Scanning the Marketing Environment
Who are the primary competitors?
How to ascertain their strategies, objectives, strengths and weaknesses, and reaction patterns?
What are the key methods for tracking and identifying opportunities in the macro-environment?
What are the key demographic, economic, natural, technological, political, and cultural developments?
The Marketing plan Market survey Segmentation
Identifying needs and wants Targeting
Choosing a target market(s)
Developping a market offering Positioning
Product
Place
Price Measuring outcomes
Promotion
The Marketing environment: key terms 1.
The Mar Marketin eting g Environ ironm ment ent The actors and forces that t hat affect a company’s capability to operate effectively in providing products and services to its customers.
2.
Macro environment The broad forces that affect not only the company but also the other actors in the microenvironment. The analysis of the five forces – political/legal, economic, ecological/physical, social/cultural and technological – is known as PEEST analysis.
3.
Micro environment The actors in the company’s immediate environment that affects its capability to operate effectively in its chosen markets.
The Marketing Environment Macroenvironment
Economic Microenvironment
Political/ legal
Customers
Suppliers
Company Distributors
Social/ cultural
Competitors
Technological
Ecological/ Physical
External marketing audit checklist Macro environment
The Macro environment Political and Legal Forces
European Union-wide laws. - collusion. - abuse of market dominance. - acquisition and mergers. - state aid.
National Laws - laws governing marketing practice – e.g. advertising. - national bodies set up to investigate anticompetitive practice.
The Macro environment Economic Forces
Economic Growth and Unemployment.
Interest and Exchange Rates.
Central and Eastern Europe.
China and India.
Russia and India
The Macro environment Ecological/Physical Environmental Forces
Global Warming.
Pollution.
Energy and Scarce Resource Conservation.
Environmentally Friendly Ingredients and Components.
Recycling and Non-Wasteful Packaging.
Hitachi
This Hitachi advertisement communicates how the company is quietly helping to preserve the planet by reducing its CO2 emissions by 100 million tons by 2025
Toyota
INSERT TOYOTA PRIUS ADVERT
Toyota demonstrates its concern for pollution control with the Toyota Prius automobile.
The Macro environment Social/Cultural Forces
Demographic Forces. - World Population Growth. - Age Distribution. - Household Structure.
Cultural Forces. - Subcultures. - Attitudes to Health. - Cash Rich - Time Poor Consumers. - Cultural Differences. - Consumerism.
World Population Growth
Innocent
The Innocent brand has been remarkably successful, tapping into the healthy living lifestyle. It has extended its product line from smoothies to vegetable pots.
Weetabix
Weetabix communicates its low sugar, low fat, high fibre attributes.
INSERT WEETABIX ADVERT
Management styles in the European Union and the USA Individual Spain p i h s r e d a e L
France Belgium
Portugal
Luxembourg
Ireland Greece Group
USA Germany Denmark
UK Netherlands
Italy Organic
Systematic
Organisation Source: Mole, J. (1990) Mind Your Manners
The Macro environment
Technological Forces
Technological Breakthroughs.
Marketing-based Technological Innovation.
Technological Exploitation.
The Macro environment
Technological Forces
Technological Breakthroughs.
Marketing-based Technological Innovation.
Technological Exploitation.
The Micro environment
Customers
Competition
Distributors
Suppliers
External marketing audit checklist Micro environment
The Porter model of competitive Industry structure Potential entrants Threat from new entrants Industry Bargaining competitors Bargaining Suppliers
Buyers Power
Rivalry among existing firms
Threat of substitut e products Substitutes
Power
Competitor analysis 1. Who are our competitors? 2. What are their strengths and weaknesses? Competitor 3. What are their strategic objectives and thrust?
analysis seeks to answer five key questions
4. What are their strategies? 5. What are their response patterns?
Competitor analysis 1. Who are our competitors?
Identify competitors • Product form
2. What are their strengths and weaknesses? 3. What are their strategic objectives and thrust? 4. What are their strategies? 5. What are their response patterns?
• Product substitutes • Generics • New entries
Competitor analysis 1. Who are our competitors? • Audit competitor 2. What are their strengths and capabilities weaknesses? • Financial • Technical 3. What are their strategic objectives and thrust?
• Managerial • Marketing assets • Strengths and
4. What are their strategies? 5. What are their response patterns?
weaknesses
Competitor analysis 1. Who are our competitors? 2. What are their strengths and Infer competitor weaknesses? objectives and strategic thrust 3. What are their strategic objectives and thrust?
• Build • Hold • Harvest
4. What are their strategies? 5. What are their response patterns?
• Growth directions
Competitor analysis 1. Who are our competitors? 2. What are their strengths and weaknesses?
3. What are their strategic objectives and thrust?
Deduce competitor strategies • Target segments
4. What are their strategies?
• Differential advantages
5. What are their response patterns?
• Competitive scope • Cost leadership
Competitor analysis 1. Who are our competitors? 2. What are their strengths and weaknesses?
