Scanning the Market Environment

Today’s Agenda Your Product and Company Skeleton of the Marketing Plan Components of Modern Marketing Information System Revisiting Marketing Environment SWOT Analysis - IKEA Paicho Pasal – An excellent Nepali Example of Value Creation

Information Needs Probes What decisions do you regularly make? What information do you need to make these decisions? What information do you regularly get? What special studies do you periodically request? What information would you want that you are not getting now? What are the four most helpful improvements that could be made in the present marketing information system?

Marketing Information System A marketing information system consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers.

Marketing Information System Components of MIS Internal Company Record Marketing Intelligence System Marketing Research System

Internal Records To spot important opportunities and potential problems, marketing managers rely on internal reports of orders, sales, prices, costs, inventory levels, receivables and payables.

Internal Records and Marketing Intelligence Order-to-Payment Cycle Sales Information System Databases, Warehousing, Data Mining Marketing Intelligence System

Marketing Intelligence The Marketing Intelligence System Provides happening data Collect marketing intelligence in variety of ways, such as reading books, newspapers, and trade publications; talking to customers, suppliers and distributors, monitoring social media on the internet, and meeting with other company managers. Collecting Marketing Intelligence on the Internet Collects marketing intelligence on internet, online review boards, discussion forums, chat rooms and blogs

Marketing Intelligence Communicating and Acting on Marketing Intelligence Should work closely coordinated with the decision making process. E.g. Coke – spotted a twitter post that went to 10,000 followers from an upset consumer who couldn't’t redeem a prize from MyCoke rewards program, Coke apologized and offered to resolve the situation. Later, he changed his Twitter avatar to photo of himself holding a Coke bottle. It is not enough you have marketing intelligence, that intelligence needs to reach to decision makers, and decision makers promptly needs to act on it as well. This is the whole essence of MIS.

Sources of Competitive Information Independent customer goods and service review forums Distributor or sales agent feedback sites Combination sites offering customer reviews and expert opinions Customer complaint sites Public blogs

Analyzing the Macroenvironment Identifying Major Forces Monitor six major forces: demographic, economic, socio-cultural, natural, technological and political-legal

Environmental Forces Demographic Political-Legal Economic Technological Socio-Cultural Natural

Remember… Remember their interactions will lead to new opportunities and threats For e.g. Explosive population growth (demographic) leads to a more resource depletion and pollution (natural), which leads consumers to call for more laws (political-legal), which stimulate new technological solutions and products (technology), that if they are affordable (economic), may actually change attitudes and behaviors (social-cultural)

Population and Demographics Population growth Population age mix Ethnic markets Household Patterns

Economic Environment Consumer Psychology – Consumer Confidence Index Income Distribution – very low, mostly low, very low & high, low & medium & high, mostly medium Savings, Debt, and Credit Levi’s has responded to changes in income distribution by offering an upscale line and a mass market line

Social-Cultural Environment Views of themselves Views of others Views of organizations Views of society Views of nature Views of the universe

Natural Environment Shortage of raw materials Increased energy costs Anti-pollution pressures Governmental protections

Toyota Experienced Success with Green Cars

Political-Legal Environment Increase in business legislation Growth of special interest groups

The Microenvironment The Company In designing marketing plans, marketing management takes other company groups into account – groups such as top management, finance, research and development, purchasing, operations, and accounting All these inter-related groups form the internal environment Top Management makes company’s mission, objectives and broad strategies All functions must “think customers”

The Microenvironment Suppliers Provide resources needed by the company to product its goods and services. Supplier problem can affect marketing Suppliers as partners

The Microenvironment Marketing Intermediaries Help the company to promote, sell an distribute its products to the final customer. Today’s marketer recognize the importance of working with the intermediaries as partners rather than simply as channels through with they sell products. Coke – McDonald and Subway

The Microenvironment Competitors Companies must provide greater customer value and satisfaction than its competitors. You should take competitive strategy based on your company’s position.

The Microenvironment Publics Any group that has actual or potential interest in or impact on an organization’s ability to achieve its objectives. Financial Publics Media Publics Government Publics Citizen-action Publics Local Publics General Publics A company can prepare marketing plans for these major publics as well as for its customer markets

The Microenvironment Customers Target one or all five markets Consumer Markets – individuals and households Business Markets – business buy goods and services and further process Reseller Markets – buy goods and services and resell for profit Government Markets – government agencies buy goods and services International Markets – buyers from other countries Each market types has special characteristics that call for careful study by the marketer

SWOT Analysis - IKEA

SWOT Analysis

SWOT Analysis I – Looking Outside for Threat and Opportunities

Identifying threats and opportunities in the external environment The world of work style and lifestyle trends that can affect your business Assessing customers Changes in the competitive arena Porter’s five forces framework

External Analysis “The essence of formulating competitive strategy,” writes scholar Michael Porter, “is relating a company to its environment.” Every company’s environment is populated with customers, competitors, suppliers, and, in most cases, regulators. And all have an impact on its profit potential. There are both current and potential customers, each with requirements for product/service quality, features, and utility. Are any of these requirements unserved? There is also a set of current competitors and still others who might enter the arena.

Customers A business, as Peter Drucker once wrote, has no higher requirement than that to create customers. In the absence of customers, the many things that businesses do—product development, manufacturing, shipping, and so forth—are utterly pointless. Who are they? How sensitive are they to price? How can they be reached? How are they currently using a particular product or service? Which of their needs are poorly served—or unserved? What level of loyalty do they have to current vendors?

Competition As George Day, a professor at the Wharton School, has perceptively written, “One of the primary issues facing mangers in formulating competitive strategy is defining the arena of competition. Where are you competing? Who are your competitors? How attractive is the competitive arena?” No examination of the external environment is complete without a thoughtful analysis of competitors and the competitive arena. Technology is a major driver of the modern economy. Technology represents both a threat and an opportunity. It is a threat in the sense that a new technology may undermine your existing business,

Porter’s Five Forces Model “The collective strength of these forces,” he writes, “determines the ultimate profit potential of an industry.” Owing to these factors, the profit potential will vary from industry to industry.

SWOT Analysis II : Looking Inside for Strengths and Weaknesses

Identifying and assessing core competencies Understanding your financial capacity for undertaking a new strategy Evaluating management and organizational culture in terms of change-readiness

Next Class Quiz 1 Paicho Pasal Assignment

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