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Summary Activity Abderrahim Aouchi Marketing 521 Texas A&M University-Commerce

2 1. Within the dynamic environment of marketing in a global economy, marketers must keep constant vigil concerning the changes happening in the world. There are seven major areas of which marketers need to be aware. List and provide an explanation of these seven major areas.

In a global environment that operates 24/7, marketers must keep constant vigil concerning the changes happening in the world. There are seven major areas of which marketers need to be aware: A new direction in global engagement The term globalization has acquired considerable emotive force. Some view it as a benecial process, a key to future world economic development and also inevitable and irreversible. Others regard it with hostility, even fear, believing that it increases inequality within and between nations, threatens employment and living standards, and thwarts social progress. The concept of economic globalization is not new. The breaking down of economic barriers, for instance, took place in the laissez-faire era of the nineteenth century (Mohamad, 2002). According to the International Monetary Fund (IMF, www.imf.org), economic globalization is a historical process, the result of human innovation and technological progress. It refers to the increasing integration of economies around the world, particularly through trade and nancial ows. The term sometimes also refers to the movement of people (labour) and knowledge (technology) across international borders. It refers to an extension beyond national borders of the same market forces that have operated for centuries at all levels of human economic activity village markets, urban industries, or nancial centres. Markets promote efciency through competition and the division of labour, the specialization that allows people and economies to focus on what they do

3 best. Global markets offer greater opportunity for people to tap into more and larger markets. It means they have access to more capital ows, technology, cheaper imports, and larger export markets. The concept of globalization seems deceivably simple. It suggests that globalization will liberalize the world economy from unnecessary bureaucracy and trade barriers. When nation states remove all barriers to global competition, the movements of goods and services, capital, multinational operations, and nancial institutions will bring greater efciency to and better utilization of the worlds resources. In short, globalization will bring good for every citizen, greater wealth creation, and prosperity. For most of the latter half of the twentieth century, this concept of globalization was enthusiastically embraced by a number of developing nations, especially in East Asia and Latin America. For many, it brought new opportunities for wealth creation and prosperity. However, it also brought hidden risks arising from volatile capital movements and poverty, discovered by many in the Asian and Latin American nancial crises of the late 1990s. The Mexican crisis of 199495 was the rst in what became a long series of nancial crises affecting developing economies in the late 1990s. It demonstrated the potential for sharp changes in investor sentiment, triggered in this case by an unsustainable external imbalance, an overvalued exchange rate pegged to the US dollar, a fragile nancial system, and a tightening of nancial conditions in the USA (long-term interest rates rose sharply in the rst half of 1994 amid fears of rising ination and following a tightening by the Federal Reserve). The Asian crisis, starting in Thailand, was triggered by similar problems (external imbalances, nancial fragilities, and exchange rate overvaluation) in an environment of further exchange rate appreciation through links to the US dollar, weakening export growth, and excessive short-term foreign borrowing. The more recent Russian and

4 Brazilian crises both erupted following concerns over domestic policy and the sustainability of exchange rate pegs. If there was a lesson to be learned from these experiences, it was that while globalization could accelerate the development of an economy, it could take it away just as easily. These recent negative experiences have set off a new direction in global engagement for many developing nations. For instance, while many Asian political leaders and thinkers seem to accept that globalization is still a positive necessity, they no longer see the existing one size ts all economic globalization, where free markets are allowed to function without interference, as the only way to global engagement. The current global economic slowdown has made it clear to these nations that it is also no longer wise to base their future economic growth on the export-led foreign direct investments which are largely driven by the interests of the USA and Western Europe. Social Responsibility and Ethics Ethics was always an issue, even before the Enron scandals. Several forces are now driving companies to practice a higher level of corporate social responsibility, rising customer expectations, changing employee expectations, government legislation, the inclusion of social criteria by investors, and changing business procurement practices. There is no easy way to perfectly distinguish between some ethical and questionable behavior. Modern-day businesses should take into consideration ethics on all levels of marketing practices. The changing consumer demographics and expectations In order to be able to develop successful customer-driven global marketing strategies, organizations need to take into account changing consumer demographics and expectations. Changes in global consumer demographics, especially in terms of their increasing life expectancy and wealth, are constantly shaping the expectations of how consumers needs

