Marketing Chapter 4 Analyzing the Marketing Environment Dhruv

Marketing Chapter 4 Analyzing the Marketing Environment Dhruv Grewal Michael Levy Mc. Graw-Hill/Irwin Copyright © 2008 by the Mc. Graw-Hill Companies, Inc. All rights reserved.

4 -2 Analyzing the Marketing Environment l l l $40 Billion diet industry Increased consumption of health and diet products Businesses responding to the demand in a variety of ways © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

4 -3 A Marketing Environment Analysis Framework © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

4 -4 The Immediate Environment © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

4 -5 Successfully Leveraging Company Capabilities Core competency Existing knowledge, facilities, patents, etc. applied to New markets, new products, etc. © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

4 -6 Test Your Knowledge Which of the following is NOT considered part of a company’s immediate environment? A) company’s corporate partners B) company’s stockholders C) competitive intelligence D) company’s capabilities

4 -7 Competitors and Competitive Intelligence l l Competitive Intelligence (CI) Proactive rather than reactive strategy © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

4 -8 Using Customer Data to Create a New Concept How do you understand adapt to the changing needs of your customer?

4 -9 Case in Point: American Eagle’s Creation of Martin and Osa Challenge Successful retailer with target demographic 15 – 25 wanting to expand to the 25 – 40 demographic. Answer New concept Martin and Osa. Relying on the core of the A&E brand: excellence in fit, quality and style to appeal to the new audience. Results Launched in late 2006, A&E expects to have 20 stores by the end of 2007 located in top fashion centers.

4 -10 Corporate Partners l l l Firms are part of alliances Align with competitors, suppliers, etc. Just in Time Delivery Systems (JIT) From factory to © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin Retailer

4 -11 Macroenvironmental Factors © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

4 -12 Culture l l Culture Country Culture versus Regional Culture © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

4 -13 Demographics Provides an easily understood snapshot of the typical consumer in a specific target market © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

4 -14 Test Your Knowledge Which of the A) B) C) D) following are examples of typical demographics? age, gender, race behavior, dress, physical settings temperature, topology, climate democrat, republican, independent

4 -15 Generational Cohorts © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

4 -16 Ethical Dilemma 4. 1 Predatory Lenders Target Seniors l l l Cater to poor credit market Charge higher rates than other lenders Charge high fees and hidden costs

4 -17 Seniors, Boomers and X and Y’ers © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

4 -18 Designing a Product for a New Generation How do firms update products to keep them relevant for changing demographics?

4 -19 Case in Point: Parker Brothers Monopoly Challenge To make a 65 year old board game relevant to today’s market. Answer Involve consumer in the redesign. Ask consumers what properties should be included in the new “Here and Now Edition” goal of replacing Atlantic City, N. J. locations with U. S. locations. Results New edition available both interactive and traditional board game format with all new properties and new icons. Launched Fall, 2006. © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

4 -20 Income l l l Purchasing power is tied to income Census bureau tracks income Many middle class families feel the decline in purchasing power in recent years © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

4 -21 Education is related to income, which determines spending power © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

4 -22 Gender Male/female roles have been shifting Marketing has changed to reflect these shifts © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

4 -23 Impact of Changing Gender Roles How do firms address the increasing number of female homeowners?

4 -24 Case in Point: barbara k! Tools Challenge By 2010 the number is expected to be 31 million women-headed households. 83% of polled female homeowners said working with tools make them feel independent. Answer In 2003 Barbara Kavovit launched “barbara k!” a line of women friendly tools. Results $5 Million in first year sales. © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

4 -25 Ethnicity By 2050, minorities will represent 50% of the population. Discussion question How are marketers responding to these changes? © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

4 -26 Test Your Knowledge Minorities now represent ____ of the population. A) one-quarter B) one-third C) one-half D) two-thirds

4 -27 Social Trends © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

4 -28 Green Consumers: The Body Shop

4 -29 Privacy Concerns l l Loss of privacy Identity theft Do not call Do not e-mail

4 -30 Time Poor Society l l l In the majority of families, most parents work Consumers have many more choices regarding leisure time Many consumers multitask

4 -31 Technological Advances l l Technology has impacted every aspect of marketing New products New forms of communication New retail channels © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

4 -32 Economic Situation Foreign currency fluctuations Combined with inflation and interest rates affect firms’ ability to market goods and services

4 -33 Political/Regulatory Environment: Competitive Practice and Trade Legislation l l l 1890: Sherman Antitrust Act 1914: Clayton Act 1914: Federal Trade Commission 1936: Robinson-Putman Act 1938: Wheeler-Lea Act 1993: North American Free Trade Agreement (NAFTA) © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

4 -34 Political/Regulatory Environment: Consumer Protection Legislation l l l 1906: Federal Food and Drug Act 1938: Food, Drug and Cosmetics Act 1966: Fair Packaging and Labeling Act 1966: Child Protection Act 1967: Federal Cigarette Labeling and Advertising Act 1972: Consumer Product Safety Act 1990: Children’s Television Act 1990: Nutrition Education and Labeling Act 1995: Telemarketing Sales Rule 2003: CAN-SPAM Act 2003: Amendment to the Telemarketing Sales Rule © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

4 -35 Test Your Knowledge Since the turn of the century, the government has enacted laws that promote both fair trade and competition by prohibiting ___________ that would damage a competitive marketplace. A) the formation of foreign corporations B) excessive foreign imports C) price gouging D) the formation of monopolies or alliances

4 -36 Scenario Planning © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

4 -37 Step 1: Assess Strengths and Weaknesses l l First half of a SWOT analysis Assess the firm’s strengths and weaknesses © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

4 -38 Step 2: Assess Opportunities and Threats l l Opportunities and threats can come from within or outside the firm Various macroeconomic factors can offer opportunities and threats © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

4 -39 Identifying Opportunities How do firms identify new opportunities for expansion?

4 -40 Case in Point: Mothercare, UK Challenge Answer Results Address the threat of a difficult retailing environment in the UK. Explore opportunities in other countries as well as expansion of online and catalog sales. 34 new stores will open this year bringing the total foreign stores to 300 with the opening of the store in Nizhny Novgorod in Russia and the first 8 stores in India. Sales growth = 27%.

4 -41 Step 3: Identify Difference Scenarios l l Test each scenario against the firm’s competencies Best opportunities are matches © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

4 -42 Test Your Knowledge What factors scenarios? A) B) C) D) must be considered when identifying alternative opportunity and motive demographics, environment, competition risks, benefits, costs culture and consumer confidence

4 -43 Step 4: Apply the Marketing Mix to Different Scenarios Develop a strategy for each element of the marketing mix for each scenario. Scenario 1 Strategy 1 Scenario 2 Strategy 2 Scenario 3 Strategy 3 Scenario 4 Strategy 4 © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

4 -44 Step 5: Assess the Profitability of Each Scenario Weigh expected revenue against expects costs. © 2007 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

4 -45 Chapter 4 Glossary l l l Competitive Intelligence (CI): Method of collecting and synthesizing information about a company’s position with respect to their rivals. Culture: The shared meanings, beliefs, morals, values, and customs of a group of people. Foreign currency fluctuations: Fluctuations in the value of foreign currency versus the U. S. dollar. Just In Time Delivery Systems: Delivery system that keeps inventories to a minimum because the company only orders them from suppliers to arrive just in time to be used. Macroenvironmental factors: Factors that operate in the external environment, namely, the culture, demographics, social issues, technological advances, economic situation, and political/regulatory environment, or CDSTEP.