Marketing Strategy

1
Marketing Strategy
Chapter 3 Environmental Analysis
3-1
2
Environmental Analysis

• Any effort at environmental analysis must be
  well-organized, systematic, and supported by
  sufficient resources (e.g., people, financial,
  information).
• Environmental analysis should be an ongoing
  effort.
• A comprehensive environmental analysis can lead
  to better planning and decision making, but it
  should be combined with the manager's intuition
  and judgment to make the results of the analysis
  useful for planning purposes.
• Environmental analysis empowers the marketing
  manager because it encourages both analysis and
  synthesis of information.

3-2
3
Data Versus Information

• Managers are more likely to be overwhelmed with
  data rather than face a shortage.
• Data does not become informative until it is
  transformed in a manner that makes it useful to
  decision makers.
• Environmental analysis is valuable only to the
  extent that it improves the quality of the
  resulting plans and decisions.
• Perpetually analyzing data without making any
  decisions is usually not worth the added expense.

3-3
4
Three Key Environments

• Analysis of the external environment
  (macroenvironmental) should include all the
  external factors competitive, economic,
  political, legal/ regulatory, technological, and
  socioculturalthat can exert direct and indirect
  pressures on both domestic and international
  marketing activities.
• The marketing manager should examine the customer
  environment (5 Ws) to assess the current and
  future situation with respect to customers in the
  firm's target markets.
• Finally, a critical evaluation of the firm's
  current and anticipated internal environment
  (microenvironmental) with respect to its
  objectives and performance, allocation of
  resources, structural characteristics, and
  political and power struggles.

3-4
5
Four Basic Types of Competition
Brand Competitors market products that are
similar in features and benefits to the same
customers at similar prices Product Competitors
compete in the same product class, but with
products that are different in features,
benefits, and price Generic Competitors market
very different products that solve the same
problem or satisfy the same basic need Total
Budget Competitors compete for the limited
financial resources of the same customers
3-5
6
Stages of Competitive Analysis
1) Identify all current and potential brand,
product, generic, and total budget
competitors 2) Assess each key competitor in
terms of relevant characteristics, such as
size, profitability, growth, objectives,
strategies, etc. 3) Assess each key
competitors strengths and weaknesses, as well
as the major competencies that each
competitor possesses 4) Focus on each
competitors marketing capabilities in terms of
their products, pricing, distribution, and
promotion 5) Estimate each competitors most
likely strategies and responses under
different environmental situations, as well as
their reactions to the organizations own
marketing efforts
3-6
7
Economic Conditions

• A thorough examination of economic factors
  requires marketing managers to gauge and
  anticipate the general economic conditions of the
  nation, region, state, and local area in which
  they operate.
• Economic factors to consider include inflation,
  employment and income levels, interest rates,
  taxes, trade restrictions and tariffs, current
  and future stages of the business cycle
  (prosperity, stagnation, recession, depression,
  and recovery), consumers' overall impressions of
  the economy and their ability and willingness to
  spend, and current and anticipated spending
  patterns of consumers in the firm's target market.

3-7
8
Political Trends

• Many marketers view political factors as being
  beyond their control and do little more than
  adjust the firm's strategies to accommodate
  changes in those factors.
• Other firms take a more proactive stance by
  seeking to influence elected officials.

3-8
9
Legal and Regulatory Factors

• The marketing manager should carefully examine
  recent court decisions and recent rulings of
  federal, state, local and self-regulatory trade
  agencies to determine their effects on marketing
  activities.
• Companies that engage in international marketing
  activities should also consider changes in the
  trade agreements between nations.

3-9
10
3-10
11
Changes in Technology

• Many changes in technology assume a frontstage
  presence in that they are most noticeable to
  customers.
• Technological changes can also assume a backstage
  presence when their advantages are not
  necessarily apparent to consumers.

3-11
12
Sociocultural Factors

• Sociocultural factors are those social and
  cultural influences can cause changes in
  attitudes, beliefs, norms, customs, and
  lifestyles.
• There are many changes taking place in the
  demographic makeup of the U.S. population.
• Changes in cultural values can also create
  challenges and opportunities for marketers.

3-12
13
The Customer Environment

• Information should be collected that identifies
• The firm's current and potential customers
• The prevailing needs of current and potential
  customers
• The basic features of the firm's and competitors'
  products that are perceived as meeting customers'
  needs
• Anticipated changes in customers' needs
• In assessing the firm's target markets, the
  marketing manager should attempt to understand
  all relevant buyer behavior and product usage
  statistics.

3-13
14
5-W Model

• Who Are Our Current and Potential Customers?
• What Do Our Customers Do with Our Products?
• Where Do Our Customers Purchase Our Products?
• When Do Our Customers Purchase Our Products?
• Why (and How) Do Our Customers Select Our
  Products?
• Why Do Potential Customers Not Purchase Our
  Products?

