perceive:

• As true about the company (it may be true, or false - perception is a reality to the consumer).

• As key benefits of the offering, such as quality, convenience, customer service, and overall value. Perceptions related to the marketing mix elements of price, distribution and marketing communications are also important.

• About how the offering fares when evaluated against competitors concerning the factors mentioned above.

Understanding the customer viewpoint also requires that the analyst review the PESTEL analysis, and determine how the trends and events identified affect both customers and noncustomers regarding the offering itself as well as its current and potential future competitors.

The most productive SWOT analysis is performed within the context of the specific product-market for which the marketing plan is developed.  The reason for this recommendation is obvious; the more specific the information, the more helpful it will be for planning purposes.  Thus firms with multiple brands or product categories don't stop once they develop a SWOT analysis at the business unit level.  Marketing managers for brands develop unique a SWOT analysis that specifically focuses on satisfying the needs of their product's targeted customers (or new markets).  This focus allows the marketer to customize the marketing mix in a manner best designed to reach the specific target market and satisfy their needs.  One would expect that the marketing plan for the consumers who purchase the Ford Focus would differ significantly from the marketing plan for consumers who buy the Ford F-150 Truck, for example.  Part of the Ford-F 150's marketing plan may involve sponsoring rodeos, fishing tournaments, or other activities associated with hauling trailers, a primary benefit sought by many truck owners.  Those who purchase a Focus would not be expecting to use the vehicle in the same manner and would have little need for this benefit.

Being productive in completing the SWOT analysis requires that specific competitors be identified beyond the brand level so that that the analyst can recognize potential threats which may be presented by product, generic, and budget level competitors.  The rationale behind this approach is to identify potential future competitors before they sneak up on the firm and do untold damage.  Currently, traditional grocery stores are bracing for increased competition from Amazon.  Amazon purchased Whole Foods in August of 2017, and speculations abound that the purchase will make Amazon' same and next day delivery service of online grocery orders more price competitive.  Amazon's growth in the online grocery industry has been slow due to limited availability in some major markets, and a premium price tag.  Prime members who use online grocery ordering are charged an extra $15 a month.  Plus, a $10 delivery charge is tacked on to orders totaling less than $50.  By purchasing Whole Foods, Amazon may be in a much better position to expand the availability of their service while potentially reducing costs to both the consumer and the firm.3

As mentioned earlier, a major benefit of the SWOT analysis occurs as a result of collaboration. Opening the lines of communication within the firm provides multiple points-of-view and access to information that the marketing manager would never achieve alone.  Listening to what other's say is important, especially when it does not agree with the analyst's preconceived notions.  Sales, advertising, promotions, PR, productions, R&D, customer service, accounting, finance, operations, inventory control, quality control and other departments provide input that can be helpful in identifying opportunities for joint projects and cross-selling of the firm's products.  More importantly, collaboration with other areas is often a key source of innovation and creativity, and can frequently be the difference between success and failure when introducing a new product, particularly one that is a radical departure from those previously marketed by the firm.4

Correctly separating internal issues from external issues requires that the analyst separate those opportunities and threats that exist independently of the firm (and which would still be present even if the firm went out of business), from internal strengths and weaknesses that are controlled by the firm.  When analysts mistakenly mix the two, they often list potential strategic actions in place of opportunities.

An opportunity may be "growing demand for {product category X} in Asian markets" and if the firm's strengths, capabilities, and competitive advantages are right, they may pursue a strategy of international expansion into Asia. Or, they may not, depending upon the level of competition, the barriers to entry, the firm's resource levels that lead to its strengths and weaknesses, and the presence and other opportunities or threats that may exist.

Based on the situation analysis, organizations analyze their strengths, weaknesses, opportunities, and threats, or conduct what’s called a SWOT analysis. See Figure 4.2 below.

