Chapter 4: Evaluating Opportunities in theChanging MarketingEnvironment

When you finish this chapter, you should

4-2

Chapter 4 Objectives 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 the different kinds of competitive situations affect strategy planning.

5. Understand how the economic and technological environment can affect strategy planning.

6. Know why you might be sent to prison if you ignore the political and legal environment.

7. Understand how to screen and evaluate marketing strategy opportunities.

8. Understand the important new terms.

The Importance of Objectives

SettingCompanyObjectives

ProvideGuidelines

CoordinateEffort

Lead to Marketing Objectives

BeExplicit

4-3

A Hierarchy of Objectives

Exhibit 4-14-4

R&DObjectives

HRObjectives

MarketingObjectives

FinanceObjectives

ProductionObjectives

CompanyObjectives

SalesPromotionObjectives

Mass SellingObjectives

PersonalSelling

Objectives

PriceObjectives

PromotionObjectives

PlaceObjectives

ProductObjectives

Limits on Opportunity Search

Marketing Strengths

Producing Capability and Flexibility

Financial Strength??????????????????????????????????????????????????

4-5

The Competitive Environment

Information on Competitors

Competitive Barriers

Competitive Rivals

Competitor Analysis

Kinds of Markets

KeyConcepts

in theCompetitiveEnvironment

4-6

The Economic and Technological Environment

Interest Rates

Global Economy Rapid Change

KeyEconomic

Forces

4-7

The Impact of Technology

Technology is the application of science to convert and economy’s resources to output

Technology impacts marketing both through opportunities for new products and new ways (processes) for handling marketing functions Example: consider the Internet Products: software for computer users Process: selling from a web site

4-8

The Political and Legal Environment

RegionalGroupings

Nationalism Consumerism

Characteristicsof the PoliticalEnvironment

4-9

Agencies Responsibilities

Federal Trade Commission (FTC) Enforces laws and develops guidelines regarding unfair business practices

Food and Drug Administration (FDA) Enforces laws and develops regulations to prevent distribution and sale of hazardous consumer products

Consumer Product Safety Commission Enforces Consumer Product Safety Act(CPSC)

Federal Communications Commission Regulates interstate wire, radio, and (FCC) television

Environmental Protection Agency (EPA) Develops and enforces environmental protection standards

Office of Consumer Affairs (OCA) Handles consumer complaints

Exhibit 4-44-10

Some Important U.S. Federal Regulatory Agencies

The Cultural and Social Environment

4-11

Cultural Trend: The Changing Roles of Women

TimePoverty

Economic Power

CareerOpportunity

Sales and Cost Curves ofTwo Strategies

Exhibit 4-6

Dol

lars Total cost

Years

Sales

0 1 2 3 4 5

Product A

In this graphic, a too-narrow focus on the first year’s results might cause the marketing manager to abandon this product as too costly.

4-12

Sales and Cost Curves of Two Strategies

Total cost

Years

Sales

0 1 2 3 4 5

Product B

In this graphic, a too-narrow focus on the first year’s results might cause the marketing manager to adopt the product prematurely, since its performance in year one is misleading.

Exhibit 4-64-13

Sales and Cost Curves of Two Strategies

Exhibit 4-64-14

Dol

lars Total cost

Years

Sales

0 1 2 3 4 5

Product A

Total cost

Years

Sales

0 1 2 3 4 5

Product B

Seen together, it is easy to see that Product A offers a vastly better overall return than does Product B

Exhibit 4-74-15

Bus

ines

s St

reng

thIndustry Attractiveness

Hig

hM

ediu

mLo

w

High Medium Low

No Growth

Borderline

Growth

Evaluating Opportunities

Insensitive Sensitive

Basiccommodity-typeconsumerproducts

Industrialproducts

Consumerproducts thatare linked to

culturalvariables

Exhibit 4-84-16

Continuum of Environmental Sensitivity

TechnologyNationalismNAFTAConsumerismCultural and Social EnvironmentStrategic Business Unit (SBU)Portfolio Management

Mission StatementCompetitive EnvironmentCompetitor AnalysisCompetitive RivalsCompetitive BarriersEconomic and Technological Environment

Key Terms

4-17