Stmkt auc-class.4-7-spring 2013


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Stmkt auc-class.4-7-spring 2013

  1. 1. 2/17/2013MARKETINGENVIRONMENT 1Examining and Responding to theMarketing Environment Environmental Scanning ◦ The process of collecting information about forces in the marketing environment  Observation  Secondary sources  Market research 2 1
  2. 2. 2/17/2013Environmental Scanning 3Environmental Scanning Internal External Micro Micro Macro • Structure Ex.: •Suppliers •Socio-culture • Culture •Competitors •Politics • Resources •Customers •Economy •Intermediaries •Technology 4 2
  3. 3. 2/17/2013 STEP.1.. INTERNAL ENVIRONMENT AUDIT 5Internal Environment Audit Involvement in performing an internal strategic-management audit provides a way forunderstanding the nature and effect of decisions in other functional business areas of the firm 3
  4. 4. 2/17/2013 Micro internal environmentActors ◦ Marketers must consider other parts of the organization including Management,1. The company marketing, finance, R&D, operations and accounting ◦ Marketing decisions must be related to the company goals and strategies 7 Management Audit Checklist  Does the firm use strategic management concepts?  Are objectives/goals measurable? Well communicated?  Do managers at all levels plan effectively? 4
  5. 5. 2/17/2013Management Audit Checklist Do managers delegate well? Is the organization’s structure appropriate? Are job descriptions clear? Are job specifications clear? Is employee morale high?Management Audit Checklist Is employee absenteeism low? Is employee turnover low? Are the reward mechanisms effective? Are the organization’s control mechanisms effective? 5
  6. 6. 2/17/2013Marketing Audit Checklist1. Are markets segmented effectively?2. Is the organization positioned well among competitors?3. Has the firm’s market share been increasing?4. Are the distribution channels reliable & cost effective?5. Is the sales force effective?6. Does the firm conduct market research?Marketing Audit Checklist6. Are product quality & customer service good?7. Are the firm’s products and services priced appropriately?8. Does the firm have effective promotion, advertising, and publicity strategies?10. Are the marketing, planning, and budgeting effective?11. Do the firm’s marketing managers have adequate experience and training?12. Is the firm’s Internet presence excellent as compared to rivals? 6
  7. 7. 2/17/2013 Finance/Accounting Audit1. Where is the firm financially strong/weak as indicated by financial ratio analysis?2. Can the firm raise needed short-term capital?3. Can the firm raise needed long-term capital through debt and/or equity?4. Does the firm have sufficient working capital?5. Are capital budgeting procedures effective? Finance/Accounting Audit 6. Are dividend payout policies reasonable? 7. Does the firm have good relations with its investors and stockholders? 8. Are the firm’s financial managers experienced and well trained? 9. Is the firm’s debt situation excellent? 7
  8. 8. 2/17/2013Production/Operations Audit 1. Are suppliers of materials, parts, etc. reliable and reasonable? 2. Are facilities, equipment, machinery, and offices in good condition? 3. Are inventory-control policies and procedures effective? 4. Are quality-control policies & procedures effective? 5. Are facilities, resources, and markets strategically located? 6. Does the firm have technological competencies? Research & Development Audit 1. Are the R&D facilities adequate? 2. If R&D is outsourced, is it cost-effective? 3. Are the R&D personnel well qualified? 4. Are R&D resources allocated effectively? 5. Are MIS and computer systems adequate? 6. Is communication between R&D and other organizational units effective? 7. Are present products technologically competitive? 8
  9. 9. 2/17/2013Management Information Systems Audit Do all managers use the information system to make decisions? Is there a Director of Information Systems position in the firm? Are data updated regularly? Do managers from all functional areas contribute input to the information system? Are there effective passwords for entry into the firm’s information system?Management Information Systems Audit Are strategists of the firm familiar with the information systems of rival firms? Is the information system user-friendly? Do all users understand the competitive advantages that information can provide? Are computer training workshops provided for users? Is the firm’s system being improved? 9
  10. 10. 2/17/2013Internal Factor Evaluation (IFE) Matrix1. List key internal factors2. Assign a weight ranging from 0.0 to 1.0 ◦ The weight range from 0.0 means not important and 1.0 means important, sum of all assigned weight to factors must be equal to 1.03. Assign 1 to 4 rating to each factor ◦ Major weakness is represented by 1.0 ◦ Minor weakness is represented by 2.0 ◦ Minor strength represented by 3.0 ◦ Major Strength represented by 4.04. Multiply the weight times the rating5. Sum the weighted scores 20 10
  11. 11. 2/17/2013 IFE Matrix conclusion  final value of total weighted score should be between range 1.0 (low) to 4.0(high).  The average weighted score for IFE matrix is 2.5 any company total weighted score fall below 2.5 consider as weak.  The company total weighted score higher then 2.5 is consider as strong in position. 21INTERNAL AUDIT IS ESSENTIAL IN .. VALUE CREATION PROCESSValue creation steps: ◦ Choose A value ◦ Create that value ◦ Communicate & Deliver that value If you fail to plan, then you plan to fail Be proactive about the future 22 11
  12. 12. 2/17/2013 23Value Chain Analysis Theprocess whereby a firm determines the costs associated with: ◦ Purchasing raw materials ◦ Manufacturing products ◦ Marketing products And compares them to the value chain of competitor firms 12
  13. 13. 2/17/2013Figure 3.5 The value chainSource: Reprinted with permission of the Free Press, a division of Macmillan, Inc., from Michael E. Porter, Competitive Advantage: Creating and sustaining superior performance, p. 6Copyright © 1985 by Michael E. Porter Value Chain Analysis  Core competencies  Distinctive competencies  Benchmarking 13
