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Chapter 2: The Dynamic Marketing Environment

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1 Chapter 2: The Dynamic Marketing Environment

2 The External Environment
the external environment is changing rapidly, with considerable implications for marketing macro forces are factors over which the company has no short-term control micro forces operate at the firm level the external macroenvironment affects different firms in different ways the better we understand the changing marketing environment and its effects, the better we can develop effective marketing programs

3 Figure 2-1 Relationship-Insensitive External Environmental Forces

4 Demographic Change refers to the changing nature of the population
most obvious change is the aging population; impact of seniors, boomers and their kids smaller families; more single-person households smaller, non-traditional households more part-time workers,dual-income households changing patterns of immigration; ethnic mix must consider the implications of these changes

5 Economic Conditions consider the effect on consumers and on businesses of: recession (business cycle) changes in interest rates inflation unemployment how are consumers likely to respond? they often shop around more; store and brand loyalty suffer when consumers are uncertain

6 Competition competition takes place at three levels:
directly at the brand or store level at the level of substitute products/services other demands upon our buying power competition is coming from unexpected sources; including more international a firm must monitor the competitive marketplace to identify its best “positioning”

7 Social and Cultural Forces
the way we lead our lives is also changing: lifestyles, values and beliefs greater emphasis on quality of life immigration brings changing values rapidly changing gender roles different attitudes toward physical activity, exercise, and diet among certain segments increased emphasis on service quality and value environmentalism has affected marketing increased demands for convenience

8 Technology launches entirely new industries, such as multimedia, digital communications and electronic commerce alters or virtually destroys existing industries, such as the effect of on regular mail and even fax stimulates other markets and industries, such as the effect of the debit card and Internet shopping on the retailing industry

9 Political and Legal Forces
government and laws affect marketing at many levels legislation often has implications for marketing; some more direct than others considerable amount of legislation in Canada affects marketing directly many industries are directly affected by legislation; packaging, labeling, advertising

10 Controllable Environmental Forces
external to the firm, but part of its marketing system because of its close relationship these can be influenced by the firm to greater or lesser degrees; they are not entirely uncontrollable these forces may be considered relationship-sensitive, as it is of considerable importance for the firm to establish solid relationships with these partners in its success

11 Figure 2-2 Relationship-Sensitive External Environmental Forces

12 The Market Environment
the environment in which the firm operates; but more than customers its market; the people or organizations whose wants and needs the firm intends to satisfy – its customers or consumers its suppliers; the other firms upon whom the firm relies to provide quality products and services so that it can serve its customers marketing intermediaries; other firms that represent the channel of distribution for the firm’s products and services

13 Internal Environmental Forces
internal factors influence the firm’s marketing strategies, programs and activities, and have the potential to affect customer satisfaction R&D, production, systems, financial are all critical to what marketing can do human resources may be the most important of all of the internal departments – the concept of the internal market is very important marketing activities have to be consistent with corporate goals, positioning and image

14 Figure 2-3 Relationship-Sensitive Internal Environmental Forces

15 Marketing Planning strategic management involves planning, implementation, and evaluation implies ongoing revision of the marketing program, based upon feedback consistent with the firm’s mission statement and based upon clear goals and objectives strategies suggest how firm will reach its goals tactics relate to how strategies will be implemented policies guide how the firm does business

16 Figure 2-4 A Company's Complete Marketing Environment

17 Figure 2-5 The Management Process in Marketing

18 Strategic Company Planning
provides the basis for strategic marketing planning sets out the company’s organizational mission and objectives provides a comprehensive situation analysis established a set of realistic goals/objectives agrees upon a series of strategies that will lead to the accomplishment of objectives

19 Figure 2-6 Three Levels of Organizational Planning

20 Strategic Marketing Planning
strategic planning is based upon what is happening in the firm’s environment matches resources with the opportunities, changes, and characteristics of the marketplace must be consistent with the firm’s mission objectives must be actionable and measurable formulation of objectives is often based upon an analysis of strengths, weaknesses, opportunities, and threats

21 The Planning Process involves carrying out a situational analysis; often including a SWOT analysis setting realistic marketing objectives selection of appropriate target market segments and an assessment of market demand determining strategies for positioning and for gaining a differential advantage on competitors identifying a strategic marketing mix that will appeal to the target segments

22 Annual Marketing Plan plan prepared for each major product or SBU
summarizes strategies that will be used to achieve specific objectives over the year points out other activities that must be performed in implementation and evaluation outlines who is responsible and what resources are to be made available represents a “road map” to guide marketing activity over the coming year

23 Contents of the Annual Plan
tactics: activities to carry out strategies financial schedules and projections timetable to guide implementation evaluation of performance against goals executive summary situation analysis -- including resources objectives tailored to organizational goals strategies relating to segments and marketing mix

24 Boston Consulting Group Matrix
classifies each SBU or product in terms of market share and industry growth potential stars: high market share and high growth cash cows: high share, low growth prospects question marks: low share in high growth sectors dogs: low market share and low growth position in the matrix suggests marketing strategy to be used

25 Figure 2-7 The Boston Consulting Group

26 Product-Market Growth Matrix
growth requires examination of both products and markets; what needs changing? market penetration: sell more of present products/services to present markets market development: sell present products to new markets or segments product development: new products/services for existing markets diversification: new products to new markets

27 Figure 2-8 Product-Market Growth Matrix


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