Chapter 3Evaluating Opportunities in the Changing Market Environment

Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

3-2

At the end of this presentation, you should be able to:

1. know the variables that shape the environment of marketing strategy planning.

2. understand why company objectives are important in guiding marketing strategy planning.

3. see how the resources of a firm affect the search for opportunities.

4. know how to conduct a competitor analysis and how different types of competition affect strategy planning.

5. understand how the economic and technological environments can affect strategy planning.

3-3

At the end of this presentation, you should be able to:

6. know how elements of the political and legal environment affect marketing strategy planning.

7. understand the cultural and social environment and how demographic trends affect strategy planning.

8. understand how to screen and evaluate marketing strategy opportunities.

9. understand important new terms.

3-4

The Marketing Environment

Marketing

Strategy Planning Process

Narrowing down to the best

opportunities

Developing a strategy

3-5

Marketing Strategy Planning: Competitors, Company, & External Market Environment (Exhibit 3-1)

Competitors• Current• Prospective

Company• Objectives• Resources

External Market Environment• Economic• Technological• Political & Legal• Cultural & Social

Best opportunities to pursue

Evaluating Opportunities• Screening criteria• Planning grids• Planning for multiple products

3-6

The Marketing Environment

Resourcesand Objectives

of the Firm

CompetitiveEnvironment

External Marketing

Environment

Direct Marketing Environment

Cultural andSocial

Environment

EconomicEnvironment

TechnologicalEnvironment

Political andLegal Environment

Target

Customers

External marketenvironment

3-7

A Hierarchy of Objectives(Exhibit 3-2)

Personal Selling

Objectives

Mass Selling

Objectives

Sales Promotion Objectives

IT Objective

s

R&D Objective

s

HR Objective

s

Finance Objective

s

Production

Objectives

Production

Objectives

Finance Objective

s

HR Objective

sR&D

ObjectivesIT

Objectives

Marketing

Objectives

Company Objective

s

Product Objective

s

Place Objective

s

Price Objective

s

Place Objective

s

Price Objective

s

Product Objective

s

Promotion

Objectives

Marketing

Objectives Promotio

n Objective

s

3-8

Company Resources May Limit Search for Opportunities

Financial Strength

Producing Capability and

Flexibility

Marketing Strengths

3-9

Analyzing Competitors and the Competitive Environment

Avoid Head-On Competition

Monopoly

Monopolistic

Competition

Oligopoly

Know the Market Situation

Pure Competitio

n

3-10

Avoiding Head-On Competition

Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

3-11

Checking Your Knowledge

A moderately-priced jewelry store is trying to differentiate itself from other jewelry stores. The store prices products somewhat lower than the super-premium jewelry stores, but offers better products and services than low-end jewelry stores provide. The market situation this store faces sounds most like:

A. pure competition.B. monopoly.C. oligopoly.D. monopolistic competition.E. oligopolistic competition.

3-12

Analyzing Competitors to Find a Competitive Advantage

Key Concepts

Competitive Rivals

Competitive

Advantage

Competitor Matrix

CompetitorAnalysis

3-13

Checking Your Knowledge

Chris wants to open a family-oriented restaurant in a thriving suburban area. Chris thinks a sports-based theme and broad menu will be attractive to the large number of families in the area. However, national chain restaurants, such as Chili’s, TGI Friday’s, and Applebee’s already draw large followings in the area. The existence of these chain restaurants is a significant:

A. competitive opportunity.B. monopoly.C. competitive barrier.D. opportunity.E. competitive environment.

3-14

Marketers Need Information about Competitors

Seek Information about Competitors

Ethical Issues

3-15

The Economic Environment

KeyEconomic

Forces

Rapid Change

Interest Rates

Global Economy

3-16

Checking Your Knowledge

Rising interest rates can slow the housing market in the United States, slowing business for real estate developers, mortgage lenders, and construction firms. This is a trend in the:

A. competitive environnent.B. technological environment.C. cultural environment.D. economic environment.E. legal environment.

3-17

The Technological Environment

Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

3-18

Checking Your Knowledge

Ford announced that it would begin offering Bluetooth wireless to help consumers more easily make hands free cell phone calls in their cars. The development of Bluetooth is a significant development in the:

A. technological environment.B. legal environment.C. corporate environment.D. social environment.E. personal environment.

