1. www.mhhe.com/fourps For use only with Perreault/Cannon/McCarthy or Perreault/McCarthy texts. © 2008 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Evaluating opportunities in the Changing Marketing Environment Evaluating opportunities in the Changing Marketing Environment CHAPTER FOUR

2. When we finish this lecture you should 1. 1. Know the variables that shape the environment of marketing strategy planning. 2. 2. Understand why company objectives are important in guiding marketing strategy planning. 3. 3. See how the resources of a firm affect the search for opportunities. 4. 4. Know how the different kinds of competitive situations affect strategy planning. 5. 5. Understand how the economic and technological environment can affect strategy planning.

3. When we finish this lecture you should 6. 6. Know why you might be sent to prison if you ignore the political and legal environment. 7. 7. Understand the cultural and social environment and how key population trends affect strategy planning. 8. 8. Understand how to screen and evaluate marketing strategy opportunities.

4. MARKET Marketing Strategy Planning, Competitors, Company, & External Market Environment (Exhibit 4-1)

5. Evaluating Opportunities Screening criteriaScreening criteria Planning gridsPlanning grids Planning for multiple productsPlanning for multiple products Company Objectives Resources Competitors Current Prospective External Marketing Environment Economic Technological Political & Legal Cultural & Social Best opportunities to pursue Marketing Strategy Planning, Competitors, Company, & External Market Environment (Exhibit 4-1)

6. Resources and Objectives of the Firm Competitive Environment The Marketing Environment Cultural and Social Environment Economic Environment Technological Environment Political and Legal Environment External Marketing Environment Direct Marketing Environment Target Customers

7. Socially and Economically Useful Function Socially and Economically Useful Function Socially and Economically Useful Function Socially and Economically Useful Function Develop an Organization Develop an Organization Develop an Organization Develop an Organization Earn Profit Objectives Set Firm’s Course Three Basic Objectives Provide Guidelines Three Basic Objectives Provide Guidelines

8. Company Objectives Company Objectives Production Objectives Production Objectives Finance Objectives Finance Objectives Marketing Objectives Marketing Objectives HR Objectives HR Objectives R&D Objectives R&D Objectives Hierarchy of Objectives (Exhibit 4-2) Mission Statement Product Objectives Product Objectives Place Objectives Place Objectives Price Objectives Price Objectives Production Objectives Production Objectives Finance Objectives Finance Objectives HR Objectives HR Objectives R&D Objectives R&D Objectives Promotion Objectives Promotion Objectives Personal Selling Objectives Personal Selling Objectives Mass Selling Objectives Mass Selling Objectives Sales Promotion Objectives Sales Promotion Objectives

9. Financial Strength Producing Capability and Flexibility Producing Capability and Flexibility Financial Strength Producing Capability and Flexibility Producing Capability and Flexibility Company Resources May Limit Search for Opportunities Marketing Strengths

11. Monopoly Monopolistic Competition Oligopoly Monopoly Monopolistic Competition Oligopoly The Competitive Environment Avoid Head-On Competition! Know the Market Situation! Pure Competition

12. Monopolistic Competition

13. © 2008 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Avoiding Head-on Competition

14. Competitive Advantage Competitive Advantage Competitive Rivals Competitive Rivals Competitor Analysis Competitor Analysis Key Concepts Key Concepts Competitive Rivals Competitive Rivals Competitive Advantage Competitive Advantage Competitor Analysis Competitor Analysis Analyzing Competition Competitive Barriers Competitive Barriers

15. Seek Information About Competitors Seek Information About Competitors Ethical Issues Competition May Vary From Country To Country Competition May Vary From Country To Country Seek Information About Competitors Seek Information About Competitors Ethical Issues Competition May Vary From Country To Country Competition May Vary From Country To Country Direct Competition Can’t Always Be Avoided Direct Competition Can’t Always Be Avoided Marketers Need Information About Competitors

16. A moderately-priced jewelry store is trying to differentiate itself from other jewelry stores. The store prices products somewhat lower than the super-premium jewelry stores, but offers better products and services than low-end jewelry stores provide. The market situation this store faces sounds most like: A. A. pure competition. B. B. monopoly. C. C. oligopoly. D. D. monopolistic competition. E. E. oligopolistic competition Checking your knowledge

