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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.
4-2
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
4-3
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 4-1
4-4
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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4-5
Financial Strength
Producing Capability
and Flexibility
Marketing Strengths
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
The Competitive Environment
Kinds of Markets
Competitor Analysis
Key
Concepts
in the
Competitive
Environment
Competitive Rivals
Competitive Barriers
Information on Competitors
4-6
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
The Economic and
Technological Environment
Global Economy
Rapid Change
Key
Economic
Forces
Interest Rates
4-7
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
4-8
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
The Political and Legal Environment
Nationalism
Consumerism
Characteristics
of the Political
Environment
Regional
Groupings
4-9
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 4-4
4-10
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
4-11
Cultural Trend:
The Changing Roles of 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
In this graphic, a
too-narrow focus on the
first year’s results might
cause the marketing
manager to abandon this
product as too costly.
5
Years
Exhibit 4-6
4-12
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
too-narrow 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 4-6
4-13
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 4-6
4-14
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 4-7
4-15
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
Continuum of Environmental Sensitivity
Insensitive
Industrial
products
Sensitive
Basic
commodity-type
consumer
products
Consumer
products that
are linked to
cultural
variables
Exhibit 4-8
4-16
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
4-17
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