For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Chapter 4: Evaluating Opportunities in the Changing Marketing Environment

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill 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.

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Importance of Objectives Setting Company Objectives Provide Guidelines Coordinate Effort Lead to Marketing Objectives Be Explicit 4-3

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill A Hierarchy of Objectives Exhibit R&D Objectives HR Objectives Marketing Objectives Finance Objectives Production Objectives Company Objectives Sales Promotion Objectives Mass Selling Objectives Personal Selling Objectives Price Objectives Promotion Objectives Place Objectives Product Objectives

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Limits on Opportunity Search Marketing Strengths Producing Capability and Flexibility Financial Strength 4-5

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Competitive Environment Information on Competitors Competitive Barriers Competitive Rivals Competitor Analysis Kinds of Markets Key Concepts in the Competitive Environment 4-6

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Economic and Technological Environment Interest Rates Global Economy Rapid Change Key Economic Forces 4-7

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill 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

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Political and Legal Environment Regional Groupings Regional Groupings Nationalism Consumerism Characteristics of the Political Environment 4-9

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill 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 Some Important U.S. Federal Regulatory Agencies

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Cultural and Social Environment 4-11 Cultural Trend: The Changing Roles of Women Cultural Trend: The Changing Roles of Women Time Poverty Economic Power Career Opportunity

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Sales and Cost Curves of Two Strategies Exhibit 4-6 Dollars Total cost Years Sales 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

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Sales and Cost Curves of Two Strategies Total cost Years Sales 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

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Sales and Cost Curves of Two Strategies Exhibit Dollars Total cost Years Sales Product A Total cost Years Sales Product B Seen together, it is easy to see that Product A offers a vastly better overall return than does Product B

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Exhibit Business Strength Industry Attractiveness High Medium Low HighMediumLow No Growth Borderline Growth Evaluating Opportunities

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill InsensitiveSensitive Basic commodity-type consumer products Industrial products Consumer products that are linked to cultural variables Exhibit Continuum of Environmental Sensitivity

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Technology Nationalism NAFTA Consumerism Cultural and Social Environment Strategic Business Unit (SBU) Portfolio Management Mission Statement Competitive Environment Competitor Analysis Competitive Rivals Competitive Barriers Economic and Technological Environment Key Terms 4-17