17. Chris wants to open a family-oriented restaurant in a thriving suburban area. Chris thinks a sports-based theme and broad menu will be attractive to the large number of families in the area. However, national chain restaurants, such as Chili’s, TGI Friday’s, and Applebee’s already draw large followings in the area. The existence of these chain restaurants is a significant: A. A. competitive rival. B. B. monopoly. C. C. competitive barrier. D. D. opportunity. E. E. competitive environment. Checking your knowledge

18. The Economic Environment Global Economy Key Economic Forces Key Economic Forces Rapid Change Interest Rates Rapid Change Interest Rates

19. No one offers your business more selection than the computer store inside your computer. EGGHEAD.COM The Technological Environment

20. Regional Economic Groupings Nationalism Regional Economic Groupings The Political Environment Consumerism Characteristics of the Political Environment

21. Sherman Act (1890) Clayton Act (1914) Federal Trade Commission (1914) Robinson-Patman Act (1936) Wheeler-Lea Amendment (1938) Antimerger Act (1950) Magnuson-Moss Act (1975) The Legal Environment – Key Antimonopoly Laws

22. Federal Trade Commission (FTC) Food and Drug Administration (FDA) Consumer Product Safety Commission (CPSC) Federal Communications Commission (FCC) Environmental Protection Agency (EPA) “Let the Seller Beware” The Legal Environment – Consumer Protection Agencies

23. Rising interest rates have slowed the housing market in the United States, slowing business for real estate developers, mortgage lenders, and construction firms. This is a tend in the: A. A. competitive environnent. B. B. technological environment. C. C. cultural environment. D. D. economic environment. E. E. legal environment. Checking your knowledge

24. The Cultural and Social Environment

25. Other Countries Current Population Other Countries Current Population People with Money Make Markets Search for Growing Markets Population Trends

26. Worldwide Population Growth

27. Other Population Trends Increasing Density Increasing Urbanization

28. Gross National Income (GNI) Gross National Income (GNI) Gross Domestic Product (GDP) Gross Domestic Product (GDP) Income earned by foreigners in the nation No Money, No Market! GNI / Country’s Population Size = Per Capita Income Gross National Income (GNI) Gross National Income (GNI)

29. Where Does Your State Stand?

30. Population Change (in %) By State 2000 - 2010

31. Population Growing, but… Population Growing, but… Population Growing, but… Population Growing, but… Birthrate – Boom or Bust? Birthrate – Boom or Bust? Birthrate – Boom or Bust? Birthrate – Boom or Bust? Graying of America Graying of America Growth Trends Young and Old Key Trends

32. Appealing to the “Matures”

33. © 2008 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Not Just for the Younger Generation

34. © 2008 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Keeping Competitive in the Social-Cultural Environment

35. Dollars Years 012345 Product A Years 012345 Product B Screening Criteria Narrow Down Strategies (Exhibit 4-9) Total cost Sales Total cost Sales

36. Planning Grids Help Evaluate Portfolio Opportunities Business Strength Industry Attractiveness High Medium Low HighMediumLow No Growth Borderline Growth

37. Multiproduct Firms Have a Difficult Strategy Planning Job

38. InsensitiveSensitive Industrial products Basic commodity-type consumer products Consumer products that are linked to cultural variables Evaluating Opportunities in International Markets (Exhibit 4-11)

39. © 2008 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Interactive Exercise: Wheel of Opportunity

40. You now 1. 1. Know the variables that shape the environment of marketing strategy planning. 2. 2. Understand why company objectives are important in guiding marketing strategy planning. 3. 3. See how the resources of a firm affect the search for opportunities. 4. 4. Know how the different kinds of competitive situations affect strategy planning. 5. 5. Understand how the economic and technological environment can affect strategy planning.

41. 6. 6. Know why you might be sent to prison if you ignore the political and legal environment. 7. 7. Understand the cultural and social environment and how key population trends affect strategy planning. 8. 8. Understand how to screen and evaluate marketing strategy opportunities. You now

42. Mission statement Competitive environment Competitor analysis Competitive rivals Competitive barriers Economic and technological environment Technology Internet Nationalism North American Free Trade Agreement (NAFTA) Consumerism Cultural and social environment Gross domestic product (GDP) Metropolitan Statistical Area (MSA) Senior citizen group Strategic business unit (SBU) Key Terms