MBAN 667 – Strategic Marketing

Analyzing Marketing Environment

Marketing Environment
Marketing Environment…

“….Today you have to run faster to stay in place…”

Philip Kotler
What is a Marketing Intelligence System?

A marketing intelligence system is a set of procedures

and sources that managers use to obtain everyday
information about developments in the marketing
environment
Marketing managers collect marketing intelligence in a variety
of different ways, such as by reading newspapers, and trade
publications; talking to customers, suppliers & distributors;
monitoring social media on the Internet; meeting with other
company managers
Marketing Environment

A company’s marketing environment

consists of the task environment of
actors and the broad environment that
affect the company’s ability to develop
and maintain successful transactions
with its stakeholders
Marketing Environment

It consists of the actors and forces that affect the ability of marketing to
develop and maintain successful relationships with its target customers

Microenvironment: forces close to the company affecting its ability to

serve its customers

Macroenvironment: larger societal forces affecting the whole

microenvironment
Marketing Environment
A company is like an orange...

… you’ve got to peel away a few layers

to get to the good stuff!
 Employees
Social Shareholders Technological
Demographic Natural
Management
Cultural
Product

Place
Target Price
Economic
Consumers
Promotion
Environmental
Natural
Political Competitors Legal

© Bruce C. Bailey 1998

Analyzing Marketing Environment…

Analysis is the critical starting point of strategic thinking…

Internal Audit

Identify strengths and weaknesses in:

Management
Marketing
Finance and accounting
Production and operations
Research and development
Management information systems
Distinctive Competencies

Firm’s strengths that cannot be easily imitated by

competitors
Building competitive advantage involves taking
advantage of distinctive competencies
Gaining Competitive Advantage

Weaknesses → Strengths → Distinctive Competencies →

Competitive Advantage
Types of Resources

Physical Resources
Human Resources
Financial Resources
Technological Resources
The Microenvironment

Employees
Shareholders
Government Suppliers
Media Forces Affecting a Intermediaries
Company’s Ability to
Serve Its Customers
Competitors General Public
Customers
Macroenvironment
“…. It is not the strongest of the species that survive, nor the most
intelligent, but the one most responsive to change….”
Charles Darwin
Trends…
Fad
unpredictable, short-lived, and without social, economic, and
political significance

Trend
more predictable and durable

Megatrend
large social, economic, political & technological changes [that] is
slow to form, and once in place, influences us for some time—
7-10 years
The Macroenvironment
Social
Demographic
Cultural
Economic Technological
Forces that Shape
Opportunities & Pose Threats
to a Company
Political Environmental
Natural
Legal
External Audit

Develop a finite list of:

opportunities that could benefit a firm
threats that should be avoided
The Demographic Environment

Demography is the study of human populations in terms of size, density,

location, age, gender, race, occupation and other statistics
Population and Demographics

• Population growth
• Population age mix
• Ethnic markets
• Educational groups
• Household patterns
Demographic Trends

Aging population
Widening gap between wealthy & poor
2025 = 18.5% population > 65 years
More households with people living alone
Social & Cultural Changes

Quality vs
Concern for Quantity
Natural Environment
Two Incomes
Changing Gender Roles
Convenience
Physical Fitness &
Health
Exercise and Diet
Economic Environment

Consumer Psychology

Income Distribution

Income, Savings, Debt, Credit

Economic Forces Stock Market
Trends

Real Income GDP Unemployment

Vs
Rates
Disposable Income

Interest
Inflation Rates
Technological Environment
Unlimited Opportunities
Rapid Pace of Change
for Innovation

Issues in the Technological Environment

Increasing R&D
Increased Regulation
budgets
Natural Environment

Shortage of
raw materials

Increased
energy costs

Anti-pollution
pressures

Governmental
protections
Political, Governmental & Legal Forces

Government Regulation
Antitrust legislation
(collection of laws that regulates the conduct and organization of business corporations
to promote fair competition for the benefit of consumers)
Tax rates
Lobbying activities
Political, Governmental & Legal Forces

