PRINCIPLES OF MARKETING

WEEK 6
OBJECTIVES
In this lesson, you will be able to
• Define an organization’s mission and vision;
• Analyze the elements of micro- and macroenvironment
and their influence on marketing planning;
• Distinguish between strategic and tactical marketing
planning in terms of objectives and processes;
• Understand and use Porter’s five forces analysis as a tool
in evaluating the level of competition in an industry.
 Choose a product that you use on a
daily basis. What would you do if this
particular product gets phased out?
As a consumer. What do you think is
the threat of substitute products?
Explain your answer.
ASSESSING COMPETITIVE
ADVANTAGE
MISSION AND VISSION
MISSION AND VISSION
• In business, companies compete against each other
products. Just like in boxing, companies need to find
their advantage in order to beat their opponents
(competitor’s products) and to stay profitable in the
market. Business organizations need to have a strategy
to combat competition, strength to stay in the game,
speed to adapt to the challenges, and the skills to
outclass other players. All of these contribute to an
organization’s competitive advantage
MISSION

A mission statement is a statement of the

organization’s purpose and what it wants to
accomplish in the bigger environment. It serves as
a guiding hand for the employees of the company.

A mission statement must be MARKET ORIENTED.

 MARKET-ORIENTED MISSION
STATEMENT
• A market-oriented mission statement defines a purpose
that focuses on satisfying a customer's need which should
match current market data and environments.
Example: An Online Bidding Site
“Our mission is to provide a global online
marketplace where practically anyone can trade
practically anything, enabling economic opportunity
around the world.”
 PRODUCT-ORIENTED MISSION
STATEMENT
• Product-oriented or production-oriented mission
statement is the mission that sell the value of the
product or production more than the benefit for the
customer behind them all.
Example: An online bidding site
“We are a platform where you can buy and sell
goods.”
Here are other examples of product-oriented versus actual
market-oriented mission statements:
Why creating a mission is important?

• Informs organization’s stakeholders about its plans and

goals;
• Unifies employees’ efforts in pursuing company goals;
• Serves as an effective public relations tool;
• Provides basis for allocating resources;
• Guides strategic or daily decision making;
• Shows that a company is proactive.
VISION

A company’s vision is its long-term goal. It defines

where the company wants to be in the future. It states how
the future will look if the organization fulfills its mission.

Vision statement questions look like:

• What are our hopes and dreams?
• What problem are we solving for the greater good?
• Who and what are we inspiring to change?
• The vision statement promotes growth, both
internally and externally. A strong vision helps
teams focus on what matters the most for their
company. It also invites innovation. A purpose-
driven company envisions success as a whole,
because they know what success means for their
company.
• A lack of vision is a road to nowhere for a
business. Imagine this: stagnation, outdated
processes, moving without purpose, feeling
uninspired.
 A mission statement focuses on today and
what an organization does to achieve it.

A vision statement focuses on tomorrow and

what an organization wants to ultimately
become.
A mission statement consists of the
organizations purpose, while a vision
statement refers to a long-term
objective of the organization.
THE MARKETING ENVIRONMENT
The marketing environment consists of two types
of environment:

1. Microenvironment – The microenvironment

consists of the components close to the company
that directly affect its ability to maintain its position
in the market and its capacity to serve its
customers.
• The microenvironment includes the immediate
factors that influence the company’s performance
and day-to-day operations.
 The Marketing
Microenvironment and its
different components
THE MICROENVIRONMENT