Figure 4.2
Elements of the SWOT Analysis

Strengths and weaknesses are internal factors specific to the firm and are somewhat controllable by the business and its actions. An organization’s strengths might include its brand name, efficient distribution network, reputation for great service, and strong financial position, among others. A firm’s weaknesses might include lack of awareness of its products in the marketplace, a high sales force turnover, and a poor location.  These factors could be influenced by the firm's owns actions.  For example, the high sales force turnover rate could be reduced by better training, a change in the compensation system, or offering an improved, more competitive product.  Figure 4.3 below summarizes some of the possible strengths and weaknesses that may be internal to a firm or associated with a particular offering.

Figure 4.3

Potential Strengths and Weaknesses in a SWOT Analysis

When performing a SWOT analysis, the analyst must look beyond the obvious list of strengths, weaknesses, opportunities, or threats to truly understand the cause that underlies each characteristic.   Resources or a lack of resources are often at the heart of a firm's strengths or weaknesses.  Some of the major types of resources that should be evaluated as potential causes include:2

Reputational Resources:  Reputational resources include corporate and brand reputation, brand image, brand equity, brand symbols, brand name, packaging, and other factors which may impact the reputation of the brand. Additional resources include celebrity endorsers (and their behavior/antics) and product failures/crises, and how the firm successfully or unsuccessfully responds to these incidents.

Information Resources:  Customer intelligence (customer insights, knowledge of target market needs, desires, how to reach the target market effectively and efficiently, etc., competitive intelligence, marketing information systems.

Relational Resources:  Relationships with customers, supply chain partners (distributors, retailers, suppliers, vendors), other stakeholders, and strategic alliances with other firms within the U.S. or in foreign countries.  Also includes consideration of the bargaining power of various groups as well as switching costs.

Legal Resources:  Patents, trademarks, copyrights, contracts, non-disclosure agreements, exclusive rights or agreements and other legal resources.

Intellectual Resources:  Expertise, innovation, research and development, creativity, and discoveries.

Financial Resources:  Cash to fund operations and new ventures, access to financial markets (e.g., ability to raise capital, sell stock; secure loans); also includes tangible assets such as property, plants, physical facilities, equipment, raw materials, or inventory, and systems which can are convertable to financial resources.  May include intangible resources such as proprietary software, systems or configurations.

Organizational Resources:  Vision, culture, custom, shared values, routines, working relationships, organizational operations, (e.g., distribution, research, and development, production, or other functional areas) and information systems for areas other than marketing.

Human Capital Resources:  Leadership, training, commitment, employee expertise, and skills.

It's the availability, or lack of these resources which make is the cause of a firm's key strengths or weaknesses.  One of the reasons why Walmart can maintain a low-cost leader position is retail is because of their strength in low-cost distribution and logistics.  The causes behind their low-cost distribution and logistics systems include their well-formed and managed distribution system, their dominant position in relationship with vendors (which gives them a great deal of power in setting the vendors price), and their strong inventory management processes and communication infrastructure. 

When strengths help to satisfy a customer need, they become capabilities of the firm. Marketing managers seek to identify capabilities as they often form sources of competitive advantage, a key benefit that should be leveraged within the marketing plan.  Additionally, the SWOT must look beyond resources when assessing strengths and weaknesses to identify any processes that are instrumental in providing customers with the benefits they desire, or which solve solutions to the customer's problems.

It's important that strengths and weaknesses not be confused with opportunities and threats.  Opportunities and threats are factors that are external to the firm and largely outside of the firm's influence and control.  These external factors would exist even if the firm itself were no longer in business. Opportunities and threat stem from events, trends, and characteristics of the PESTEL, and competitive environments. Opportunities might result from a low number of competitors in a specific product-market being explored, or favorable socio-cultural trends that relate to the offering being a market, such as increased demand for home health care stemming from the trend of people living longer and the desire of individuals to live at home as long as they can. Threats might result from high-interest rates that increase borrowing costs, a new competitive entry into the market that better meets the needs of consumers, or one of many other factors.  Some examples of potential opportunities and threats that marketing analysts may look for are listed below in Figure 4.4.

Figure 4.4

Potential Opportunities and Threats in a SWOT Analysis

The easiest way to determine if a factor is external or internal is to take away the company, organization, or individual and see if the factor still exists. Internal factors such as strengths and weaknesses are specific to a company or individual, whereas external factors such as opportunities and threats affect multiple individuals and organizations in the marketplace.

