CHAPTER FOUR

Evaluating Opportunities in the Changing Marketing Environment

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When we finish this lecture you should

1. 2. 3. 4. 5.

Know the variables that shape the environment of marketing strategy planning. Understand why company objectives are important in guiding marketing strategy planning. See how the resources of a firm affect the search for opportunities. Know how the different kinds of competitive situations affect strategy planning. Understand how the economic and technological environment can affect strategy planning.

When we finish this lecture you should

6. 7.

Know why you might be sent to prison if you ignore the political and legal environment. Understand how to screen and evaluate marketing strategy opportunities.

Marketing Strategy Planning, Competitors, Company, & External Market Environment (Exhibit 4-1)
External market environment, company, and competitors are key elements that must be factored in as the firm develops its marketing mix.

Direct market environment

Marketing Strategy Planning, Competitors, Company, & External Market Environment (Exhibit 4-1)
e.g. Nestle going into bottled water business

Direct market environment

Company Objectives Resources

Competitors Current Prospective

External Marketing Environment Economic Technological Political & Legal Cultural & Social

Evaluating Opportunities Screening criteria Planning grids Planning for multiple products

YouTube: Self-driving car

Best opportunities to pursue

Top 10 trends

The Marketing Environment

Resources and Objectives of the Firm Customers Competitive Environment

Direct Marketing Environment

Cultural and Social Environment

Target

Economic Environment

Political and Legal Environment

External Marketing Environment

Technological Environment

Direct Marketing Environment

Company Objectives Resources

Competitors Current Prospective

Objectives Set Firms Course

Three Basic Objectives Provide Guidelines

Socially and Economically Useful Function

Develop an Organization

Earn Profit

Socially and Economically Useful Function

Make a guess.
Which company has a social objective in improving lives in every community they touch? Coca-Cola Which company has an agenda that states balanced active lifestyles for all their customers? McDonalds

Hierarchy of Objectives (Exhibit 4-2)

Mission Statement
Company Objectives E.g. to be the premier purveyor of the finest coffee in the world Starbucks

Production Objectives

Finance Objectives

Marketing Objectives

HR Objectives

R&D Objectives

Product Objectives

Place Objectives

Promotion Objectives

Price Objectives

Personal Selling Objectives

Mass Selling Objectives

Sales Promotion Objectives

Company Resources May Limit Search for Opportunities

e.g. Google bought Youtube, MSN bought Hotmail Latest: Krafts acquired Cadbury chocs

Financial Strength

Producing Capability and Flexibility

Marketing Strengths
e.g. Frito-Lay, added cookies to its traditional line of salty snacks

SWOT Analysis
A scan of the internal and external environment is an important part of the strategic planning process. Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis. The SWOT analysis provides information that is helpful in matching the firm's resources and capabilities to the competitive environment in which it operates. As such, it is instrumental in strategy formulation and selection.

SWOT Analysis Framework

Environmental Scan
/ Internal Analysis /\ Strengths Weaknesses \ External Analysis /\ Opportunities Threats

|
SWOT Matrix

Marketing Strengths

The Competitive Environment

Competition can be from direct or indirect competitors

Avoid Head-On Competition! Know the Market Situation!

Monopolistic Competition Pure Competition

Monopoly

Oligopoly

Monopolistic Competition

Analyzing Competition

Competitor Analysis Key Concepts

Competitive Advantage

Competitive Barriers

Competitive Rivals

Marketers Need Information About Competitors

Seek Information About Competitors

Ethical Issues

Competition May Vary From Country To Country Direct Competition Cant Always Be Avoided

External Marketing Environment

Economic Technological Political & Legal Cultural & Social

The Economic Environment

Many retail brands are produced overseas

Global Economy

Rapid Change

Key Economic Forces

Interest Rates

e.g. 7-11 booming business during this recession

The Technological Environment

No one offers your business more selection than the computer store inside your computer.
EGGHEAD.COM

YouTube: Minority Report Trailer

YouTube: Minority Report Touch screen

The Political Environment

Nationalism Characteristics of the Political Environment

Regional Economic Groupings

E.g. NAFTA EU

Consumerism

The Legal Environment Key Antimonopoly Laws

Sherman Act (1890) Clayton Act (1914) Federal Trade Commission (1914) Robinson-Patman Act (1936) Wheeler-Lea Amendment (1938) Antimerger Act (1950) Magnuson-Moss Act (1975)

The Legal Environment Consumer Protection Agencies

Federal Trade Commission (FTC) Food and Drug Administration (FDA) Consumer Product Safety Commission (CPSC) Federal Communications Commission (FCC) Environmental Protection Agency (EPA)

Let the Seller Beware Latest legal issue

The Cultural and Social Environment

Screening Criteria Narrow Down Strategies

(Exhibit 4-6)

comparing ROIs

Product A Sales

Product B Sales Total cost

Dollars

Total cost

Years

Years

Evaluating Opportunities in International Markets

(Exhibit 4-8)

Insensitive
Industrial products Basic commodity-type consumer products

Sensitive
Consumer products that are linked to cultural variables

e.g. German Tech Parking vs Chinese Tech Parking

You now

1. 2. 3. 4. 5.

Know the variables that shape the environment of marketing strategy planning. Understand why company objectives are important in guiding marketing strategy planning. See how the resources of a firm affect the search for opportunities. Know how the different kinds of competitive situations affect strategy planning. Understand how the economic and technological environment can affect strategy planning.

You now

6. 7.

Know why you might be sent to prison if you ignore the political and legal environment. Understand how to screen and evaluate marketing strategy opportunities.

Key Terms

Mission statement Competitive environment Competitor analysis Competitive rivals Competitive barriers Economic and technological environment Technology Internet Nationalism

North American Free Trade Agreement (NAFTA) Consumerism Cultural and social environment Strategic business unit (SBU) Portfolio management