1. Evaluating Opportunities in the Changing Market Environment
Chapter 3
Evaluating Opportunities in the Changing Market Environment
CHAPTER THREE
Lecture Notes for
Essentials of Marketing 14e
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2. At the end of this presentation, you should be able to:
This slide refers to material on p. 62.
know the variables that shape the environment of marketing strategy planning.
understand why company objectives are important in guiding marketing strategy planning.
see how the resources of a firm affect the search for opportunities.
know how to conduct a competitor analysis and how different types of competition affect strategy planning.
understand how the economic and technological environments can affect strategy planning.
At the end of this presentation, you should be able to :
know the variables that shape the environment of marketing strategy planning.
understand why company objectives are important in guiding marketing strategy planning.
see how the resources of a firm affect the search for opportunities.
know how to conduct a competitor analysis and how different types of competition affect strategy planning.
understand how the economic and technological environments can affect strategy planning.

3. At the end of this presentation, you should be able to:
This slide refers to material on p. 62.
know how elements of the political and legal environment affect marketing strategy planning.
understand the cultural and social environment and how demographic trends affect strategy planning.
understand how to screen and evaluate marketing strategy opportunities.
understand important new terms.
At the end of this presentation, you should be able to:
know how elements of the political and legal environment affect marketing strategy planning.
understand the cultural and social environment and how demographic trends affect strategy planning.
understand how to screen and evaluate marketing strategy opportunities.
understand important new terms.

4. The Marketing Environment
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Marketing Strategy Planning Process
Summary Overview
The narrowing-down process should consider the important elements of the market environment and how they are shifting.
Key Issues:
The marketing strategy planning process requires:
Narrowing down to the best opportunities;
Developing a strategy that:
gives the firm a competitive advantage;
provides target customers with superior customer value.
Narrowing down to the best opportunities
Developing a strategy

5. Best opportunities to pursue
Marketing Strategy Planning: Competitors, Company, & External Market Environment (Exhibit 3-1)
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Company
Objectives
Resources
Competitors
Current
Prospective
External Market Environment
Economic
Technological
Political & Legal
Cultural & Social
Summary Overview
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 strategic planning grids, covered in the chapter. Often, firms must plan for multiple products simultaneously.
Once all the above are considered, a 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?
Evaluating Opportunities
Screening criteria
Planning grids
Planning for multiple products
Best opportunities to pursue

6. The Marketing Environment
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Customers
Resources and Objectives of the Firm
Competitive Environment
Direct Marketing Environment
Cultural and Social Environment
Economic Environment
Technological Environment
Political and Legal Environment
Target
Summary Overview
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 4 Ps 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
External market
environment

7. A Hierarchy of Objectives (Exhibit 3-2)
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IT Objectives
R&D Objectives
HR Objectives
Finance Objectives
Production Objectives
Marketing Objectives
Product Objectives
Place Objectives
Price Objectives
Promotion Objectives
Personal Selling Objectives
Mass Selling Objectives
Sales Promotion Objectives
Summary Overview
These objectives are general in scope, serving as guidelines. A firm should develop its own objectives—which reflect a company’s mission statement and objectives.
Key Issues
A mission statement helps set the course. It sets out the organization’s basic purpose for being.
The whole firm must work toward the same objectives.
Company objectives provide the larger framework for setting marketing objectives.
Marketing objectives guide the development of objectives for each element of the marketing mix.
Knowing the objectives for a specific element of the marketing mix then guides more specific objectives.
For example, marketing objectives drive promotion objectives.
And then promotion objectives will drive objectives for each element of the promotion blend.
Objectives should be explicit, quantified, and related to time deadlines.
Discussion Question: What does it mean to say that objectives should be “quantified”? Why are quantified objectives preferable to objectives that are not quantified?
Company Objectives
Marketing Objectives
Promotion Objectives

8. Company Resources May Limit Search for Opportunities
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Financial Strength
Summary Overview
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—some opportunities require more capital than others.
For example, developing a drug to cure cancer might require a very large investment in research & development.
Producing capability and flexibility—a company must decide if it has the production capacity and labor skills needed to pursue a particular opportunity.
As production increases, the cost of producing each unit decreases.
Making changes can be costly and takes time.
Marketing strengths—does the company have competitive advantages, such as:
familiar brand;
strong channel relations;
creative brand advertising; and
industry-leading sales forces?
The knowledge of people at the firm can be a unique resource.
By analyzing successes or failures in relation to the firm’s resources, management can discover why the firm was successful—or why it failed—in the past.
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? 
Producing Capability and Flexibility
Marketing Strengths

