Marketing Environment

Analysis

including their number.A firm’s macro Environment… • Technological – The technological environment includes factors and trends related to innovations that affect the development of new products or the marketing process. • Politico-Legal – In today’s world economy. • Socio-Cultural – The social environment includes all factors and trends related to groups of people. . • Economic – Demographic – The economic environment includes factors and trends related to income levels and the production of goods and services. – These technological trends can provide opportunities for new product development. or both. affect how marketing activities are performed. behavior. and growth projections. international political events greatly affect marketing activities. For example the impact of the war on terrorism on the travel and security industries. characteristics.

Analytical Tools • Mapping Company Strengths / Weakness with Environment Characteristics – Porter's Five Forces – BCG Matrix – GE Matrix – Ansoff Matrix – SWOT Analysis .

” .Michael Porter … “An industry’s profit potential is largely determined by the intensity of competitive rivalry within that industry.

Porter’s Five Forces .

Portfolio Analysis … … Strategy at the time (1970s) was focused on two dimensions of the portfolio grids … … Industry Attractiveness … Competitive Position .

Where was Michael Porter coming from? .

School of Economics … … at Harvard … .

Structural reasons why … … some industries were profitable * Firm concentration * Established cost advantages * Product differentiation * Economies of scale .

Structural reasons … … all represented barriers to entry in certain industries. thus allowing those industries to be more profitable than others. .

Porters Five Forces … * Threat of Entry * Bargaining Power of Suppliers * Bargaining Power of Buyers * Development of Substitute Products or Services .

… lack of adequate distribution channels or access to raw materials. . … strong customer loyalty or strong brand preferences.Barriers to Entry … … large capital requirements or the need to gain economies of scale quickly.

* Few good substitute raw materials or suppliers are available. highly concentrated suppliers exists. * The cost of switching raw materials or suppliers is high. .Power of Suppliers … … high when * A small number of dominant.

* Customers’ purchases represent a major portion of the sellers’ total revenue. . large or buy in volume . * The products being purchased are standard or undifferentiated making it easy to switch to other suppliers.Power of Buyers … … high when * Customers are concentrated.

* Consumers’ switching costs decline. * Competitors plan to increase market penetration or .Substitute products … … competitive strength high when * The relative price of substitute products declines .

* Fixed costs or barriers to leaving the industry are high. * Demand for the industry’s products declines or industry growth slows. .Rivalry among competitors … intensity increases as * The number of competitors increases or they become equal in size.

industry profits decline.Summary … As rivalry among competing firms intensifies. in some cases to the point where an industry becomes inherently .

IBM etc) want to grow There are several alternative growth strategies proposed by Ansoff Market Strategies on vertical axis Market Penetration Strategy Market Development Strategy Product Strategies on horizontal axis Product Development Strategy Product Diversification Strategy 0 .Ansoff Matrix Growth Marketing Strategy Most companies (ASDA. British Airways.

Ansoff Matrix Current Products Current Markets New Markets New Products Growth Marketing Strategy Market Penetration Strategy Product Development Strategy Market Development Strategy Product Diversification Strategy .

PR. additional features of existing products Introductory promotion of new products etc in Wrexham Product Diversification Strategy Launching new products in new markets Strategies: developing new products. radio etc in Chester Product Development Strategy Launching new products in existing markets Strategies: developing new products. additional features of existing products Introductory promotion of new products etc in Chester . price discounts etc in Wrexham Market Development Strategy Entering new markets with existing products Strategies: introductory offers. trial brochures.Ansoff Matrix Market Penetration Strategy Expanding sales from existing products in existing markets Strategies: heavy promotions.

Boston Consultancy Group Model • Relative Market Share – Company Market Share/Highest Market Share (or 2nd Highest Market Share if the Company is the leader) – Market Growth Rate .

BCG Matrix Market Growth Rate Stars Cash Cows Question Marks Dogs Relative Market Share .

General Electric Model • Market Attractiveness • Company Strength • Method – List the core attractiveness features with weightage – Rank the environment on these features – Multiply the rank with the weightage to get the coordinates for both Market Attractiveness and Company Strengths for the SBU .

1 7 5 0.1 2 3 0.5 10 2 5 1 Managerial Skills 0.5     Total   1             8.6 Technology Orientation 0.4 Competitive Skills 0.1 0.3 10 2 3 0.5 Legal Framework 0.8   5.2 0.2 0.4 Entry Barriers 0.9 2.6 1.2 2 Distance 0.3 Technology Orientation 0.1 2 3 0.1 7 5 0.7 0.Market Attractiveness Whightag e Rank (on a scale of 1  to 10) for Market  A Rank (on a scale of 1  to 10) for Market  B Coordinate  for  Market  A Coordinate  for  Market  B Growth 0.1       Total   1                   5.2 1 10 0.05 2 2 0.4 .15 4 10 0.2 10 2 2 0.3 Brand Stregth 0.2   SBU Strength Whightag e Rank (on a scale of 1  to 10) for SBU A Rank (on a scale of 1  to 10) for SBU B Coordinate  for  SBU A Coordinate  for  SBU B Financial Strengths 0.5 Size 0.7 0.2 10 2 2 0.

GE Matrix Invest Invest Analyze Market Attractiveness A B Invest HOLD MILK Milk Dives t Divest SBU Strength .

.East Central Ohio Freight • Discussion Questions – What is the competitive Structure of the TL and LTL Markets? – What factors impact the primary demand? – Provide an analysis of the strategic decision using the GE Model – Conduct an analysis of the industry using Porter’s Five forces model – Provide an analysis of the strategic decision using Ansoff’s Matrix.