5 should be served. According to the UN World Population Prospects (United Nations; 2000), the number of older people (60 or over) will more than triple, increasing from 606 million today to nearly 2 billion by 2050. The increase in the number of the oldest old (80 or over) is expected to be even more marked, passing from 69 million in 2000 to 379 million in 2050, more than a vefold increase. The population aged 60 or over in the more developed regions currently constitutes about 20% of the population and by 2050 it will account for 33%. The older population of the more developed regions has already surpassed the child population (persons aged 014) and by 2050 there will be two older persons for every child. In the less developed regions, the proportion of the population aged 60 The increasing number of so-called grey consumers or over will rise from 8% in 2000 to close to has signicant implications on patterns of demand 20% in 2050 and expectations in the global markets. As the projection for the ageing population increases, life expectancy is also set to increase. In 2000, the octogenarians (aged 8089) outnumbered nonagenarians (aged 9099) by a wide margin, i.e. 88% of the 69 million people over the age of 80, and the proportion of centenarians (aged 100 and over) is small, i.e. 0.3% or 180,000. However, octogenarians are projected to increase to 314 million in 2050, 5.2 times the number in 2000, while the number of nonagenarians will reach 61 million, an eightfold increase. But the number of centenarians will grow the fastest, so that by 2050 it will be 18 times as large as the number in 2000. As world fertility continues to decline and life expectancy rises, the world population will age faster in the next 50 years than during the past half-century. However, the world population as a whole in terms of growth in per capita GDP is becoming wealthier. The World Banks Development Indicators in 2002 showed a consistent trend that the number of people living in developing countries on less than US$1 a day fell from 1.3 billion to 1.2 billion between 1990

6 and 1999, and people living in extreme poverty fell from 29% to 23% over the same period. In terms of regional patterns of long term economic growth, all trading regions sustained a reasonably positive growth rate between 1960 and 2000, ranging from East Asia (which grew faster than any other developing region with GDP per capita growth of 5.3% a year) to the more moderate 1.6% a year in the Latin American and Caribbean region. The changing consumer demographics in life expectancy, declining fertility, and increased wealth have signicant implications on consumer demand and expectations. Consumers will live and work longer (improved healthcare and diet), consume more products/services per capita (family units are smaller), have a higher disposable income and sophistication (they are likely to be working longer and are more knowledgeable than previous generations), and be more demanding (they have more experience in comparing products/services over a longer life span). The new breed of consumers will have even higher expectations of how their wants and needs are to be fullled. Many companies are becoming more customer-driven in catering for the needs of consumers. However, the better they serve these consumers and provide higher values, the further they fuel consumer expectations. The proliferation of privatization in the public sectors to improve efciency and provide choice for consumers will also enhance this trend. The changing nature of competition In the era of global business, when goods and services can be marketed and sold in ways that were unimaginable in the past, organizations need to compete for survival not only within their domestic market but globally, and also be prepared to ght for market share. The nature of global competition is and will be shaped by the following realities: The size of the (usually foreign) competitors is increasing and they have more

7 resources (i.e. more people and capital) to compete in todays global marketplace, many sectors are characterized by the growing dominance of a small number of giant multinationals. When we look at Glaxo-Smith-Kline (www.gsk.com) and Pzer (www.pzer.com) in drugs, Microsoft (www.microsoft.com) and Apple (www.apple.com) in computer operating systems, General Motors (www.gm.com) and VW in cars and commercial vehicles, Disney (www.disney.com) and Warner Bros (www.warnerbros.com) in entertainment, and Shell (www.shell.com) and BP (www.bp.com) in the oil and its derivatives business, the reality for many organizations of having to compete with the invincible competitors is all too real.