9. Analyzing Competitors and the Competitive Environment
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Avoid Head-On Competition
Summary Overview
The competitive environment affects the number and types of competitors the marketing manager must face and how they may behave. Prudent managers choose strategies that avoid head-on competition and/or plan for competition when it is inevitable.
Key Issues
Marketers should understand the differences among types of market situations:
Monopoly: one company serves the entire customer base. Competitor-free environments are rare.
Monopolistic competition: a number of different firms offer marketing mixes that some customers see as different. Monopolistic competition is typical, and a challenge.
Oligopoly: a small number of firms controls the market. Barriers to competitive entry are high.
Pure competition: a large number of firms compete with similar (commodity) products. Price is the determining factor in making a purchase.
Discussion Question: Can you think of an example for each of the four types of competitive situations? For which market situation(s) is it easiest to think of an example? For which type is it hardest to think of an example? Why?
Know the Market Situation
Monopoly
Monopolistic Competition
Oligopoly
Pure Competition

10. Avoiding Head-On Competition
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Most product-markets head toward pure competition—or oligopoly—over the long term. In these situations, competitors offer very similar products. Thus, it is up to marketing managers to differentiate their products from those of the competition. This can be done in many ways. For example, in this ad, Shell Oil is attempting to differentiate itself from its competitors by encouraging people concerned with safety and physical well-being to write for a free book: “Learn How To Avoid Driving’s Most Dangerous Distractions.”
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11. Checking Your Knowledge
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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. pure competition.
B. monopoly.
C. oligopoly.
D. monopolistic competition.
E. oligopolistic competition.
Checking Your Knowledge
ANSWER: D
Feedback: In the above question, there are three different jewelry stores discussed (low-end, moderately-priced, and super-premium). Each store differs on pricing, quality of merchandise, and services. In monopolistic competition, a number of different firms (at least three different jewelry stores mentioned) offer marketing mixes that at least some customers see as different. This question is an example of monopolistic competition. ‘D’ is the best answer selection.

12. Analyzing Competitors to Find a Competitive Advantage
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Competitor Analysis
Competitive Rivals
Key
Concepts
Summary Overview
Marketing managers must understand the competitive environment.
Key Issues
Competitor analysis: 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.
Competitive rivals: the firms that will be the closest competitors.
Marketing managers must anticipate future competition.
Successful marketers naturally attract competition.
Competitor matrix: an organized table that compares the strengths and weaknesses of a company with those of its competitive rivals.
Search for sustainable competitive advantage: a marketing mix that customers see as better than a competitor’s mix and cannot be easily copied.
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?
Competitor Matrix
Competitive Advantage

13. Checking Your Knowledge
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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. competitive opportunity.
B. monopoly.
C. competitive barrier.
D. opportunity.
E. competitive environment.
Checking Your Knowledge
Answer: C
Feedback: In his competitor analysis, Chris has identified three national chain restaurants that are already in his area and have established clientele. The existence of these restaurants is a condition that may make it difficult for Chris’ proposed restaurant to compete. The best answer selection is ‘C’. Chili’s, TGI Friday’s, and Applebee’s are competitive barriers for entry into this market with a restaurant of Chris’ description.

14. Marketers Need Information about Competitors
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Seek Information about Competitors
Summary Overview
Marketing managers should seek out information on competitive practices.
Key Issues
The search for information can raise ethical issues.
Discussion Questions:
How would you answer the following questions?
Should people who go to work for their former competitors use information they gained from their previous employers?
Is there anything wrong with having computer hackers break into a competitor’s computer system to access information?
Ethical Issues

15. The Economic Environment
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Global Economy
Rapid Change
Key
Economic Forces
Summary Overview
The economic environment affects the way firms and the whole economy use resources. The economic environment is affected by the interactions of all the elements of the macro-economic system.
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?
Marketing strategies change in a recession.
During a recession, consumers spend less on products that are not necessities.
Therefore, marketing managers find ways to adapt their marketing strategies and lessen the impact of the recession.
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

16. Checking Your Knowledge
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Rising interest rates can slow the housing market in the United States, slowing business for real estate developers, mortgage lenders, and construction firms. This is a trend in the:
A. competitive environnent.
B. technological environment.
C. cultural environment.
D. economic environment.
E. legal environment.
Checking Your Knowledge
Answer: D
Feedback: Changes in the economy are often accompanied by changes in the interest rate. In the above question, the changes in the housing market (because of changing interest rates) are trends within the economic environment. The best answer selection is ‘D’.

