Essentials of Marketing: A Global-Managerial Approach, 9th edition

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Chapter Four
Evaluating Opportunities
in the Changing Marketing
Environment
Mission Statement Provides
Guidance
• Mission statement helps set the course of a firm by
explicitly stating the organization’s basic purpose for being
– May make it clear that some opportunities (target market or
marketing mix alternatives) are not related to the mission
– Some opportunities may be a good fit with mission, but not
as good a fit or as high a priority as others
• Mission statement works in combination with specific
objectives and should relate to screening criteria used to
evaluate strategy alternatives
Mission Statement Provides Guidelines
• Mission statement - the organization’s
basic purpose for being
• Mission statement - works in
combination with specific objectives
to evaluate strategy alternatives
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
Objective’s Should Set Firm’s Course
Three
Three
Basic
Basic Objectives
Objectives
Provide
Provide
Guidelines
Guidelines
Socially
Socially and
and
Economically
Economically
Useful
Useful Functions
Functions
Develop
Develop an
an
Organization
Organization
Earn
Earn Profit
Profit
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for
use only
with Essentials of Marketing
© 2003 McGraw-Hill Companies,
Inc., McGraw-Hill/Irwin
Mission Statement Provides Guidelines
Mission Statement and Objectives
Mission
Mission
Statement
Company
Company
Objectives
Objectives
Production
Production
Objectives
Objectives
Finance
Finance
Objectives
Objectives
Product
Product
Objectives
Objectives
Personal
Personal Selling
Selling
Objectives
Objectives
Marketing
Marketing
Objectives
Objectives
Place
Place
Objectives
Objectives
HR
HR
Objectives
Objectives
Promotion
Promotion
Objectives
Objectives
Mass
Mass Selling
Selling
Objectives
Objectives
R&D
R&D
Objectives
Objectives
Price
Price
Objectives
Objectives
Sales
Sales Promotion
Promotion
Objectives
Objectives
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
Mission Statement Provides Guidelines
Company Resources May Limit
Search for Opportunities
Financial
Financial Strength
Strength
Producing
Producing Capability
Capability
and
and Flexibility
Flexibility
Marketing
Marketing Strengths
Strengths
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
Examples of Company
Resources
•
•
•
•
•
•
Financial strength (Intel)
Producing flexibility (DaimlerChrysler)
Patents (IBM)
Channel relationships (Kraft)
Loyal customer base (Coke)
Technical capability (3M)
Examples of Company Resources
•
•
•
•
•
•
Financial strength (AT&T)
Producing flexibility (Chrysler)
Patents (IBM)
Channel relationships (Kraft)
Loyal customer base (Coke)
Technical capability (3M)
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
The Competitive Environment
Basic Objectives Provide Guidelines
Avoid Head-On Competition!
Know
Know the
the Market
Market Situation!
Situation!
Monopoly
Monopoly
Monopolistic
Monopolistic
Competition
Competition
Oligopoly
Oligopoly
Pure
Pure
Competition
Competition
© 2003 McGraw-Hill
Companies, Inc., McGraw-Hill/Irwin
© 2003 McGraw-Hill Companies,
Inc., McGraw-Hill/Irwin—for
use only with Essentials of Marketing
Analyzing Competition
Competitor
Competitor
Analysis
Analysis
Competitive
Competitive
Advantage
Advantage
Key
Key
Concepts
Concepts
Competitive
Competitive
Barriers
Barriers
© 2003
McGraw-Hill
Companies,
Inc.,with
McGraw-Hill/Irwin
Courtesy Harley-Davidson
Motor
Company—for
use only
Essentials of Marketing
Competitive
Competitive
Rivals
Rivals
Competitor Analysis: Disposable Diaper
Competition in Japan
P&G’s Current and
Planned Strategy
Kao’s Strengths (+) and
Weaknesses (-)
Target Market(s)
Upscale, modern parents who
can afford disposable diapers
Same as for P&G
Product
Improved fit and absorbency
(+); brand name imagery
weak in Japan (-)
Brand familiarity (+); but no
longer the best performance
(-)
Place
Promotion
Price
(Potential) Competitive
Barriers
Likely response(s)
Uni-Charm’s Strengths
(+) and Weaknesses (-)
Same as for P&G, but also
budget-conscious segment
that includes cloth diaper
users (+)
Two brands- for different
market segments- and more
convenient package with
handles (+)
Distribution through
Close relations with and
Distribution through 80% of
independent wholesalers to
control over wholesalers who
food stores in best locations
both food and drugstores (+),
carry only Kao products(+);
(+); shelf space for two brands
but handled by fewer retailers
computerized inventory
(+)
(-)
reorder system (+)
Heaviest spending on daytime
Large efficient sales force (+);
Advertising spending high
TV, heavy sales promotion,
lowest advertising spending (- (+); effective ads that appeal
including free samples (+);
) and out-of-date ad claims (-)
to Japanese mothers (+)
small sales force (-)
High retail price (-) but lower
Highest retail price (-), but
Lowest available retail price
unit price for larger quanities
also best margins for
(+);price of premium brand
(+)
wholesalers and retailers (+)
comparable to P&G (-)
Parent protection (+), limits in Inferior product (-), excellent Economies of scale and lower
access to retail shelf space (-)
logistics support system (+)
costs (+); loyal customers (+)
Improve wholesaler and
Press retailers to increase inIncrease short-term sales
retailer margins; faster
store promotion; change
promotions; but if P&G takes
deliveries in channel; change
advertising and/or improve
customers, cut price on
package to require less shelf
product
premium brand
space
The Political Environment
