1. Chapter 2 Situation & Environmental Analysis

2. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Components of a Situation Analysis... Internal environment Customer environment External environment

3. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. The Internal Environment Review current objectives, strategy & performance Evaluate the availability of resources Understand the strengths & weaknesses of your organizational culture & structure

4. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. External Environment Competitive Forces : –Who are our current & future competitors? –Brand competition-what products are similar in features & benefits to the same customers? –Product competition-who competes in the same product class (different features, benefits & price)? –Generic competition-what very different products solve the same problem or needs? –Total budget competition-what competes for limited financial resources of the same customer

5. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Other Issues for Consideration in Evaluating the External Environment Economic growth and stability Political trends Legal and regulatory factors Changes in technology Cultural trends

6. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Issues in the Customer Environment Identify current & potential customers Understand needs of current & potential customers Determine basic features of the firm’s & competitor’s products that meet customers needs Anticipate changes in customers needs

7. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. The 5-W Model for Customer Analysis... Who are our current & potential customers? What do customers do with our products? Where do customers purchase our products? When do customers purchase our products? Why (& how) do customers select our products? Why do potential customers not purchase our products?

8. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Key Aspects of the Competitive Analysis Identify all current & potential brand, product, generic & total budget competitors Assess key competitors size, growth, profitability, objectives, strategies & target markets Assess competitors strengths & weaknesses Analyze each competitor’s market capabilities in terms of products, distribution, promotion & pricing Estimate competitors’ likely strategies & responses under different environmental situations

9. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. External Environmental Factors- Economic Growth & Stability Inflation Employment & income levels Interest rates Taxes Trade restrictions Tariffs Consumer confidence Business cycles

10. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. External Environment-Political Trends Issues mostly beyond a firm’s direct control Some firms protest or lobby…others hire specialists to do so for them –Tobacco industry –Automotive industry –Drug companies –Health care providers

11. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Other External Environment Considerations Legal and regulatory factors –laws & regulations may influence marketing decisions & activities Changes in technology –improvements in the way we accomplish tasks & processes Cultural trends –demographic trends –lifestyle trends –changes in cultural values

12. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Collecting Environmental Data & Information Internal data sources-company sales records & research ( for example, intranets) Government sources-census data, small business administration, etc. Periodicals and books Commercial, fee based sources- A.C. Nielsen

13. COPYRIGHT © 2002 Thomson Learning, Inc. All rights reserved. Problems That Can Occur During Data Collection Incomplete or inaccurate definition of the marketing problem Ambiguity about the usefulness or relevance of the data collected Severe information overload Expensive & time consuming data collection Finding ways to organize the data collected