Evaluating Opportunities in the Changing Marketing Environment Chapter Four

Mission Statement Provides Guidance Mission statement helps set the course of a firm by explicitly stating the organization’s basic purpose for being –May make it clear that some opportunities (target market or marketing mix alternatives) are not related to the mission –Some opportunities may be a good fit with mission, but not as good a fit or as high a priority as others Mission statement works in combination with specific objectives and should relate to screening criteria used to evaluate strategy alternatives

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing Mission Statement Provides Guidelines Mission statement - the organization’s basic purpose for being Mission statement - works in combination with specific objectives to evaluate strategy alternatives

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing

Mission Statement Provides Guidelines

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing Mission Statement Provides Guidelines

Examples of Company Resources Financial strength (Intel) Producing flexibility (DaimlerChrysler) Patents (IBM) Channel relationships (Kraft) Loyal customer base (Coke) Technical capability (3M)

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing Examples of Company Resources Financial strength (AT&T) Producing flexibility (Chrysler) Patents (IBM) Channel relationships (Kraft) Loyal customer base (Coke) Technical capability (3M)

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing Basic Objectives Provide Guidelines

Courtesy Harley-Davidson Motor Company—for use only with Essentials of Marketing

Competitor Analysis: Disposable Diaper Competition in Japan

©2001 Hertz System, Inc. Hertz is a registered service mark and trademark of Hertz System, Inc. —for use only with Essentials of Marketing

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing Major Focus of Some Important Laws that Affect Marketing Sherman Act (1890) –prohibits conspiracy to reduce competition –example: price "fixing" agreements among competing firms Federal Trade Commission Act (1914) – prohibits unfair methods of competition – example: use of deceptive advertising Robinson-Patman Act (1936) – prohibits most types of price-related discrimination – example: offering "advertising allowances" to some middlemen but not others (without cost justification)

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing Exhibit 4-2

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing Some Important U.S. Federal Regulatory Agencies 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 adulterated or misbranded foods, drugs, cosmetics, and hazardous consumer products Consumer Product Safety Commission (CPSC) Enforces the Consumer Product Safety Act— which covers any consumer product not assigned to other regulatory agencies Federal Communications Commission (FCC) Regulates interstate wire, radio, television, and telephone Environmental Protection Agency (EPA) Develops and enforces environmental protection standards Office of Consumer Affairs (OCA) Handles consumers’ complaints

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing Examples of Changes in the Political/Legal Environment Deregulation of energy industries Less emphasis on antitrust laws by federal government Maturing of consumerism More attention to laws governing international trade Changes in labeling requirements

Courtesy of CNN—for use only with Essentials of Marketing CNN ad

Examples of Effect of Technological Environment Rapid changes in the Internet and World Wide Web Robotics (better quality control, lower production costs) Computer scanners at retail check-out counters Worldwide satellites for data communication Automated inventory control Electronic fuel injection on automobiles Cellular phones and fax machines for communication

Examples of Trends in the Cultural Environment More women in the work force "Aging" of America, but accompanied by new growth in the “teen” group More single-person households More health consciousness More concern about the environment

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing Examples of Effect of Technological Environment Rapid changes in the Internet and World Wide Web Robotics (better quality control, lower production costs) Computer scanners at retail check-out counters Worldwide satellites for data communication Automated inventory control Electronic fuel injection on automobiles Cellular phones and fax machines for communication

Age Distribution Average age is increasing But there is a big teen cycle under way Post World War II "Baby Boomers“ –Still a big, influential group 50 and older group to grow dramatically in next decade

Median Family Income, Over Time (in 2001 dollars)

Income Distribution Growth in real income has slowed down Middle income groups in U.S. enjoy real choices –U.S. distribution like Canada, Western Europe, Japan, Australia, New Zealand Higher income groups still have much of the spending power –Top 20% income group has over 47 percent of total income! –Bottom 20% income group has only about 4 percent!

Percent of Total Income Going to Different Income Groups in 2001 Note: the 20 percent of all families who have the lowest incomes account for only 4.2% of total income; the 20% with the highest incomes have 47.7 percent-- a 10-fold difference between the “haves” and “have-nots”

GE's Strategic Planning Grid A way of organizing business judgments about existing and/or proposed product-market plans Business Strengths Dimension –Company size, market share –Profit margins –Technology position –Limiting factors (personnel, capital needed, etc.) Industry Attractiveness Dimension –Size of market and growth trends –Competitive situation –Social impact –Industry profitability

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing General Electric’s Strategic Planning Grid Exhibit 4-9