Evaluating Opportunities in the Changing Marketing Environment Chapter Four.
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Transcript of Evaluating Opportunities in the Changing Marketing Environment Chapter Four.
Evaluating Opportunities in the Changing Marketing Environment
Chapter FourChapter Four
Mission Statement Provides Guidance
• Mission statement helps set the course of a firm by explicitly stating the organization’s basic purpose for being– May make it clear that some opportunities (target market or
marketing mix alternatives) are not related to the mission– Some opportunities may be a good fit with mission, but not
as good a fit or as high a priority as others• Mission statement works in combination with specific
objectives and should relate to screening criteria used to evaluate strategy alternatives
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
Mission Statement Provides Guidelines
• Mission statement - the organization’s basic purpose for being
• Mission statement - works in combination with specific objectives to evaluate strategy alternatives
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
Resourcesand Objectives
of the Firm
CompetitiveEnvironment
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
The Marketing Environment
Cultural andSocial
Environment
EconomicEnvironment
TechnologicalEnvironment
Political andLegal Environment
Direct Market Environment
External Market Environment
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
Socially and Economically
Useful Functions
Socially and Economically
Useful Functions
Socially and Economically
Useful Functions
Socially and Economically
Useful Functions
Develop an OrganizationDevelop an
OrganizationDevelop an
OrganizationDevelop an
Organization
Earn ProfitEarn Profit
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Objective’s Should Set Firm’s Course
ThreeBasic Objectives
ProvideGuidelines
ThreeBasic Objectives
ProvideGuidelines
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
Mission Statement Provides Guidelines
Company Objectives
Company Objectives
Production Objectives
Production Objectives
Finance Objectives
Finance Objectives
Marketing Objectives
Marketing Objectives
HR Objectives
HR Objectives
R&D Objectives
R&D Objectives
Mission Statement and Objectives
MissionStatementMission
Statement
Product Objectives
Product Objectives
Place Objectives
Place Objectives
Price Objectives
Price Objectives
Production Objectives
Production Objectives
Finance Objectives
Finance Objectives
HR Objectives
HR Objectives
R&D Objectives
R&D Objectives
Promotion Objectives
Promotion Objectives
Personal Selling Objectives
Personal Selling Objectives
Mass Selling Objectives
Mass Selling Objectives
Sales Promotion Objectives
Sales Promotion Objectives
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
Mission Statement Provides Guidelines
Financial StrengthFinancial StrengthFinancial StrengthFinancial Strength
Producing Capability and Flexibility
Producing Capability and Flexibility
Company Resources May Limit Search for Opportunities
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Producing Capability and Flexibility
Producing Capability and Flexibility
Marketing StrengthsMarketing Strengths
Examples of Company Resources
• Financial strength (Intel)
• Producing flexibility (DaimlerChrysler)
• Patents (IBM)
• Channel relationships (Kraft)
• Loyal customer base (Coke)
• Technical capability (3M)
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
Examples of Company Resources
• Financial strength (AT&T)
• Producing flexibility (Chrysler)
• Patents (IBM)
• Channel relationships (Kraft)
• Loyal customer base (Coke)
• Technical capability (3M)
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
Basic Objectives Provide Guidelines
MonopolyMonopoly Monopolistic CompetitionMonopolistic Competition OligopolyOligopolyMonopolyMonopoly Monopolistic CompetitionMonopolistic Competition OligopolyOligopoly
The Competitive Environment
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Avoid HeadAvoid Head--On Competition!On Competition!
Know the Market Situation!Know the Market Situation!
Pure Competition
Pure Competition
Courtesy Harley-Davidson Motor Company—for use only with Essentials of Marketing
Competitive Advantage
Competitive Advantage
Competitive Rivals
Competitive Rivals
Competitor Analysis
Competitor Analysis
KeyConcepts
KeyConcepts
Competitive Rivals
Competitive Rivals
Competitive Advantage
Competitive Advantage
Competitor Analysis
Competitor Analysis
Analyzing Competition
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Competitive Barriers
Competitive Barriers
Competitor Analysis: Disposable Diaper Competition in Japan
P&G’s Current andPlanned Strategy
Kao’s Strengths (+) andWeaknesses (-)
Uni-Charm’s Strengths(+) and Weaknesses (-)
Target Market(s)Upscale, modern parents whocan afford disposable diapers
Same as for P&G
Same as for P&G, but alsobudget-conscious segmentthat includes cloth diaper
users (+)
ProductImproved fit and absorbency
(+); brand name imageryweak in Japan (-)
Brand familiarity (+); but nolonger the best performance
(-)
Two brands- for differentmarket segments- and more
convenient package withhandles (+)
Place
Distribution throughindependent wholesalers to
both food and drugstores (+),but handled by fewer retailers
(-)
Close relations with andcontrol over wholesalers whocarry only Kao products(+);
computerized inventoryreorder system (+)
Distribution through 80% offood stores in best locations
(+); shelf space for two brands(+)
Promotion
Heaviest spending on daytimeTV, heavy sales promotion,including free samples (+);
small sales force (-)
Large efficient sales force (+);lowest advertising spending (-) and out-of-date ad claims (-)
Advertising spending high(+); effective ads that appeal
to Japanese mothers (+)
PriceHigh retail price (-) but lowerunit price for larger quanities
(+)
Highest retail price (-), butalso best margins for
wholesalers and retailers (+)
Lowest available retail price(+);price of premium brand
comparable to P&G (-)(Potential) Competitive
BarriersParent protection (+), limits inaccess to retail shelf space (-)
Inferior product (-), excellentlogistics support system (+)
Economies of scale and lowercosts (+); loyal customers (+)
Likely response(s)
Improve wholesaler andretailer margins; faster
deliveries in channel; changepackage to require less shelf