3-19

The Political Environment

Regional Economic Grouping

s

Nationalism

Examples of Characteristicsof the PoliticalEnvironment

3-20

The Political Environment

3-21

The Legal Environment - Key Antimonopoly Laws (Exhibit 3-3)

Sherman Act (1890)

Federal Trade

Commission Act (1914)

Wheeler-Lea

Amendment (1938)

Clayton Act (1914)

Antimerger Act (1950)

Magnuson-Moss Act (1975)

Robinson-Patman Act

(1936)

3-22

The Legal Environment - Consumer Protection Agencies

Food and Drug

Administration (FDA)

Consumer Product Safety

Commission (CPSC)

3-23

Checking Your Knowledge

Many states have appointed or elected commissions that oversee the business practices of utilities and other industries that serve the public interest. For a company operating in one of these industries, dealing with this important state-level regulatory commission is an important element of the:

A. legal environment.B. social environment.C. monopoly environment.D. technological environment.E. corporate environment.

3-24

Checking Your Knowledge

The Federal Trade Commission informed Tropicana that it would have to stop advertising that one of the benefits of “heart-healthy” Tropicana orange juice was to lower blood pressure. For Tropicana, this situation was a significant development in the:

A. economic environment.B. social environment.C. competitive environment. D. internal company environment.E. legal environment.

3-25

The Cultural and Social Environment

Changes in Cultural and

Social Environment

Cultural changes

Demographic data

3-26

Keeping Competitive in the Social-Cultural Environment

Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

3-27

World PopulationLocation

Population Growth, Location, and Mobility

Rural to Urban

PopulationMobility

World Population Growth

3-28

No Money, No Market!

Gross National Income(GNI)

GrossDomestic Product(GDP)

Income earned by foreigners who own

resources in the nation

GNI / Country’s Population Size = Per Capita Income

+ =

3-29

Technology Adoption Races across Continents

Technology Indicators

Cell phone

Internet

3-30

2010 Population (in millions) and Percent Change by State, 2000–2010 (Exhibit 3-5)

3-31

Interactive Exercise: Wheel of Opportunity

3-32

Population Trends in the U.S. Consumer Market

Graying of America

Key TrendsGeneration X – fewer

in number

Generation Y – techno savvy

Generation Z – cautious

3-33

Screening Criteria Help Narrow Down to Specific Strategies

Product-Market Screening Criteria

Qualitative Criteria

Quantitative Criteria

3-34

Expected Sales and Cost Curves of Two Strategies over Five-Year Planning Periods (Exhibit 3-8)

Do

llars

Years

0 1 2 3 4 5

Product A

Years

0 1 2 3 4 5

Product BSales

Total cost

SalesTotal cost

3-35

General Electric’s Strategic Planning Grid (Exhibit 3-9)

Bu

sin

ess

Str

eng

ths

Industry AttractivenessH

igh

Me

diu

mL

ow

High Medium Low

No Growth

Borderline

Growth

3-36

Consumer products linked

to cultural variables

Industrial products

Continuum of Environmental Sensitivity (Exhibit 3-10)

Basic commodity-type

consumer products

SensitiveInsensitive

3-37

You should now be able to:

1. know the variables that shape the environment of marketing strategy planning.

2. understand why company objectives are important in guiding marketing strategy planning.

3. see how the resources of a firm affect the search for opportunities.

4. know how to conduct a competitor analysis and how different types of competition affect strategy planning.

5. understand how the economic and technological environments can affect strategy planning.

3-38

You should now be able to:

6. know how elements of the political and legal environment affect marketing strategy planning.

7. understand the cultural and social environment and how demographic trends affect strategy planning.

8. understand how to screen and evaluate marketing strategy opportunities.

9. understand the important new terms

3-39

Key Terms

1. mission statement2. competitive environment3. sustainable competitive

advantage4. competitor analysis5. competitive rivals6. competitor matrix7. economic environment8. technology9. nationalism10. North American Free

Trade Agreement (NAFTA)

11. cultural and social environment

12. gross domestic product (GDP)

13. gross national income (GNI)

14. senior citizens15. baby boomers16. Generation X17. Generation Y18. Generation Z19. sustainability