4 Marketing Environments Professor Close

Marketing Environment (1) Factors outside our control in the short run (CPA) Consider the strategy (where are the opportunities?) Broad objectives: beyond pleasing our customers

Marketing Environment (2) Broad objectives: –Useful function (Wang computers) Need satisfaction (Hallmark) PR purposes (RJR vs. Alcohol) –Organization to support Entrepreneur’s challenge Example: organization charts –Profit (#1, long run) Other financial subordinate (market share, Eastern) Time horizon: When will firm generate profit? (Amazon) Considers resources (how many years)

Marketing Environment (3) Compatibility is a key Question to consider: do you think Wal- Mart can focus on both quality and price? What about their labor issues?

Simpsons on Wal-Mart

Marketing Environment (4) Resources: remember 2x2 matrix; how to find strong areas –Examine functional areas Financial: Wal-Mart (purchasing) Production: –Larger capacity (cost/unit, economy of scale) –Flexibility (Sara Lee and what else?) –Often opposed Marketing: –Brand strength –Channel relationships (car dealers, franchisees, and what else?)

Marketing Environment (5) Preferable Combination –Example: Wal-Mart - financial, distribution, and relationships –What other example can you think of that has a strong combination?

Six Environments (1) Economy: a system of producing, distributing, & consuming wealth (what is ours?) –Shifts (purchasing declines) –Examples: Interest rates influence buying (financial services; 0% financing) Rising costs, inflation unavoidable (Wal-Mart & cereal manufacturing) –International: Countries are interconnected (Japan) Exchange rate (want weak dollar. Why??)

Six Environments (2) Technological: application of knowledge to perform tasks more efficiently/effectively Effective: accomplishing tasks Efficient: accomplishing tasks with minimum use of resources –Base of economic environment (potential) –Technology transfer is rapid (Pentium chips and what else?) –Ethics: consumer research (hits on web sites, selling your info, privacy??)

Apple Ipod Commercial

Six Environments (3) Political –International Nationalism: emphasis on “our” country influences trade (buy American) Trade groups: ease trade among members –EU – lowers trade barriers among European nations (looking East) –NAFTA – Canada, U.S., and Mexico –What do you see as the advantages and disadvantages of each? Consumerism –Champions individual vs company –Ralph Nader – any speed

Six Environments (4) Competitors –Tend to become similar (sodas, beer, any others?) –Competitive barriers Position difficult to copy (any area of firm) Marketing helps maintain distinction (image, etc) Can usually avoid “head on” competition

80’s She-Ra Commercial

Six Environments (5) Competitors (continued) –Competitor Analysis Potential competitors (generic vs product mkt) Then narrow down to similar mixes Challenges –New product (electric car, PC, and what else?) –Competitive response (very tough) –Market research Careful! Example: test market, customer contact, business plans Ethics (non-compete)

Six Environments (6) Legal (close with political) –Philosophy: Competition is encouraged Federal law conveys intent, but not detailed interpretation –Sellers must: Tell the truth Meet contracts

Example of an Illegal Ad

Six Environments (7) Legal (continued) –Regulations: Food and drugs must be safe & sanitary Magnuson-Moss Act: warranties Robinson-Patman Act: price discrimination Consumer Product Safety Commission (sets standards) –Protects from unsafe products (bicycle – unsafe) –Stricter on children State/local laws vary (California) –Let the buyer beware (pro-consumer)

Six Environments (8) Cultural/Social –Culture: manner in which people live –Very broad Women’s role (U.S. vs Japan) Fitness Debt Time-poor society

Summary Read pages (SBUs & Portfolio Analysis) Marketing environment and strategy Six environments –Economic –Technological –Competitive –Political –Legal –Cultural/social Any questions?