Marketing Management
2nd Edition
Michael R. Czinkota and Masaaki Kotabe
Chapter 3:
Understanding the
Environment and
the Competition
© 2000 South-Western College Publishing
Slide #1
Chapter Outline
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Growing Environmental Turbulence
Overall Environment
Sociocultural Environment
Technological Environment
Economic Environment
Political and Legal Environment
Environmental Analysis
Competition
© 2000 South-Western College Publishing
Slide #2
Growing Environmental
Turbulence
1900
1930
1950
1970
1990
Stable
Reactive
Anticipating
Exploring
Creative
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Slide #3
Overall Environment
External
Environment
Marketing
Environment
Internal
Organization
Geography
Demographics
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Culture
Competitors
Technology
Suppliers
Laws
Society
Politics
Economy
Slide #4
Sociocultural Environment
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Societal trends
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© 2000 South-Western College Publishing
Goods-producing to
service-producing
Materialist society to
postmaterialist
society
Demography
Slide #5
U.S. Age Groups
45
77M born
1980 - 1999
76M born
1945 - 1964
“Baby Boomers”
40
Millions
35
30
25
20
15
10
5
0
0-9
10-19 20-29 30-39 40-49 50-59 60-69 70-70 80-89 90-99
© 2000 South-Western College Publishing
Slide #6
Technological Environment
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© 2000 South-Western College Publishing
Electronic Data
Interchange (EDI)
Merchandise scanning
Data sharing
Distribution
relationships
Customer
communication
Slide #7
Economic Environment
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Globalization
Regional economic
integration
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Exchange rates
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© 2000 South-Western College Publishing
NAFTA
European Union
MERCOSUR
Currency flows
Slide #8
Political and Legal Environment
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Laws and regulations
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Interest groups
Stakeholders
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© 2000 South-Western College Publishing
Intellectual property
Contract law
Workers’ councils
Slide #9
Environmental Analysis
Method 1:
Environmental
Scanning
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Track information on
political, social, and
economic affairs; on
changes in attitudes,
and changes in the
market.
Example:
Content analysis
Slide #10
Environmental Analysis
Method 2:
Delphi
Studies
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Aggregate judgment
of a number of
experts who cannot
come together
physically.
Slide #11
Environmental Analysis
Method 3:
Scenario
Building
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Group of employees
identifies the forces
of change within an
industry.
Slide #12
Competition: Industry
Industry:
Group of organizations
that offer products that
are near substitutes for
each other.
Important factors:
 Size of the market
 Number of
organizations
© 2000 South-Western College Publishing
Slide #13
Competitive Structure
Issues affecting structure of
competition:
 Economies of scale
 Government influence
 Competitive history of firms
 Distribution channels
 Production capacity configuration
© 2000 South-Western College Publishing
Slide #14
Forces Driving Competition
Potential entrants
Threat of
new entrants
Bargaining power
of suppliers
Suppliers
Industry
competitors
Rivalry among
existing firms
Buyers
Bargaining
power
of buyers
Threat of
substitute products
Substitutes
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Slide #15
Competitive Structure
Three types of competitive response:
 Nonresponse (or slow response)
 Fast response
 Focused response
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Slide #16
Competitive Strategies
Cost
Leadership
Product
Differentiation
Focus
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Slide #17
Attack Strategies
Bypass attack
Flank attack
Guerilla
warfare
Frontal attack
Attacker
Defender
Encirclement attack
© 2000 South-Western College Publishing
Slide #18