Executives using SWOT analysis compare the internal and external factors to generate ideas about how their firm might become more successful. In general, it is wise to focus on ideas that allow a firm to leverage its strengths by focusing on capabilities while steering clear of or minimizing its weaknesses. Capitalizing on opportunities that play to the firm's capabilities is necessary if a firm is to accomplish its goals and objectives, and matching capabilities with opportunities require careful consideration.  A capability can become a competitive advantage for the firm when it provides superior value to customers than competitive offerings are capable of delivering.  In some situations, a firm may be able to able to convert a weakness into a strength (and hopefully a capability) by investing available resources strategically as needed.  For example, a firm may have abundant financial resources, but poor customer service that can become a strength by investing in training, support systems, and a relationship marketing strategy. 

Weaknesses that remains so limit the firm's ability to pursue opportunities.  Limitations are real, and cannot be ignored during the strategic planning process, just as threats must be recognized and dealt with in a manner that protects the firm or minimizes the impact of the threat.  Several years ago Subway identified untapped overseas market opportunities.  At that time, Subway’s strengths included a well-established brand name and a simple business format that was easily adapted to other cultures. In considering the opportunities offered by overseas markets and Subway’s strengths, it is not surprising that entering and expanding in different countries has been a key element of Subway’s strategy in recent years. Indeed, Subway currently has operations in over 100 nations.  Of course, other restaurant chains such as McDonald’s and KFC also see this overseas opportunity and are external threats to Subway's success5.

It is important that opportunities should not be confused with strategic options designed to capitalize on these opportunities. In the case of Subway, it would be a mistake to list “entering new countries” as an opportunity. Instead, untapped markets are the opportunity presented to Subway, and entering those markets is a way for Subway to exploit the opportunity - the strategic option to be evaluated.

In summary, marketers seek, to match strengths with opportunities, while either minimizing or avoiding weaknesses and threats.  Firms should carefully consider whether current resources can be used in a meaningful way to convert a key weakness into a strength, particularly one that provides customer value and which can become a capability of the firm.  When a capability provides greater customer value than competitors, it becomes a competitive advantage.  Firms strive to obtain competitive advantages, as they offer a sound basis for positioning the product while providing real value to consumers.

A competitive advantage results from a tangible, real difference between the firm (or brand) and its competition.  As discussed earlier, competitive advantages stem from key strengths that are capabilities tied to customer's needs, and which allow the firm to satisfy customer's need in a manner that is superior to anything the competition can provide.  Thus the sources of a firm's competitive advantage can stem from many factors.  Some of these factors are shown below in Figure 4.5:6

Figure 4.5
Potential Sources of Competitive Advantage

Generally speaking, many firms develop competitive advantage strategies based on customer intimacy, product leadership, or operational excellence.

Customer Intimacy.  Key sources of a customer intimacy competitive advantage include efficient and effective customer analysis systems, a strong customer orientation, quality products, and superior customer service.  The benefit of a well-implemented customer intimacy strategy is that it often results in highly brand loyal customers who value their relationship with the firm or brand.  Firms that develop a strategy based on a customer intimacy competitive advantage put great effort into understanding and satisfying their customer's needs better than the competition. The entire firm focuses on understanding the customer and how best to serve their needs.  Often this involves personalizing service or customizing products to meet the needs of individual consumers.  Many casinos assign employees who cater to the whims of high-rollers, for example.  The Ritz-Carlton hotel also follows a customer intimacy strategy. Interactions with the customer feature exceptional service and the rooms and restaurant typically exceed customer expectations.  Maintaining a customer intimacy competitive advantage also implies that a firm’s marketing communications do not overpromise what the offering will the deliver. Instead, a proven strategy is to delight customers by understating the benefits received.