3. What are their strategic objectives and thrust?
Estimate competitor response patterns • Retaliatory
4. What are their strategies?
• Complacent • Hemmed-in
5. What are their response patterns?
• Selective Unpredictable
Competitor identification The competitive arena Product from competitors • Technically similar products Product substitutes • Technically dissimilar products Generic competitors • Products that solve the problem or eliminate it in a dissimilar way Potential new entrants • With technically similar products • With technically dissimilar products
Company capability profiles
The Customer Value Analysis 1.
Identify the major attributes customers value
2.
Assess the attributes
quantitative importance
of the different
3.
Assess the company’s and competitors’ performances on the different customers values against their rate importance
4.
Examine how customers in a specific segment rate the the company’s performance against a specific major competitor on an attribute-by-attribute basis
5.
Monitor customer values over time
Customer's ratings of competitors on key attributes Customer Awareness
Product Quality
Product Availability
Technical Assistance
Selling Staff
Competitor A
E
E
P
P
G
Competitor B
G
G
E
G
E
Competitor C
F
P
G
F
F
Note: E = excellent, G = good, F = fair, P = poor.
Competitor B should not be attacked !
Advertise your performance on key attributes
Competitive Strategy Options
Competitive Strategy Options
How tough is the competition in this segment?
A segment is unattractive if: It already contains numerous, strong, or aggressive competitors; It is stable or declining; Fixed costs are high; Exit barriers are high; Competitors have high stakes in staying in the segment;
►lead to frequent price wars, advertising battles, and new product introductions, competing is expensive !
How tough is the competition in this segment?
A segment is unattractive if: It already contains numerous, strong, or aggressive competitors; It is stable or declining; Fixed costs are high; Exit barriers are high; Competitors have high stakes in staying in the segment;
►lead to frequent price wars, advertising battles, and new product introductions, competing is expensive !
How tough is the competition in this segment?
A segment is unattractive if: It already contains numerous, strong, or aggressive competitors; It is stable or declining; Fixed costs are high; Exit barriers are high; Competitors have high stakes in staying in the segment;
►lead to frequent price wars, advertising battles, and new product introductions, competing is expensive !
Who can potentially enter the segment?
A segment’s attractiveness entry and exit barriers.
varies
with
the
height
of
its
Entry barriers: high capital requirements; economies of scale; patents and licensing requirements; scare locations, raw materials, or distributors; reputation requirements.
Exit barriers: legal or moral obligations to customers, creditors, and employees; government restrictions; low asset salvage value due to overspecialisation or obsolescence; lack of alternatives opportunities; high vertical integration; emotional barriers.
Barriers and Profitability
The most attractive segment is one in which entry barriers are high and exit barriers are low
What are the substitutes for my product?
Prices and profits in the segment are likely to fall if the substitutes are:
As performant as my product but cheaper; More performant than my product for similar price
How strong is the buyers’ bargaining power?
Buyers’ bargaining power grows when:
They become more concentrated or organized; The product represents a significant portion of the buyers’ cost; The product is undifferentiated; The buyers’ switching costs are low; Buyers are price sensitive; Buyers can integrate upstream.
How strong is the suppliers’ bargaining power?
Suppliers tend to be powerful when:
They are concentrated or organised; There are few substitutes; The supplied product is an important important input; input; The costs of switching suppliers are high; The suppliers can integrate downstream.
L’hexagone sectoriel : le football français en 2006 Créteil, Red Star Faible menace
Menace des entrants potentiels
O.L, O.M, LOSC, etc. Très forte intensité
10
10
5
Pouvoir de négociation des fournisseurs
5
5
10
Pouvoir de 10 négociation des clients et distributeurs
5 0
Équipementiers, concurrents, image de marque forte Pouvoir fort
5
5
10 Pouvoir de l’état
Intensité concurrentielle
10
DNCG, fiscalité Fort pouvoir
Rugby (Stade Français), Basket (PBR)
Groupes de supporters, leaders d’opinion, coûts de transfert élevés Pouvoir moyen Menace des produits de substitution
The KFS are in fact the factors that counteract the forces of competition Strength of competition
Elements to counteract Creating a brand valued by the final customer
Buyers' bargaining power
Establishment of transfer costs Multiplication of distribution networks Forward integration Multiplication of sources of supply
Suppliers' bargaining power
Using technologies and generic components Integrate backwards
Improving value for money Customer Loyalty (reputation, service quality, etc..) Establishment of transfer costs (technology specific) Threat of substitutes
Creation of a technological breakthrough Launch a campaign to destabilize the substitute Ability to supply the substitute
The KFS are in fact the factors that counteract the forces of competition Strength of competition
Elements to counteract
Setting a price level not profitable for entrants Customer Loyalty (reputation, service quality, etc..) Threat of potential entrants
Establishment of transfer costs Protection technology (patents, trade secrets) Control of scarce resources or distinctive skills
Innovation Capacity Customer Loyalty (reputation, service quality, etc..) Establishment of transfer costs Industry rivalry
Protection technology (patents, trade secrets) Control of scarce resources or distinctive skills Reducing fixed costs