While competitors can seemingly access any international markets and compete freely, they are protected by government in their own domestic market In a global market environment, it is assumed that organizations compete by the same rules using the same tools (i.e. people, knowledge, and resources) available to all. The concept of global competition seems deceptively simple: in a fully globalized marketplace where all players can access markets free from protectionism and operate under similar market forces conditioned by a set of universal rules, organizations that reign are those which are most efcient and offer superior competitive advantage. In todays global marketplace, many sectors are characterized by the growing dominance of a small number of giant multinationals. When we look at Glaxo-Smith-Kline (www.gsk.com) and Pzer (www.pzer.com) in drugs, Microsoft (www.microsoft.com) and Apple(www.apple.com) in computer operating systems, General Motors (www.gm.com) and VW in cars and commercial vehicles, Disney (www.disney.com) and Warner Bros (www.warnerbros.com) in entertainment, and Shell (www.shell.com) and BP (www.bp.com) in the oil and its derivatives business, the reality for many organizations of having to

8 compete with the invincible competitors is all too real. In a global market environment, it is assumed that organizations compete by the same rules using the same tools (i.e. people, knowledge, and resources) available to all. The concept of global competition seems deceptively simple: in a fully globalized marketplace where all players can access markets free from protectionism and operate under similar market forces conditioned by a set of universal rules, organizations that reign are those which are most efcient and offer superior competitive advantage. However, the global

marketplace is not a level playing eld. Even the USA, the number one perpetrator of free trade, recently resorted to protectionism when its steel industry came under threat from cheap imports. The European Union continues to spend half of its entire budget on subsidizing its agricultural produce, and there seems to be little sign of reform. Japan, while under enormous pressure to reform its declining economy, is slow to remove many of its non-tariff barriers. Competitors will not be limited to those that currently operate in the same industry because it It has often been a misconception of many organizations that their competitors are those operating in the same industry. Many well-established organizations are surprised by new entrants to the market which are not identied in their sophisticated competitor analysisbecause it focuses only on existing competitors in the same industry. In the UK, for instance, many new entrants to the nancial services market are high-street retailers. When we take a broader perspective, every organization is a potential competitor as every player in the market is ghting for a larger share of the consumers disposable income. The new competition is between networks rather than single organizations

9 The intensity of todays competition, the increasing expectations of consumers, and the quickening speed of technological change are leading to shorter product life cycle. This means that the window for recuperating investments in research and development, and pursuing global dominance, is narrowing. In order to compete organizations form alliances with other market players, either on a temporary project-based footing or through something more permanent, such as a joint venture. The new competition is and will be increasingly between networks rather than single organizations.

The emergence of a global services economy The trading of invisibles services plays a vital role in todays world economy. Infrastructural services (e.g. transportation, communications, nancial services), education, health, recreation, and other professional services now represent approximately 28% of world trade. Services make up a major portion of many national economies, ranging from 39% of GDP in a country such as Nigeria, to 89% in economies such as Hong Kong (China). In the US economy, 77% of its GDP is generated from the services sector, which employs 80% of its workforce. The UK economy shares a similar pattern with 70% of its GDP generated from services and only 18% from manufacturing. On average, the services sectors produce 45% more revenue per capita than manufacturing and other sectors. The services sector is already increasing in importance in most developing countries and particularly in less developed countries (LDCs), and usually contributes to at least 45% of the GDP. In general, the services sector is expanding faster than sectors such as agriculture or manufacturing. For most efcient value-added primary industries, services usually make up one-quarter of inputs too. Increasingly, even in goods production, the major portion of value-added (up to 70%) comes from services inputs:

