BUSINESS MARKETING

TOPIC 1. MARKETING PLANNING AND CONTEXT ANALYSIS

SITUATION ANALYSIS

What we do first is to analyze the general situation. We need to understand the economy but also the consumers, and my
competitors (because in every country could be different types of competitors). And also, we need to be honest with our internal
organization, and compare ourselves with our competitors.

5Cs framework

1. Climate à Understand the situation we are facing: political, economic, social/cultural, technological, environmental, legal
2. Competitors à Marketing myopia, when we decide who are our competitors, we need to be open-minded, because
sometimes there are some competitors that we don’t care, but they are.
3. Customers à we care about the value and satisfaction
4. Company
5. Collaborators

MACROECONMIC ANALYSIS (CLIMATE)

Çççççç

The pestel framework is used to analyze and monitor the macro-environmental factors that may affect organization’s
performance

1. Political: What degree the government intervenes in the economy.

Specifically, political factors include areas such as tax, policy, labor law, environmental law, trade restrictions, tariffs, and
political stability.
Political factors may also include goods and services which the government wants to provide or be provided and those
that the government does not want to be provided.
Furthermore, governments have great influence on the health, education, and infrastructure of a nation

2. Economic: Include economic growth, interest rates, exchange rates, and the inflation rate.
These factors have major impacts on how businesses operate and make decisions.
For example, interest rates affect a firm's cost of capital and therefore to what extent a business grows and expands.
Exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy

3. Socio-cultural: Include the cultural aspects and include health consciousness, population growth rate, age distribution,
career attitudes, education level, religion and beliefs lifestyles and emphasis on safety.
Trends in socio-cultural factors affect the demand for a company's products and how that company operates.
Furthermore, companies may change various management strategies to adapt to these social trends (such as recruiting
older workers)

4. Technological: Include technological aspects such as R&D activity, automation, technology incentives and the rate of
technology change.
They can determine barriers to entry, minimum efficient production level and influence outsourcing decisions.
Furthermore, technological shifts can affect costs, quality, and lead to innovation

5. Environmental: Include ecological and environmental aspects such as weather, climate, and climate change, which may
especially affect industries such as tourism, farming, and insurance Furthermore, growing awareness of the potential
impacts of climate change is affecting how companies operate and the products they offer, both creating new markets
and diminishing or destroying existing ones

6. Legal: Include discrimination law, consumer law, data protection, antitrust law, employment law, and health and safety
laws These factors can affect how a company operates, its costs, and the demand for its products Include acts of
 BUSINESS MARKETING
parliament and associated regulations, international and national standards, local government by-laws, and mechanisms
to monitor and ensure compliance with these

ADDITIONAL FACTORS

Ethical: Ethical recruiting practices and employment standards (not using children to produce goods), Ethical advertising and sales
practices

Demographic factors: population growth rate, immigration and emigration rates social classes, minorities, family size and structure.

PESTEL FRAMEWORK EXECTUTION

Unit of analysis à macro-environment (it can be geographically limited), and the main objective is that is conducted as part of the
external analysis when conducting a strategic analysis or doing market research, to give an overview of different macro-
environmental factors that the company must take into consideration.

STEPS

- Gather RELEVANT information about political, economic, social, and technological, environmental and legal factors
- Evaluate gathered information – identify which of the PESTEL factors represent opportunities or threats
- Link with other analyses that you may have done or plan doing such as SWOT

TYPICAL ERRORS

You identify anything and everything that is related to PESTEL factors, irrespective of relevance.
You do a limited or no research and all and make general statements unsupported by data or sources.
You do not identify sources of your data following proper citation rules.
You do not create a conclusion – evaluate the gathered information.
You stay at simple listing of facts and the reader has to ask: “So what?”
You miss the opportunity to link the conclusion from the PESTEL analysis with the conclusions from other analyses such as Porter’s
Five Forces or threats and opportunities in your SWOT analysis

INDUSTRY ANALYSIS (PORTER’S 5 FORCES FRAMEWORK)

The five forces is a framework for understanding the competitive forces at work in an industry, and which drive the way economic
value is divided among industry actors A key proposition:

• The focal firm’s performance critically depends on the degree of competitiveness of the five forces within an industry
• The stronger and more competitive these forces are, the less likely the focal firm is able to earn above-average returns,
and vice versa

1. Rivalry among existing competitors examines how intense the current competition is in the market.
Number and diversity of competitors; industry concentration, balance, growth, and life cycle; quality differences, product
differentiation, brand identity/loyalty, switching costs, barriers to exit, intermittent overcapacity and informational
complexity.

2. Threat of new entrants examines the barriers to enter a certain industry.

Economies of scale, product differentiation, brand identity, access to distribution channels, capital requirements, access
to latest technology, access to necessary inputs, absolute cost advantages, experience and learning effects, government
policies, switching costs and expected retaliation from existing players.

