Chapter 3

Evaluating
Opportunities in
the Changing
Market
Environment

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 At the end of this presentation, you
should be able to:
1. know the variables that shape the environment of
marketing strategy planning.
2. understand why company objectives are important in
guiding marketing strategy planning.
3. see how the resources of a firm affect the search for
opportunities.
4. know how to conduct a competitor analysis and how
different types of competition affect strategy planning.
5. understand how the economic and technological
environments can affect strategy planning.
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3-2
 At the end of this presentation, you
should be able to:
6. know how elements of the political and legal
environment affect marketing strategy planning.
7. understand the cultural and social environment
and how demographic trends affect strategy
planning.
8. understand how to screen and evaluate marketing
strategy opportunities.
9. understand important new terms.

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3-3
 The Marketing Environment

Marketing
Strategy
Planning
Process

Narrowing down to the

Developing a strategy
best opportunities

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 Marketing Strategy Planning: Competitors,
Company, & External Market Environment
(Exhibit 3-1)

Company Competitors External Market Environment

• Objectives • Current • Economic
• Resources • Prospective • Technological
• Political & Legal
• Cultural & Social

Evaluating Opportunities
• Screening criteria
• Planning grids
• Planning for multiple products

Best opportunities to pursue

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 A Hierarchy of Objectives
(Exhibit 3-2)
Production
Objectives Product
Objectives
Personal
Finance
Selling
Objectives
Place Objectives
Company Marketing Objectives
Objectives Objectives

HR Promotion Mass Selling

Objectives Objectives Objectives

R&D
Objectives Price
Objectives Sales
IT Promotion
Objectives Objectives
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 Company Resources May Limit
Search for Opportunities

Financial Strength

Production Capability
and Flexibility

Marketing Strengths

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 Analyzing Competitors and the
Competitive Environment

Avoid Head-On Competition

Know the Market Situation

Monopolistic Pure
Monopoly Oligopoly
Competition Competition
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 Avoiding Head-On Competition

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 Checking Your Knowledge

A moderately-priced jewelry store is trying to differentiate itself

from other jewelry stores. The store prices products somewhat
lower than the super-premium jewelry stores, but offers better
products and services than low-end jewelry stores provide. The
market situation this store faces sounds most like:

A. pure competition.
B. monopoly.
C. oligopoly.
D. monopolistic competition.
E. oligopolistic competition.
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3-10
 Analyzing Competitors to Find a
Competitive Advantage
Competitor Competitive
Analysis Rivals

Key
Concepts

Competitor Competitive
Matrix Advantage
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 What and how many can be
produced? At what cost?

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 Marketers Need Information about
Competitors

Seek Information about

Competitors

Ethical Issues

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 Checking Your Knowledge

Chris wants to open a family-oriented restaurant in a thriving

suburban area. Chris thinks a sports-based theme and broad
menu will be attractive to the large number of families in the
area. However, national chain restaurants, such as Chili’s, TGI
Friday’s, and Applebee’s already draw large followings in the
area. The existence of these chain restaurants is a significant:

A. competitive opportunity.
B. monopoly.
C. competitive barrier.
D. opportunity.
3-14E. competitive environment.
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 The Marketing Environment
Customers
Resources Competitive
and Objectives Environment
of the Firm Direct Marketing
Environment

Cultural and
Economic
Social Target Environment
Environment

External Marketing
External market
Environment
environment
Political and Technological
3-15
Legal Environment Environment
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 The Economic Environment

Global Economy Rapid Change

Key
Economic
Forces

Interest Rates
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 Checking Your Knowledge

Rising interest rates can slow the housing market in the

United States, slowing business for real estate developers,
mortgage lenders, and construction firms. This is a trend in
the:

A. competitive environnent.
B. technological environment.
C. cultural environment.
D. economic environment.
E. legal environment.
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3-17
 The
Technological
Environment

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 The Technological Environment

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3-19
 Checking Your Knowledge

Ford announced that it would begin offering Bluetooth

wireless to help consumers more easily make hands free
cell phone calls in their cars. The development of
Bluetooth is a significant development in the:

A. technological environment.
B. legal environment.
C. corporate environment.
D. social environment.
E. personal environment.
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3-20
 The Political Environment

Examples of
Characteristics Regional
Nationalism of the Political Economic
Environment Groupings

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 The Political Environment

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 The Legal Environment - Key
Antimonopoly Laws (Exhibit 3-4)
Sherman Act
(1890)
Magnuson- Clayton Act
Moss Act (1975) (1914)

Federal Trade
Antimerger Act
Commission Act
(1950)
(1914)

Wheeler-Lea Robinson-
Amendment Patman Act
(1938) (1936)
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 The Legal Environment - Consumer
Protection Agencies

Consumer
Food and Drug
Product Safety
Administration
Commission
(FDA)
(CPSC)

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 Checking Your Knowledge

Many states have appointed or elected commissions that

oversee the business practices of utilities and other industries
that serve the public interest. For a company operating in
one of these industries, dealing with this important state-
level regulatory commission is an important element of the:

A. legal environment.
B. social environment.
C. monopoly environment.
D. technological environment.
E. corporate environment.
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3-25
 Checking Your Knowledge

The Federal Trade Commission informed Tropicana that it would

have to stop advertising that one of the benefits of “heart-
healthy” Tropicana orange juice was to lower blood pressure.
For Tropicana, this situation was a significant development in
the:

A. economic environment.
B. social environment.
C. competitive environment.
D. internal company environment.
E. legal environment.
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3-26
 The Cultural and Social
Environment
Changes in
Cultural and
Social
Environment

Demographic
Cultural changes
data

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 Keeping Competitive in the Social-
Cultural Environment
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3-28
 Population Growth, Location, and
Mobility

World Population Growth

World
Population
Location

Population
Mobility

Rural to Urban
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 No Money, No Market!

Gross National Income

(GNI)
Gross
+ = Domestic
Product
Income earned by foreigners (GDP)
who own resources in the
nation

GNI / Country’s Population Size = Per Capita Income

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 Technology Adoption Races across
Continents

Cell phone Internet

Technology Indicators

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 2010 Population (in millions) and Projected
Percentage Change by State 2010–2020 (Exhibit
3-6)

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 Population Trends in the U.S.
Consumer Market
Graying of America

Key Trends
Generation X – fewer in
number

Generation Y – techno
savvy

Generation Z – cautious
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 Screening Criteria Help Narrow
Down to Specific Strategies

Product-Market
Screening Criteria

Qualitative Quantitative
Criteria Criteria

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 Expected Sales and Cost Curves of Two
Strategies over Five-Year Planning Periods
(Exhibit 3-9)
Product A Product B
Sales Sales
Total cost

Total cost
Dollars

0 1 2 3 4 5 0 1 2 3 4 5

Years Years

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 General Electric’s Strategic Planning Grid
(Exhibit 3-10)
Industry Attractiveness
High Medium Low
High
Business Strengths
Medium

No Growth
Low

Borderline

Growth

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 Continuum of Environmental
Sensitivity (Exhibit 3-11)

Insensitive Sensitive
Basic Consumer
Industrial commodity-type products linked
consumer
products products to cultural
variables

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 Key Terms
1. mission statement 12. cultural and social environment
2. competitive environment 13. gross domestic product (GDP)
3. sustainable competitive 14. gross national income (GNI)
advantage 15. senior citizens
4. competitor analysis 16. baby boomers
5. competitive rivals 17. Generation X
6. competitor matrix 18. Generation Y
7. economic environment 19. Generation Z
8. free trade 20. sustainability
9. technology
10. nationalism
11. North American Free Trade
Agreement (NAFTA)
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