10 upstream (such as feasibility studies and research and development activities); on stream (such as accounting, engineering, and administrative services); and downstream (such as advertising, warehousing, and distribution). The advent of new technologies The advent of new technologies (e.g. the internet and the World Wide Web, mobile devices,digital TV) has opened up business and marketing opportunities in the development of innovative products and services, and the creation of new values to consumers. For instance, conventional marketing and targeting techniques allow an organization to reach hundreds, thousands, or even tens of thousands of potential customers. But with a personal computer and a modem the organization can reach a community of millions at a fraction of the cost. The size of the online market is impressive, but size alone is merely the beginning of its attraction for the commercial sector. New technologies can provide a competitive edge because they give businesses a leverage over its time and investment, allow them to target prospective consumers easily, and level the playing eld between them and their competitors, no matter how large or well nanced. The rapid adoption of these technologies as a commercial medium has led to businesses experimenting with innovative ways of marketing in the electronic environment. As a commercial medium, new technologies offer opportunities as a powerful delivery channel, a medium for marketing communications, and a market in and of themselves. Those opportunities are associated with the interactive nature of the medium. First, there is signicant potential to reduce distribution costs. This can be seen in the cases of publishing, information services, and software. Organizations are able to target customers directly, thus eliminating some of the marketing costs and constraints imposed by conventional methods such as terrestrial television. This may also make distribution

11 more efcient due to reduced overhead costs resulting from uniformity, automation, and integration of management processes.Secondly, online businesses are able to transfer more of the selling function to the customer, through online ordering and the use of e-commerce. This also benets the businessin the form of capturing customer information on buying preferences and behaviour. The interactive nature of new technologies is conducive to developing customer relationships. This potential for greater customer interaction facilitates relationship marketing and customer support to a greater degree than has been possible with traditional media. This has provided unprecedented opportunities to customize communications precisely to individual customers, allowing them to request as much or as little information as they wish, when they wish, and how they wish. Finally, the new technologies also bring operational benets, especially for industrial suppliers, which include reduced errors, time, and overhead costs in information processing; reduced costs to suppliers by electronically accessing online databases of bid opportunities, online abilities to submit bids, and online review of awards. The growing transparency of corporate practices Globalization brings businesses into contact with countries which conduct business by different rules. Until recently, businesses had relative freedom to exercise a different set of practices in different countries. Due to the lack of transparency in what businesses got up to in other countries, many businesses had been able to exploit those differences in the legal frameworks or conditions between countries to maximize prots. The emergence of global media and internet technologies means that businesses are now confronted with a much greater level of transparency of their international practices than ever before. The advent of modern, truly global communications technologies has brought about an avalanche of new debates on issues ranging from the exploitation of

12 cheap and child labour, environmental pollution and global warming to genetically modied organisms (GMOs) and privacy on the internet. Added to this is the unprecedented scrutiny by non-governmental organizations (NGOs) and the increasing global consumers demand for the right of access to information. Over 60 countries have passed legislation that recognizes and protects the right to access information held by public bodies. In Europe, Africa, and the Americas, countries have adopted human rights . The right to access information held by public bodies is a key piece of the wider right to freedom of opinion and expression. The exercise of this right enables consumers to keep their businesses as well as governments accountable for unethical or socially irresponsible practices in developing countries. The growing transparency of corporate practice worldwide has put pressure on organizations not just to be more ethical in their business operations but also to assume greater social responsibility towards a range of global social issues, including combating climate change, minimizing the abuse of human rights in employment practices, and elevating global poverty. These pressures may come from an organizations own ethical values, its home-country government, or constituencies which threaten to boycott its products or to spread adverse publicity about it. Many companies, including Nike with its alledged sweatshops in Indonesia, Nestl with the ways in which it marketed its milk powder in Africa, and Shell over criticism of its perceived failure to oppose the Nigerian governments abuse of human rights, have learned the hard way. Bad behaviour in one country can be seized on by the NGOs and the media, and then broadcast in the home country. Many organizations now believe that socially responsible behaviour not only helps to avoid negative consequences from perceived irresponsibility but can also lead to strategic and nancial success.

13 2. Explain the steps in the marketing planning process

Marketing planning is a logical sequence and series of activities leading to the setting of strategic planning objectives for an enterprise, and the formulation of strategic plans for achieving them. In essence it is a process for determining what a business should become and how it can optimally achieve that goal. Under the marketing concept, the firm must find a way to discover unfulfilled customer needs and bring to market products that satisfy those needs. The process of doing so can be modeled in a sequence of steps: the situation is analyzed to identify opportunities, the strategy is formulated for a value proposition, tactical decisions are made, the plan is implemented and the results are monitored. I. Situation Analysis

A thorough analysis of the situation in which the firm finds itself serves as the basis for identifying opportunities to satisfy unfulfilled customer needs. In addition to identifying the customer needs, the firm must understand its own capabilities and the environment in which it is operating. The situation analysis thus can be viewed in terms an analysis of the external environment and an internal analysis of the firm itself. The external environment can be described in terms of macro-environmental factors that broadly affect many firms, and microenvironmental factors closely related to the specific situation of the firm.

