Chapter 2
Situation & Environmental Analysis
Components of a Situation
Analysis...
Internal environment
Customer environment
External environment
COPYRIGHT © 2002 Thomson Learning, Inc.
All rights reserved.
The Internal Environment
Review current objectives, strategy &
performance
Evaluate the availability of resources
Understand the strengths & weaknesses of your
organizational culture & structure
COPYRIGHT © 2002 Thomson Learning, Inc.
All rights reserved.
External Environment
Competitive Forces:
– Who are our current & future competitors?
– Brand competition-what products are similar in
features & benefits to the same customers?
– Product competition-who competes in the same
product class (different features, benefits & price)?
– Generic competition-what very different products
solve the same problem or needs?
– Total budget competition-what competes for limited
financial resources of the same customer
COPYRIGHT © 2002 Thomson Learning, Inc.
All rights reserved.
Other Issues for Consideration in
Evaluating the External Environment
Economic growth and stability
Political trends
Legal and regulatory factors
Changes in technology
Cultural trends
COPYRIGHT © 2002 Thomson Learning, Inc.
All rights reserved.
Issues in the Customer Environment
Identify current & potential customers
Understand needs of current & potential
customers
Determine basic features of the firm’s &
competitor’s products that meet customers
needs
Anticipate changes in customers needs
COPYRIGHT © 2002 Thomson Learning, Inc.
All rights reserved.
The 5-W Model for Customer
Analysis...
Who are our current & potential customers?
What do customers do with our products?
Where do customers purchase our products?
When do customers purchase our products?
Why (& how) do customers select our
products?
Why do potential customers not purchase our
products?
COPYRIGHT © 2002 Thomson Learning, Inc.
All rights reserved.
Key Aspects of the Competitive
Analysis
Identify all current & potential brand, product, generic &
total budget competitors
Assess key competitors size, growth, profitability,
objectives, strategies & target markets
Assess competitors strengths & weaknesses
Analyze each competitor’s market capabilities in terms of
products, distribution, promotion & pricing
Estimate competitors’ likely strategies & responses
under different environmental situations
COPYRIGHT © 2002 Thomson Learning, Inc.
All rights reserved.
External Environmental FactorsEconomic Growth & Stability
Inflation
Employment & income levels
Interest rates
Taxes
Trade restrictions
Tariffs
Consumer confidence
Business cycles
COPYRIGHT © 2002 Thomson Learning, Inc.
All rights reserved.
External Environment-Political
Trends
Issues mostly beyond a firm’s direct control
Some firms protest or lobby…others hire
specialists to do so for them
–
–
–
–
Tobacco industry
Automotive industry
Drug companies
Health care providers
COPYRIGHT © 2002 Thomson Learning, Inc.
All rights reserved.
Other External Environment
Considerations
Legal and regulatory factors
– laws & regulations may influence marketing
decisions & activities
Changes in technology
– improvements in the way we accomplish tasks &
processes
Cultural trends
– demographic trends
– lifestyle trends
– changes in cultural values
COPYRIGHT © 2002 Thomson Learning, Inc.
All rights reserved.
Collecting Environmental Data
& Information
Internal data sources-company sales records &
research ( for example, intranets)
Government sources-census data, small
business administration, etc.
Periodicals and books
Commercial, fee based sourcesA.C. Nielsen
COPYRIGHT © 2002 Thomson Learning, Inc.
All rights reserved.
Problems That Can Occur
During Data Collection
Incomplete or inaccurate definition of the
marketing problem
Ambiguity about the usefulness or relevance
of the data collected
Severe information overload
Expensive & time consuming data collection
Finding ways to organize the data collected
COPYRIGHT © 2002 Thomson Learning, Inc.
All rights reserved.