MARKETING MANAGEMENT

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• MARKETING MANAGEMENT
• WEEK 2
• The Marketing Environment
• Market Opportunities

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LAST WEEK

• VisionWhat do we want to be?
• Mission statement What is our business? / why
  does our business exist?
• SWOT

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Last lecture
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Understanding Where We Want to Go

• Alice asked the cat, "Can you tell me which way
  to go?" The cat replied, "That all depends on
  where you want to get to". From Alice In
  Wonderland.

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(Corporate) Objectives

• What am I trying to achieve?

• ________________ ________________
• ________________ ________________
• ________________ ________________

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Market Characteristics

• How can I describe this market in terms of
  whether it will get me where I want to go?

________________ ________________
________________ ________________
________________ ________________
Market Characteristics
We need to consider the Environment.
Market Characteristics
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The Marketing Environment

• AGENDA FOR THIS WEEK
• Identification of marketing opportunities,
  including
• The resources required for searching for
  opportunities
• Understanding how the macro-environment
  influences strategy planning
• Understanding the screening and evaluation of
  marketing strategy opportunities

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When we finish this lecture you should

• Understand the sorts of company objectives that
  are useful for a companys marketing strategy
• Recognise that a companys resources affect its
  search for opportunities
• Know the effect of competitive pressures on
  strategy planning
• Understand why a competitive advantage is key to
  capitalising on marketing opportunities
• Understand how the economic, technological,
  social and cultural, and political and legal
  environments influence strategy planning

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The Components of a Companys
Macro-Environment
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Macro- environment PEST analysis

• Economic factors
• Socio-cultural factors
• Technological factors
• Political factors

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Economic environment

• Affects the way in which companies (or the whole
  economy) use resources
• Affected by the interaction of the macroeconomic
  system
• Changes rapidly
• Marketing strategy may fail if a country suffers
  a rapid or extended business decline
• Changes in economy are often accompanied by
  changes in interest rates
• Economies of the world are interconnected

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Economic environment (Cont.)

• GNP, GNP per capita
• Import/ export, balance of payment
• FDI
• Private/ public, national/ multinational
• Private consumption
• Income distribution
• Exchange rate
• Employment
• Production costs
• Energy consumption
• Inflation

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Economic Influences on the development of IKEA???
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The prevailing economic environment is a major
determinant for consumers requiring credit or
considering investment products.
COURTESY OF GODFREY PEMBROKE FINANCIAL CONSULTANTS
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The prevailing economic environment is a major
determinant for consumers requiring credit or
considering investment products.
COURTESY OF MACQUARIE BANK
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Political Environment

• Political regime (stability, approach towards
  bus)
• Party system (single, dual, multi-party)
• International relations
• Import/export restrictions/ incentives
• Investment regulations (equity restrictions,
  incentives, taxation, profit repatriation,
  transfer prices)
• Accounting/ control system
• Exchange control
• Marketing regulations

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Examples of changes in thepolitical and legal
environments

• Ban on liquor or cigarette sponsorship
• Control of advertising by the Trade Practices
  Commission
• Unsafe or defective goods are the liability of
  the manufacturer
• Deregulation of the broadcasting industry
• Deregulation of the airline industry
• Deregulation of government services to allow
  competition
• Native title and land claims legislation

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Because of strong ethnocentric feelings, many
companies used a patriotic theme to promote their
products.
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Because of strong ethnocentric feelings, many
companies used a patriotic theme to promote their
products.
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How important is the brand?

• This Important?
• Role of International media.
• Source The Australian, 9th March, 2007

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Cultural and social environments

• Affect how people live and why they behave as
  they do
• Affect buying behaviour
• Variables
• Languages people speak
• Types of education
• Religious beliefs
• Types of food
• Styles of clothing
• Housing they choose
• View of marriage and family

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Social and cultural trends

• Increasing multiculturalism
• Changing role of women
• More women in the workforce (66 )
• Women delaying marriage and having fewer children
• Ageing of the population
• More single-person households
• More convenience-oriented
• More health consciousness
• Food products with reduced fats and added fibre
• More concern about the environment

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Social and cultural trends Environment

• Population and pop structure (age, urban, race,
  regional)
• Culture and cultural homogeneity
• Criminality rate
• Consumption level (car, TV, telephone)
• Living standards (health, communication,
  mobility)
• .