Regional
Regional
Economic
Economic
Groupings
Groupings
Nationalism
Nationalism
Characteristics
Characteristics
of
of the
the Political
Political
Environment
Environment
Consumerism
Consumerism
© 2003
McGraw-Hill
Companies,
©2001 Hertz System, Inc. Hertz is a registered
service
mark and
trademarkInc.,
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Major Focus of Some Important Laws
that Affect Marketing
• Sherman Act (1890)
– prohibits conspiracy to reduce competition
– example: price "fixing" agreements among
competing firms
• Federal Trade Commission Act (1914)
– prohibits unfair methods of competition
– example: use of deceptive advertising
• Robinson-Patman Act (1936)
– prohibits most types of price-related
discrimination
– example: offering "advertising allowances" to
some middlemen but not others (without cost
justification)
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
Exhibit 4-2
The Legal Environment
+
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Companies, Inc., McGraw-Hill/Irwin
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Companies,
Inc., McGraw-Hill/Irwin—for
use only with Essentials of Marketing
Some Important U.S. Federal Regulatory
Agencies
Agencies
Responsibilities
Federal Trade Commission (FTC)
Enforces laws and develops guidelines regarding
unfair business practices
Food and Drug Administration (FDA)
Consumer Product Safety Commission
(CPSC)
Federal Communications Commission (FCC)
Environmental Protection Agency (EPA)
Office of Consumer Affairs (OCA)
Enforces laws and develops regulations to
prevent distribution and sale of adulterated or
misbranded foods, drugs, cosmetics, and
hazardous consumer products
Enforces the Consumer Product Safety Act—
which covers any consumer product not assigned
to other regulatory agencies
Regulates interstate wire, radio, television, and
telephone
Develops and enforces environmental protection
standards
Handles consumers’ complaints
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
Examples of Changes in the Political/Legal
Environment
• Deregulation of energy industries
• Less emphasis on antitrust laws by
federal government
• Maturing of consumerism
• More attention to laws governing
international trade
• Changes in labeling requirements
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
CNN ad Protection
Consumer
“Let the Seller Beware”
© 2003 McGraw-Hill
Inc.,
McGraw-Hill/Irwin
Courtesy
of CNN—for Companies,
use only with
Essentials
of Marketing
Examples of Effect of Technological
Environment
• Rapid changes in the Internet and World Wide Web
• Robotics (better quality control, lower production costs)
• Computer scanners at retail check-out counters
• Worldwide satellites for data communication
• Automated inventory control
• Electronic fuel injection on automobiles
• Cellular phones and fax machines for communication
Examples of Trends in the
Cultural Environment
• More women in the work force
• "Aging" of America, but accompanied by
new growth in the “teen” group
• More single-person households
• More health consciousness
• More concern about the environment
Examples
of
Effect
of
Technological
People with Money Make Markets
Environment
• Rapid
Search
for changes in the Internet and World Wide Web
Growing
Markets
• Robotics
(better quality Other
control,Countries
lower production
Other Countries
costs)
• Computer scanners at retail check-out counters
• Worldwide satellites for
data communication
Current
Population
Current
Population
• Automated inventory control
• Electronic fuel injection on automobiles
Population
Population Trend
Trend
• Cellular phones and fax machines for
www.demographicsnow.com
communication
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Companies, Inc., McGraw-Hill/Irwin
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Companies,
Inc., McGraw-Hill/Irwin—for
use only with Essentials of Marketing
Age Distribution
• Average age is increasing
• But there is a big teen cycle under way
• Post World War II "Baby Boomers“
– Still a big, influential group
• 50 and older group to grow
dramatically in next decade
Median Family Income, Over Time
(in 2001 dollars)
60,000
50,000
40,000
30,000
20,000
10,000
19
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
2098
00
0
Income Distribution
• Growth in real income has slowed down
• Middle income groups in U.S. enjoy real choices
– U.S. distribution like Canada, Western Europe,
Japan, Australia, New Zealand
• Higher income groups still have much of the
spending power
– Top 20% income group has over 47 percent of
total income!
– Bottom 20% income group has only about 4
percent!
Percent of Total Income Going to Different
Income Groups in 2001
Top 20%
47.7
22.9
Middle
15.4
9.7
Lowest 20%
4.2
0
20
40
60
Each Group's Percent of Total Income
Note: the 20 percent of all families who have the lowest
incomes account for only 4.2% of total income; the
20% with the highest incomes have 47.7 percent-a 10-fold difference between the “haves” and “have-nots”
GE's Strategic Planning Grid
• A way of organizing business judgments about existing
and/or proposed product-market plans
• Business Strengths Dimension
–
–
–
–
Company size, market share
Profit margins
Technology position
Limiting factors (personnel, capital needed, etc.)
• Industry Attractiveness Dimension
–
–
–
–
Size of market and growth trends
Competitive situation
Social impact
Industry profitability
Exhibit 4-9
General Electric’s Strategic Planning Grid
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin—for use only with Essentials of Marketing
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