3. Threat of substitute products or services: the existence of substitutes increases the propensity of customers to switch to
alternatives.
Number of substitute products available, buyer’s propensity to substitute, relative price performance of substitutes,
perceived level of product differentiation, switching costs, substitute producer’s profitability and aggressiveness.

4. Bargaining power of suppliers: how much power and control companies’ suppliers have over the potential to raise its prices
or to reduce the quality of purchased goods.
Number, concentration, and size of suppliers; availability of substitutes for the supplier’s products, differentiation of
supplier’s products or services, switching costs for supplier’s products.
 BUSINESS MARKETING
5. Bargaining power of buyers: to what extent customers can put the company under pressure by demanding better quality
à driving up costs or exert control over price
Number of customers, size of each buyer’s order, price sensitivity; buyer’s concentration, ability to substitute, switching
costs, information availability.

COMPLEMENTORS AND GOVERNMENT ARE NOT FORCES

Complementors à any factor that makes it more attractive for suppliers to supply an industry on favorable terms or that makes it
more attracted for buyers to purchase products or services from an industry at prices higher than it would pay absent the
complementor.

Government à is not a force because its involvement is neither inherently good nor bad for industry profitability. To understand
the influence of government on competition, we should analyze how specific government policies affect the five competitive forces.
For instance, patents raise barriers to entry, boosting industry profit potential. Conversely, government policies favoring unions may
raise supplier power and diminish profit potential.

Understanding the forces that shape industry competition is the starting point for developing strategy. The model is therefore a
great tool to produce strategic actions on what to do in the future.

5 FORCES FRAMEWORK EXECUTION

A group of firms producing products (goods and/or services) that are similar to each other.
Different classification systems:

• ISIC - International Standard Industrial Classification of all economic activities, the most complete and systematic industrial
classification made by the United Nations Statistics Division.
• NACE - Nomenclature statistique des activités économiques dans la Communauté européenne - the Statistical classification
of economic activities in the European Union Community.
• SIC – Standard Industrial Classification codes are four-digit numerical codes assigned by the U.S. government to business
establishments to identify the primary business of the establishment

Unit of analysis à industry (selecting the industry, geography, and industry boundaries), and the main objective is to determine
attractiveness of an industry (its profit-generation potential). Attractive industries show bigger profit potential, it is easier to be
profitable in these industries.

STEPS

- Clearly specify the INDUSTRY for which you are doing the analysis
- Perform industry analysis for each of 5 forces.
Identify factors that increase, and factors that decrease profit potential in the industry related to the force analyzed.
Provide overall impact of each force – use descriptive such as very high, high, moderately high, medium, low, etc.
- Provide a CONCLUSION – based on five evaluations, provide overall evaluation of the profit generation potential of the
analyzed industry.
- Determine how well (any competitive advantage) a company of interest for you is situated within the industry and justify
your conclusion about its greater or lower profit potential in comparison to the industry average
VRIO analysis can provide information needed in this step
 BUSINESS MARKETING
TYPICAL ERRORS

You do not clearly state for which INDUSTRY you are doing the 5F analysis.
In your 5F analysis you talk about a specific company essentially doing the analysis for the company, not for the industry.
You apply different industry boundaries in your industry definition and in your 5F analysis.
You do not go deep enough in your analysis of forces.
You do not perform research and do not cite sources of the information used in the analysis.
You do not provide overall evaluation for each force.
You do not provide the conclusion – evaluation of industry attractiveness.

SWOT ANALYSIS

HELFUL HARMFUL

INTERNAL STRENGTHS WEAKNESSES

What advantages does your organization have? What could you improve?
What do you do better than anyone else? What should you avoid?
What unique or lowest-cost resources can you draw What are people in your market likely to see as
upon that others can't? weaknesses? What factors lose you sales?
What do people in your market see as your strengths?
What factors mean that you "get the sale"?
What is your organization’s unique selling
proposition?

EXTERNAL OPPORTUNITIES THREATS

What good opportunities can you spot?
What interesting trends are you aware of?
Useful opportunities can come from such things as:
- Changes in technology and markets on both
a broad and narrow scale
- Changes in government policy related to your
field
- Changes in social patterns, population
profiles, lifestyle changes, and so on
- Local events
What obstacles do you face?
What are your competitors doing?
Are quality standards or specifications for your job,
products or services changing?
Is changing technology threatening your position?
Do you have bad debt or cash-flow problems?
Could any of your weaknesses seriously threaten your
business?

BENEFITS LIMITATIONS

Simple to do and practical to use Excessive lists of strengths, weaknesses, opportunities, and
Clear to understand threats
Focuses on the key internal and external factors affecting the No prioritization of factors
company Factors are described too broadly
Helps to identify future goals Factors are often opinions not facts
Initiates further analysis No recognized method to distinguish between strengths and
weaknesses, opportunities, and threats
 BUSINESS MARKETING
SWOT SPECTURUM PROCESS: OVERVIEW

SWOT SPECTRUM PROCESS: PRIORITIZATION

Strengths and weaknesses are evaluated on 3 categories:

1. Importance
2. Rating
3. Score

Opportunities and threats are evaluated on 3 categories:

1. Importance
2. Probability
3. Score

SWOT VS. PESTEL ANALYSIS

The advantage and disadvantages of SWOT analysis is that it is simple to produce a list but far too easy to miss important external
factors.
Producing the results of each factor is not enough, for the SWOT to be successful it is essential to carry out further analysis of all
the possible threats and disadvantages to make sure that they have been planned for in advance.
The advantages and disadvantages of PEST analysis is that while the external factors are looked at closely there are no internal
evaluations carried out.
Due to the advantages and the disadvantages of using either one or the other methods it is a good idea to combine the two to help
provide you with the best analysis It is a good practice to perform PEST analysis and then use the results in the opportunities and
threat section of the SWOT

SWOT ANALYSIS EXECUTION

Unit of analysis à organizations (firms), departments, products, processes, projects, …, and the main objective is that helps
assessing a company’s current internal and external situation but does not provide concrete strategic actions to take. To map out
the strategic options Company has, use TOWS matrix.

FACTORS TO CONSIDER

Factors must be identified relative to the competitors. It allows specifying whether the factor is a strength or a weakness.
Avoid creating too short or too long lists. Aim for 3 – 5 most relevant items for each of 4 parts.
Items in your matrix must be clearly defined and as specific as possible. For example, firm’s strength is:
- Brand image (vague, brand image can be also poor and a weakness)
- Strong brand image (a little bit better, but still far from goes)
- Brand image valued at 10 billion USD, which is the most valued brand in the industry (very good)

Rely on facts not opinions. Find some external information (proper citation must be used) or involve someone who could provide
an unbiased opinion.
Factors should be action orientated. For example, “slow introduction of new products” is action orientated weakness.
 BUSINESS MARKETING
Apply it at the right level - for example, you might need to apply SWOT Analysis at product or product-line level, rather than at the
whole company level.
Use it in conjunction with other strategy tools so that you get a comprehensive picture of the situation you're dealing with.

TOWS MATRIX

You must draw a conclusion from a swot analysis. Leaving just with matrix filled with bullet points (even if they are perfectly well
identifying) is useless.

PROFILING COMPETITORS

The Competitive Profile Matrix (CPM) is a tool that compares the firm and its rivals and reveals their relative strengths and
weaknesses. It can be also used for any type of multiple option comparisons such as selecting international market you consider
entering.
• Used to better understand the external environment and the competition in a particular industry.
• The matrix identifies a firm’s key competitors and compares them using industry’s critical success factors.
• The analysis also reveals company’s relative strengths and weaknesses against its competitors, so a company would know,
which areas it should improve and, which areas to protect.

CRITICAL SUCCESS FACTORS

Critical Success Factors (CSF) are the key areas, which must be performed at the highest possible level of excellence if organizations
want to succeed in the industry.
• CSFs vary between different industries and include both internal and external factors.
• In your analysis, the more critical success factors are included the more robust and accurate the analysis is.
• However, the number of CSF should be meaningful in terms of weight in your final decision.
• Whenever possible go for CSF that are objective (i.e., specific numbers from an independent verifiable source)

EXEMPLES OF CRITICAL SUCCESS FACTORS

STEPS

- Identify critical success factors

- Assign the weights and ratings
- Compare the scores and act
 BUSINESS MARKETING
CMP EXAMPLE

MARKETING PLAN

A marketing plan is a written document that summarizes what the marketer has learned about the marketplace and indicates how
the firm plans to reach its marketing objectives.
• It operates in two levels – strategic and tactical.
• The strategic marketing plan lays out the target markets and the value proposition.
• The tactical marketing plan specifies the product, price, channel and communication.

Where are we now? ANALYSIS HYPOTHESIS

Where do we want to be in the future? MARKETING STRATEGY CAUSE & EFFECT
How are we going to get there? MARKETING MIX JUSTIFICATION

OBJECTIVES AND STRUCTURE

1. Develop hypothesis: understand the market à a hypothesis is a proposed explanation for a situation
2. Propose cause and effect relationship: ask yourself WHAT IF? à cause – effect (price out – sales increase; ad campaigns –
increased brand awareness; product development – customer loyalty)
3. Decide the actions that you are proposing in your marketing plan and justify them à product development – attract new
customers.
When Apple unveiled a smaller, cheaper iPhone partially in an attempt to appeal to smartphone buyers in developing
markets, and the company said it is facing an order backlog amid strong demand

SUMMARY AND NEXT STEPS

- Perform situation analysis using 5C framework

- Analyze the external (macroeconomic) environment
using PESTEL framework
- Analyze industry using Porter’s Five Forces framework
- Profile competitors using CPM matrix
- Bridge external and internal analysis using SWOT
- Explain marketing plan elements and purpose