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What do you see?
Look at the picture below and write down for
yourself what you see in it
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The people who interpreted the pictures were aged
about 14-50, and came from Bolivia, China,
Ethiopia, France, Indonesia, Italy, the
Netherlands, Peru, Tunisia and Uganda
Can you also see those things or do they seem
very strange Interpretations to you?
The people who interpreted the pictures were aged
about 14-50, and came from Bolivia, China,
Ethiopia, France, Indonesia, Italy, the
Netherlands, Peru, Tunisia and Uganda.

• Some meeting between a father and her daughter.
  She could have some problem.
• A daughter helping her old father.
• A husband helping his wife.
• A father ushering his daughter on gently.
• A man angry with a woman and teaching her a
  lesson.
• Two friends but who are not on good terms for the
  time being.
• A man trying to talk to a woman who turns her
  back to him.
• Tenderness.
• Courtship.
• A pickpocket.

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Same or Different Interpretations?

• As you see, the pictures have an amazing possible
  number of interpretations.
• These interpretations differ because people
  concentrate on different aspects. Some look for
  unique attributes of the people in the picture.
  Others look for family relationships, or for
  hierarchical relationships. Yet others look for
  gender differences, for cooperation, for
  antagonism, or for details that highlight
  professional or religious roles. Try to find out
  what kind of attributes you have highlighted.

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So What?

• The learning to be drawn from this is that this
  also holds for social situations in general just
  by looking you cannot tell what is happening.
• Unconsciously you bring your own cultural frame
  of interpretation to bear upon the situation.
  This is not to say that culture alone determines
  how one interprets a picture or a situation.
• Ones own unique history and personality also
  play an important role. But some of the
  interpretations made by people from other parts
  of the world are probably very strange to your
  mind.
• Understanding culture is vital for developing a
  marketing plan!!

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ARGENTINA
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ARGENTINA
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AUSTRALIA
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BELGIUM
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EGYPT
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FRANCE
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GERMANY / HONG KONG
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IRELAND / KOREA
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SAUDI ARABIA / SWEDEN
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Technological environment

• Technologythe application of science to convert
  economic resources to output
• Robotics (better quality control, lower
  production costs)
• Computer scanners at retail check-out counters
• Automated inventory control
• Worldwide satellite communications of data
• Personal computers
• Fax machines for communication
• Email for communication
• Internet and the World Wide Web

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Technological Environment

• Scientific level (patents, research intensity,
  university/ research system, knowledge workers)
• Infrastructure (transport, communication)

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• The competition
• Porters five forces

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The five competitive forces
of new
entrants
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Porters five forces

• Developed by Michael Porter 1980
• Competitive strategy techniques for analysing
  industries and competitors
• Corporate strategy must be shaped by competitive
  environment
• Explains why some industries are more profitable
  than others.

• Example of COMPETITION as a driver for
  international expansion
• McCann Erickson, the advertising agency, follows
  longtime client, Coke, to all countries where
  company is present

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Porters five forces

• Warning
• It is an industry level analysis
• It is not an analysis of company or product
• An industry is a group of companies which market
  products which are close substitutes for each
  other
• Do not use this tool to compare different
  industries
• The evaluation of the relative strength/weakness
  of the five forces is subjective
• You have to make a judgement on relative balance
  of forces

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What are the five forces

• Level of competition
• Threat of new entrants
• Power of suppliers
• Power of customers
• Threat of substitutes

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Porters five forces
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Porters five forces

• Fierce or relaxed?
• Price competition
• Marketing war
• Technology/RD war
• Number of companies
• Growth rate/size of industry
• Differentiation
• Production capacity
• High exit barriers

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Porters five forces

• How powerful?
• Concentration of buyer/customer power
• Size and number Many/few buyers
• Switching costs
• Product differentiation
• Brands vs. commodities
• Buyer/supplier backward integration
• Relative margin supplier/buyer
• Importance of product to customer and vice versa
• Customer knowledge about product costs

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Porters five forces

• How high are the barriers to entry?
• Barriers to entry
• Capital required
• Technological know how
• Power of brands/marketing costs
• Access to distribution
• Economies of scale
• Switching costs for customers
• Market size/growth opportunity
• Legal/regulatory hurdles