Customer intimacy is not restricted to high-priced hotels or to casinos who wish to retain players who may gamble thousands of dollars a night.  Bundling services and products into a “solution” designed specifically for the individual customer can also be a form of customization resulting from a customer intimacy strategy.  Successfully implementing this form of customer intimacy typically requires a well-developed database, a data mining system, and a variety of partners who aid in the production and delivery of the bundled products and services.  Amazon.com has access to a massive number of vendors, and their data mining system is second to none when it comes to suggesting bundled solutions.  Essentially, the software delves through purchase records and uses pattern recognition protocols to find other items that were purchased by other consumers along with the one currently being bought by the customer, and then delivers suggestions for items which the customer may wish to purchase to at the same time.

Firms that follow a Product Leadership strategy generally share several characteristics which customers may notice when interacting with the firm:

A firm must have core competencies (superior internal strengths) in the following areas to be successful in pursuing a customer intimacy strategy:

• Exceptional skills in discovering customer needs

• Problem-solving skills

• Ability to customize products and solutions

• A customer relationship orientation and mindset

• The ability to successfully engage in collaborative (win-win) negotiation skills

Product Leadership.  Firms that excel at Product Leadership invest heavily in both technology and R&D to continuously introduce superior, high-quality products to the targeted customers.  Products may boast new features or higher levels of existing features (e.g., more memory; better camera photo quality).  Development of complementary products as part of a Product Leadership strategy is often common.  The advantage of having a competitive advantage in product leadership is that it can often lead to premium prices and greater profitability for the firm.

Key sources of this competitive advantage include not only abundant financial resources to fund research and development and technological investments, but also human capital strengths, such as exceptional or visionary leadership, access to a highly skilled labor force, teams that work well together, competent management, and strong marketing skills.  BMW and Apple are often cited as examples of firms that have excelled at Product Leadership.

Generally, firms that follow a Product Leadership strategy share several characteristics which customers may notice when interacting with the firm:

A firm must have core competencies (internal strengths) in the following areas to be successful in pursuing a product leadership strategy:

• Basic research, and rapid interpretation of research results

• Applied product development research

• Fast capitalization and development of market opportunities

• Excellent marketing skills

Operational Excellence. Firms with a competitive advantage in operational excellence can operate more efficiently and at a lower cost than their competition.  The value they deliver is price-based, stemming from lower production costs, economies of scale, lower raw material costs, lower delivery/distribution/supply chains costs, etc.   A lower cost structure means that the firm can beat competitor's prices, providing the same benefits at a lower price.

Generally, firms that follow an operational excellence strategy share several characteristics which customers may notice when interacting with the firm:

A firm must have core competencies (internal strengths) in the following areas to be successful in pursuing an operational excellence strategy:

• Dependable distribution and supply chain operations

• Low-cost operations

• Capable customer service

• Accurate forecasting and effective demand management

In summary, while some firms can execute more than one of these competitive advantage strategies, most successful firms select a single competitive advantage strategy on which to focus.  Different core competencies must be present if firms are to achieve competitive advantages in customer intimacy, product leadership or operational excellence.  Still, the target market must recognize that a competitive advantage exists before it can be of benefit to the firm.  The marketing communications used to actively create and manage customer perceptions by promoting the idea that the firm excels at whichever strategy is followed.

A strategic focus sets the overall direction for the firm's marketing strategy and is generally determined by the analyst at the end of the SWOT analysis.  It sets the stage for integrating the different marketing mix components into a coherent strategy.  Typically, the strategic focus is tied to the competitive advantage and the pursuit of opportunities. Sometimes, though, the strategic focus may change to determine how best to defend against the firm's vulnerabilities or compensate for its weaknesses in light of current competitive, customer, and environmental conditions.  The strategic focus of the firm may change over time as changes occur in the situation analysis and correspondingly throughout the SWOT analysis. Concerning strategic focus, one of the following four directions for a firm's strategic efforts may be selected to guide the overall marketing plan.