3-14
15
Who Are Our Current and Potential Customers?

• The manager should consider
• demographic characteristics (gender, age, income,
  occupation, education, ethnic background, family
  life cycle, etc.)
• geographic characteristics (where customers live,
  density of the target market, etc.)
• psychographic characteristics (attitudes,
  opinions, interests, motives, lifestyles, etc.)
  in defining the firm's target markets.
• Depending on the type of products sold by the
  firm, purchase influencers, such as children or
  spouses, may be important as well.
• For business-to-business marketers, the analysis
  should focus on the decision-making unit (DMU).

3-15
16
What Do Our Customers Do with Our Products?

• The "what" question entails an assessment of how
  customers consume and dispose of the firm's
  products.
• Here the marketing manager might be interested in
• identifying how often products are consumed
  (sometimes called the usage rate)
• differences between heavy and light users of
  products
• whether complementary products are used during
  consumption
• what customers do with the firm's products after
  consumption

3-16
17
Where Do Our Customers Purchase Our Products?

• Until recently, most firms looked solely at
  traditional channels of distribution, such as
  brokers, wholesalers, and retailers.
• Many other forms of distribution are available
  today, most notably nonstore retailing, which
  includes
• vending machines
• door-to-door selling
• direct marketing through catalogs or infomercials
• electronic merchandising through computers and
  interactive television

3-17
18
When Do Our Customers Purchase Our Products?

• The "when" question refers to any situational
  influences that may cause customer purchasing
  activity to vary over time, including the
  seasonality of the firm's products and the
  variability in purchasing activity caused by
  promotional events.
• The "when" question also includes more subtle
  influences that can affect purchasing behavior,
  such as
• physical and social surroundings
• time perceptions
• the purchase task
• time of day
• time available to search for alternatives
• what the purchase is intended to accomplish.

3-18
19
Why (and How) Do Our Customers Select Our
Products?

• The "why" question involves identifying the basic
  need-satisfying benefits provided by the firm's
  products.
• The potential benefits provided by the features
  of competing products should also be analyzed.
• It is also important to identify potential
  changes in customers' current needs and the needs
  that customers may have in the future.
• The "how" part of this question refers to the
  means of payment that customers use when making a
  purchase.
• How can we practice CRM

3-19
20
Why Do Potential Customers Not Purchase the
Organizations Products?

• Noncustomers have a basic need that the product
  does not fulfill
• The product does not match noncustomers
  lifestyles or image
• Competing products have better features or
  benefits
• The product is too expensive for some customers
• Noncustomers may have high switching costs
• Noncustomers are simply unaware of the
  products existence
• Noncustomers have misconceptions about the
  product
• Poor distribution makes the product hard to find

3-20
21
Internal Environment

• First, the marketing manager must periodically
  assess the firm's current marketing goals,
  objectives, and performance.
• Second, the marketing manager should review the
  current and anticipated levels of organizational
  resources that can be used for marketing
  purposes.
• Finally, the marketing manager should review
  current and anticipated structural issues that
  could affect marketing activities.

3-21
22
Collecting Environmental Data Information

• The marketing manager should invest time and
  money to perform research to uncover data that is
  pertinent to the development of the marketing
  plan.
• This effort will always involve the collection of
  secondary data, which is compiled inside or
  outside the organization for some purpose other
  than the current analysis.
• If the required data or information is not
  available, primary data may have to be collected
  through marketing research.
• Accessing secondary data sources is usually
  preferable as a first option because they can be
  obtained more quickly and at less cost than
  collecting primary data.

3-22
23
Sources of Environmental Data

• Internal sources may also be a good source of
  data on customer needs, attitudes, and behavior.
  The organization's own records are the best
  source of data on current objectives,
  performance, and available resources.
• The sheer volume of available information on the
  economy, our population, and business activities
  is the major strength of most government data
  sources.
• The articles and research reports that are
  available in periodicals and books provide a
  gamut of information about many organizations,
  industries, and nations.
• Commercial sources are almost always relevant to
  a specific issue because they deal with the
  actual behaviors of customers in the marketplace.
• The best approach to secondary data collection is
  one that blends data and information from a
  variety of sources.
• If needed secondary data is not available, out of
  date, inaccurate or unreliable, or irrelevant to
  the specific problem at hand, the manager may
  have little choice but to collect primary data
  through marketing research.

3-23
24
Overcoming Problems in Data Collection

• One of the most common problems is an incomplete
  or inaccurate assessment of the situation for
  which data is being gathered to address.
• Another common difficulty is the expense of
  collecting environmental data.
• A third issue is the time it takes to collect
  environmental data.
• A final challenge is finding a way to organize
  the vast amount of data and information that are
  collected during the environmental analysis.

3-24