17. The Technological Environment
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Summary Overview
Technology is the application of science to convert an economy’s resources to output. Technology affects marketing in two basic ways: opportunities for new products and opportunities for new processes. In modern economies, the rate of technological change is very rapid.
The video clip highlights the extensive use of bar code technology in manufacturing, retailing, wholesaling, transportation, and medical industries.
Key Issues
Technology leads to breakthrough opportunities.
Internet technologies are reshaping marketing.
The Internet changes based on the way consumers shop and marketers market.
Discussion Question: In what other ways has the Internet affected marketing? Hint—think about each of the 4Ps.
Technology poses challenges.
Sometimes, new technological breakthroughs are rushed to market. Technology also speeds up obsolescence.
Technology has raised ethical issues about the privacy of personal information, ecological concerns, and the intrusiveness of telemarketing and Internet advertising.
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18. Checking Your Knowledge
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Ford announced that it would begin offering Bluetooth wireless to help consumers more easily make hands free cell phone calls in their cars. The development of Bluetooth is a significant development in the:
A. technological environment.
B. legal environment.
C. corporate environment.
D. social environment.
E. personal environment.
Checking Your Knowledge
Answer: A
Feedback: Advances in the technological environment have resulted in an explosion of high-tech products. The development of Bluetooth technology in vehicles is clearly an example of this. The best answer selection is ‘A’.

19. The Political Environment
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Examples of
Characteristics of the Political Environment
Nationalism
Regional Economic Groupings
Summary Overview
The political environment refers to the way societies order their governments and to the attitudes of the government and people toward business.
Let’s talk about two examples of different characteristics of the political environment.
Key Issues
 Nationalism is an emphasis on a country’s interests before anything else.
Nationalism can be limiting in international markets, by reducing sales and blocking marketing activity.
 Regional economic groupings are becoming more important.
The European Union has unified European markets.
The North American Free Trade Agreement (NAFTA) is building trade cooperation in North America.
Discussion Question: Are regional groupings a form of nationalism? Explain.

20. The Political Environment
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Summary Overview
Although Europe is becoming a large unified market, marketers will still encounter differences among European countries.
Key Issues
Adero wants marketers to keep in mind that a website can attract prospects from all over the world.
It also wants marketers to note that a website won’t be successful in turning them into customers if it ignores nationalism and cultural differences.

21. The Legal Environment - Key Antimonopoly Laws (Exhibit 3-3)
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Sherman Act (1890)
Magnuson-Moss Act (1975)
Clayton Act
(1914)
Summary Overview
The legal environment refers to the rules and laws that set standards for conduct; further, these rules and laws 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 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.
The Sherman Act deals with conspiracy or restraint of trade
The Clayton Act substantially lessens competition by controlling how firms sell some products
The Federal Trade Commission Act focuses on unfair methods of competition like deceptive selling practices
The Robinson Patman Act controls practices that might injure competition – like when a buyer uses power to get particularly low prices
The Wheeler Lea Amendment governs unfair or deceptive practices – like deceptive packaging or advertising
The Antimerger Act tries to maintain competition by limiting a firm’s ability to buy competitors, producers, or distributors
The Magnuson Moss Act focuses on unreasonable practices around product warranties.
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?
Antimerger Act (1950)
Federal Trade Commission Act (1914)
Wheeler-Lea Amendment (1938)
Robinson-Patman Act (1936)

22. The Legal Environment - Consumer Protection Agencies
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Summary Overview
This slide provides a description of some important Federal regulatory agencies, many of which deal with consumer protection.
Key Issues
Consumer protection laws are not new.
Sellers are required to be truthful, meet contracts, and stand behind their products.
Food and drugs are controlled by the Food and Drug Administration (FDA).
One major initiative of the FDA is the development of standards for nutritional labeling.
Product safety is controlled.
The Consumer Product Safety Act of 1972 empowers its commission to remove unsafe products from the market.
State and local laws vary.
For example, every state has different automotive franchise legislation governing the retailing of new vehicles.
Laws and enforcement differ across countries:
Because legal environments are closely tied to national governments, laws and enforcement vary significantly around the world.
Discussion Question: What are some areas of consumer protection that are of current interest to the courts and to political leaders?
Food and Drug Administration (FDA)
Consumer Product Safety Commission (CPSC)