1. COMPANY MANAGEMENT
Marketing is one department in an organization that
closely works with other departments such as upper
management, finance, operations, sales, and research and
development in order to implement projects, finalize
plans, and create campaigns.
• UPPER MANAGEMENT – decides on the company goals
and objectives, strategies and policies.
• FINANCE DEPARTMENT – manages the financial aspects
(e.g. profits, cost, expenses, etc.) of the company.
2. SUPPLIERS
Suppliers provide the resources and materials
needed by the company to manufacture goods and deliver
services. Companies usually treat their suppliers as
partners because of their role in production process.
Problems with suppliers can seriously affect the company.
3. INTERMEDIARIES
Marketing Intermediaries are entities that help get
the company’s products to its final consumers. These
include resellers, distributors, and retailers. They help
move the products from the manufacturer to the actual
places where they are sold. They make the products
available in big and small retailers for consumers’
convenience.
4. CUSTOMERS
Customers are an integral part of the
microenvironment. Companies strive to build a good
relationship with them to foster loyalty and repeat
transactions.
The following are different types of customers:
• Consumer Market – individuals and households that buy
products for personal consumption
• Business Market – buys materials for use in production
• Reseller Market – buys products for reselling at a profit
• Government Market – government agencies that buy
products to provide public service
• Global Market – consumers from other countries.
5. COMPETITORS
Competitors offer products belonging in the same
product category or industry. They try to offer the most
superior value to consumers to earn a bigger market share
and gain more profit.
6. PUBLIC
A public is any group of individuals that has an actual
or potential interest in the company or its product. The
public can also include potential investors and people
who refer new customers to the business. Understanding
the public as a group of potential customers can help you
target new markets to increase brand awareness.
The following are the types of members of
the public:

• Financial Public – Banks, lending institutions, and

stockholders make up the financial public. They have the
capacity to help provide funding for the company’s
expansion.
• Government Public – This includes government agencies
that formulate regulations and provide permits for the
conduct of the business.
• Media Public – TV, radio, print or new media agencies
comprise the media public that provide news and
information to the public regarding the company and its
products.
• Citizen-action public – This includes organizations that
champion different causes-from promotion of
environment protection to fighting for minorities’ rights.
• Local Public –These are the people within the immediate
community where the company is located.
• General Public – This includes anyone who knows about
the company and anyone who can see he campaigns and
products of the company.
• Internal Public – This consists of the company’s
employees, management, and stakeholders who
contribute in achieving the goals of the organization.
The marketing environment consists of two
types of environment:

2. Macroenvironment –
In the field of marketing, the macro
environment is the set of external factors and
forces, not controlled by the company, that
influence its development.
 The Marketing
Macroenvironment and its
different components
 THE MACROENVIRONMENT
1. DEMOGRAPIC ENVIRONMENT
The demographic environment contains quantitative information
on the human population such as age, gender, income, religion,
educational attainment, and other statistical data. In marketing, these
pieces of information are important as they help determine the
characteristics of the company’s customers, which help formulate the
right products for its target market.

The three biggest generations are:

• The Baby Boomers – Born post World-War II (between 1946-1964),
baby boomers make up the mature market.
• Generation X – Born between 1965 and 1976, Generation
X has growing purchasing power. Gen Ex-ers are a strong
generation who are open to diversity and more
experiences.
• Millennials or Generation Y – Born between 1977 and
2000, millennials are very comfortable with technology
and form a large part of digital consumers.
• Generation Z – Born after the year 2000, they are also
tech-savvy as they are growing up with technology. They
are predicted to be highly connected, lead a technology-
driven life, and be avid consumers of social media.
2. Economic Environment
The economic environment consists of factors that affect
the purchasing power and spending patterns of consumers.
3. Natural Environment
The natural environment consists of changes in the
physical environment and natural resources.
4. Technological Environment
Companies nowadays enjoy the many opportunities
offered by technology. The availability of technology can help
marketers gather data and information , conduct business
online, enjoy advancement in production, and many others.
• 5. POLITICAL ENVIRONMENT
The political environment includes laws and legislation
regulating businesses government rulings, and other factors that
may affect the way businesses are conducted. New policies and
regulations may affect sales of certain products.
6. CULTURAL ENVIRONMENT
People acquire a particular set of value systems based on
their culture, beliefs and religion.
• Core Beliefs and values – the ones passes on from parents and
family to their children and are reinforced by the school, religion
and government.
• Secondary beliefs and values – more open to change and most
likely influenced by other people in a social circle and people met
while going through life. Media and the wealth of information
online can also influence your secondary beliefs and values.
STRATEGIC AND TACTICAL PLANNING
• Strategy – In real world business, the term strategy
actually is the thinking process required to plan a
change, course of action, or organization. Strategy
defines, or outlines, the desired goals and why a
company should go about achieving them.

