1. BUSI 406 Principles of Marketing: Evaluating Opportunities in the Changing Market Environment Chapter 3

2. Review Guidelines for Marketing Cases Let’s Review
Today’s Agenda
Answer any questions
Team Assignments
If you have any questions/issues with your team, please see me ASAP – the longer you wait, the less I can help you…
Team Assignments are for all 3 Case Assignments and major project
Review Guidelines for Marketing Cases
Let’s Review
Discuss material you read in Chapter 3 of your textbook

3. Guidelines for Marketing Cases
Due date for first case assignment – Waimate Springs Lodge (pg. 628) is Wednesday, February 1
Prepare an original team 2 page max plus exhibits (12 pt. font, reasonable margin, double spaced text) write-up of the case based only on your own work focusing on:
Current situation
Analysis of the situation (3Cs, SWOT)
Assess possible strategy options, including no change, and recommend an overall strategy, explain why you recommend this strategy
Specific action plan and implementation (Target Mkt, 4 Ps)
Highlights from three to five year annual financial pro forma – BEP?
Exhibits are good, but optional – may be used for SWOT or 3 to 5 year annual financial pro forma and other material, highlight within 2 page text
Biggest piece of advice – do not focus on what is already in the case…tell me something new!

4. Marketing strategy planning & marketing strategy
Let’s Review
Marketing strategy planning & marketing strategy
3 C’s SWOT, Target marketing & 4 P’s in a marketing mix
Attractive Opportunities
Breakthrough opportunities
Competitive Advantage
Four Generic Growth Strategies
Market Penetration, Market Development, Product Development, Diversification

5. Review the major trends in the External Market Environment
Today’s Goals
Examine two of the 3 C’s
Company objectives & mission statements
Competitive environment
Review the major trends in the External Market Environment
Economic environment
Technological environment
Political/Legal environment
Cultural/Social environment
Screening opportunities using the GE Planning Grid and the BCG Growth/Share Matrix

6. Marketing Strategy Planning involves:
What is Marketing Strategy Planning? Finding attractive opportunities and developing sustainable marketing strategies, and being rewarded financially for doing so.
Marketing Strategy Planning involves:
3C’s: Company, customers, competitors SWOT analysis
Marketing Strategy: Specifying a target market and a related marketing mix
Target Market: a fairly homogenous group of customers to whom a company wishes to appeal
Marketing Mix: the controllable variables (4 P’s) the company puts together to serve this target group
Product
Place
Price
Promotion and communication
Pro forma Budget: A plan without a budget is not a plan, show me the numbers, expected revenues against expected expenses, plus other outcome metrics
Summary Overview
Marketing strategy planning means finding opportunities and developing profitable marketing strategies that the company can use to capitalize on them.
Key Issues
Marketing strategy--specifies a target market and a related marketing mix; provides “big picture” of what the firm will do.
Target market --a fairly homogeneous (similar) group of customers to whom a company wishes to appeal.
Marketing mix--the controllable variables the company puts together to satisfy the target market.

7. Marketing Strategy Planning Process
The text’s comprehensive model is referenced to indicate where we are, and what is covered in the following discussion
Key Issues
External market environment, company, and competitors are key elements that must be factored in as the firm develops its marketing mix.

8. Best opportunities to pursue
Marketing Strategy Planning, Competitors, Company, & External Market Environment (See page 522)
Company
Objectives
Resources
Competitors
Current
Prospective
External Marketing Environment
Economic
Technological
Political & Legal
Cultural & Social
Evaluating Multiple Opportunities
Screening criteria
Planning grids
Specific aspects of the external market environment, company, and competitors aid the firm in evaluating opportunities. From these opportunities, the best opportunities can be selected.
Key Issues
Each company has objectives it wants to accomplish, and specific resources at its disposal.
When looking at its competitors, firms must include not only its current competitors, but potential (future) ones as well.
The external market environment is made up of: the economic environment, the technological environment, the political and legal environment, and the cultural and social environment.
Opportunity evaluation is aided by several screening criteria, or proscriptive planning grids, covered in the chapter. Often, firms must plan for multiple products simultaneously.
Once all the above are considered, and firm should be able to identify the best opportunities to pursue.
Discussion Question: Think of a firm that is identified with one major product. Who are its current competitors? Who are its potential competitors?
Best opportunities to pursue

9. The Marketing Environment (See page 522 in text)
Customers
Resources and Objectives of the Firm
Competitive Environment
Direct Marketing Environment
Cultural and Social Environment
Economic Environment
Technological Environment
Political and Legal Environment
The five basic areas of the marketing environment are shown in this diagram. Marketers should consider each area and how each area interacts with the others when planning strategies.
Key Issues
Direct market environment: customers, the resources and objectives of the company, and the firms’ competitors.
External market environment: the economic environment, the technological environment, the political and legal environment, and the cultural and social environment.
Marketers make decisions about the 4Ps in the context of the environment.
Discussion Question: How is it that a marketer can influence, but not directly control, the environment? Give an example.
Marketers must continually scan the environment and search for potential opportunities and threats.
External Marketing Environment

10. A mission statement helps set the course and basic purpose for being.
The whole firm should work toward these same objectives.