23. Checking Your Knowledge
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Many states have appointed or elected commissions that oversee the business practices of utilities and other industries that serve the public interest. For a company operating in one of these industries, dealing with this important state-level regulatory commission is an important element of the:
A. legal environment.
B. social environment.
C. monopoly environment.
D. technological environment.
E. corporate environment.
Checking Your Knowledge
Answer: A
Feedback: State-appointed commissions that oversee the business practices of utilities and other public service industries are part of the legal environment. The best answer selection is ‘A’.

24. Checking Your Knowledge
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The Federal Trade Commission informed Tropicana that it would have to stop advertising that one of the benefits of “heart-healthy” Tropicana orange juice was to lower blood pressure. For Tropicana, this situation was a significant development in the:
A. economic environment.
B. social environment.
C. competitive environment.
D. internal company environment.
E. legal environment.
Checking Your Knowledge
Answer: E
Feedback: The Federal Trade Commission investigates unfair methods of competition. This governmental body operates in the legal environment. ‘E’ is the best answer selection.

25. The Cultural and Social Environment
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Changes in
Cultural and Social Environment
Summary Overview
The cultural and social environment affects how and why people live and behave as they do.
Key Issues
This includes demographic trends in population trends and income.
Cultural changes
Demographic data

26. Keeping Competitive in the Social-Cultural Environment
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This ad shows how Farmland Dairies is attempting to provide products that will meet the needs of consumers who are concerned about fat and cholesterol in their diets.
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27. Population Growth, Location, and Mobility
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World Population Growth
World Population Location
Summary Overview
Just 50 years ago, about two-thirds of the world’s population lived in rural areas. Today about half live in urban areas. The world’s population is changing regionally as well, moving from regions of fewer opportunities to regions of greater opportunities.
Key Issues
There has been a movement of the population from rural areas to urban areas.
There has and will be drastic changes in population for different regions. The total world population continues to grow, but that growth differs by country and continent. Developing countries in Africa and Asia are growing quickly. In Japan, Russia and many European countries the population in the next decade is projected to decline.
All of these changes create different needs and purchase patterns.
In many developing countries Coca-Cola is the largest advertiser in the country. Why does a brand like Coca-Cola focus on these developing countries where the average person might earn less than $3 per day?
Population Mobility
Rural to Urban

28. No Money, No Market! + = Gross National Income (GNI) Gross Domestic
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Gross National Income
(GNI)
Gross
Domestic
Product
(GDP) +
Summary Overview
In order to have a market, consumers must have money. Two popular measures of national income are:
Key Issues
Gross domestic product (GDP): The total market value of all goods and services provided in a country’s economy in a year by both residents and nonresidents of that country.
GDP includes foreign income.
Gross national income (GNI) is similar to GDP, but GNI does not include income earned by foreigners who own resources in that nation.
Marketers should examine GDP, GNI and other measures in order to get a complete picture of income.
GNI and GDP do not indicate how much money is in the hands of individuals in a country.
 GNI per-capita: dividing GNI by the nation’s population size is a measure of individual income.
It gives some idea of the income level of people in the country.
The large number of countries with low GNI per capita is a stark reminder that much of the world’s population lives in extreme poverty.
Discussion Question: Can you think of any products or services that might be attractive to consumers in countries with low per capita income rates?
There might be considerable potential, and less competition, in areas where per capita income is low. =
Income earned by foreigners who own resources in the nation
GNI / Country’s Population Size = Per Capita Income

29. Technology Adoption Races across Continents
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Cell phone
Internet
Summary Overview
Technology affects the world around us.
Key Issues
 Two technology indicators that impact marketing strategy:
Data on cell phone
Internet usage
The adoption of these technologies may have their greatest impact in developing countries.
As adoption of these technologies speeds ahead, marketing managers will need to adjust their marketing strategies accordingly.
Technology Indicators

30. 2010 Population (in millions) and Percent Change by State, 2000–2010 (Exhibit 3-5)
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Summary Overview
The overall distribution of population is critical to the analysis of a market. Using the United States as an example, Exhibit 3-5 shows that current population and population growth can vary greatly in different regions of a country.
Key Issue
Marketing managers will find growth opportunities in states and regions of the country that are growing.

