1. The Marketing Environment and Competitor Analysis
SWOT analysis
PEST analysis
Five forces analysis

2. SWOT analysis
Strengths (internal)
Weaknesses (internal)
Opportunities (external)
Threats (external)

3. SWOT ANALYSIS
A SWOT analysis is an excellent tool to use if the organization wants to take a step back and assess the situation they are in. Issues raised from the analysis are then used to assist the organization in developing their marketing mix strategy. A SWOT analysis must form the part of any prudent marketing strategy.

5. SWOT Analysis Opportunities Threats Strengths Weaknesses
Based on assumption an effective strategy derives from a sound “fit” between a firm’s internal resources and its external situation
Opportunities
A major favorable situation in a firm’s environment
Threats
A major unfavorable situation in a firm’s environment
Strengths
A resource advantage relative to competitors and the needs of markets firm serves
Weaknesses
A limitation or deficiency in one or more resources or competencies relative to competitors

6. Strength examples could include:
A strong brand name.
Market share.
Good reputation.
Expertise and skill.
Weaknesses could include:
Low or no market share.
No brand loyalty.
Lack of experience.

7. Opportunities could include:
A growing market.
Increased consumer spending.
Selling internationally.
Changes in society beneficial to your company.
Threats could include:
Competitors
Government policy eg taxation, laws.
Changes in society not beneficial to your company.

8. PEST analysis
Political factors
Economic factors
Socio-cultural factors
Technological factors

9. Political/legal Monopolies legislation Environmental protection laws
Taxation policy
Employment laws
Government policy
Legislation
Others?

10. Economic Factors Inflation Employment Disposable income
Business cycles
Energy availability and cost
Others?

11. Socio-cultural factors
Demographics
Distribution of income
Social mobility
Lifestyle changes
Consumerism
Levels of education
Others?

12. Technological New discoveries and innovations
Speed of technology transfer
Rates of obsolescence
Internet
Information technology
Others?

13. Porter’s Five Forces Model
Potential Entrants
Threat of New Entrants
Industry
Competitors
Bargaining
Power
of Suppliers
Bargaining
Power
of Buyers
Suppliers
Buyers
Rivalry Among
Existing Firms
One assumption of Porter’s five forces model is that some industries are inherently more attractive than others; that is, the profit potential for companies in that industry is higher. As this figure indicates, the interaction and strength of five forces influences profit potential.
Threat of Substitute Products or Services
Substitutes 13
These five forces determine the profit potential of a particular industry 13

14. Five forces analysis
One assumption of Porter’s five forces model is that some industries are inherently more attractive than others; that is, the profit potential for companies in that industry is higher. As this figure indicates, the interaction and strength of five forces influences profit potential.

15. The purpose of Five-Forces Analysis
The five forces are environmental forces that impact on a company’s ability to compete in a given market.
The purpose of five-forces analysis is to diagnose the principal competitive pressures in a market and assess how strong and important each one is.

16. Threat of New Entrants Barriers to Entry Economies of Scale
Government Policy
Economies of Scale
Product Differentiation
Capital Requirements
Switching Costs
Access to Distribution Channels
Cost Disadvantages Independent of Scale
Barriers to Entry 12

17. Bargaining Power of Suppliers
Suppliers are likely to be powerful if:
Suppliers exert power in the industry by:
* Threatening to raise
prices or to reduce quality
Powerful suppliers can squeeze industry profitability if firms are unable to recover cost increases
Supplier industry is dominated by a few firms
Suppliers’ products have few substitutes
Buyer is not an important customer to supplier
Suppliers’ product is an important input to buyers’ product
Suppliers’ products are differentiated
Suppliers’ products have high switching costs
Supplier poses credible threat of forward integration 15

18. Bargaining Power of Buyers
Buyer groups are likely to be powerful if:
Buyers compete with the supplying industry by:
* Bargaining down prices
* Forcing higher quality
Buyers are concentrated or purchases are large relative to seller’s sales
Purchase accounts for a significant fraction of supplier’s sales
Products are undifferentiated
Buyers face few switching costs
Buyers’ industry earns low profits
Buyer presents a credible threat of backward integration
Product unimportant to quality
Buyer has full information 18

19. Threat of Substitute Products
Products with similar function limit the prices firms can charge
Keys to evaluate substitute products:
Products with improving price/performance tradeoffs relative to present industry products
Example:
Electronic security systems in place of security guards
Fax machines in place of overnight mail delivery 21

20. Rivalry Among Existing Competitors
Intense rivalry often plays out in the following ways:
Jockeying for strategic position
Using price competition
Staging advertising battles
Making new product introductions
Increasing consumer warranties or service
Occurs when a firm is pressured or sees an opportunity
Price competition often leaves the entire industry worse off
Advertising battles may increase total industry demand, but may be costly to smaller competitors 25

21. Rivalry Among Existing Competitors
Cut-throat competition is more likely to occur when:
Numerous or equally balanced competitors
Slow growth industry
High fixed costs
Lack of differentiation or switching costs
High storage costs
Capacity added in large increments
High strategic stakes
High exit barriers
Diverse competitors 26

22. Strategic Management in Action
Analyzing
Current
Situation
Deciding on
Strategies
Putting
Strategies
in Action
Evaluating and
Changing Strategies
Situation
Analysis
Strategy
Formulation
Strategy
Implementation
Strategy
Evaluation
Organizational
Context
External
Analysis
Functional
Competitive
This slide illustrates the strategic management process and indicates how each chapter fits into the process. This slide provides an overview of the textbook’s organization.
Internal
Analysis
Corporate

23. The directional policy matrix (GE matrix)
INDUSTRY ATTRACTIVENESS
High Medium Low
High
Medium
Low
Investment and Growth
Selective Growth
Selectivity
BUSINESS STRENGTH
Selective Growth
Harvest Or Divest
Selectivity
Harvest Or Divest
Harvest Or Divest
Selectivity

24. Porter - the value chain
FIRM INFRASTRUCTURE
HUMAN RESOURCE MANAGEMENT
TECHNOLOGY DEVELOPMENT
PROCUREMENT
SUPPORT ACTIVITIES
M A R G I N
INBOUND OPERATIONS OUTBOUND MARKETING SERVICE LOGISTICS LOGISTICS & SALES
M A R G I N
PRIMARY ACTIVITIES
(Source: M Porter)

25. Gap analysis - and what to do about it …
Objective
Forecast
The strategic ‘gap’
Sales/Profits (Rs.)
Time

26. Strategic Alternatives
1. Improve productivity
Reduce costs
Improve the sales mix
Increase prices
Reduce discounts
Increase productivity
2. Market penetration
Increase market share
Increase usage frequency
Increase purchase values
3. Market development
Geographical expansion
Find new customer segments
4. Product development
Develop new products
Reconfigure existing products
5. Diversification
New products to new markets