Patent laws
Protectionist policies
(protecting domestic industries against foreign competition by means of tariffs,
subsidies)
Governments taking equity stakes in companies
Fiscal Policies: the means by which a government adjusts its spending levels
and tax rates to monitor and influence a nation's economy
Competition Analysis
Competition Analysis

Identify:
Main sources of competitive forces
Strength of these forces

Key analytical tool

Five Forces Model of Competition
Five-Forces Model of Competition
Five-Forces Model of Competition

Assess strength of each competitive force:

Rivalry among competitors
Substitute products
Potential entry
Bargaining power of suppliers
Bargaining power of buyers
Rivalry Among Competing Firms is Higher…

High number of competing firms

Similar size of firms competing
Falling demand for the industry’s products
Falling prices in the industry
Consumers can switch brands easily
Barriers to leaving the market are high
Rivalry Among Competing Firms is Higher…

Barriers to entering the market are low

Fixed costs are high among firms competing
The product is perishable
Rivals have excess capacity
Consumer demand is falling
Rivals have excess inventory
Rivals sell similar products/services
Potential Entry of New Competitors

Barriers to entry are important

Quality, pricing and marketing can overcome
barriers
Barriers to Entry

Economies of scale
Inability to gain access to specialized technology
Lack of product differentiation
Brand loyalty
Capital requirements
Access to distribution channels
Legal Constraints
Development of Substitute Products

Pressure increases when:

Prices of substitutes decrease
Consumers’ switching costs decrease
High quality substitute products are available
The Bargaining Power of Suppliers is Higher…

There is a small number of suppliers

The cost of switching suppliers is high
Few good substitute raw materials are available
Certain suppliers provide highly differentiated raw materials
The Bargaining Power of Consumers is Higher…

Demand is low or declining

Customers’ purchases represent a major portion of the sellers’
total revenue
Customers are concentrated or buy in volume
Products are standard or undifferentiated
Consumers Gain Bargaining Power…

If they can inexpensively switch

If sellers are struggling in the face of falling consumer demand
If they are well informed about sellers’ products, prices and costs
If they have discretion in whether and when they purchase the
product
Competitive Intelligence

A systematic process for gathering and analyzing

information about the competition’s activities and
general business trends to further a business’s own
goals
Competitors

Indicate direct competitors

Indicate indirect competitors
Market Commonality

The number and significance of markets that a firm

competes in with rivals
Resource Similarity

Extent to which the type and amount of a firm’s internal

resources are comparable to a rival
Firms with similar types and amounts of resources tend to have
similar strengths and weaknesses—and use similar strategies
Competitor Analysis
Key Questions Concerning Competitors

Strengths & Weaknesses

?
Objectives & Strategies
Responses to external variables
Vulnerability to our alternative strategies
Our vulnerability to strategic counterattack
SWOT Analysis

S – Strengths
W – Weaknesses
O – Opportunities
T – Threats
Strengths

Positive tangible and intangible attributes, internal to

an organization
They are within the organization’s control
Weaknesses

Factors that are within an organization’s control that

detract from its ability to attain the core goal
Which areas might the organization improve?
Opportunities

External attractive factors that represent the reason for

an organization to exist and develop
What opportunities exist in the environment, which will
propel the organization?
Are there new situations coming that you can take
advantage of?
Are there gaps in the “market” that you can fill?
Are there partnerships that might be fruitful?
Market Opportunity Analysis (MOA)
Can the benefits involved in the opportunity be articulated convincingly to a
defined target market?
Can the target market be located and reached with cost-effective media and
trade channels?
Does the company possess or have access to the critical capabilities and
resources needed to deliver the customer benefits?
Can the company deliver the benefits better than any actual or potential
competitors?
Will the financial rate of return meet or exceed the company’s required
threshold for investment?
Threats
External factors, beyond an organization’s control, which
could place the organization’s mission or operation at
risk
Who is your competition and what do they offer that you
can’t do as well or at all?
Are there “environmental” changes or situations that
could cause problems for you and your programs?
What other roadblocks are being thrown in your path?
PESTEL Analysis

Political Environment
Economical Environment
Social Environment
Technological Environment
Environmental Environment
Legal Environment
Thank you for your
attention