31. Interactive Exercise: Wheel of Opportunity
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The purpose of this exercise is to help students extend their conceptual knowledge of the external marketing environment and the manner in which trends or occurrences within these environments present opportunities or threats. Set in the context of “The Wheel of Opportunity,” students are shown hypothetical or actual trends pertaining to the technological, economic, social, and legal-political environments. Competitive factors are not discussed in the context of this exercise. For each environmental trend or event, students are challenged to identify the product category or industry for which that trend represents the strongest opportunity.
For complete information and suggestions on using this Interactive Exercise, please refer to the “Notes on the Interactive Exercise” section for this chapter in the Multimedia Lecture Support Package to Accompany Essentials of Marketing. That same information is available as a Word document in the assets folder for the PowerPoint file.

32. Population Trends in the U.S. Consumer Market
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Graying of America
Key Trends
Summary Overview
Age distribution in the U.S. has a big impact on marketing decisions. Here we highlight a few of the major trends across different age cohorts.
Key Issues
The Graying of America: Boomers have had a big effect on marketing all their lives. The growth of rock-and-roll in the 1960s and 1970s was driven by record-buying teenage baby boomers.
Discussion Question: How will marketing to senior citizens--those over 65-- be different ten years from now?
 Generation X, sometimes called Gen X, refers to the generation born immediately following the baby boom—from 1965 to 1977.
By 2010, this group fell mostly in the 30–44 age group and the 6.1 percent decline in its numbers between 2000 and 2010 was the result of the baby bust.
 Generation Y, sometimes called Millenials, refers to those born from 1978 to 1994.
This group emerged from the echo boom and is generally larger in number than Generation X.
This group grew up with technology.
Generation Z, refers to those born since 1995.
This group is still young, so ideas about its emerging values are more speculative.
Generation X – fewer in number
Generation Y – techno savvy
Generation Z – cautious

33. Screening Criteria Help Narrow Down to Specific Strategies
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Product-Market
Screening Criteria
Summary Overview
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 (ROI) goals.
Qualitative criteria summarize what businesses to be in and what strengths and trends to use as a base.
Many organizations now screen opportunities on sustainability —the idea that it’s important to meet present needs without compromising the ability of future generations to meet their own needs
The whole marketing plan should be evaluated against these criteria.
Qualitative Criteria
Quantitative Criteria

34. Expected Sales and Cost Curves of Two Strategies over Five-Year Planning Periods (Exhibit 3-8)
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Dollars
Years 1 2 3 4 5
Product A
Years 1 2 3 4 5
Product B
Sales
Sales
Total cost
Summary Overview
A marketing manager using the total profit approach estimates potential sales and costs during the life of a plan. These graphs provide one such estimate for two different products. Product A represents the estimates for a much improved product. And Product B shows a “me-too” product.  Product B involves lower initial costs and is profitable more quickly while Product A is not profitable until year 3.
Discussion Question: Consider the graph shown in the slide—which one is the better opportunity for the firm to pursue? Is it Product A or Product B? Why?
A total profit approach can help evaluate possible plans.
Product A has high start-up costs.
Product B earns profits within one year.
If the firm can afford the start-up costs and delayed profits, the long term profit potential for Product A is greater.
Total cost

35. General Electric’s Strategic Planning Grid (Exhibit 3-9)
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Industry Attractiveness
High
Medium
Low
High
Summary Overview
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’s strategic planning grid positions opportunities according to industry attractiveness and business strengths.
Industry attractiveness is based on characteristics such as size, growth, and competitive structure.
Discussion Question: What characteristics of an industry would be attractive?
Business strengths—resources of the organization like people skills, technological position, growth, market share or profitability, among others.
Using industry attractiveness and business strengths, 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.
Business Strengths
Medium
No Growth
Low
Borderline
Growth

