For use only with Perreault/Cannon/ McCarthy texts, © 2010 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Chapter 3 Evaluating Opportunities in the Changing Marketing Environment Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

At the end of this presentation, you should be able to: 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. 3-2

At the end of this presentation, you should be able to: 6.Know why you might be sent to prison if you ignore the political and legal environment. 7.Understand the cultural and social environment and how key population trends affect strategic planning. 8.Understand how to screen and evaluate marketing strategy opportunities 3-3

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

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

Resources and Objectives of the Firm Competitive Environment Cultural and Social Environment Economic Environment Technological Environment Political and Legal Environment External Marketing Environment Direct Marketing Environment Target Customers The Marketing Environment 3-6

Socially and Economically Useful Function Socially and Economically Useful Function Develop an Organization Develop an Organization Earn Profit Three Basic Objectives Provide Guidelines Three Basic Objectives Provide Guidelines Objectives Set Firm’s Course 3-7

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

Financial Strength Producing Capability and Flexibility Producing Capability and Flexibility Marketing Strengths Company Resources May Limit Search for Opportunities 3-9

Marketing Strengths 3-10

Monopoly Monopolistic Competition Oligopoly Avoid Head-On Competition! Know the Market Situation! Pure Competition The Competitive Environment 3-11

Competitive Advantage 3-12

Analyzing Competition Key Concepts Key Concepts Competitive Rivals Competitive Advantage Competitive Barriers Competitor Analysis 3-13

Seek Information About Competitors Seek Information About Competitors Ethical Issues Direct Competition Can’t Always Be Avoided Direct Competition Can’t Always Be Avoided Marketers Need Information about Competitors 3-14

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 3-15

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 3-16

Global Economy Key Economic Forces Key Economic Forces Rapid Change Interest Rates The Economic Environment 3-17

Regional Economic Groupings Nationalism Examples of Characteristics of the Political Environment Examples of Characteristics of the Political Environment The Political Environment 3-18

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) The Legal Environment – Key Antimonopoly Laws 3-19

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” The Legal Environment – Consumer Protection Agencies 3-20

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 3-21

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 3-22

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 3-23

Changes in Cultural and Social Environment Changes in Cultural and Social Environment Changing Role of Women Changing Role of Women The Cultural and Social Environment Changes Come Slowly Changes Come Slowly 3-24

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 3-25

Other Countries Current Population Population Trends Marketers Search for Growing Markets 3-26

Increasing Density Increasing Urbanization Other Population Trends 3-27

Gross National Income (GNI) Gross National Income (GNI) Gross Domestic Product (GDP) Gross Domestic Product (GDP) Income earned by foreigners in the nation GNI / Country’s Population Size = Per Capita Income No Money, No Market! + = 3-28

Literacy and marketing problems What do third world consumers really need? Much segmenting may be required Issues Related to Development 3-29

Where Does Your State Stand? (Exhibit 3-6) 3-30

Population Mobility Urban to Suburban Rural to Urban US Population Mobility 3-31

Appealing to the “Matures” 3-32

Screening Criteria Narrow Down Strategies Product-Market Screening Criteria Product-Market Screening Criteria Qualitative Criteria Quantitative Criteria 3-33

Dollars Years Product A Years Product B Total cost Sales Total cost Sales The Total Profit Approach is One Type of Quantitative Screening Criteria (Exhibit 3-9) 3-34

Business Strength Industry Attractiveness High Medium Low HighMediumLow No Growth Borderline Growth Planning Grids Help Evaluate Portfolio Opportunities (Exhibit 3-10) 3-35

Consumer products linked to cultural variables Industrial products InsensitiveSensitive Evaluating Opportunities in International Markets (Exhibit 3-11) Basic commodity- type consumer products 3-36

You should now be able to: 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. 3-37

At the end of this presentation, you should be able to: 6.Know why you might be sent to prison if you ignore the political and legal environment. 7.Understand the cultural and social environment and how key population trends affect strategic planning. 8.Understand how to screen and evaluate marketing strategy opportunities 3-38

Key Terms Mission statement Competitive environment Competitor analysis Competitive rivals Competitive barriers Economic and technological environment Technology Internet Nationalism North American Free Trade Agreement (NAFTA) Cultural and social environment Gross domestic product (GDP) Metropolitan Statistical Area (MSA) Senior citizen group Sustainability Strategic business unit (SBU) 3-39