Aggressive Strategic Focus:  When the SWOT analysis reveals an abundance of internal strengths that pair well with multiple external opportunities, an aggressive strategic focus may be followed, particularly if the firm has abundant financial resources that make the exploitation of two or more opportunities feasible. Multiple marketing strategies are developed to exploit different opportunities.  Some examples include expanding into new territories or new customer markets, developing new products, capitalizing upon a growth market, etc.  Firms may develop goods and services to satisfy multiple needs among market target markets, very often in different geographic locations. Firms that succeed with aggressive strategies are often leaders in the industry, and their level of dominance in the market may be very strong.  While having an abundance of internal strengths and the corresponding core competencies and competitive advantages needed to capitalize upon multiple external opportunities would seem to offer the greatest opportunity for success, firms must be careful when selecting which opportunities to pursue.  While abundant, resources are still limited, and attempting to capitalize upon too many opportunities could easily result in overextending the company.   The firm may find that selectively pursuing the most promising opportunities offers the best use of the firm's resources while maximizing potential benefits to customers, and profitable returns to the shareholders.

Diversification Strategic Focus:  Firms that have many internal strengths, yet face many external threats, often develop a marketing strategy to diversify their business or products. Diversification helps to offset the threats faced by the firm in their current markets and businesses. Coca-Cola introduced flavored milk products as part of their product diversification strategy in India, as they continue to combat the threat of changing consumer trends that favor healthier beverages and reduced soft drink consumption.7   There are different forms of diversification which a firm may consider.

Related diversification occurs when a firm moves into a new industry that has important similarities with the firm’s existing industry or business lines.  See Figure 4.6 for one example. As another example, Google is in the information business, and in 2014 it purchased Titan Aerospace, a maker of solar-powered drones8.

Figure 4.6

The Sweet Fragrance of Success: The Brands That “Make Up” the Lauder Empire

Firms that leverage core competencies as part of the diversification strategy are likely to be more successful.  Honda Motor Company provides a good example of leveraging a core competency through related diversification. Although Honda is best known for its cars and trucks, the company started out in the motorcycle business. Through competing in this business, Honda developed a unique ability to build small and reliable engines. When executives decided to diversify into the automobile industry, Honda was successful in part because it leveraged this ability within its new business. Honda also applied its engine-building skills in the all-terrain vehicle, lawn mower, and boat motor industries. Most recently, Honda has developed an energy-efficient six-passenger HA-420 HondaJet aircraft, which is undergoing FAA approval.

Sometimes the benefits of related diversification that executives hope to enjoy are never achieved. Estée Lauder used to distribute Sean John Fragrance but divested itself of the product line. Of course, Sean John is P. Diddy, among other aliases. He continues to sell fragrances, the latest called, I Am King.

Why would a soft-drink company buy a movie studio? It’s hard to imagine the logic behind such a move, but Coca-Cola did just this when it purchased Columbia Pictures in 1982 for $750 million. The purchase is a good example of unrelated diversification, which occurs when a firm enters an industry that lacks any important similarities with the firm’s existing industry or industries. Luckily for Coca-Cola, its investment paid off—Columbia was sold to Sony for $3.4 billion just seven years later.  See Figure 4.7 for examples of unrelated diversification at Berkshire Hathaway.

Most unrelated diversification efforts, however, do not have happy endings. Harley-Davidson, for example, once tried to sell Harley-branded bottled water. Starbucks tried to diversify into offering Starbucks-branded furniture. Such initiatives are very expensive, both in terms of direct costs such as marketing and indirect costs such as executive time. However, these efforts were disasters. Although Harley-Davidson and Starbucks both enjoy iconic brands, these strategic resources simply did not transfer effectively to the bottled water and furniture businesses.  More importantly, the firms lacked competitive advantages and necessary strengths to compete effectively against better-established competitors.

As the number of smokers in the U.S. and worldwide decline, iconic lighter firm Zippo diversified into camping supplies, including LED lights, grills, and stoves as one method of combating lost sales.  While diversification efforts have been profitable, the firm has been far more successful in growing demand for custom lighters that serve as talismans or fashion statements which consumer can design online.9

Finally, a proposed diversification move should pass three tests, or it should be rejected10.

1. How attractive is the industry that a firm is considering entering? Unless the industry has strong profit potential, entering it may be very risky.

2. How much will it cost to enter the industry? Executives need to be sure that their firm can recoup the expenses that it absorbs to diversify.

