mktg 370 the marketing environment lars perner, instructor 1 the marketing environment and marketing...

MKTG 370 THE MARKETING ENVIRONMENT Lars Perner, Instructor 1

The Marketing Environment andThe Marketing Environment andMarketing StrategyMarketing Strategy

Environmental Environmental scanningscanning

Environmental forcesEnvironmental forces SocialSocial EconomicEconomic TechnologicalTechnological CompetitiveCompetitive RegulatoryRegulatory

Strategic PlanningStrategic Planning– PurposesPurposes– Objectives and Objectives and

challengeschallenges Business-Unit Business-Unit

Strategies--core Strategies--core competenciescompetencies

Issues in creating a Issues in creating a strategystrategy

Choosing your battles Choosing your battles carefullycarefully


The Marketing EnvironmentThe Marketing Environment

The importance of The importance of the environmentthe environment

Some forces and Some forces and their implicationstheir implications– e.g., truth in e.g., truth in

lending laws; lending laws; antitrust laws, antitrust laws, economic cycles; economic cycles; changing changing demographicsdemographics


Environmental Scanning and Environmental Scanning and AnalysisAnalysis

SCANNING ANALYSIS

ACTION


Elements of The EnvironmentElements of The Environment

SocialSocial EconomicEconomic TechnologicalTechnological CompetitiveCompetitive RegulatoryRegulatory


Social ForcesSocial Forces

Demographics—Demographics—moremore– Older citizensOlder citizens– Unmarried singlesUnmarried singles– ImmigrantsImmigrants– Ethnic diversityEthnic diversity

Family changesFamily changes– ““Blended” familiesBlended” families– Non-traditional Non-traditional

householdshouseholds

Cultural changesCultural changes– Roles of womenRoles of women– ValuesValues

E.g., fitnessE.g., fitness Longer work hours for Longer work hours for

some; yet also more some; yet also more people working part people working part timetime

Changing cultural Changing cultural standards (e.g., were standards (e.g., were Beatle members’ Beatle members’ haircuts haircuts thatthat offensive?)offensive?)


Economic ForcesEconomic Forces

Consumer IncomeConsumer Income– Nominal vs. Nominal vs.

inflation adjustedinflation adjusted– Impact of inflationImpact of inflation– Disposable vs. pre-Disposable vs. pre-

tax incometax income– Discretionary Discretionary

incomeincome– Regional influencesRegional influences– Economic cyclesEconomic cycles

“Teach a parrot to say ‘supply”and ‘demand” and you have a learned economist!” Paul Samuelson.


Economic CyclesEconomic CyclesState of Cycle Good Aspects Bad Aspects

Prosperity Affluence; high employment

Danger of inflation; high interest rates

“Soft Landing”

Dangers of inflation reduced

Layoffs

Recession Lower interest rates; low levels of inflation

Low growth (vicious cycle); job loss

Depression May be able to get bargains

Vicious cycle; severe job loss

Recovery Economic growth; job growth

Rising interest rates; inflation


Technological ForcesTechnological Forces

Changes in technology may Changes in technology may make business obsolete; e.g.,make business obsolete; e.g.,– buggy whips (automobile)buggy whips (automobile)– airport at Gander, airport at Gander,

Newfoundland (longer range Newfoundland (longer range aircraft)aircraft)

– Federal Express (fax machine; Federal Express (fax machine; Internet)Internet)

New opportunities—e.g., New opportunities—e.g., specialty online retailers, specialty online retailers, mass customizationmass customization


CompetitionCompetition

LevelsLevels– Discretionary incomeDiscretionary income– Product competitionProduct competition– Brand competitionBrand competition

Market structuresMarket structures– MonopolyMonopoly (e.g., electric power) (e.g., electric power)– OligopolyOligopoly (e.g., cars, OPEC) (e.g., cars, OPEC)– Monopolistic competitionMonopolistic competition (e.g., (e.g.,

supermarkets)supermarkets)– Pure competitionPure competition (commodities; (commodities;

e.g., e.g., Competition Competition

– benefits the consumerbenefits the consumer– is increasingly globalis increasingly global


Issues in CompetitionIssues in Competition

Barriers to entryBarriers to entry– FinancialFinancial– TechnologicalTechnological– Intellectual propertyIntellectual property– Brand recognitionBrand recognition– Running businessesRunning businesses– Distribution Distribution

channelschannels– Other asset (e.g., Other asset (e.g.,

landing rights)landing rights)

Power ofPower of– BuyersBuyers

Substitutes availableSubstitutes available– DirectDirect– IndirectIndirect

– SuppliersSuppliers

Existing competitors Existing competitors and substitutesand substitutes

Potential Potential competition—DO competition—DO NOT underestimate!NOT underestimate!


