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Marketing Strategy MKT 460. Chapter 3 Environmental Analysis Taufique Hossain. Learning Objectives. To define the marketing environment and discuss the relevant types of market information that are required for market scanning and analysis.

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marketing strategy mkt 460

Marketing StrategyMKT 460

Chapter 3

Environmental Analysis

Taufique Hossain

learning objectives
Learning Objectives
  • To define the marketing environment and discuss the relevant types of market information that are required for market scanning and analysis.
  • To review the analytical models and frameworks that can be used in the analysis stage.
  • Macro-environment
    • Social, political, economic, technological contexts
  • Competitive environment
    • Company, immediate competitors, customers
  • Internal environment
    • Resources, capabilities
pest analysis of the macro environment
PEST Analysis of the Macro-Environment






the economic and political environment
The Economic and Political Environment

Economic growth rates and the business cycle

Interest rates, consumer and business confidence

Employment and unemployment

National and supra-national governments

Taxation and fiscal policy

Internationalisation and globalisation

Regional trade and trading areas

the social and cultural environment

The Youth Market

The Grey Market

The Social and Cultural Environment

Demographic Change

Changing life-styles and living patterns

Multi-ethnic societies

technological environment
Technological Environment
  • Technological changes impact every industry
  • Shortening of commercialization times
  • Short product life cycles
  • Impact of internet
legal environment
Legal Environment
  • Laws, regulations and codes of practice emanating from national governments, EU, local governments, statutory bodies, trade associations etc.
new strategies for changing environments
New Strategies for Changing Environments
  • Global positioning
  • The master brand
  • The integrated enterprise and end user focus
  • Best in class processes
  • Mass customization
  • Breakthrough technology
the shift in strategy for delivering shareholder value
The Shift in Strategy for Delivering Shareholder Value

Focus on core competencies

The new strategic imperative

Domestic focus

Global focus

Portfolio approaches

analysis of the competitive environment
Analysis of the Competitive Environment
  • Porter’s five forces model
  • Strategic groups
  • Industry evolution and forecasting
  • Environmental stability
five forces driving competition
Five Forces Driving Competition

Threat of new entrants

Bargaining power of suppliers

Rivalry among existing firms in the industry

Bargaining power of buyers

Threat of substitutes

Source: Adapted from Porter (1986, 1988)

rivalry among existing firms
Rivalry Among Existing Firms
  • Competitors are roughly evenly balanced
  • Low market growth
  • Exit barriers are high
  • Product differentiation is low
  • Fixed costs are relatively high
threat of market entry
Threat of Market Entry
  • Costs of entry are low
  • Existing or new distribution channels are open to use
  • Little competitive retaliation is anticipated
  • Differentiation is low
  • There are gaps in the market
threat of substitutes
Threat of Substitutes
  • Making existing technologies redundant
  • Incremental product improvement
bargaining power of suppliers
Bargaining Power of Suppliers
  • Suppliers are more concentrated than buyers
  • Costs of switching suppliers are high
  • Suppliers’ offerings are highly differentiated
bargaining power of buyers
Bargaining Power of Buyers
  • More concentrated than sellers
  • Alternative supply sources are readily available
  • Buyer switching costs are low
strategic groups
Strategic Groups
  • Firms within an industry following similar strategies aimed at similar customers or customer groups
    • E.g. Coca cola and Pepsi
map of strategic groups in the us automobile market
Map of Strategic Groups in the US Automobile Market

The Faded Champions

VW Audi, Rover Group

The Big Three

GM, Ford, Chrysler

Broad line

The Samurai

Toyota, Nissan,

Honda, Mazda

Degree of Specialisation

Luxury cars

Mercedes, BMW,

Volvo*, Saab*



Rolls-Royce*, Ferrari*,

Aston Martin*,

Lamborghini*, Lotus*,

Morgan, McLaren

Narrow line



Local Content

(*brands now owned by large-scale American or European manufacturers)

  • Hooley et al. Chapters 3 and 6.
  • Day and Schoemaker (2005), ‘Scanning the Periphery’, Harvard Business Review, 83, 11, pp. 135-148.
  • Kangis and O’Reilly (2003), ‘Strategies in a Dynamic Marketplace: A Case Study in the Airline Industry’, Journal of Business Research, 56, pp. 105-111.