Transcript Chapter 3 Evaluating Opportunities in Changing Market Environments

Part 1: Marketing strategy and
management
Chapter 3: Identifying marketing
opportunities
Step 1: Analyse the current market
environment
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When we finish this lecture you
should
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Understand the sorts of company objectives that are useful
for a company’s marketing strategy
Recognise that a company’s resources affect its search for
opportunities
Know the effect of competitive pressures on strategy planning
Understand why a competitive advantage is key to capitalising
on marketing opportunities
Understand how the economic, technological, social and
cultural, and political and legal environments influence
strategy planning
Know about the different types of international and domestic
marketing opportunities to pursue
Understand how to screen and evaluate marketing strategy
opportunities
Know the logic behind planning grids or matrices
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Forces that shape the marketing
Environment
• Direct marketing environment
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Customers
The company
Competitors
• External market environment
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Economic
Technological
Political and legal
Cultural and social
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Company objectives
• Mission statement
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Sets out the organisation’s basic purpose for being
• Three generic objectives
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Engage in activities that perform a socially and
economically useful function
Develop an organisation to carry out the functions of the
business and implement its strategies
Earn sufficient profit to survive
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Figure 3.1 A hierarchy of objectives
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Examples of
company resources
• Financial strength (BHP Billiton)
• Production capability and flexibility (Fisher and
Paykel)
• Marketing strengths
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Patents (Sarich)
Channel relationships (Nestle, Westpac)
Distribution dominance (Coca-Cola)
Skilled sales force; low-cost Internet Web site
Technical capability (Du Pont)
Loyal customer base (Kraft)
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The competitive environment
• Pure competition
• Oligopoly
• Monopoly
• Monopolistic competition
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Figure 3.2 The five competitive forces
Threats
of new
entrants
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Competitive advantage
• The company has a marketing mix that the target
market sees as better than a competitor's mix
• The company is required to
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understand current competitors' offerings
anticipate competitors' likely plans
monitor effects of changes in competition
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Figure 3.3 A framework for competitor analysis—
disposable nappies in Japan
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Economic environment
• Affects the way in which companies (or the whole
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economy) use resources
Affected by the interaction of the macroeconomic
system
Changes rapidly
Marketing strategy may fail if a country suffers a
rapid or extended business decline
Changes in economy are often accompanied by
changes in interest rates
Economies of the world are interconnected
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Technological environment
• Technology—the application of science to convert
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economic resources to output
Robotics (better quality control, lower production
costs)
Computer scanners at retail check-out counters
Automated inventory control
Worldwide satellite communications of data
Personal computers
Fax machines for communication
Email for communication
Internet and the World Wide Web
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Examples of changes in the
political and legal environments
• Ban on liquor or cigarette sponsorship
• Control of advertising by the Trade Practices
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Commission (Australia) or Commerce Commission
(NZ)
Unsafe or defective goods are the liability of the
manufacturer
Deregulation of the broadcasting industry
Deregulation of the airline industry
Deregulation of government services to allow
competition
Native title and land claims legislation
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Figure 3.4 Main features of the Trade Practices Act
(Australia) and the Commerce Act and Fair Trading
Act (New Zealand)
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Cultural and social environments
• Affect how people live and why they behave as
they do
• Affect buying behaviour
• Variables
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Languages people speak
Types of education
Religious beliefs
Types of food
Styles of clothing
Housing they choose
View of marriage and family
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Social and cultural trends
• Increasing multiculturalism
• Changing role of women
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More women in the workforce (66 %)
Women delaying marriage and having fewer children
‘Ageing’ of the population
More single-person households
More convenience-oriented
More health consciousness
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Food products with reduced fats and added fibre
• More concern about the environment
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Attractive opportunities
• Marketing strategy planning—finding attractive
opportunities and developing profitable marketing
strategies
• Breakthrough opportunities—enable innovators to
develop marketing strategies that are difficult to
imitate and are more likely to be profitable for a
long period of time
• Competitive advantage—exists when the marketing
mix of a company is perceived by the target
market as superior to that of the company’s
competitors
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Figure 3.5 Four basic types of opportunities
Present
New
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Types of opportunities
• Marketing penetration—Visa sponsored the Sydney
2000 Olympic Games and re-focused its advertising
on encouraging current customers to use their card
more often, to increase their chance of winning
tickets to the Games
• Market development—McDonald’s reached new
customers by opening outlets in airports, office
buildings and zoos
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Types of opportunities (continued)
• Product development—Microsoft boosted sales by
introducing new versions of programs and also new
products
• Diversification—Sony expanded into the production
of recorded music and motion pictures; Sony
announced expansion into corporate Internet
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Evaluating opportunities
• Growth strategies are necessary but they can carry
different risks
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Diversification is most risky
Market penetration is the most usual strategy
Market development and international growth are
profitable ways of taking advantage of current strengths
Trends in environment may make an opportunity more, or
less, attractive
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Evaluating opportunities (continued)
• SWOT is a useful aid for identifying and listing a
company’s strengths, weaknesses, opportunities
and threats
• International trade is increasing; a low-cost foreign
producer may enter the home market
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Figure 3.6 An example of product-market
screening criteria for a small retail and wholesale
distributor ($5 million annual sales)
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Figure 3.7 Expected sales and cost curves of two
strategies over five-year planning periods
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Figure 3.8 Continuum of environmental sensitivity
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Figure 3.9 General Electric’s strategic planning
grid
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Figure 3.10 The Boston Consulting Group (BCG)
matrix
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What we will be doing in the next
chapter
• In Chapter 4 we will discuss how information can
be obtained to facilitate the planning and
implementation of successful marketing strategies
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