Company Objectives: MGMT 120 Lecture Notes ©professor Freddy Lee

MGMT 120
Principles of Marketing
Lecture 4:
You need to have your group ready by due date. Group submission form available
for download on website.
Marketing Environments
Resources
and Objectives
of the Firm
Competitive
Environment
Direct Market
Environment
Cultural and
Social
Environment
Economic
Environment
Political and
Legal Environment
External Market
Environment
Technological
Environment
The Marketing Environment: Internal
It is about the company

Company mission, structure and culture, financial situation, technology, production, quality control
programs, R&D (research and development), relationship with suppliers/agents/customers.
Objectives should set the course

Should be socially and economically useful
Should organize to innovate, implement strategies
Should sustain profitability
Helps to have a mission statement
It is about strength and weaknesses

It is usually controllable.
Hierarchy of Objectives
Company
Objectives
Production
Objectives
Finance
Objectives
Product
Objectives
Marketing
Objectives
Place
Objectives
Personal
Selling
Objectives
HR
Objectives
Promotion
Objectives
Mass Selling
Objectives
R&D
Objectives
Price
Objectives
Sales
Promotion
Objectives
MGMT 120 Lecture Notes

Professor Freddy Lee
Resources vs Opportunities
Limitation of resources
???
??
???
??
Financial Strength
Producing Capability
and Flexibility
Marketing Strengths
The Marketing Environment: External
It is about the macro-environment
Competition;
Macro-economy;
Technology;
Political and legal;
Social and cultural.
It is about opportunities and threats
It affects the company, as well as its suppliers and customers;
It is usually uncontrollable.
Competitive Environment
Kinds of Markets
Key
Concepts
in the
Competitive
Environment
Competitive Rivals
Information on Competitors
Competitor Analysis
Trends of Competition
The emergence of fast, responsive network corporations;

Mergers reduce costs through economies of scale;
International competition from emerging countries.

Many Firms
The Competition Continuum
Pure
Competition
-Large number of
sellers;
-Similar products;
-Distribution is
Monopolistic
Competition
-Large number
of sellers;
-Unique but substitutable products;
-Pricing is
important.
-Local Monopoly
important.
Oligopoly
-A few large
competitors;
-Similar products;
-Promotion is key
to achieve perceived product
difference.
One Firm
Monopoly
-Single producer;
-Unique and
unsubstitutable
products;
-Marketing mix
is unimportant.
The Economic Environment
Economic environment constantly changes

Interest rate, inflation rate, exchange rate
Global economy and trade
Tariffs and Quotas
Purchasing power and spending
Family income: no real increase since 1980;

Spending patterns (in % of total expenditure)
Food, clothing, and personal care declines;
Recreation expenditure increases.
The Technological Environment
Provides new product and market opportunities

Provides new processes to be more efficient
The Internet
Convergence: integrating technology with commercial activities
Challenges
Too tech-oriented to maintain the marketing concept;

Privacy issues.
The Political and Legal Environment
Political
Nationalism (e.g., Buy American, buyBC);

Consumerism- rights and powers of consumers;
Regionalism and free trade- NAFTA, EU
Environmentalism.
Legal
Increasing emphasis on deregulation;

Protect competition: the Competition Act;
Consumer rights and protection.

Cultural and Social Environment
Migration
E
Lifestyle
Cultural Trend:
The Changing Roles of Women
Whats happening in USA
Move toward natural and healthful products and lifestyles;

Growing number and importance of older Americans;
Population concentration in census metropolitan areas;
Teens Market;
Population Mobility.
People with Money Make Markets
Other Countries
Current
Current Population
Population
Population Trend
Other Population Trends
Increasing Density
Increasing Urbanization
Early Bird gets the worm

Provided
Bird knows how to pick up a worm

Bird knows what a worm is
No other early birds

In other words
Have the know how ready

Be able to identify opportunities
First mover and competition
EVALUATING OPPORTUNITIES
Developing and applying screening criteria
Return-on-investment (ROI) approach
Whole plans should be evaluated
Total profit approach
Product A
D
ol
la
0
Product B
Sales
Total cost
D
ol
la
Total cost
1 2 3 4 5
Years
Sales
1 2 3 4 5
Years
The GE Grid (Matrix)
Industry Attractiveness
High
Medium
Low
High
Medium
Low
YES!
Hmm
NO!

SWOT Analysis
An analytical framework that identifies and lists a firms strengths and weakness as well as its
opportunities and threats.
Purpose: Distinctive Competencies + Strategic Opportunities
Internal
Positive
Strengths
External
Leverage
Constraints
Vulnerability
Negative
Opportunities
Weaknesses
Threats
Problems
The Changing Environment

Note how J.D. adapt to the changing environment
Whats their core business?

Agricultural Equipment
Whatre their other businesses?
Construction, Lawn and garden, Golf & Turf
What happened in 1979? 1983?
Built on strength (Product Innovation and distribution thru JD dealer network.
R&D Investment in product improvements
Capital Investment in manufacturing equipment and processes
Expand financial services
Superior Products, credit services, dealer service
What happened in the 1990s?
Diversification into insurance and healthcare, improve core business, export, carried brand to other
businesses
Cultural and social changes?
Aging pop, dual income, lawn care outsource, quality & service conscious consumers, golf
Consumer equipment, Golf and Turf Equipment, Nascar
Next Time
Find a group if you have not got into any one Max 5.
DOWNLOAD Case write-up handout
Read the video case Volkswagen New Beetle
What is the customer value behind the New Beetle?

Why didnt Volkswagen managers more accurately forecast the sales potential for the New Beetle?


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MGMT 120

The Marketing Environment: Internal

It is about the company

Objectives should set the course

It is about strength and weaknesses

MGMT 120 Lecture Notes

The Marketing Environment: External

It is about the macro-environment

The emergence of fast, responsive network corporations;

MGMT 120 Lecture Notes

The Competition Continuum

The Economic Environment

Economic environment constantly changes

Family income: no real increase since 1980;

The Technological Environment

Provides new product and market opportunities

Too tech-oriented to maintain the marketing concept;

The Political and Legal Environment

Nationalism (e.g., Buy American, buyBC);

Increasing emphasis on deregulation;

MGMT 120 Lecture Notes

Cultural and Social Environment

Whats happening in USA

Move toward natural and healthful products and lifestyles;

People with Money Make Markets

Early Bird gets the worm

Bird knows how to pick up a worm

No other early birds

Have the know how ready

The GE Grid (Matrix)

MGMT 120 Lecture Notes

The Changing Environment

Whats their core business?

What is the customer value behind the New Beetle?

MGMT 120 Lecture Notes

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