11. Company Resources May Enable or Limit Pursuit of Opportunities
Financial Strength
Financial Strength
Producing Capability and Flexibility
Producing Capability and Flexibility
It is important to evaluate how realistic each opportunity is in relation to the specific capabilities of the company.
Key Issues
Key areas that limit the search for opportunities are:
Financial strength--opportunities require capital.
Producing capability and flexibility:
As production increases, the cost of producing each unit decreases.
Making changes can be costly and take time.
Marketing strengths--competitive advantages, such as:
familiar brand
strong channel relations;
creative brand advertising;
industry-leading salesforces.
Discussion Question: Several years ago, Frito-Lay, a leading producer of snack foods, added cookies to its traditional line of salty snacks. What marketing strengths could Frito-Lay bring to bear in this extension of its product line?
Marketing Strengths

12. The Competitive Environment -- Analyzing Competition
Competitor Analysis
Competitor Analysis
Key
Concepts
Competitive Advantage
Competitive Advantage
Competitor analysis is an organized approach for evaluating the strengths and weaknesses of current or potential competitors' marketing strategies. Marketers do this by gathering information on the competitors from a variety of internal and external sources.
Key Issues
Search for competitive advantage: new or better ways to satisfy customer needs and provide better value than the competition.
Competitive rivals: the firms that will be the closest competitors.
Marketing managers must anticipate future competition.
Successful marketers naturally attract competition.
Discussion Question: Think about a major grocery store chain that serves your area. What are the competitive rivals for this chain? Are these rivals the only relevant competitors? Why or why not?
Competitive barriers--the conditions that make it difficult or impossible for a firm to compete in a given market.
Competitive Barriers
Competitive Rivals
Competitive Rivals

13. Competitive Barriers
Entry Barriers: how difficult is it to enter the industry?
Mobility Barriers: once you’ve entered the industry, there may be some segments that are hard to access.
Exit Barriers: how difficult is it to leave the industry?

14. The Economic Environment
Global Economy
Rapid Change
Rapid Change
Key
Economic Forces
The economic and technological environment affects the way firms and the whole economy use resources. The economic environment is affected by the way all the elements of the macro-economic system interact.
Key Issues
The economic environment can change very rapidly. In periods of rapid business decline, even a well-planned marketing strategy may fail.
Discussion Question: Can you name a major world event that changed the economic environment and drastically altered the business practices of a major industry?
Interest rates and inflation affect consumer buying processes.
Interest rates can go up sharply in times of high inflation.
Buying power declines during high inflation.
The global economy is increasingly connected.
Competition can come from almost anywhere.
Global trade is affected by exchange rates.
Interest Rates
Interest Rates

15. Technological Environment
Technology is the application of science to convert an economy’s resources to output. Technology affects marketing in two basic ways: with new products and with new processes. In modern economies, the rate of technological change is very rapid.
Key Issues
Technological advances create new market opportunities.
Technology transfer is rapid from one country to the next.
Internet technologies are reshaping marketing.
Discussion Question: In what other ways has the Internet affected marketing? Hint—think about each of the 4Ps.
Technology also poses challenges.
Sometimes, new technological breakthroughs are rushed to market.
Technology also speeds up obsolescence.
Technology has also raised ethical issues about the privacy of personal information, ecological concerns, and the intrusiveness of telemarketing and Internet advertising.

16. The Political and Legal Environment – See Exhibit 3-4
Key Antimonopoly Laws
Sherman Antitrust Act (1890)
Clayton Act (1914)
Federal Trade Commission (1914)
Robinson-Patman Act (1936)
Wheeler-Lea Amendment (1938)
Antimerger Act (1950)
Magnuson-Moss Act (1975)
Consumer Protection Agencies
Federal Trade Commission (FTC)
Food and Drug Administration (FDA)
Consumer Product Safety Commission (CPSC)
Federal Communications Commission (FCC)
Environmental Protection Agency (EPA)
The legal environment refers to the rules and laws that set standards for conduct that are enforced by legal power. Starting in 1890, the United States Congress passed a series of laws designed to encourage competition. Each of these laws regulates different aspects of the marketing mix.
Key Issues
There is also a relationship between antimonopoly laws and marketing mix planning.
For example, the Sherman Act prohibits monopoly or conspiracy to control a product, distribution channels, or prices.
Prosecution is serious and can lead to a variety of penalties, including heavy fines and jail terms.
Discussion Question: In light of all of the legislation prohibiting anticompetitive behavior and deceptive practices, why do you think we still see false advertising claims or deceptive prices?