• Tactics – are the specific actions to be taken in

implementing a strategy. These actions comprise what is
to be done, in what order, using which tools and
personnel.
STRATEGIC PLANNING

• Strategic planning involves forecasting and

setting the long-term goals of a company.
• It seeks to establish a clear and concerted
direction for all marketing activities of an
organization. It includes plans to reach
specific goals and objectives.
•
TACTICAL PLANNING

• Tactical planning focuses on short-term specific actions

in order to bring the company closer to established
strategic plans. It details what needs to be done, by
which department, and the tools or facilities needed to
achieve the company’s goals.
• It determines the means or tactics to implement the
strategies.
• It involves the identification of specific activities,
timetables, responsibilities, and budgets and their
implementation. The objective is to ensure that the
strategies are implemented successfully.
SITUATION ANALYSIS

• The company sees a bigger picture of the industry where the

company belongs and looks at the different factors that may
dictate where the business will lead. It also looks at how
strong the competition is within the industry and how
consumers respond to changes in the marketing environment.
• There are several methods that a company can use to
conduct a situation analysis, and here are two:
• PEST analysis
• Porter’s five forces analysis
PEST Analysis

• PEST Analysis PEST– or political, economic,

sociocultural, and technological – analysis
mostly covers the macroenvironment of
marketing. It helps a company identify
opportunities and threats in four major areas, or
reveal the direction of change within the business
environment.
PEST Analysis

In identifying the major factors in each area, here are some

sample questions that a company may answer:
Political When is the country’s next election? How can this impact the
business? • What are the existing legislation or laws that
directly or indirectly affect the industry? • What are other
political factors that the company can consider?
Economic How stable is the current economy? Is it growing, stagnating, or
declining? • What is the inflation rate? Does it have an impact on
the sales of the product? • If the customers’ level of disposable
income is changing, how is this affecting industry sales? If the
disposable income drops, do the customers choose not to buy the
product anymore? • How is globalization affecting the economic
environment? • How is globalization affecting the economic
environment? • What are other economic factors that the company
can consider?
PEST Analysis

Sociocultural Sociocultural • Do consumers have a favorable image of the

industry? • How would attitude shifts affect industry sales (e.g.,
customers’ preference for healthy choices)? • How do religious
beliefs and lifestyle choices affect the population? • What are other
sociocultural factors that the company can consider?
Technological Are there new technologies that the company can take advantage of? •
Do its competitors have access to new technologies that can improve
their competitive advantage? • Are there technologies that the
company’s competitors are using but it still has yet to adapt? • What
are other technological factors that the company can consider
PORTER’S FIVE FORCES ANALYSIS

• It was created by Harvard Business School professor

Michael E. Porter in 1979 and has since become an
important tool for managers.
• Porter’s five forces analysis focuses on the
microenvironment factors, measures how intense the
competition is and, how attractive the industry is.
• Five Forces analysis can be used to guide business
strategy to increase competitive advantage
 PORTER’S
FIVE FORCES
ANALYSIS
PORTER’S FIVE FORCES ANALYSIS

1. Rivalry among existing competitors - This force

examines how intense the competition is in the
marketplace. It considers the number of existing
competitors and what each one can do, customer
loyalty and quality differences.
2. Threat of substitute products – This refers to the
number of other alternative products that can be used
by customers to replace the company’s product
offering. Companies that produce goods or services for
which there are no close substitutes will have more
power to increase prices and lock in favorable terms.
Other factors to consider include the following:
• Cost differences
• Availability of substitute products
• Convenience of buying substitute products
3. Threats of new entrants -This force considers how easy
or difficult it is for competitors to join the marketplace.
The easier it is for a new competitor to gain entry, the
greater the risk is of an established business’s market
share being depleted. The following factors to consider
include the following:
• Time and cost involved to enter the market
• Requirement for specialist knowledge
• Cost advantages
• Barriers to entry
4. Bargaining power of buyer – This measures
the degree of influence of the buyers or
customers to lower the product prices.
Other factors to consider include the following:
• Number of customers
• Differences between competitors and how
easily customers can switch among them.
• Price sensitivity
5. Bargaining power of suppliers –This measures
the degree of influence of the suppliers to
command higher prices for their raw materials.
Other factors to consider include the following:
• Number of suppliers
• Uniqueness of products/materials being
supplied
• A company’s ability to substitute a raw
material
Successful people do consistently
what normal people do
occasionally.

- Craig Groeschel
ACTIVITY