Lecture Basic Marketing: A global-managerial approach: Chapter 4 - William D. Perreault, E. Jerome McCarthy

Chapter 4:
  

Evaluating
Opportunities in the
Changing Marketing
Environment

For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


Chapter 4 Objectives
When you finish this chapter, you should
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 the different kinds 
of competitive situations 
affect strategy planning.
4­2

5. Understand how the economic 

and technological 
environment can affect 
strategy planning.
6.  Know why you might be sent 
to prison if you ignore the 
political and legal 
environment.
7. Understand how to screen and 
evaluate marketing strategy 
opportunities.
8. Understand the important new 
terms.
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


The Importance of Objectives
Provide
Guidelines

Setting
Company
Objectives

Be
Explicit

Coordinate
Effort

Lead to Marketing
Objectives
4­3

For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


A 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

Exhibit 4­1
4­4

For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


Limits on Opportunity Search

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4­5

Financial
Financial Strength
Strength

Producing
Producing Capability
Capability
and
and Flexibility
Flexibility

Marketing
Marketing Strengths
Strengths

For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


The Competitive Environment
Kinds of Markets

Key
Concepts
in the
Competitive
Environment

Competitor Analysis

Competitive Rivals

Competitive Barriers

Information on Competitors
4­6

For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


The Economic and
Technological Environment
Global
Global Economy
Economy

Rapid
Rapid Change
Change

Key
Economic
Forces

Interest
Interest Rates
Rates
4­7

For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


The Impact of Technology
Technology is the application of science to 
convert and economy’s resources to output
Technology impacts marketing both 
through opportunities for new products and 
new ways (processes) for handling 
marketing functions
Example:  consider the Internet
Products:  software for computer users
Process: selling from a web site
4­8

For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill

The Political and Legal Environment

Nationalism
Nationalism

Consumerism
Consumerism

Characteristics
of the Political
Environment

Regional
Regional
Groupings
Groupings
4­9

For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


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)

Enforces laws and develops regulations to 
prevent distribution and sale of hazardous 
consumer products

Consumer Product Safety Commission 
(CPSC)

Enforces Consumer Product Safety Act

Federal Communications Commission 
(FCC) 

Regulates interstate wire, radio, and 
television 

Environmental Protection Agency (EPA)

Develops and enforces environmental 
protection standards

Office of Consumer Affairs (OCA) 

Handles consumer complaints

Exhibit 4­4
4­10

For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


The Cultural and Social Environment

Time
Poverty

Economic
Power

Career
Opportunity

4­11

Cultural
CulturalTrend:
Trend:
The
TheChanging
Changing Roles
Rolesof

of Women
Women
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


Sales and Cost Curves of
Two Strategies
Product A

Dollars

Sales

0

Total cost

1

2

3

4

5

In this graphic,  a 

too­narrow focus on the 
first year’s results might 
cause the marketing 
manager to abandon this 
product as too costly.

Years

Exhibit 4­6
4­12

For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


Sales and Cost Curves of
Two Strategies
Product B

In this graphic,  a 
too­narrow focus on 
the first year’s results 
might cause the 
marketing manager 
to adopt the product 
prematurely,  since its 
performance in year 
one is misleading.

Sales
Total cost

0

1

2

3

4

5

Years
Exhibit 4­6
4­13

For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


Sales and Cost Curves of
Two Strategies
Product A

Product B
Sales

Sales

Dollars

Total cost

0

Total cost

1

2

3

Years

4

5

0

1

2

3

4

5

Years

Seen together, it is easy to see that Product A offers a
vastly better overall return than does Product B
Exhibit 4­6
4­14

For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


Evaluating Opportunities
Industry Attractiveness
Low

Medium

High

Medium

No Growth
Low

Business Strength

High

Borderline
Growth

Exhibit 4­7
4­15

For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


Continuum of Environmental Sensitivity

Insensitive
Industrial
products

Exhibit 4­8
4­16

Sensitive
Basic
commodity­type
consumer
products

Consumer
products that
are linked to
cultural
variables

For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


Key Terms
Mission Statement
Competitive Environment
Competitor Analysis
Competitive Rivals
Competitive Barriers
Economic and Technological
   Environment

4­17

Technology
Nationalism
NAFTA
Consumerism
Cultural and Social Environment
Strategic Business Unit (SBU)
Portfolio Management

For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill