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Scanning the Marketing Environment

Who are the primary competitors? How to ascertain their strategies, objectives, strengths and weaknesses, and reaction patterns? What are the key methods for tracking and identifying opportunities in the macro-environment? What are the key demographic, economic, natural, technological, political, and cultural developments?

The Marketing plan


Market survey
Segmentation

Identifying needs and wants


Targeting

Choosing a target market(s) Developping a market offering

Positioning

Product

Place

Price Measuring outcomes

Promotion

The Marketing environment: key terms


1. The Marketing Environment
The actors and forces that affect a companys capability to operate effectively in providing products and services to its customers. 2.

Macro environment
The broad forces that affect not only the company but also the other actors in the microenvironment. The analysis of the five forces political/legal, economic, ecological/physical, social/cultural and technological is known as PEEST analysis.

3.

Micro environment
The actors in the companys immediate environment that affects its capability to operate effectively in its chosen markets.

The Marketing Environment


Macroenvironment

Economic Microenvironment Suppliers

Political/ legal

Customers Company

Distributors Social/ cultural Competitors Ecological/ Physical

Technological

External marketing audit checklist Macro environment

The Macro environment


Political and Legal Forces

European Union-wide laws. - collusion. - abuse of market dominance. - acquisition and mergers. - state aid. National Laws - laws governing marketing practice e.g. advertising. - national bodies set up to investigate anticompetitive practice.

The Macro environment


Economic Forces
Economic Growth and Unemployment. Interest and Exchange Rates. Central and Eastern Europe. China and India. Russia and India

The Macro environment


Ecological/Physical Environmental Forces
Global Warming. Pollution. Energy and Scarce Resource Conservation. Environmentally Friendly Ingredients and Components. Recycling and Non-Wasteful Packaging.

Hitachi

This Hitachi advertisement communicates how the company is quietly helping to preserve the planet by reducing its CO2 emissions by 100 million tons by 2025

Toyota

INSERT TOYOTA PRIUS ADVERT

Toyota demonstrates its concern for pollution control with the Toyota Prius automobile.

The Macro environment


Social/Cultural Forces
Demographic Forces. - World Population Growth. - Age Distribution. - Household Structure. Cultural Forces. - Subcultures. - Attitudes to Health. - Cash Rich - Time Poor Consumers. - Cultural Differences. - Consumerism.

World Population Growth

Innocent

The Innocent brand has been remarkably successful, tapping into the healthy living lifestyle. It has extended its product line from smoothies to vegetable pots.

Weetabix

Weetabix communicates its low sugar, low fat, high fibre attributes.

INSERT WEETABIX ADVERT

Management styles in the European Union and the USA


Individual Spain France Belgium Ireland Greece Group Italy Organic UK Netherlands Systematic Luxembourg Denmark USA Germany

Leadership

Portugal

Organisation
Source: Mole, J. (1990) Mind Your Manners

The Macro environment


Technological Forces
Technological Breakthroughs. Marketing-based Technological Innovation. Technological Exploitation.

The Macro environment


Technological Forces
Technological Breakthroughs. Marketing-based Technological Innovation. Technological Exploitation.

Copyright 2003 Prentice-Hall, Inc.

The Micro environment


Customers Competition Distributors Suppliers

External marketing audit checklist Micro environment

The Porter model of competitive Industry structure


Potential entrants Threat from new entrants Industry Bargaining competitors Bargaining Power Threat of substitut e products
Rivalry among existing firms

Suppliers

Buyers

Power

Substitutes

Competitor analysis
1. Who are our competitors? 2. What are their strengths and weaknesses? Competitor 3. What are their strategic objectives and thrust? 4. What are their strategies? 5. What are their response patterns? analysis seeks to answer five key questions

Competitor analysis
1. Who are our competitors? 2. What are their strengths and weaknesses? 3. What are their strategic objectives and thrust? 4. What are their strategies? 5. What are their response patterns? Identify competitors Product form Product substitutes Generics New entries

Competitor analysis
1. Who are our competitors? Audit competitor 2. What are their strengths and capabilities weaknesses? Financial Technical 3. What are their strategic objectives and thrust? 4. What are their strategies? 5. What are their response patterns? Managerial Marketing assets Strengths and weaknesses

Competitor analysis
1. Who are our competitors? 2. What are their strengths and Infer competitor weaknesses? objectives and strategic thrust 3. What are their strategic objectives and thrust? 4. What are their strategies? 5. What are their response patterns? Build Hold Harvest Growth directions

Competitor analysis
1. Who are our competitors? 2. What are their strengths and weaknesses? 3. What are their strategic objectives and thrust? 4. What are their strategies? 5. What are their response patterns? Deduce competitor strategies Target segments Differential advantages Competitive scope Cost leadership

Competitor analysis
1. Who are our competitors? 2. What are their strengths and weaknesses? 3. What are their strategic objectives and thrust? 4. What are their strategies? 5. What are their response patterns? Estimate competitor response patterns Retaliatory Complacent Hemmed-in Selective Unpredictable

Competitor identification
The competitive arena Product from competitors Technically similar products Product substitutes Technically dissimilar products Generic competitors Products that solve the problem or eliminate it in a dissimilar way Potential new entrants With technically similar products With technically dissimilar products

Company capability profiles

The Customer Value Analysis


1. 2. 3. Identify the major attributes customers value Assess the quantitative importance of the different attributes Assess the companys and competitors performances on the different customers values against their rate importance Examine how customers in a specific segment rate the companys performance against a specific major competitor on an attribute-by-attribute basis Monitor customer values over time

4.

5.

Customer's ratings of competitors on key attributes


Customer Product Product Awareness Quality Availability Competitor A Competitor B Competitor C E G F E G P P E G Technical Assistance P G F Selling Staff G E F

Note: E = excellent, G = good, F = fair, P = poor.

Competitor B should not be attacked !

Advertise your performance on key attributes

Competitive Strategy Options

Competitive Strategy Options

How tough is the competition in this segment?


A segment is unattractive if: It already contains numerous, strong, or aggressive competitors; It is stable or declining; Fixed costs are high; Exit barriers are high; Competitors have high stakes in staying in the segment;

lead to frequent price wars, advertising battles, and new product introductions, competing is expensive !

How tough is the competition in this segment?


A segment is unattractive if: It already contains numerous, strong, or aggressive competitors; It is stable or declining; Fixed costs are high; Exit barriers are high; Competitors have high stakes in staying in the segment;

lead to frequent price wars, advertising battles, and new product introductions, competing is expensive !

How tough is the competition in this segment?


A segment is unattractive if: It already contains numerous, strong, or aggressive competitors; It is stable or declining; Fixed costs are high; Exit barriers are high; Competitors have high stakes in staying in the segment;

lead to frequent price wars, advertising battles, and new product introductions, competing is expensive !

Who can potentially enter the segment?


A segments attractiveness entry and exit barriers. varies with the height of its

Entry barriers: high capital requirements; economies of scale;


patents and licensing requirements; scare locations, raw materials, or distributors; reputation requirements.

Exit barriers: legal or moral obligations to customers, creditors, and

employees; government restrictions; low asset salvage value due to overspecialisation or obsolescence; lack of alternatives opportunities; high vertical integration; emotional barriers.

Barriers and Profitability

The most attractive segment is one in which entry barriers are high and exit barriers are low

What are the substitutes for my product?


Prices and profits in the segment are likely to fall if the substitutes are: As performant as my product but cheaper; More performant than my product for similar price

How strong is the buyers bargaining power?


Buyers bargaining power grows when:
They become more concentrated or organized; The product represents a significant portion of the buyers cost; The product is undifferentiated; The buyers switching costs are low; Buyers are price sensitive; Buyers can integrate upstream.

How strong is the suppliers bargaining power?


Suppliers tend to be powerful when:
They are concentrated or organised; There are few substitutes; The supplied product is an important input; The costs of switching suppliers are high; The suppliers can integrate downstream.

Lhexagone sectoriel : le football franais en 2006


Menace des entrants potentiels 10 Crteil, Red Star Faible menace O.L, O.M, LOSC, etc. Trs forte intensit 10 Intensit concurrentielle

5 10 Pouvoir de ngociation des fournisseurs quipementiers, concurrents, image de marque forte Pouvoir fort 10 Pouvoir de ltat DNCG, fiscalit Fort pouvoir 5 0

5 5 Pouvoir de 10 ngociation des clients et distributeurs Groupes de supporters, leaders dopinion, cots de transfert levs Pouvoir moyen Menace des produits de substitution

10

Rugby (Stade Franais), Basket (PBR) Menace moyenne

The KFS are in fact the factors that counteract the forces of competition Strength of competition Elements to counteract
Creating a brand valued by the final customer Establishment of transfer costs Multiplication of distribution networks Forward integration Multiplication of sources of supply Using technologies and generic components Integrate backwards

Buyers' bargaining power

Suppliers' bargaining power

Threat of substitutes

Improving value for money Customer Loyalty (reputation, service quality, etc..) Establishment of transfer costs (technology specific) Creation of a technological breakthrough Launch a campaign to destabilize the substitute Ability to supply the substitute

The KFS are in fact the factors that counteract the forces of competition Strength of competition Elements to counteract
Setting a price level not profitable for entrants Customer Loyalty (reputation, service quality, etc..) Establishment of transfer costs Protection technology (patents, trade secrets) Control of scarce resources or distinctive skills

Threat of potential entrants

Industry rivalry

Innovation Capacity Customer Loyalty (reputation, service quality, etc..) Establishment of transfer costs Protection technology (patents, trade secrets) Control of scarce resources or distinctive skills Reducing fixed costs

State power

Lobbying capacity

Key success factors of the football industry in France


Create a brand valued by the public (supporters, opinion leaders) Establish exclusive partnerships with a supplier, sponsors, supplier clubs (Brazil, League 2) Develop programs for consumer loyalty (pricing, subscription, related services, sales promotion) Control of scarce resources and distinctive skills (players, coaches, stadium) Lobbying capacity towards regulators