3. Will the new unit and the firm be better off? Unless the answer is yes, avoid diversification.

Figure 4.7

Unrelated Diversification at Berkshire Hathaway

Turnaround Strategic Focus.  If firms find themselves in a position where too many internal weaknesses and problems prevent them from pursuing the many external opportunities that exist, a turnaround strategy is often the answer.  Typically this means the firm must fix the cause of the weaknesses and existing problems before it can hope to consider pursuing new opportunities.  Firms that follow a turnaround strategy may focus on11:

• Achieving cost efficiencies that among other things may include reducing R&D expenditures, reducing inventory, pursuing accounts receivables, eliminating pay raises, and reducing the marketing budget.  Such actions are often among the first steps taken as part of a recovery turnaround strategy, though relying on cost reductions alone is rarely successful in the long-term and can lead to higher employee turnover and decreased morale.  There is also an inherent danger in cutting investments to R&D, as doing so hampers R&D from becoming part of the Turnaround solution.

• Asset retrenchment typically occurs simultaneously with cost efficiencies or follows this process.  This process involves evaluating underperforming assets to see if they should be sold off, or retained and allowed to perform at less than optimal levels.  For example, if older, less efficient equipment could be sold to help fund the purchase of state of the equipment that would ultimately pay for itself via lower production costs, asset retrenchment may make sense.

• Focusing on core activities involves determining the customers, markets, and products that offer the greatest profits, and refocusing the firm's limited resources on these core areas.  Brands with high equity and loyal consumers have often spurred turnarounds, and customer relationship marketing strategies are often crucial in successfully generating the sales and loyalty necessary for this type of turnaround strategy to succeed.

• Building for the future may become the new turnaround strategic focus once the first three options discussed have helped to stabilize the financial position of the firm.  It's at this point that the recovery often begins.  The firm moves away from a model of day-to-day survival an back towards a planning process that focuses on a longer horizon.  Existing resources are leveraged to broaden the product line or to take advantage of new opportunities which frequently involve expanding into new geographic markets or developing new products.

Process-oriented turnaround strategies may also be of value to the firm.

• Changing the CEO occurs commonly when firms are in trouble and seeking turnaround; in fact, some CEOs specialize in leading firms through turnarounds.  Charismatic leaders are especially effective at motivating employees and reassuring the public.  CEOs are fired and replaced when the incumbent is unwilling or unable to recognize that problems exist, and as a sign of change, as the Board of Director's ultimately holds the CEO responsible for the success or failure of the firm.

• Changing top management also signals changes to investors and employers, and is deemed essential by many experts if a true turnaround it to be successful.

• Organizational culture change may be necessary to challenge existing beliefs which are no longer relevant and change attitudes which are inhibiting the firm's change.

Defensive Strategic Focus.  The worst position a firm can face is being battered by external threats and competition while being overwhelmed by internal problems and weaknesses. Defending existing market share becomes increasingly important.  Developing exclusive arrangements with retailers or other key supply chain members can be helpful.  Price matching may be necessary to prevent competitors from stealing customers.  Matching or "one-upping" the competition concerning new products features or services is sometimes possible.  Alternately, the firm might focus on defending a small, but profitable niche market segment. These are just a few examples of how a strategic defensive focus might influence the marketing mix elements.

The selection and articulation of the strategic focus are important because it not only provides a guide for marketing strategy, it also sets the stage for developing the marketing goals and objectives.  Similar to the goals previously discussed, marketing objectives should be SMART - specific, measurable, achievable, realistic, and timely.  They must also be consistent with the goals and objectives set for the SBU, and with the mission, and corporate goals set for the firm.

As you will learn when we discuss marketing implementation, marketing objectives are tied closely to key performance indicators. Key performance indicators are monitoring variables which are used to evaluate the success or failure of the marketing plan  A single marketing goal, such as "increase brand X's market share," may require multiple specific marketing objectives. For example, "The sales force will increase the number of grocery retailers carrying brand X by 10% during the 2018 business year" and "an overall coupon redemption rate of 5% will be achieved during the coupon campaigns" are two objectives that may both help to increase market share. Multiple objectives are necessary as many actions can contribute to increasing marketing, and both of the examples listed contribute in their own way to the overarching goal of increasing brand X's market share.  Often objectives are assigned to specific departments (e.g., sales, advertising, etc.) or individuals within the integrated marketing communications (IMC) departments. Objectives are frequently tied to media or consumer behavior.  "The marketing plan will achieve a 40% average repurchase rate of the offering among its target market by December 31st, 2019." or "500 new likes will be captured for the product's Facebook page by December 31, 2018."

