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The Marketing Environment and Marketing Strategy

Environmental scanning Environmental forces Social Economic Technological Competitive Regulatory. Strategic Planning Purposes Objectives and challenges Business-Unit Strategies--core competencies Issues in creating a strategy Choosing your battles carefully.

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The Marketing Environment and Marketing Strategy

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  1. Environmental scanning Environmental forces Social Economic Technological Competitive Regulatory Strategic Planning Purposes Objectives and challenges Business-Unit Strategies--core competencies Issues in creating a strategy Choosing your battles carefully The Marketing Environment andMarketing Strategy

  2. The Marketing Environment • The importance of the environment • Some forces and their implications • e.g., truth in lending laws; antitrust laws, economic cycles; changing demographics

  3. Environmental Scanning and Analysis ANALYSIS SCANNING ACTION

  4. Elements of The Environment • Social • Economic • Technological • Competitive • Regulatory

  5. Demographics—more Older citizens Unmarried singles Immigrants Ethnic diversity Family changes “Blended” families Non-traditional households Cultural changes Roles of women Values E.g., fitness Longer work hours for some; yet also more people working part time Changing cultural standards (e.g., were Beatle members’ haircuts that offensive?) Social Forces

  6. Consumer Income Nominal vs. inflation adjusted Impact of inflation Disposable vs. pre-tax income Discretionary income Regional influences Economic cycles Economic Forces “Teach a parrot to say ‘supply” and ‘demand” and you have a learned economist!” Paul Samuelson.

  7. Economic Cycles

  8. Technological Forces • Changes in technology may make business obsolete; e.g., • buggy whips (automobile) • airport at Gander, Newfoundland (longer range aircraft) • Federal Express (fax machine; Internet) • New opportunities—e.g., specialty online retailers, mass customization

  9. Competition • Levels • Discretionary income • Product competition • Brand competition • Market structures • Monopoly (e.g., electric power) • Oligopoly (e.g., cars, OPEC) • Monopolistic competition (e.g., supermarkets) • Pure competition (commodities; e.g., • Competition • benefits the consumer • is increasingly global

  10. Barriers to entry Financial Technological Intellectual property Brand recognition Running businesses Distribution channels Other asset (e.g., landing rights) Power of Buyers Substitutes available Direct Indirect Suppliers Existing competitors and substitutes Potential competition—DO NOT underestimate! Issues in Competition

  11. Political Forces • Lobbying by • business groups (e.g., honey lobby) • consumer/political groups (e.g., labor unions; senior lobby) • foreign interests

  12. Legal and Regulatory Environment • Laws and Regulations • for safety • for consumer protection • to protect special interests • Dangers of litigation--anyone can sue, and juries often buy it! • Examples: • Antitrust • Fair competition • Pricing • “Truth in Lending”--have to tell people real costs of financing; car leases now regulated

  13. Antitrust Law No, now that you mention it, I don’t trust you! • Provisions • Must compete fairly; no • collusion • predation • Must not abuse market power; no • “excessive” market share • “tying”--requiring people to buy a less desired item to get a desired one; e.g., • must buy service to get Xerox copier • Ford only drilled a slot if you bought a radio

  14. Strategy • Plan • to achieve desired objectives (e.g., profit, market share) • based on available resources (e.g., financial, patents, trademarks, people, brand name/image , distribution channels) • subject to choices made (e.g., willingness to take risk, short run vs. long run goals)

  15. Strategy, Marketing, and the Organization DESIRED OUTCOMES RESEARCH, ANALYSIS AND PLANNING IMPLEMENTATION STRATEGY RESULTS EVALUATION

  16. Dimensions of Strategy • Ultimate organizational objective • Profit • Non-profit • Level • Corporate • Business Unit • Functional

  17. The Business What is it? Should not define too narrowly or too broadly The Mission Scope Customers Markets Technology Values Values and culture Goals and objectives Profit Revenue Market share Unit sales Employee welfare Social responsibility Technological leadership Other Some Issues in Strategy

  18. Considerations in Strategies • Customers • Competencies • Competitors

  19. Selecting Target Consumers • Demand measurement/forecasting • Market segmentation • Target marketing • Market positioning

  20. The Boston Consulting Group (BCG) Matrix © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

  21. Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis STRENGTHS STRATEGY WEAKNESSES OPPORTUNITIES THREATS

  22. Strengths Technology Market share Barriers to entry Brand name Cash Weaknesses Non-Windows division (e.g., MSN, games) Opportunities Hardware e.g., home networks Services Threats Recession Legal Regulatory SWOT--Microsoft

  23. Decision on whether to stay in ISP business Game business If the decision is to stay: Should more resources be invested? Possible focus or differentiation? Dealing with decline in demand due to recession Price cuts? “Hold out?” Political relations to limit future legal problems Microsoft: Implications

  24. SMAC Criteria for Strategic Plans • Specific • Measurable • Achievable • Consistent

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