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  1. 1. Chapter 2The Dynamic Marketing Environment
  2. 2. Chapter Outline External Macroenvironment External Microenvironment Organization’s Internal Environment Planning as Part of Management Strategic Company Planning Strategic Marketing Planning The Annual Marketing Plan
  3. 3. External Macroenvironment1.Demography: is the study of the human population in terms of size, density, location, age, gender, race, occupation, and other variables.2.Economic conditions: consist of factors that affect consumers purchasing power and spending patterns as as well as a firm’s marketing system.
  4. 4. External Macroenvironment3.Competition: marketers must monitor and understand their competitor’s marketing activities and gain a strategic advantage. Three Major Sources of Competition: 1. Direct brand and store competition 2. Substitute competition 3. General competition
  5. 5. External Macroenvironment4.Social and Cultural Forces: some of these forces which have influenced marketing are: - erosion of stereotypes - emphasis on service quality - enhanced concern for the physical environment - desire for convenience - impulse buying
  6. 6. External Macroenvironment5.Political and Legal Forces: create laws, regulations and legislation that affect marketing.Three purposes of regulations: 1.To protect companies from each other. 2.To protect consumers from unfair business practices. 3. To protect the interests of society from unrestrained activity.
  7. 7. External Macroenvironment6.Technology: Technological breakthroughs create, replace and radically change industries, as well as stimulate markets not related to the technology. Marketers must carefully monitor technological changes and invest in R&D to spur innovation.
  8. 8. External Microenvironment1.The Market: are people or organizations with wants to satisfy, money to spend, and the willingness to spend it.2.Suppliers: provide goods and/or services and affect the prices a marketer must charge as well as their ability to satisfy their customers.3.Marketing Intermediaries: are firms that aid in the flow of products from the marketing company to its markets.
  9. 9. Internal EnvironmentThese forces are largely inside the companyand are directly controllable bymanagement. They require carefulrelationship building by marketingpersonnel to best contribute to thedevelopment of winning marketingprograms.
  10. 10. Planning as Part of Management1. The Marketing Management Processa)Planning - involves setting goals, and selectingstrategies and tactics to reach those goals.b)Implementation - involves organizing and staffing,leading, guiding and directing. It also involves turningmarketing strategies and plans into marketing actions toaccomplish objectives.c)Evaluation - involves comparing results with goals toguide future plans, and if necessary, taking correctiveaction to make sure objectives are reached.
  11. 11. 2. Basic Management TerminologyMission Statement - is a statement of an organization’s purpose, (what it wants to accomplish in the larger environment.) It helps employees understand the values of the firm and acts as a guide to instill ethical organizational as well as marketing behavior.Objectives - are desired outcomes which a company commits to achieve a measurable outcome in a specified period. - They should be clear and specific, stated in writing, ambitious but realistic, consistent with each other, measurable whenever possible and for a specified period.
  12. 12. 2. Basic Management TerminologyStrategies - suggest how a firm will achieve its goals.Tactics - relate to how strategies will be implemented.Policies - guide how a firm does business.
  13. 13. 3. Levels of Goals and Strategies An objective at one organizational level may become a strategy for management at a higher level.
  14. 14. 4. Scope of Planning Activitiesa)Strategic Company Planning is the process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities.b) Strategic Marketing Planning is guided by the organizations mission and goalsc)Annual Marketing Planning is a short term marketing plan that describes the current marketing situation, the strategy for the year, and the action program, budgets and controls.
  15. 15. Four Steps in Strategic Company Planning1.Defining the organizational mission.2. Analyzing the situation.3. Setting organizational objectives.4. Selecting strategies to achieve the organizational objectives.
  16. 16. Product/Market Expansion Strategies1.Market Penetration - is a strategy for company growth by increasing sales of current products to current market segments without changing the product in any way.2.Market Development - is a strategy for company growth by identifying and developing new market segments for current products.3.Diversification - is a strategy for company growth by starting up or acquiring businesses outside the company’s current products markets.
  17. 17. Strategic Marketing Planning1. Conduct a Situation Analysis (SWOT Analysis): Strengths - are competitive advantages or distinct competencies that give the firm an advantage in meeting the needs of its target market. Weaknesses - are limitations the company might face in marketing strategy development or implementation.
  18. 18. SWOT Analysis: Opportunities - are favorable conditions in the environment that could produce rewards for the organization if acted upon properly. Threats - are conditions or barriers that may prevent the firm from reaching its objectives.
  19. 19. 2. Develop Marketing Objectives marketing objectives must be linked to the company wide goals.
  20. 20. 3. Select Target Markets and Estimate DemandSegments – are part of marketsTarget Market – a group of customers to whom a seller aims its marketing efforts Can focus on one or more market segments!!
  21. 21. 4. Determine Positioning and Differential AdvantagePositioning: refers to a product’s image in relation to directly competitive products, as well as other products marketed by the same company.Differential Advantage: refers to any feature of an organization or brand perceived by customers to be desirable and different from those of the competition.
  22. 22. 5. Design a Marketing MixThe marketing mix includes:1. Product2. Price3. Place (distribution)4. Communication5. Customer Service
  23. 23. The Annual Marketing Plan is the master plan for a product, a product line, a brand or a market. it represents a “road-map” to guide marketing activity over the coming year.
  24. 24. Planning ModelsStrategic Business Units (SBU) To make planning more effective, a large, diverse organization may divide itself into smaller planning units called Strategic Business Units The unit should: – Be a separately identifiable business – Have a distinct mission – Have separate competitors – Have a separate group of executives charged with profit responsibility – Have its own strategic plan
  25. 25. The Boston Consulting Group Matrix Using this model, a strategic business unit (SBU) can be classified according to two factors: its market share relative to competitors, and the growth rate of the industry in which the SBU operates. The resulting 2 x 2 grid has 4 quadrants that represent distinct categories of SBUs or major products. Each category is assigned a name that reflects its market share, industry growth rate, cash needs, and appropriate strategies. A company should seek a balanced portfolio of SBUs with a mix of stars, cash cows, and questions marks, but hopefully no dogs.
  26. 26. Product-Market Growth Matrix growth requires examination of both products and markets; what needs changing? Should you stay and fight? Or should you forge an alliance to meet the challenge? – market penetration: sell more of present products/services to present markets – market development: sell present products to new markets or segments – product development: new products/services for existing markets – diversification: new products to new markets diversification