The situation analysis should include past, present, and future aspects. It should include a history outlining how the situation evolved to its present state, and an analysis of trends in order to forecast where it is going. Good forecasting can reduce the chance of spending a year bringing a product to market only to find that the need no longer exists.

14 If the situation analysis reveals gaps between what consumers want and what currently is offered to them, then there may be opportunities to introduce products to better satisfy those consumers. Hence, the situation analysis should yield a summary of problems and opportunities. From this summary, the firm can match its own capabilities with the opportunities in order to satisfy customer needs better than the competition.

There are several frameworks that can be used to add structure to the situation analysis:

5 C Analysis :company, customers, competitors, collaborators, climate. Company represents the internal situation; the other four cover aspects of the external situation

PEST analysis : for macro-environmental political, economic, societal, and technological factors. A PEST analysis can be used as the "climate" portion of the 5 C framework.

SWOT analysis : strengths, weaknesses, opportunities, and threats - for the internal and external situation. A SWOT analysis can be used to condense the situation analysis into a listing of the most relevant problems and opportunities and to assess how well the firm is equipped to deal with them.

II. Marketing Strategy

Once the best opportunity to satisfy unfulfilled customer needs is identified, a strategic plan for pursuing the opportunity can be developed. Market research will provide specific market information that will permit the firm to select the target market segment and optimally position the offering within that segment. The result is a value proposition to the target market. The marketing strategy then involves:

Segmentation Targeting (target market selection)

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Positioning the product within the target market Value proposition to the target market

III. Marketing Mix Decisions

Detailed tactical decisions then are made for the controllable parameters of the marketing mix. The action items include:

Product development - specifying, designing, and producing the first units of the product.

Pricing decisions Distribution contracts Promotional campaign development

IV. Implementation and Control

At this point in the process, the marketing plan has been developed and the product has been launched. Given that few environments are static, the results of the marketing effort should be monitored closely. As the market changes, the marketing mix can be adjusted to accomodate the changes. Often, small changes in consumer wants can addressed by changing the advertising message. As the changes become more significant, a product redesign or an entirely new product may be needed. The marketing process does not end with implementation - continual monitoring and adaptation is needed to fulfill customer needs consistently over the long-term.

16 3. There are six major components of a companys marketing situation. Arrange these six into a Marketing audit and provide/explain what are the key informational data within each of the six components.

Marketing audit should start with the market place at beginning and should explore the changes that are happening in the marketplace. Then the marketing audit will move to examine the companys marketing objectives and strategies, organization and systems. The marketing auditor may move to examine one or two key functions in more detail that are important to the marketing performance of the company. The marketing audit follows the following areas as components of marketing audit: Environmental Audit Macro Environmental Audit The Macro-environmental component examines six main areas, the detail depending on the involvement of the business and involvement required by the industry. Under marketing audit, the macro environment covers some environmental factors, like, Demographics - major demographic developments and trends pose opportunities, Economical factors developments in income, prices, savings and credit will affect the company under that, Environmental factors, Technological factors changes occurring in product and process technology and company's position in these technologies, Political factors - changes in laws and regulations might affect marketing strategy and tactics and the changes in the areas of pollution control, equal employment opportunity, product safety, advertising, price control, that affects the marketing strategy of company, Cultural - public's attitude towards business and toward the company's products and changes in customer lifestyles and values might affect the company.