36. Continuum of Environmental Sensitivity (Exhibit 3-10)
This slide relates to material on p
Indicates place where slide “builds” to include the corresponding point (upon mouse click).
Industrial
products
Consumer products linked to cultural
variables
Sensitive
Insensitive
Summary Overview
Planning grids and portfolio analysis apply to international opportunities as well. However, it might be more difficult to be completely familiar with all of the environmental variables at work in foreign countries. The farther one goes from familiar territory, the greater the risk of making big mistakes.
Key Issues
Marketers must evaluate the risks.
Risk assessment varies from market to market.
International markets may be evaluated according to the likelihood of drastic political changes.
Risks vary along a continuum of environmental sensitivity.
 Most industrial products are relatively insensitive to their environment. Industrial firms may find it easier to use the same marketing mix they use in a domestic market in a new international market.
 Consumer products closely linked to other social or cultural variables are very sensitive to their environments. For example, when Disney opened a theme park in France, the parks failed to consider local French customs—such as serving wine with meals. The Euro Disney initially failed to meet its sales goals, but after adding local touches, the park became more successful.
 Basic commodity-type products may have some sensitivity to the environment—so a marketing mix may require minor changes.
If the risks of an international opportunity are hard to judge, it may be wise to look first for opportunities that involve exporting.
Basic
commodity-type consumer products

37. You should now be able to:
This slide refers to material on p. 62.
know the variables that shape the environment of marketing strategy planning.
understand why company objectives are important in guiding marketing strategy planning.
see how the resources of a firm affect the search for opportunities.
know how to conduct a competitor analysis and how different types of competition affect strategy planning.
understand how the economic and technological environments can affect strategy planning.
At the end of this presentation, you should be able to :
know the variables that shape the environment of marketing strategy planning.
understand why company objectives are important in guiding marketing strategy planning.
see how the resources of a firm affect the search for opportunities.
know how to conduct a competitor analysis and how different types of competition affect strategy planning.
understand how the economic and technological environments can affect strategy planning.

38. You should now be able to:
This slide refers to material on p. 62.
know how elements of the political and legal environment affect marketing strategy planning.
understand the cultural and social environment and how demographic trends affect strategy planning.
understand how to screen and evaluate marketing strategy opportunities.
understand the important new terms
At the end of this presentation, you should be able to:
know how elements of the political and legal environment affect marketing strategy planning.
understand the cultural and social environment and how demographic trends affect strategy planning.
understand how to screen and evaluate marketing strategy opportunities.
understand the important new terms

39. Key Terms mission statement competitive environment
This slide refers to boldfaced terms appearing in Chapter 3.
mission statement
competitive environment
sustainable competitive advantage
competitor analysis
competitive rivals
competitor matrix
economic environment
technology
nationalism
North American Free Trade Agreement (NAFTA)
cultural and social environment
gross domestic product (GDP)
gross national income (GNI)
senior citizens
baby boomers
Generation X
Generation Y
Generation Z
sustainability
Summary Overview
These are key terms you should be familiar with based upon the material in this presentation.
Key Issues
Mission statement: sets out the organization's basic purpose for being.
Competitive environment: the number and types of competitors the marketing manager must face, and how they may behave.
Sustainable competitive advantage: a marketing mix that customers see as better than a competitor’s mix and cannot be easily copied.
Competitor analysis: an organized approach for evaluating the strengths and weaknesses of current or potential competitors' marketing strategies.
Competitive rivals: a firm's closest competitors.
Competitor matrix: an organized table that compares the strengths and weaknesses of a company with those of its competitive rivals
Economic environment: affects the way firms—and the whole economy—use resources.
Technology: the application of science to convert an economy's resources to output.
Nationalism: an emphasis on a country's interests before everything else.
North American Free Trade Agreement (NAFTA): lays out a plan to reshape the rules of trade among the U.S., Canada, and Mexico.
Cultural and social environment: affects how and why people live and behave as they do.
Gross domestic product (GDP): the total market value of all goods and services provided in a country’s economy in a year by both residents and nonresidents of that country.
Gross national income (GNI): measure that is similar to GDP, but GNI does not include income earned by foreigners who own resources in that nation.
Senior citizens: people over the age of 65.
Baby boomers: those born between 1946 and 1964—are now creating new opportunities in industries such as tourism, health care, and financial services—all of which are more important to the middle-aged and retired.
Generation X: generation born immediately following the baby boom—from 1965 to 1977.
Generation Y: those born from 1978 to 1994.
Generation Z: those born since 1995.
Sustainability: the idea that it’s important to meet present needs without compromising the ability of future generations to meet their own needs.