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Porters five forces

• What are real substitutes?
• Relative price
• Relative performance
• Industry categorisation of substitutes
• Consumer categorisation of substitutes
• Alternative technologies
• Consumer cost of switching

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Porters five forces
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Porters five forces

• The theory
• The stronger the balance of forces the more
  difficult it is for firms in an industry to raise
  prices
• The reverse is true
• The company is required to
• understand current competitors' offerings
• anticipate competitors' likely plans
• monitor effects of changes in competition

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Porters five forces

• The company is required to
• understand current competitors' offerings
• anticipate competitors' likely plans
• monitor effects of changes in competition

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Competitor Analysis
Response

• What will our competitors do in the future?
• Where do we hold an advan-tage over our
  competitors?
• How will this change our relationship with our
  competitors?

Capabilities
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Features of brands car industry
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Evaluation of brands car industry
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Evaluation of brands - makes
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Evaluation of brands - attributes
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Evaluation of brands makes and attributes
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Evaluation of brands makes and attributes
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Interpreting Perceptual MapsAnother Example
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Product attributes - beer

• Full bodied
• Heavy
• Popular with men
• Special occasions
• Dining out
• Premium
• Popular with women

• Less filing
• Light
• Pale color
• On a budget
• Good value
• Blue collar

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Perceptual maps - beers (attributes)
Heavy
Popular with Men
Heavy
Full Bodied
Special Occasions
Blue Collar
Dining Out
Premium
Good Value
Premium
Budget
Popular with Women
Pale Color
On a Budget
Light
Less Filling
Light
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Perceptual maps - beers (brands and attributes)
Heavy
Popular with Men
Heavy

Full Bodied
Old Milwaukee
Budweiser

Becks

Meister Brau
Heineken
Special Occasions

Miller
Blue Collar

Dining Out
Premium
Good Value

Coors
Premium
Budget
Strohs

Michelob

Popular with Women
Coors Light

Miller Lite
Pale Color

On a Budget
OldMilwaukee Light
Light
Less Filling
Light
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Attractive opportunities

• Marketing strategy planningfinding attractive
  opportunities and developing profitable marketing
  strategies
• Breakthrough opportunitiesenable innovators to
  develop marketing strategies that are difficult
  to imitate and are more likely to be profitable
  for a long period of time
• Competitive advantageexists when the marketing
  mix of a company is perceived by the target
  market as superior to that of the companys
  competitors

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Four basic types of opportunities
Present
New
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Product/Market Expansion Grid
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Types of opportunities

• Marketing penetrationVisa sponsored the Sydney
  2000 Olympic Games and re-focused its advertising
  on encouraging current customers to use their
  card more often, to increase their chance of
  winning tickets to the Games
• Market developmentMcDonalds reached new
  customers by opening outlets in airports, office
  buildings and zoos
• Product developmentMicrosoft boosted sales by
  introducing new versions of programs and also new
  products
• DiversificationSony expanded into the production
  of recorded music and motion pictures Sony
  announced expansion into corporate Internet

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Evaluating opportunities

• Growth strategies are necessary but they can
  carry different risks
• Diversification is most risky
• Market penetration is the most usual strategy
• Market development and international growth are
  profitable ways of taking advantage of current
  strengths
• Trends in environment may make an opportunity
  more, or less, attractive

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Evaluating opportunities (continued)

• SWOT is a useful aid for identifying and listing
  a companys strengths, weaknesses, opportunities
  and threats
• International trade is increasing a low-cost
  foreign producer may enter the home market

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An opportunity for BiC???
BICs Market
Perfume???
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Objective Develop a new category internationally

• Taking fine French perfume out of the bedroom
  and into the on-the-go world
• We build new categories.  We change consumer
  behaviour

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The Bic Perfume
5 Euro Intense distribution French culture -
history Colourful
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Story-board
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Target marketing vs mass marketing

• Target marketing
• Marketing mix is tailored to fit specific target
  customers
• Mass marketing
• Vaguely aims at everyone with the same
  marketing mix

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What we will be doing in the week

• consumer behaviour
• Market Segmentation