17 Task Environmental Audit How competitive is the marketplace? What are competitors doing, and are they doing it well? What might they be preparing to do? These are all vital to understand in preparing yourselves for the battle. The task environment audit is evaluated under Markets - market size, growth, geographical distribution and profits and major market segments, under customers customers' needs and buying processes and also product quality, service, sales force and price, Competitors, Distribution & dealers, Suppliers, Facilitators & marketing firms and Publics. Marketing Strategy Audit The marketing strategy audit is vital for company, and the marketing audit is make sure that the companys marketing strategy is fit with companys marketing goals and objectives as well as corporate goals and objectives. Under the marketing strategy audit, the auditor evaluate marketing performance by evaluating marketing goals and objectives, company mission the move to the strategy of organization. Under strategy evaluation, the auditor may concern following type of questions: Has the management articulated a clear marketing strategy for achieving its marketing objectives? Is the strategy convincing? Is the company using the best basis for market segmentation? Does the company have clear criteria for rating the segments? Has the company developed an effective positioning and marketing mix for each target segment?

18 Marketing Organization Audit The marketing organization audit is mainly considered effectiveness of the organization activities as well as efficiency of operation of company. Here all the activities and main management functions are considered such as manufacturing, purchasing, financing as well as research and development. Here the marketing auditor must make sure that the company is actually achieved the effectiveness within the organization and also within the marketplace. And also following types of questions are considered by marketing auditors: Are there good communications and working relations between marketing and sales? Is the product-management system working effectively? Are product managers able to plan profits or only sales volumes?

Marketing System Audit Here the marketing auditor is considered whether the company is using appropriate marketing systems to collect the information, plan the activities, control the operations and to maintain smoothly their day to day activities and whether these systems are properly worded within the company or not. Those are the main things, the marketing auditor must consider under marketing systems audit. Most of the organizations are today having different type of marketing systems to collect the information and control the operation. Such as marketing information systems, marketing planning systems, marketing control systems and new product development systems. These systems have its own functions. Here the marketing auditor task is to make sure whether the systems are properly worked or not. Marketing Productivity Audit Most of the companies are operating to earn so much of profits. The marketing productivity audit is focused on evaluate the company profits and revenue. So the marketing productivity audit is very important to evaluate the marketing performance. The marketing auditor is used profitability analysis and cost effectiveness analysis for their evaluation

19 process. Under the marketing productivity audit, following type question asked by marketing auditor: What is the profitability of the company's different products, markets, territories and channels of distribution? Should the company enter, expand, contract or withdraw from any business segments? Do any marketing activities seem to have excessive costs? Can cost-reducing steps be taken?

Marketing Functions Audit Under the marketing function audit, the auditor is using marketing mix elements to analyze company functions such as product, price, place and promotion. Here marketing auditor evaluates marketing performance by asking questions under product, price, place and promotion.

4. There are ten major marketing weaknesses. List and explain the signs and solutions to these marketing weaknesses.

5. Colleges, universities, and other educational institutions can be classified as service organizations. How can you apply the marketing principles in regard to managing a service organization to TAMU-Commerce? Do you have any advice as to how it could become a better service marketer?

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References

21 Carol, D. (2005). Tobacco Escapes Huge Penalty. Retrieved from http://www.washingtonpost.com/wpdyn/content/article/2005/06/07/AR2005060702019.html Larry, B. (2011). Strategies of the tobacco industry. Retrieved from http://www.tobacco.org/resources/history/strategieslb.html Mallen, B. (2005). Can companies that make products that kill be socially responsible. Retrieved from http://mallenbaker.net/csr/page.php?Story_ID=1492 Steven, R. (2009). Tobacco Companies Targeting Teens, Study Says. Retrieved from http://health.usnews.com/health-news/managing-yourhealthcare/policy/articles/2009/02/12/tobacco-companies-targeting-teens-study-says CDG. (2011). Cigarette production, exports, and domestic consumption in United States Retrieved from http://www.cdc.gov/tobacco/data_statistics/tables/economics/expdcom/

Appendices

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Figure 1. chart representing cigarette production, exports, and domestic consumption in United States from 19902007

Figure 2. Table representing cigarette production, exports, and domestic consumption in United States from 19902007