Chapter 3

1. Chapter 3 Evaluating Opportunities in the Changing Marketing Environment www.mhhe.com/fourps

2. 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 the different kinds of competitive situations affect strategy planning. • Understand how the economic and technological environment can affect strategy planning.

3. At the end of this presentation, you should be able to: • Know why you might be sent to prison if you ignore the political and legal environment. • Understand how to screen and evaluate marketing strategy opportunities

4. Marketing Strategy Planning: Competitors, Company & External Market Environment (Ex. 3-1)

5. Marketing Strategy Planning: Competitors, Company & External Market Environment (Ex. 3-1) • Company • Objectives • Resources • Competitors • Current • Prospective • External Marketing Environment • Economic • Technological • Political & Legal • Cultural & Social • Evaluating Opportunities • Screening criteria • Planning grids • Planning for multiple products Best opportunities to pursue

6. Resourcesand Objectivesof the Firm CompetitiveEnvironment Cultural andSocial Environment Target EconomicEnvironment Political andLegal Environment TechnologicalEnvironment The Marketing Environment Customers Direct Marketing Environment External Marketing Environment

7. Objectives Set Firm’s Course ThreeBasic ObjectivesProvide Guidelines Socially and Economically Useful Function Develop an Organization Earn Profit

8. Company Objectives Production Objectives Finance Objectives HR Objectives R&D Objectives Production Objectives Finance Objectives Marketing Objectives HR Objectives R&D Objectives Product Objectives Place Objectives Promotion Objectives Price Objectives Product Objectives Place Objectives Price Objectives Personal Selling Objectives Mass Selling Objectives Sales Promotion Objectives Hierarchy of Objectives (Exhibit 3-2) MissionStatement

9. Company Resources May Limit Search for Opportunities Financial Strength Producing Capability and Flexibility Marketing Strengths

10. Marketing Strengths

11. Avoid Head-On Competition! The Competitive Environment Know the Market Situation! Monopoly Monopolistic Competition Oligopoly Pure Competition

12. Competitive Advantage

13. Avoiding Head-On Competition © 2009 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

14. Analyzing Competition CompetitorAnalysis Competitive Rivals Key Concepts Competitive Barriers CompetitiveAdvantage

15. Marketers Need Information about Competitors Seek Information About Competitors Ethical Issues Direct Competition Can’t Always Be Avoided

16. Checking Your Knowledge • 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: • pure competition. • monopoly. • oligopoly. • monopolistic competition. • oligopolistic competition

17. Checking Your Knowledge • 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: • competitive opportunity. • monopoly. • competitive barrier. • opportunity. • competitive environment.

18. Rapid Change Global Economy Interest Rates The Economic Environment Key EconomicForces

19. The Technological Environment © 2009 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

20. The Political Environment Examples of Characteristicsof the PoliticalEnvironment Nationalism Regional Economic Groupings

21. The Legal Environment – Key Antimonopoly Laws • Sherman Act (1890) • Clayton Act (1914) • Federal Trade Commission (1914) • Robinson-Patman Act (1936) • Wheeler-Lea Amendment (1938) • Antimerger Act (1950) • Magnuson-Moss Act (1975)

22. The Legal Environment – Consumer Protection Agencies • Federal Trade Commission (FTC) • Food and Drug Administration (FDA) • Consumer Product Safety Commission (CPSC) • Federal Communications Commission (FCC) • Environmental Protection Agency (EPA) “Let the Seller Beware”

23. Checking Your Knowledge • 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: • competitive environnent. • technological environment. • cultural environment. • economic environment. • legal environment.

24. Checking Your Knowledge • 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: • technological environment. • legal environment. • corporate environment. • social environment. • personal environment.

25. Checking Your Knowledge • 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: • legal environment. • social environment. • monopoly environment. • technological environment. • corporate environment.

26. The Cultural and Social Environment Changes in Cultural and Social Environment Changing Role of Women Changes Come Slowly

27. Keeping Competitive in the Social-Cultural Environment © 2009 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

28. Checking Your Knowledge • 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: • economic environment. • social environment. • competitive environment. • internal company environment. • legal environment.

29. Screening Criteria Narrow Down Strategies Product-Market Screening Criteria Qualitative Criteria Quantitative Criteria

30. Product B Product A Sales Sales Total cost Total cost Dollars 0 1 2 3 4 5 0 1 2 3 4 5 Years Years The Total Profit Approach is One Type of Quantitative Screening Criteria (Exhibit 3-6)

31. Planning Grids Help Evaluate Portfolio Opportunities (Exhibit 3-7) Industry Attractiveness High Medium Low High Business Strength Medium No Growth Borderline Low Growth

32. Multiproduct Firms Have a Difficult Strategy Planning Job

33. Evaluating Opportunities in International Markets (Exhibit 3-8) Industrial products Consumer products linked to cultural variables Insensitive Sensitive Basic commodity-type consumer products

34. InteractiveExercise: Wheel of Opportunity

35. You should now 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 the different kinds of competitive situations affect strategy planning. • Understand how the economic and technological environment can affect strategy planning.

36. You should now be able to: • Know why you might be sent to prison if you ignore the political and legal environment. • Understand how to screen and evaluate marketing strategy opportunities.

37. Key Terms • North American Free Trade Agreement (NAFTA) • Cultural and social environment • Sustainability • Strategic business unit (SBU) • Portfolio management • Mission statement • Competitive environment • Competitor analysis • Competitive rivals • Competitive barriers • Economic and technological environment • Technology • Internet • Nationalism