1. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Chapter 4: Evaluating Opportunities in the Changing Marketing Environment

2. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Objectives Should Set Firm’s Course Three basic objectives should drive a firm’s objectives: Engage in specific activities that will perform a socially and economically useful function. Develop an organization to carry on the business and implement it strategies. Earn enough profit to survive. Objectives should be specific, measurable and obtainable. The entire firm should work toward the same objectives. Company objectives lead to functional, including marketing, objectives.

3. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill A Hierarchy of Objectives Exhibit 4-1 4-4 R&D Objectives HR Objectives Marketing Objectives Finance Objectives Production Objectives Company Objectives Sales Promotion Objectives Mass Selling Objectives Personal Selling Objectives Price Objectives Promotion Objectives Place Objectives Product Objectives

4. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Limits on Opportunity Search Marketing Strengths Producing Capability and Flexibility Financial Strength 4-5

5. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Uncontrollable Environment Competitive environment Economic environment Technological environment Political environment Legal environment Social and cultural environment These cannot be controlled in the short run.

6. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Competitive Environment Information on Competitors Competitive Barriers Competitive Rivals Competitor Analysis Kinds of Markets Key Concepts in the Competitive Environment 4-6

7. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Economic and Technological Environment Interest Rates Global Economy Rapid Change Key Economic Forces 4-7

8. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Impact of Technology Technology is the application of science to convert and economy’s resources to output Technology impacts marketing both through opportunities for new products and new ways (processes) for handling marketing functions Example: consider the Internet Products: software for computer users Process: selling from a web site 4-8

9. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Political and Legal Environment Regional Groupings Regional Groupings Nationalism Consumerism Characteristics of the Political Environment 4-9

10. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Agencies Responsibilities Federal Trade Commission (FTC) Enforces laws and develops guidelines regarding unfair business practices Food and Drug Administration (FDA)Enforces laws and develops regulations to prevent distribution and sale of hazardous consumer products Consumer Product Safety Commission Enforces Consumer Product Safety Act (CPSC) Federal Communications Commission Regulates interstate wire, radio, and (FCC) television Environmental Protection Agency (EPA)Develops and enforces environmental protection standards Office of Consumer Affairs (OCA) Handles consumer complaints Exhibit 4-4 4-10 Some Important U.S. Federal Regulatory Agencies

11. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Cultural and Social Environment Affects how and why people live and behave as they do. Changes occur slowly.

12. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Cultural and Social Environment 4-11 Cultural Trend: The Changing Roles of Women Cultural Trend: The Changing Roles of Women Time Poverty Economic Power Career Opportunity

13. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Sales and Cost Curves of Two Strategies Exhibit 4-6 Dollars Total cost Years Sales 012345 Product A In this graphic, a too-narrow focus on the first year’s results might cause the marketing manager to abandon this product as too costly. 4-12

14. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Sales and Cost Curves of Two Strategies Total cost Years Sales 012345 Product B In this graphic, a too-narrow focus on the first year’s results might cause the marketing manager to adopt the product prematurely, since its performance in year one is misleading. Exhibit 4-6 4-13

15. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Sales and Cost Curves of Two Strategies Exhibit 4-6 4-14 Dollars Total cost Years Sales 012345 Product A Total cost Years Sales 012345 Product B Seen together, it is easy to see that Product A offers a vastly better overall return than does Product B

16. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Exhibit 4-7 4-15 Business Strength Industry Attractiveness High Medium Low HighMediumLow No Growth Borderline Growth Evaluating Opportunities

17. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Evaluating Opportunities Industry attractiveness size market growth, pricing market diversity competitive structure industry profitability technical role social environment legal human Business strengths size growth share position profitability margins technology position strengths/weaknesses image pollution people