For use only with Perreault and McCarthy texts. © 2006 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin CHAPTER FOUR Evaluating Opportunities in the Changing Marketing Environment

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin When we finish this lecture you should 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. 6.Know why you might be sent to prison if you ignore the political and legal environment Know about the cultural and social environment and key population and income trends that affect it Understand how to screen and evaluate marketing strategy opportunities. © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin When we finish this lecture you should

Resources and Objectives of the Firm Competitive Environment © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The Marketing Environment Cultural and Social Environment Economic Environment Technological Environment Political and Legal Environment External Marketing Environment Direct Marketing Environment

Socially and Economically Useful Function Socially and Economically Useful Function Socially and Economically Useful Function Socially and Economically Useful Function Develop an Organization Develop an Organization Develop an Organization Develop an Organization Earn Profit © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Objectives Should Set Firm’s Course Three Basic Objectives Provide Guidelines Three Basic Objectives Provide Guidelines

Company Objectives Company Objectives Production Objectives Production Objectives Finance Objectives Finance Objectives Marketing Objectives Marketing Objectives HR Objectives HR Objectives R&D Objectives R&D Objectives Mission Statement and Objectives Mission Statement Product Objectives Product Objectives Place Objectives Place Objectives Price Objectives Price Objectives Production Objectives Production Objectives Finance Objectives Finance Objectives HR Objectives HR Objectives R&D Objectives R&D Objectives Promotion Objectives Promotion Objectives Personal Selling Objectives Personal Selling Objectives Mass Selling Objectives Mass Selling Objectives Sales Promotion Objectives Sales Promotion Objectives © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Financial Strength Producing Capability and Flexibility Producing Capability and Flexibility Financial Strength Producing Capability and Flexibility Producing Capability and Flexibility Company Resources May Limit Search for Opportunities © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Marketing Strengths

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Marketing Strengths +

Monopoly Monopolistic Competition Oligopoly Monopoly Monopolistic Competition Oligopoly The Competitive Environment © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Avoid Head-On Competition! Know the Market Situation! Pure Competition

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Monopolistic Competition +

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Avoiding Head-on Competition

Competitive Advantage Competitive Advantage Competitive Rivals Competitive Rivals Competitor Analysis Competitor Analysis Key Concepts Key Concepts Competitive Rivals Competitive Rivals Competitive Advantage Competitive Advantage Competitor Analysis Competitor Analysis Analyzing Competition © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Competitive Barriers Competitive Barriers

Seek Information About Competitors Seek Information About Competitors Ethical Issues Competition May Vary From Country To Country Competition May Vary From Country To Country Seek Information About Competitors Seek Information About Competitors Ethical Issues Competition May Vary From Country To Country Competition May Vary From Country To Country Direct Competition Can’t Always Be Avoided Direct Competition Can’t Always Be Avoided Marketers Need Information About Competitors © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

The Economic Environment © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Global Economy Key Economic Forces Key Economic Forces Rapid Change Interest Rates Rapid Change Interest Rates

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The Technological Environment +

Regional Economic Groupings Nationalism Regional Economic Groupings The Political Environment © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Consumerism Characteristics of the Political Environment

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The Legal Environment Exhibit 4-3 +

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Consumer Protection “Let the Seller Beware” +

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The Cultural and Social Environment +

Other Countries Current Population Other Countries Current Population © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin People with Money Make Markets Search for Growing Markets Population Trends

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Worldwide Population Growth +

Other Population Trends © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Increasing Density Increasing Urbanization

Gross National Income (GNI) Gross National Income (GNI) Gross National Income (GNI) Gross National Income (GNI) Gross Domestic Product (GDP) Gross Domestic Product (GDP) Income earned by foreigners in the nation No Money, No Market! © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin GNI / Country’s Population Size = Per Capita Income

Issues Related to Development © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Literacy and marketing problems What do third world consumers really need? Much segmenting may be needed

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Where Does Your State Stand? Exhibit 4-5a +

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Where Are the People Today and Tomorrow? Exhibit 4-5b +

US Population Mobility © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Population Mobility Urban to Suburban Rural to Urban

Population Growing, but… Population Growing, but… Population Growing, but… Population Growing, but… Birthrate – Boom or Bust? Birthrate – Boom or Bust? Birthrate – Boom or Bust? Birthrate – Boom or Bust? Graying of America Graying of America Growth Trends Young and Old © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Key Trends

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Appealing to the “Matures” +

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Not Just for the Younger Generation

Buying Power Buying Power Unique Culture Unique Culture High Growth High Growth Buying Power Buying Power High Growth High Growth Unique Culture Unique Culture Teenagers – They’re Back © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Different Needs

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Keeping Competitive in the Social- Cultural Environment

Dollars Years Product A Years Product B Using Screening Criteria to Narrow Down to Strategies © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Total cost Sales Total cost Sales

Planning Grids Help Evaluate a Portfolio of Opportunities © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Business Strength Industry Attractiveness High Medium Low HighMediumLow No Growth Borderline Growth

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Multiproduct Firms Have a Difficult Strategy Planning Job +

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Evaluating Opportunities in International Markets Exhibit 4-10 InsensitiveSensitive Industrial products Basic commodity-type consumer products Consumer products that are linked to cultural variables

© 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Interactive Exercise: Wheel of Opportunity

Mission statement Competitive environment Competitor analysis Competitive rivals Competitive barriers Economic and technological environment Technology Internet Nationalism © 2006 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin North American Free Trade Agreement (NAFTA) Consumerism Cultural and social environment Gross domestic product (GDP) Metropolitan Statistical Area (MSA) Senior citizen group Strategic business unit (SBU) Key Terms