BUSI 406: Principles of Marketing

Lecture 4 Outline of Last Lecture I. Marketing strategy planning a. 3C’s b. SWOT c. Target marketing d. 4 P’s/marketing mix II. Attractive Opportunities

Outline of Current Lecture I. Two of the Cs a. Company objectives & mission statements b. Competitive environment II. External Marketing Environment a. Economic environment b. Technological environment c. Political/Legal environment d. Cultural/Social environment III. Screening opportunities

Current Lecture

The Marketing Environment The narrowing-down process should consider the important elements of the market environment and how they are shifting. Key Issues: • The marketing strategy planning process requires: o Narrowing down to the best opportunities; o Developing a strategy that: - gives the firm a competitive advantage; - provides target customers with superior customer value.

Marketing Strategy Planning: Competitors, Company & External Market Environment

Specific aspects of the external market environment, company, and competitors aid the firm in evaluating opportunities. From these opportunities, the best opportunities can be selected. • Each company has objectives it wants to accomplish, and specific resources at its disposal.

These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute. • When looking at its competitors, firms must include not only its current competitors, but potential (future) ones as well. • The external market environment is made up of: o economic environment o technological environment o political and legal environment o cultural and social environment. • Opportunity evaluation is aided by several o screening criteria • or strategic planning grids, covered in the chapter. Often, firms must plan for multiple products simultaneously. • Once all the above are considered, a firm should be able to identify the best opportunities to pursue.

The Marketing Environment The five basic areas of the marketing environment are shown in this diagram. Marketers should consider each area and how each area interacts with the others when planning strategies. • Direct market environment: - customers, the resources and objectives of the company, and the firms’ competitors. • External market environment: • the economic environment, the technological environment, the political and legal environment, and the cultural and social environment. • Marketers make decisions about the 4 Ps in the context of the environment. • Marketers must continually scan the environment and search for potential opportunities and threats.

Hierarchy of Objectives The three general objectives provide guidelines. But a firm should develop its own objectives. • A mission statement helps set the course. It sets out the organization’s basic purpose for being. • The whole firm should work toward the same objectives. • Company objectives provide the larger framework for setting marketing objectives. o Marketing objectives should be set for each marketing strategy. o They should be as detailed as possible. • Objectives should be explicit--quantified and related to time deadlines.

Company Resources May Limit Search for Opportunities It is important to evaluate how realistic each opportunity is in relation to the specific capabilities of the company.

Key areas that limit the search for opportunities are: • Financial strength--opportunities require capital. • Producing capability and flexibility: o As production increases, the cost of producing each unit decreases. o Making changes can be costly and take time. • Marketing strengths--competitive advantages, such as: o familiar brand o strong channel relations; o creative brand advertising; o industry-leading salesforces.

The Competitive Environment affects the number and types of competitors the marketing manager must face -- and how they may behave. Prudent managers choose strategies that avoid head-on competition and/or plan for competition when it is inevitable.

Marketers should understand the differences among types of market situations: • Monopoly: - one company serves the entire customer base. Competitor-free environments are rare. • Monopolistic competition: a number of different firms offer marketing mixes that at least some customers see as different. Monopolistic competition is typical, and a challenge. • Oligopoly: a small number of firms controls the market. Barriers to competitive entry are high. • Pure competition: a large number of firms compete with essentially similar (commodity) products. Price is typically the determining factor in making a purchase.

Analyzing Competition Marketing managers must understand the competitive environment. • Competitor analysis: an organized approach for evaluating the strengths and weaknesses of current or potential competitors' marketing strategies. Marketers do this by gathering information on the competitors from a variety of internal and external sources. • Competitive rivals: the firms that will be the closest competitors. • Marketing managers must anticipate future competition. • Successful marketers naturally attract competition. • Competitor matrix: an organized table that compares the strengths and weaknesses of a company with those of its competitive rivals. • Search for sustainable competitive advantage: a marketing mix that customers see as better than a competitor’s mix and cannot be easily copied.

Marketers Need Information About Competitors Marketing managers should seek out information on competitive practices.