Chapter 4:

Evaluating
Opportunities in the
Changing Marketing
Environment

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Objectives Should Set Firms Course

Three basic objectives should drive a firms objectives:
Engage in specific activities that will perform a socially

and economically useful function.

Develop an organization to carry on the business and
implement it strategies.
Earn enough profit to survive.

Objectives should be specific, measurable and

obtainable.
The entire firm should work toward the same objectives.
Company objectives lead to functional, including
marketing, objectives.

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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 4-1
4-4

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Limits on Opportunity Search

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?????
?????
?????
?????
4-5

Financial
Financial Strength
Strength

Producing
Producing Capability
Capability
and
and Flexibility
Flexibility

Marketing
Marketing Strengths
Strengths

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Uncontrollable Environment
Competitive environment
Economic environment
Technological environment
Political environment
Legal environment
Social and cultural environment
These cannot be controlled in the short run.
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The Competitive Environment

Kinds of Markets

Key
Concepts
in the
Competitive
Environment

Competitor Analysis

Competitive Rivals

Competitive Barriers

Information on Competitors
4-6

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The Economic and

Technological Environment
Global
Global Economy
Economy

Rapid
Rapid Change
Change

Key
Economic
Forces

Interest
Interest Rates
Rates
4-7

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The Impact of Technology

Technology is the application of science to
convert and economys 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
4-8

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The Political and Legal Environment

Nationalism
Nationalism

Consumerism
Consumerism

Characteristics
of the Political
Environment

Regional
Regional
Groupings
Groupings
4-9

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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 4-4
4-10

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The Cultural and Social Environment

Affects how and why people live and
behave as they do.
Changes occur slowly.

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The Cultural and Social Environment

Time
Poverty

Economic
Power

Career
Opportunity

4-11

Cultural
CulturalTrend:
Trend:
The
TheChanging
Changing Roles
Rolesof
of Women
Women
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Sales and Cost Curves of

Two Strategies
Product A

Dollars

Sales

Total cost

In this graphic, a
too-narrow focus on the
first years results might
cause the marketing
manager to abandon this
product as too costly.

Years

Exhibit 4-6
4-12

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Sales and Cost Curves of

Two Strategies
Product B

In this graphic, a
too-narrow focus on
the first years results
might cause the
marketing manager
to adopt the product
prematurely, since its
performance in year
one is misleading.

Sales
Total cost

Years

Exhibit 4-6
4-13

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Sales and Cost Curves of

Two Strategies
Product A

Product B
Sales

Sales

Dollars

Total cost

Total cost

Years

Years

Seen together, it is easy to see that Product A offers a

vastly better overall return than does Product B
Exhibit 4-6
4-14

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Evaluating Opportunities
Industry Attractiveness
Low

Medium

High

Medium

No Growth
Low

Business Strength

High

Borderline
Growth

Exhibit 4-7
4-15

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Evaluating Opportunities
Industry attractiveness

Business strengths

size

size

market growth, pricing

growth

market diversity

share

competitive structure
industry profitability
technical role
social
environment
legal
human

position
profitability
margins
technology position
strengths/weaknesses
image
pollution
people
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