1. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 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., 2000 Irwin/McGraw-Hill When you finish this chapter, you should 4-2 Chapter 4 Objectives 1. Know the variables that shape the environment of marketing strategy planning. 2. Understand why company objectives are important in guiding marketing strategy planning. 3. See how the resources of a firm affect the search for opportunities. 4. Know how the different kinds of competitive situations affect strategy planning. 5. Understand how the economic and technological environment can affect strategy planning. 6. Know why you might be sent to prison if you ignore the political and legal environment. 7. Know about the cultural and social environment and key population and income trends that affect it. 8. Understand how to screen and evaluate marketing strategy opportunities. 9. Understand the important new terms.

3. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill The Importance of Objectives Setting Company Objectives Provide Guidelines Coordinate Effort Lead to Marketing Objectives Be Explicit 4-3

4. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 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

5. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill Limits on Opportunity Search Marketing Strengths Producing Capability and Flexibility Financial Strength 4-5

6. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 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., 2000 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., 2000 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., 2000 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., 2000 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 4-10 Some Important U.S. Federal Regulatory Agencies

11. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill The Cultural and Social Environment 4-11 Example of a Cultural Trend: The Changing Roles of Women Example of a Cultural Trend: The Changing Roles of Women Time Poverty Economic Power Career Opportunity

12. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill Money Growth Concentration Literacy Relative Buying Power Rate of Growth Population Density Communication Concerns Focus: Identifying Potential Markets 4-12

13. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill US Population Trends Shifts to Suburban Areas Shifts to Suburban Areas Changing Household Composition Changing Household Composition Aging Population Birthrate Regional Differences 4-13

14. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill 1935 19702005 13 19 26 Birthrate 25.0 18.7 19.4 14.6 14.0 16.6 After a peak between 1950 and 1955, U.S. Birthrates declined steadily until 1975. Following a brief rise in rates finishing about 1990, rates have again begun to fall. 4-14 Changes in U.S. Birthrate, 1935-2005

15. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill Sales and Cost Curves of Two Strategies Exhibit 4-8 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. 4-15

16. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 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 4-8 4-16

17. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill Sales and Cost Curves of Two Strategies Exhibit 4-8 4-17 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

18. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill Exhibit 4-9 4-18 Business Strength Industry Attractiveness High Medium Low HighMediumLow No Growth Borderline Growth Evaluating Opportunities

19. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill InsensitiveSensitive Basic commodity-type consumer products Industrial products Consumer products that are linked to cultural variables Exhibit 4-10 4-19 Continuum of Environmental Sensitivity

20. For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill Nationalism NAFTA Consumerism Cultural and Social Environment Gross National Product (GNP) Metropolitan Statistical Area Senior Citizen Strategic Business Unit (SBU) Mission Statement Competitive Environment Competitor Analysis Competitive Rivals Competitive Barriers Economic and Technological Environment Technology Key Terms 4-20