17. Keeping Competitive in the Changing Cultural & Social Environment
Health Craze in America for example

18. Keeping Competitive in the Changing Cultural & Social Environment

19. Increasing Urbanization
Population Trends
Increasing Density
Beyond population growth, marketers must examine the patterns of population density and population movement.
Key Issues
The population is becoming more concentrated.
Population density: how concentrated the population is in a particular area.
Discussion Question: What parts of the marketing mix would be most affected by population density?
Urbanization: the movement of people from rural areas into more industrialized urban areas.
Advanced technologies, such as satellite TV and the Internet, accelerate this trend.
Discussion Question: Cable News Network (CNN) broadcasts via satellite worldwide from its headquarters in Atlanta, Georgia. What are some of the implications of this worldwide communication for marketers?
Increasing Urbanization

20. NC and Southeastern population growth is expected to continue, as is the Southwestern US
Turning to key characteristics of the United States market, the first is the overall distribution of the population in the various states. Exhibit 3-6 shows that current population and population growth vary a lot in different regions of the country.
Key Issues
The size of the land area of a state does not necessarily correspond to the size of its population.
The areas with high population concentrations tend to be in close proximity to major bodies of water or rivers.
Discussion Question: Why are there so many high population areas near waterways? What implications does this tendency have for the marketing mix?
Marketers may look to less populated areas, such as the western mountain states, for markets that are relatively untapped.
Discussion Question: Can you think of examples of products or services that have migrated to one region from another in response to the shifting population?
The Census Bureau is an excellent source for detailed information on these population patterns.
2010 Population (in millions)
Percent Change by State, 2000–2010

21. Gen X – fewer in number; Gen Y – tech savvy
US Growth Trends
Key Trends
Graying of America
Gen X – fewer in number; Gen Y – tech savvy
Summary Overview
In the United States, the population is growing, but the growth rate has slowed considerably--to about one percent per year in the last decade. In examining the growth of the population, marketers should look at growth from sources within the U. S. and growth from external sources.
Key Issues
Much of the growth in the U. S. population comes from immigrants.
The birthrate is the number of babies born per one thousand people in the population. Is the birthrate a boom or a bust? It’s both!
The highest birthrates in the last century—the “Baby Boom” —occurred from 1946 to 1964.
After the Baby Boom, the birthrate fell to a low point in 1976.
The birthrate rose slightly between 1980 and 1990.
The birthrate is declining again.
Discussion Question: American couples are now having fewer children than in the Baby Boom years. What implications does this trend have for marketers?
The graying of America is now underway as the Baby Boomers enter middle age and senior citizenry.
Discussion Question: How will marketing to senior citizens--those over 65-- be different ten years from now?
Diversity Explosion

23. Whose Population is Aging the Fastest?
Median Age 23
Source: United Nations Population Division. World Population Prospects, the 2008 Revision. 23

24. Japan: Face of the Future
Source: New York Times, September 2, 1997.

25. “Diversity Explosion” (William Frey, Brookings Institute, 2014) and the “Next America” (Paul Taylor, PEW Research Center, 2016) highlight how the America of tomorrow will look different from the America of the past…

26. Screening Criteria Narrow Down Strategies
Product-Market
Screening Criteria
Qualitative “Fit” Criteria
Quantitative “Data” Criteria
Successful, innovative firms have strong programs for evaluating opportunities that they identify as a result of scanning the environment. These techniques help them select the opportunities most appropriate for the firm’s particular competitive position.
Key Issues
Marketers must develop and apply screening criteria.
Quantitative criteria include sales, profit, and return on investment goals.
Qualitative criteria summarize what businesses to be in and what strengths and trends to use as a base.
The whole marketing plan should be evaluated.

27. GE’s Strategic Planning Grid Helps Evaluate a Portfolio of Opportunities
Industry Attractiveness
High
Medium
Low
High
Business Strengths
Medium
Graphical planning grids help managers summarize the interaction of several key factors identified by the company to be important to successful business ventures.
Key Issues
General Electric strategic planning grid: positions opportunities according to industry attractiveness and business strength.
Industry attractiveness--characteristics such as size, growth, and competitive structure.
Discussion Question: What characteristics of an industry would be attractive?
Business strength--resources of the organization like people skills, technological position, growth, market share or profitability, among others.
Using industry attractiveness and business strength, a manager can show where any opportunity appears on this grid.
Opportunities occupying the green area of this matrix are growth opportunities and should be pursued. Such opportunities occur in more attractive industries and better fit with the company’s strengths.
Opportunities falling in the red area are ones that the firm should avoid. Such opportunities are perhaps in low growth industries and do not play to the company’s strengths.
In the middle, the yellow areas are borderline opportunities that the firm needs to analyze more fully in order to determine if they are worthwhile. A company may be able to develop a marketing strategy that offsets the lack of strength or low attractiveness in an industry.
No Growth
Low
Borderline
Growth

28. Analyzing the Current Business Portfolio of Strategic Business Units (SBUs) Using BCG’s Growth Share Matrix
Relative Market Share
Market Growth Rate L H
Boston Consulting Group’s Growth Share Matrix
Star
???
Cow
Dog

29. Marketing does not take place in a vacuum!
Summary
Marketing does not take place in a vacuum!
Success depends on anticipating changes (both opportunities and threats) in the marketing environment.
Marketing can be “reactive or proactive” - which do you want to be?

30. For Next Class…
Please read Chapter 4 “Focusing Marketing Strategy with Segmentation and Positioning”