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