The following outline puts the remaining elements of the Marketing Plan into context.

Figure 4.8
The Structure of the Marketing Plan

I.  Executive Summary

II.  Situation Analysis

1. The Internal Analysis

2. The Customer Environment

3. The External Environment (PESTEL analysis)

4. The Competitive Environment
   

III.  SWOT analysis

A. Strengths

B.  Weaknesses

C.  Opportunities

D.  Threats

E. Analysis of SWOT Elements

F.  Developing a Competitive Advantage

G. Selection of a Strategic Focus

IV.  Marketing Goals and Objectives

A.  Marketing Goals
B.  Marketing Objectives

V.  Marketing Strategy

A.  Primary (and secondary) Target Market
B. Overall branding strategy
C. Product strategy
D. Pricing strategy
E.  Distribution and supply chain strategy
F. Integrated marketing communications strategy

VI.  Marketing Implementation

A.  Structural Issues
B.  Tactical Issues

VII. Evaluation and Control

A.  Controls
B.  Implementation Schedule and Timeline
C. Marketing Audits

This concludes the discussion of the SWOT analysis, competitive advantage, strategic focus, and marketing objectives. Future chapters will discuss the remaining topic illustrated in Table 4.7 in more detail.

1. Ferrell, O.C.  and Michael Hartline (2014). Marketing Strategy: Text and Cases, 6th Edition, South-western Publishing' Cengage Learning.

2. This list and most of this section are based on E. K. Valentin, "SWOT Analysis from A resource-Based View," Journal of Marketing Theory and Practice, 9 (Spring 2001), 54-69.

3. Jhonsa, Eric (2017, December 25). "7 Bold Amazon Predictions for 2018," thestreet.com, retrieved from https://www.thestreet.com/story/14429680/1/7-big-amazon-predictions-for-2018.html, January 12, 2018.

4. Ferrell, O.C.  and Michael Hartline (2014). Marketing Strategy: Text and Cases, 6th Edition, South-western Publishing' Cengage Learning.

5. Wikipedia. (2014). Subway (Restaurant). Retrieved from http://en.wikipedia.org/wiki/Subway_(restaurant)

6. This table and most of this section, including the characteristics and core competencies is based on Ferell, O.C.  and Michael Hartline (2014). Marketing Strategy: Text and Cases, 6th Edition, South-western Publishing' Cengage Learning.

7.  Team, Trevis, (February 25, 2016). "How Coca Cola Is Continuing Its Product Diversification Strategy," www.Forbes.com, retrieved from https://www.forbes.com/sites/greatspeculations/2016/02/25/how-coca-cola-is-continuing-its-portfolio-diversification-strategy/#470074a02adf, January 15, 2018.

8. Mack, E. (2014, April 14).  Google Confirms Purchase Of Titan Aerospace For Data Drone Effort, Forbes.  Retrieved from http://www.forbes.com/sites/ericmack/2014/04/14/google-reportedly-buying-solar-drone-maker-not-facebook/

9. Brown, Abram (2014, August 20). "America Doesn't Smoke Much Anymore.  So How is Zippo Manufacturing Having its Best Years Ever?", Forbes.com, https://www.forbes.com/sites/abrambrown/2014/08/20/america-doesnt-smoke-much-anymore-so-how-is-the-zippo-manufacturing-co-having-its-best-years-ever/#2bb4987d7d73, retrieved January 15, 2018.

10. Porter, M. E. (1987). From competitive advantage to corporate strategy. Harvard Business Review, 65(3), 102–121.

11. Varghese, Jacob (2018, April, 2014), Checklist of Some Offensive ad Defensive Competitive Strategies for International Business. Tradeready.ca, retrieved from http://www.tradeready.ca/