Political ForcesPolitical Forces

Lobbying byLobbying by– business groupsbusiness groups

(e.g., honey lobby)(e.g., honey lobby)– consumer/consumer/

politicalpolitical groups groups (e.g., labor unions; (e.g., labor unions; senior lobby)senior lobby)

– foreign interestsforeign interests


Legal and Regulatory Legal and Regulatory EnvironmentEnvironment

Laws and RegulationsLaws and Regulations– for safetyfor safety– for consumer protectionfor consumer protection– to protect special intereststo protect special interests

Dangers of litigationDangers of litigation----anyone anyone can sue, and juries often buy it!can sue, and juries often buy it!

Examples:Examples:– Antitrust Antitrust

Fair competitionFair competition PricingPricing

– ““Truth in Lending”Truth in Lending”--have to tell --have to tell people real costs of financing; car people real costs of financing; car leases now regulatedleases now regulated


Antitrust LawAntitrust Law

ProvisionsProvisions– Must compete fairlyMust compete fairly; no; no

collusioncollusion predationpredation

– Must not abuse market powerMust not abuse market power; no; no ““excessive” market shareexcessive” market share ““tyingtying”--requiring people to buy a less ”--requiring people to buy a less

desired item to get a desired one; e.g.,desired item to get a desired one; e.g.,– must buy service to get Xerox copiermust buy service to get Xerox copier– Ford only drilled a slot if you bought a Ford only drilled a slot if you bought a

radioradio

No, now thatyou mentionit, I don’ttrust you!


StrategyStrategy

Plan Plan – to achieve desired objectives (e.g., to achieve desired objectives (e.g.,

profit, market share)profit, market share)– based on available resources (e.g., based on available resources (e.g.,

financial, patents, trademarks, people, financial, patents, trademarks, people, brand name/image , distribution brand name/image , distribution channels) channels)

– subject to choices made (e.g., subject to choices made (e.g., willingness to take risk, short run vs. willingness to take risk, short run vs. long run goals)long run goals)


Strategy, Marketing, and the Strategy, Marketing, and the OrganizationOrganization

DESIRED OUTCOMES

STRATEGY

RESEARCH,ANALYSIS

AND PLANNING

IMPLEMENTATION

EVALUATIONRESULTS


Dimensions of StrategyDimensions of Strategy

Ultimate organizational objectiveUltimate organizational objective– ProfitProfit– Non-profitNon-profit

LevelLevel– CorporateCorporate– Business UnitBusiness Unit– FunctionalFunctional


Some Issues in StrategySome Issues in Strategy

The BusinessThe Business– What is it?What is it?– Should not define too Should not define too

narrowly or too broadlynarrowly or too broadly

The MissionThe Mission– ScopeScope– CustomersCustomers– MarketsMarkets– TechnologyTechnology– ValuesValues

Values and cultureValues and culture Goals and Goals and

objectivesobjectives– ProfitProfit– RevenueRevenue– Market shareMarket share– Unit salesUnit sales– Employee welfareEmployee welfare– Social responsibilitySocial responsibility– Technological Technological

leadershipleadership– OtherOther


Considerations in StrategiesConsiderations in Strategies

CustomersCustomers CompetenciesCompetencies CompetitorsCompetitors


Demand Demand measurement/foremeasurement/forecastingcasting

Market Market segmentationsegmentation

Target marketingTarget marketing Market positioningMarket positioning

Selecting Target ConsumersSelecting Target Consumers


The Boston Consulting Group The Boston Consulting Group (BCG) Matrix(BCG) Matrix

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin


Strengths, Weaknesses, Opportunities, Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysisand Threats (SWOT) Analysis

STRATEGY

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS


SWOT--MicrosoftSWOT--Microsoft

StrengthsStrengths– TechnologyTechnology– Market shareMarket share– Barriers to entryBarriers to entry– Brand nameBrand name– CashCash

WeaknessesWeaknesses– Non-Windows Non-Windows

division (e.g., MSN, division (e.g., MSN, games)games)

OpportunitiesOpportunities– HardwareHardware

e.g., home networkse.g., home networks

– ServicesServices ThreatsThreats

– RecessionRecession– LegalLegal– RegulatoryRegulatory


Microsoft: ImplicationsMicrosoft: Implications

Decision on Decision on whether to stay in whether to stay in – ISP businessISP business– Game businessGame business

If the decision is to If the decision is to stay:stay:– Should more Should more

resources be resources be invested?invested?

– Possible focus or Possible focus or differentiation?differentiation?

Dealing with Dealing with decline in demand decline in demand due to recessiondue to recession– Price cuts?Price cuts?– ““Hold out?”Hold out?”

Political relations to Political relations to limit future legal limit future legal problemsproblems


SMAC Criteria for Strategic SMAC Criteria for Strategic PlansPlans

SpecificSpecific MeasurableMeasurable AchievableAchievable ConsistentConsistent

mktg 370 the marketing environment lars perner, instructor 1 the marketing environment and marketing...

Documents

regulatory environment

global slide

mass customization slide

technological forces

competition barriers

social forces demographics

political forces

opec monopolistic competition