Marketing Environment Analysis

Marketing and Customer value

• The task of any company is to deliver
customer value at a profit.
• In economies with many different types of
people, each with individual wants, perceptions,
preferences, and buying criteria, its important for
companies to satisfy each kind of customer and
give value for the price. This has lead the
companies to do proper planning.
• The value delivery process: The value
creation and delivery can be divided into
three phases
•
Value delivery process/Value Chain
Traditional:
Make the product: Design-Procure-Make
Sell the product: Price-Sell-Promote-Distribute-Service
Value creation and delivery sequence:
Choose the value: Segmentation-market selection
(targeting)-value positioning – essence of strategic
marketing
Modern:
Provide the value: Product development-service
development-pricing-sourcing/making-distributing
Communicate the value: Sales force-sales promo-
advertising
Tactical marketing
 Value Chain
By Michael Porter

It is a tool for identifying ways to create more

customer value.
According to this model, every firm is a
synthesis of activities performed to design,
produce, market, deliver and support its
product.
 THE GENERIC VALUE
CHAIN
Firm’s Infrastructure

Support Human Resource Management

Activitie
s Technology Development

Procurement

Inbound Operations Outbound Marketing

Primary Logistics and Sales Services
Logistics
Activitie
s
 THE GENERIC VALUE
CHAIN
Firm’s Infrastructure

Support Human Resource Management

Activitie
s Technology Development

Procurement

Inbound Operations Outbound Marketing

Primary Logistics and Sales Services
Logistics
Activitie
s
 Core Competency
• For its core business – firms need
labour,materials,machines, information
and energy
• Firms may outsource less critical resources if
they can be obtained at better quality or
lower cost
• The key is to own and nurture the resources
and competencies that make up the essence
of the business
 Core Competency
• Core competency has three characteristics
1.It is a source of competitive advantage in
that it makes a significant contribution to
perceived customer benefits
2.It has applications in a wide variety of
markets
3. It is difficult to imitate
 Strategic Planning
Creating, providing and communicating value
requires different marketing activities – and
for them to be executed – Strategic
planning is required !
Strategic planning calls for actions in three
areas
1. Managing a firm’s business as an
investment portfolio
2. Assessing each business strength by
considering the market growth rate and the
company’s position and fit in that market
3. Establishing a strategy
 Understanding strategic planning
Large firms have four organisational levels
1. Corporate level
2. Divisional level
3. Business unit level
4. Product level
Assigning Resources to SBU
BCG Matrix – Boston Consulting Group
GE/McKinsey Matrix
 Assessing growth opportunities

Diversification growth

Integrative growth

Sales Intensive growth

Time in years
 S.W.O.T.
• Strength and Weakness – Internal
analysis
• Opportunity and threat – External
analysis
 Identifying the
Major Forces
• Six major forces in the broad environment

Demographic Natural

Economic Technological

Socio-cultural Political-legal
The Economic Environment

CONSUMER PSYCHOLOGY

INCOME DISTRIBUTION

INCOME, SAVINGS, DEBT, CREDIT

The Socio cultural Environment

Views of Views of
ourselves society

Views of Views of
others nature

Views of
organizations
 The natural environment
• Corporate environmentalism
– Opportunities await those who can reconcile
prosperity with environmental protection
The Technological Environment

Accelerating pace of change

Unlimited opportunities
for innovation

Varying R&D budgets

Increased regulation of
technological change
The Political-Legal Environment

LAWS

GOVERNMENT AGENCIES

PRESSURE GROUPS
 Porter’s Five Forces
Model of Competition/ Industry
Environment

Industries include rich mixture of forces so that the firms are able
to earn above average returns.
As compared to the general environment industry environment
has
the most direct approach.
It includes five forces: Threat of new entrants, Bargaining
power of suppliers, Bargaining power of buyers, Threat of
Substitute products and Rivalry among existing competitors.
 Threat of New Entrants
Economies of Scale

Barriers to Product Differentiation

Entry
Capital Requirements

Switching Costs

Access to Distribution Channels

Expected Retaliation

Government Policy
 Bargaining Power of Suppliers
Suppliers are likely to be powerful if:

Supplier industry is dominated by a few firms

Suppliers’ products have few substitutes Buyer is

not an important customer to supplier

Suppliers’ product is an important input to buyers’ product

Suppliers’ products are differentiated

Suppliers’ products have high switching costs

Supplier poses credible threat of forward integration

 Bargaining Power of Buyers
Buyer groups are likely to be powerful if:

Buyers are concentrated or purchases are large relative to seller’s sales.

Ex Flipkart and Amazon

Products are undifferentiated

Buyers face few switching costs

Buyer presents a credible threat of backward integration Ex: Mac

donalds

Product unimportant to quality

Buyer has full information

 Threat of Substitute Products

Products with improving price/performance tradeoffs relative

to present industry products

Example:

Electronic security systems in place of security guards

Fax machines in place of overnight mail delivery

 Rivalry Among Existing
Competitors
Intense rivalry often plays out in the following
ways:
Fight for strategic position
Using price competition

Staging advertising battles

Increasing consumer warranties or service

Making new product introductions

Occurs when a firm is pressured or sees an

opportunity
Price competition often leaves the entire industry worse off

Advertising battles may increase total industry demand, but may be

costly to smaller competitors
Rivalry Among Existing
Competitors
Cutthroat competition is more likely to occur
when:
Numerous or equally balanced competitors
Slow growth industry
High fixed
costs High storage
costs
Lack of
differentiation
High strategic stakes
or switching costs
High exit barriers
 Corporate and Divisional strategic
planning
1. Defining the corporate mission
2. Establishing strategic business units
3. Assigning resources to each SBU
4. Assessing growth opportunities
 Corporate and Divisional strategic
planning
First understand what is vision: Long term
goal.

Asian Paints
We want to be an innovative, agile, and
responsive world class research and technology
organisation that's aligned to future customer
needs and catalyses the growth of the
company across existing and future
businesses.
 Defining the corporate mission
It can be understood by answering
Management Guru Peter’s Drucker’s
questions

1. What is our business

2. Who is the customer
` 3. What is of value to the customer
4. What will our business be
 Mission Statements
• It is something that provides employees with a shared
sense of purpose, direction and opportunity
• It guides geographically dispersed employees to work
independently and yet collectively toward realizing the
organizational goals
• Mission statements are best when they reflect a ‘vision’ – a
almost impossible dream that provides direction for the
company for the next 10 to 20 years
• Good mission statements have three things
1. Focus on limited number of goals
2. Stress on company’s values and policies
3. Define major competitive spheres within which the firm will
operate – industry, product and applications, competence,
market segment, vertical and geographical
 Mission Statements
• 'To provide paints as per market demand,
ensuring desired level and quality of customer
(dealer) service, continued availability of the
right product mix of right quality at the right
time. ''
 Examples
McDonald: is to be our customer’s favorite
place and way to eat and drink.

Samsung: Vision is to “digital convergence

movement” and mission “digital-e-
company”

Nestle: Good Food, Good Life

Nike: To bring inspiration and innovation in

every athlete
 Defining business
• Business is defined as customer
a
satisfying process
• Has three important parameters – customer
groups, customer needs and technology
• Large firms manage different businesses
which are known as SBUs – Strategic
Business Units
 What is a Strategic Business Unit

1. It is a single business or collection of related

businesses that can be planned separately
from the rest of the company.
2. It has its own set or rivals.
3. It has a manager who is responsible for
strategic planning and profit performance
and who controls most of the factors
affecting profit.