  14. 14. 2/17/2013 Transforming Value Chain Activities into Sustained Competitive Advantage Value Some Chain Some Core Distinctive CoreActivities Competencies Competencie Competencies Are Evolve into s Yield Arise in SomeIdentified Distinctive Sustained Activities and Competencies CompetitiveAssessed Advantages Step.2.. EXTERNAL ENVIRONMENT AUDIT 28 14
  15. 15. 2/17/2013Micro external environmentActors ◦ The five types of customer markets  Consumer1. Suppliers  Business2. Marketing  Reseller intermediaries  Government3. Customers  International4. Competitors5. Publics 29Micro external environmentActors ◦ Conducting competitor analysis is critical for success of the firm1. Suppliers ◦ A marketer must monitor2. Marketing the competitors’ intermediaries offerings to create strategic3. Customers advantage4. Competitors5. Publics 30 15
  16. 16. 2/17/2013 Key Questions Concerning Competitors Their strengths Their weaknesses Their objectives and strategies Their responses to external variables Their vulnerability to our alternative strategies Our vulnerability to strategic counterattack Key Questions Concerning Competitors Product/service positioning Entry and exit of firms in the industry Key factors for current position in industry Sales/profit ranking of competitors over time Nature of supplier and distributor relationships The threat of substitute products/services 16
  17. 17. 2/17/2013Sources of Competitive Intelligence  Internet  Consultants  Employees  Trade journals  Managers  Want ads  Suppliers  Newspaper articles  Distributors  Government filings  Customers  Competitors  Creditors Objectives of Competitive Intelligence  Provide a general understanding of industry and competitors  Identify areas where competitors are vulnerable and assess impact of actions on competitors  Identify potential moves that a competitor might make Ch 3- Copyright © 2011 Pearson Education 34 17
  18. 18. 2/17/2013 Publics  The companys marketing environment also includes various publics. A public is any group that has an actual or potential interest in or impact on an organizations ability to achieve its objectives. 35 Macro external environmentMacro environmental Forces are :Socio-Cultural LegalTechnological Educational / EthicalEconomic DemographicalEcologicalPolitical 36 18
  19. 19. 2/17/2013 Economic Forces  Business Cycle ◦ A pattern of economic fluctuations Prosperity Positive Economic Indicators Recession Recovery Depression Time 37Economic ForcesStages in the Business CycleProsperity Low unemployment and high total income create high buying powerRecession Rising unemployment reduces total buying power; consumer and business spending declineDepression Unemployment extremely high, wages and total disposable income are very low, and there is a lack of consumer confidenceRecovery Economy is moving out of recession or depression towards prosperity 38 19
  20. 20. 2/17/2013Economic Forces Willingness to Spend ◦ the tendency to buy because of expected satisfaction from a product, influenced by the ability to buy and numerous psychological and social forces ◦ Expectations influencing the willingness to spend:  Future employment  Income levels  Prices  Family size  General economic conditions (e.g., rising prices) 39Sociocultural Forces Sociocultural Forces ◦ The influences in a society and its culture(s) that change people’s attitudes, beliefs, norms, customs, and lifestyles Demographic Diversity and Characteristics ◦ Increasing proportion of older consumers ◦ Rising number of single adults ◦ Increasingly multicultural societies. 40 20
  21. 21. 2/17/2013Sociocultural Forces (cont’d) Cultural Values ◦ Primary source of values is the family ◦ Values influence  Eating habits  Alternative health and medical treatment choices  Attitudes toward marriage  Concern for the natural environment Consumerism ◦ Organized efforts by individuals, groups, and organizations to protect consumers’ rights 41Demographical Forces Demographic Diversity and Characteristics ◦ Increasing proportion of older consumers ◦ Rising number of single adults ◦ Increasingly multicultural societies. 42 21
  22. 22. 2/17/2013Technological Forces Adoption and Use of Technology ◦ Failing to adopt new technology can cause a loss of market leadership ◦ Protecting the firm’s inventions is critical ◦ Using a technology assessment allows the firm to anticipate the effects of new products and processes on the firm 43Percent of Kids Who HaveTechnology in Their BedroomsTechnology 2000 2003Radio 83% 83%TV 59 61VCR 35 42Video Game 34 35Telephone 38 31PC 14 17DVD Player 3 14Own cell phone 7 13PC Online 9 9 Source: Knowledge Networks/SRI as reported in American Demographics, February 2004, p. 13. 44 22
  23. 23. 2/17/2013 Industry Analysis:The External Factor Evaluation (EFE) Matrix Economic  Political Social  Governmental Cultural  Technological Demographic  Competitive Environmental  Legal Ch 3- 45 EFE Matrix Steps1. List key external factors2. Weight from 0 to 1 ◦ The weight range from 0.0 means not important and 1.0 means important, sum of all assigned weight to factors must be equal to 1.03. Rate effectiveness of current strategies ◦ The response is poor represented by 1.0 ◦ The response is average is represented by 2.0 ◦ The response is above average represented by 3.0 ◦ The response is superior represented by 4.04. Multiply weight * rating5. Sum weighted scores 23
  24. 24. 2/17/2013Ch3-47 24
  25. 25. 2/17/2013 Industry Analysis EFE Total weighted score of 4.0  Organization response is outstanding to threats and weaknesses Total weighted score of 1.0  Firm’s strategies not capitalizing on opportunities or avoiding threats ChCopyright © 2011 Pearson 3-Education 49 Industry Analysis: Competitive Profile Matrix (CPM)  Identifies firm’s major competitors and their strengths & weaknesses in relation to a sample firm’s strategic positions  Critical success factors include internal and external issues 25
  26. 26. 2/17/2013 26