space
Press retailers to increase in-store promotion; change
advertising and/or improveproduct
Increase short-term salespromotions; but if P&G takes
customers, cut price onpremium brand
©2001 Hertz System, Inc. Hertz is a registered service mark and trademark of Hertz System, Inc. —for use only with Essentials of Marketing
The Political Environment
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Regional Economic Groupings
Regional Economic Groupings
NationalismNationalism
ConsumerismConsumerism
Characteristicsof the PoliticalEnvironment
Characteristicsof the PoliticalEnvironment
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
Major Focus of Some Important Lawsthat Affect Marketing
• Sherman Act (1890)
– prohibits conspiracy to reduce competition
– example: price "fixing" agreements among competing firms
• Federal Trade Commission Act (1914)
– prohibits unfair methods of competition
– example: use of deceptive advertising
• Robinson-Patman Act (1936)
– prohibits most types of price-related discrimination
– example: offering "advertising allowances" to some middlemen but not others (without cost justification)
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
Exhibit 4-2
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
The Legal Environment
+
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
Some Important U.S. Federal RegulatoryAgencies
AgenciesAgencies ResponsibilitiesResponsibilities
Federal Trade Commission (FTC)Federal Trade Commission (FTC) Enforces laws and develops guidelines regarding unfair business practices
Enforces laws and develops guidelines regarding unfair business practices
Food and Drug Administration (FDA)Food and Drug Administration (FDA) Enforces laws and develops regulations to prevent distribution and sale of adulterated or misbranded foods, drugs, cosmetics, and hazardous consumer products
Enforces laws and develops regulations to prevent distribution and sale of adulterated or misbranded foods, drugs, cosmetics, and hazardous consumer products
Consumer Product Safety Commission (CPSC)
Consumer Product Safety Commission (CPSC)
Enforces the Consumer Product Safety Act—which covers any consumer product not assigned to other regulatory agencies
Enforces the Consumer Product Safety Act—which covers any consumer product not assigned to other regulatory agencies
Federal Communications Commission (FCC)Federal Communications Commission (FCC) Regulates interstate wire, radio, television, and telephone
Regulates interstate wire, radio, television, and telephone
Environmental Protection Agency (EPA)Environmental Protection Agency (EPA) Develops and enforces environmental protection standards
Develops and enforces environmental protection standards
Office of Consumer Affairs (OCA)Office of Consumer Affairs (OCA) Handles consumers’ complaintsHandles consumers’ complaints
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
Examples of Changes in the Political/Legal Environment
• Deregulation of energy industries
• Less emphasis on antitrust laws by federal government
• Maturing of consumerism
• More attention to laws governing international trade
• Changes in labeling requirements
Courtesy of CNN—for use only with Essentials of Marketing
CNN ad
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
“Let the Seller Beware”“Let the Seller Beware”
Consumer Protection
Examples of Effect of Technological Environment
• Rapid changes in the Internet and World Wide Web
• Robotics (better quality control, lower production costs)
• Computer scanners at retail check-out counters
• Worldwide satellites for data communication
• Automated inventory control
• Electronic fuel injection on automobiles
• Cellular phones and fax machines for communication
Examples of Trends in the Cultural Environment
• More women in the work force
• "Aging" of America, but accompanied by new growth in the “teen” group
• More single-person households
• More health consciousness
• More concern about the environment
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
Examples of Effect of Technological Environment
• Rapid changes in the Internet and World Wide Web
• Robotics (better quality control, lower production costs)
• Computer scanners at retail check-out counters
• Worldwide satellites for data communication
• Automated inventory control
• Electronic fuel injection on automobiles
• Cellular phones and fax machines for communication
Other CountriesOther Countries
Current PopulationCurrent Population
Other CountriesOther Countries
Current PopulationCurrent Population
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
People with Money Make Markets
Search for Growing Markets
Population TrendPopulation Trend
www.demographicsnow.com
Age Distribution
• Average age is increasing
• But there is a big teen cycle under way
• Post World War II "Baby Boomers“– Still a big, influential group
• 50 and older group to grow dramatically in next decade
Median Family Income, Over Time (in 2001 dollars)
0
10,000
20,000
30,000
40,000
50,000
60,000
196019
6219
6419
6619
6819
7019
7219
7419
7619
7819
8019
8219
8419
8619
8819
9019
9219
9419
9619
9820
00
Income Distribution• Growth in real income has slowed down• Middle income groups in U.S. enjoy real choices
– U.S. distribution like Canada, Western Europe, Japan, Australia, New Zealand
• Higher income groups still have much of the spending power– Top 20% income group has over 47 percent of
total income!– Bottom 20% income group has only about 4
percent!
Percent of Total Income Going to Different Income Groups in 2001
4.2
9.7
15.4
22.9
47.7
0 20 40 60
Lowest 20%
Middle
Top 20%
Each Group's Percent of Total Income
Note: the 20 percent of all families who have the lowestincomes account for only 4.2% of total income; the20% with the highest incomes have 47.7 percent--
a 10-fold difference between the “haves” and “have-nots”
GE's Strategic Planning Grid
• A way of organizing business judgments about existing and/or proposed product-market plans
• Business Strengths Dimension– Company size, market share– Profit margins– Technology position– Limiting factors (personnel, capital needed, etc.)
• Industry Attractiveness Dimension– Size of market and growth trends– Competitive situation– Social impact– Industry profitability
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
General Electric’s Strategic Planning GridExhibit 4-9