The Marketing Environment and Marketing Strategy

Environmental scanning Environmental forces Social Economic Technological Competitive Regulatory

Strategic Planning
Purposes Objectives and challenges

Business-Unit Strategies--core competencies Issues in creating a strategy Choosing your battles carefully
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MKTG 370

THE MARKETING ENVIRONMENT

Lars Perner, Instructor

The Marketing Environment

The importance of the environment Some forces and their implications

e.g., truth in lending laws; antitrust laws, economic cycles; changing demographics

MKTG 370

THE MARKETING ENVIRONMENT

Lars Perner, Instructor

Environmental Scanning and Analysis

SCANNING

ANALYSIS

ACTION
MKTG 370

THE MARKETING ENVIRONMENT

Lars Perner, Instructor

Elements of The Environment

Social Economic Technological Competitive Regulatory

MKTG 370

THE MARKETING ENVIRONMENT

Lars Perner, Instructor

Social Forces

Demographics more
Older citizens Unmarried singles Immigrants Ethnic diversity

Cultural changes
Roles of women Values

E.g., fitness

Family changes
Blended families Non-traditional households

Longer work hours for some; yet also more people working part time Changing cultural standards (e.g., were Beatle members haircuts that offensive?)
Lars Perner, Instructor

MKTG 370

THE MARKETING ENVIRONMENT

Economic Forces

Consumer Income
Nominal vs. inflation adjusted Impact of inflation Disposable vs. pretax income Discretionary income Regional influences Economic cycles

Teach a parrot to say supply and demand and you have a learned economist! Paul Samuelson.
Lars Perner, Instructor

MKTG 370

THE MARKETING ENVIRONMENT

Economic Cycles
State of Cycle Good Aspects Bad Aspects Prosperity Soft Landing Recession Depression Recovery
Affluence; high employment Dangers of inflation reduced Lower interest rates; low levels of inflation May be able to get bargains Economic growth; job growth Danger of inflation; high interest rates Layoffs Low growth (vicious cycle); job loss Vicious cycle; severe job loss Rising interest rates; inflation

MKTG 370

THE MARKETING ENVIRONMENT

Lars Perner, Instructor

Technological Forces

Changes in technology may make business obsolete; e.g.,

buggy whips (automobile) airport at Gander, Newfoundland (longer range aircraft) Federal Express (fax machine; Internet)

New opportunitiese.g., specialty online retailers, mass customization

Lars Perner, Instructor

MKTG 370

THE MARKETING ENVIRONMENT

Competition

Levels

Market structures

Discretionary income Product competition Brand competition

Monopoly (e.g., electric power) Oligopoly (e.g., cars, OPEC) Monopolistic competition (e.g., supermarkets) Pure competition (commodities; e.g., benefits the consumer is increasingly global

Competition

MKTG 370

THE MARKETING ENVIRONMENT

Lars Perner, Instructor

Issues in Competition

Barriers to entry
Financial Technological Intellectual property Brand recognition Running businesses Distribution channels Other asset (e.g., landing rights)

Power of
Buyers

Substitutes available
Direct Indirect

Suppliers

Existing competitors and substitutes Potential competitionDO NOT underestimate!

Lars Perner, Instructor

MKTG 370

THE MARKETING ENVIRONMENT

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Political Forces

Lobbying by
business groups (e.g., honey lobby) consumer/politic al groups (e.g., labor unions; senior lobby) foreign interests

MKTG 370

THE MARKETING ENVIRONMENT

Lars Perner, Instructor

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Legal and Regulatory Environment

Laws and Regulations

for safety for consumer protection to protect special interests

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

Examples:
Antitrust

Fair competition Pricing

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

MKTG 370

THE MARKETING ENVIRONMENT

Lars Perner, Instructor

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Antitrust Law

Provisions
Must compete fairly; no

collusion predation

No, now that you mention it, I dont trust you!

Must not abuse market power; no

excessive market share tying--requiring people to buy a less desired item to get a desired one; e.g.,
must buy service to get Xerox copier Ford only drilled a slot if you bought a radio

MKTG 370

THE MARKETING ENVIRONMENT

Lars Perner, Instructor

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Strategy
Plan

to achieve desired objectives (e.g., profit, market share) based on available resources (e.g., financial, patents, trademarks, people, brand name/image , distribution channels) subject to choices made (e.g., willingness to take risk, short run vs. long run goals)
MKTG 370

THE MARKETING ENVIRONMENT

Lars Perner, Instructor

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Strategy, Marketing, and the Organization

DESIRED OUTCOMES

RESEARCH, ANALYSIS AND PLANNING

IMPLEMENTATION

STRATEGY

RESULTS
MKTG 370

EVALUATION
THE MARKETING ENVIRONMENT
Lars Perner, Instructor

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Dimensions of Strategy
Ultimate

organizational objective

Profit Non-profit
Level

Corporate Business Unit Functional

MKTG 370

THE MARKETING ENVIRONMENT

Lars Perner, Instructor

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Some Issues in Strategy

The Business
What is it? Should not define too narrowly or too broadly

Values and culture Goals and objectives

The Mission
Scope Customers Markets Technology Values

Profit Revenue Market share Unit sales Employee welfare Social responsibility Technological leadership Other

MKTG 370

THE MARKETING ENVIRONMENT

Lars Perner, Instructor

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Considerations in Strategies
Customers Competencies Competitors

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Lars Perner, Instructor

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Selecting Target Consumers

Demand measurement/fore casting Market segmentation Target marketing Market positioning

MKTG 370

THE MARKETING ENVIRONMENT

Lars Perner, Instructor

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The Boston Consulting Group (BCG) Matrix

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

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THE MARKETING ENVIRONMENT

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

STRENGTHS

WEAKNESSES

STRATEGY

OPPORTUNITIES THREATS
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Lars Perner, Instructor

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SWOT--Microsoft

Strengths
Technology Market share Barriers to entry Brand name Cash

Opportunities
Hardware
e.g.,

home networks

Services

Threats
Recession Legal Regulatory

Weaknesses
Non-Windows division (e.g., MSN, games)

MKTG 370

THE MARKETING ENVIRONMENT

Lars Perner, Instructor

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Microsoft: Implications

Decision on whether to stay in

ISP business Game business

Dealing with decline in demand due to recession

Price cuts? Hold out?

If the decision is to stay:

Should more resources be invested? Possible focus or differentiation?

Political relations to limit future legal problems

MKTG 370

THE MARKETING ENVIRONMENT

Lars Perner, Instructor

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SMAC Criteria for Strategic Plans

Specific Measurable Achievable Consistent

MKTG 370

THE MARKETING ENVIRONMENT

Lars Perner, Instructor

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