MKTG 370 THE MARKETING ENVIRONMENT Lars Perner, Instructor 1 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

MKTG 370 THE MARKETING ENVIRONMENT Lars Perner, Instructor 2 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 3 Environmental Scanning and Analysis SCANNING ANALYSIS ACTION

MKTG 370 THE MARKETING ENVIRONMENT Lars Perner, Instructor 4 Elements of The Environment  Social  Economic  Technological  Competitive  Regulatory

MKTG 370 THE MARKETING ENVIRONMENT Lars Perner, Instructor 5 Social Forces  Demographics— more –Older citizens –Unmarried singles –Immigrants –Ethnic diversity  Family changes –“Blended” families –Non-traditional households  Cultural changes –Roles of women –Values  E.g., fitness  Longer work hours for some; yet also more people working part time  Changing cultural standards (e.g., were Beatle members’ haircuts that offensive?)

MKTG 370 THE MARKETING ENVIRONMENT Lars Perner, Instructor 6 Economic Forces  Consumer Income –Nominal vs. inflation adjusted –Impact of inflation –Disposable vs. pre- tax income –Discretionary income –Regional influences –Economic cycles “Teach a parrot to say ‘supply” and ‘demand” and you have a learned economist!” Paul Samuelson.

MKTG 370 THE MARKETING ENVIRONMENT Lars Perner, Instructor 7 Economic Cycles

MKTG 370 THE MARKETING ENVIRONMENT Lars Perner, Instructor 8 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 opportunities—e.g., specialty online retailers, mass customization

MKTG 370 THE MARKETING ENVIRONMENT Lars Perner, Instructor 9 Competition  Levels –Discretionary income –Product competition –Brand competition  Market structures –Monopoly (e.g., electric power) –Oligopoly (e.g., cars, OPEC) –Monopolistic competition (e.g., supermarkets) –Pure competition (commodities; e.g.,  Competition –benefits the consumer –is increasingly global

MKTG 370 THE MARKETING ENVIRONMENT Lars Perner, Instructor 10 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 competition—DO NOT underestimate!

MKTG 370 THE MARKETING ENVIRONMENT Lars Perner, Instructor 11 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 12 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 13 Antitrust Law  Provisions –Must compete fairly; no  collusion  predation –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 No, now that you mention it, I don’t trust you!

MKTG 370 THE MARKETING ENVIRONMENT Lars Perner, Instructor 14 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 15 Strategy, Marketing, and the Organization DESIRED OUTCOMES STRATEGY RESEARCH, ANALYSIS AND PLANNING IMPLEMENTATION EVALUATIONRESULTS

MKTG 370 THE MARKETING ENVIRONMENT Lars Perner, Instructor 16 Dimensions of Strategy  Ultimate organizational objective –Profit –Non-profit  Level –Corporate –Business Unit –Functional

MKTG 370 THE MARKETING ENVIRONMENT Lars Perner, Instructor 17 Some Issues in Strategy  The Business –What is it? –Should not define too narrowly or too broadly  The Mission –Scope –Customers –Markets –Technology –Values  Values and culture  Goals and objectives –Profit –Revenue –Market share –Unit sales –Employee welfare –Social responsibility –Technological leadership –Other

MKTG 370 THE MARKETING ENVIRONMENT Lars Perner, Instructor 18 Considerations in Strategies  Customers  Competencies  Competitors

MKTG 370 THE MARKETING ENVIRONMENT Lars Perner, Instructor 19  Demand measurement/fore casting  Market segmentation  Target marketing  Market positioning Selecting Target Consumers

MKTG 370 THE MARKETING ENVIRONMENT Lars Perner, Instructor 20 The Boston Consulting Group (BCG) Matrix © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

MKTG 370 THE MARKETING ENVIRONMENT Lars Perner, Instructor 21 Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis STRATEGY STRENGTHS WEAKNESSES OPPORTUNITIES THREATS

MKTG 370 THE MARKETING ENVIRONMENT Lars Perner, Instructor 22 SWOT--Microsoft  Strengths –Technology –Market share –Barriers to entry –Brand name –Cash  Weaknesses –Non-Windows division (e.g., MSN, games)  Opportunities –Hardware  e.g., home networks –Services  Threats –Recession –Legal –Regulatory

MKTG 370 THE MARKETING ENVIRONMENT Lars Perner, Instructor 23 Microsoft: Implications  Decision on whether to stay in –ISP business –Game business  If the decision is to stay: –Should more resources be invested? –Possible focus or differentiation?  Dealing with decline in demand due to recession –Price cuts? –“Hold out?”  Political relations to limit future legal problems

MKTG 370 THE MARKETING ENVIRONMENT Lars Perner, Instructor 24 SMAC Criteria for Strategic Plans  Specific  Measurable  Achievable  Consistent