Marketing Management 2nd Edition

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Marketing Management2nd Edition
Michael R. Czinkota and Masaaki Kotabe
Chapter 3 Understanding the Environment and the
Competition
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Growing Environmental Turbulence
1900 Stable
1930 Reactive
1950 Anticipating
1970 Exploring
1990 Creative
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Estimated Quarterly U.S. Retail E-Commerce Sales
http//www.census.gov/mrts/www/current.html
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Overall Environment
External Environment
Laws
Culture
Marketing Environment
Internal Organization
Technology
Suppliers
Competitors
Society
Geography
Politics
Economy
Demographics
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Sociocultural Environment

• Societal trends
• Goods-producing to service-producing
• Materialist society to postmaterialist society
• Demography

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U.S. Age Groups
77M born 1980 - 1999
76M born 1945 - 1964 Baby Boomers
Source US Census Bureau. Census 2000 Summary
File 3
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Technological Environment

• Electronic Data Interchange (EDI)
• Merchandise scanning
• Data sharing
• Distribution relationships
• Customer communication

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Technology

• Increasingly, research directed toward major
  breakthrough technologies is being conducted by
  consortiums of companies rather than by single
  companies.

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Four Common Errors of Firms

• The belief that an evolutionary approach to
  technology will be enough.
• The assumptions that there will be ample early
  warning about a coming discontinuity.
• The expectation that customer contact and input
  is sufficient preparation for change (customers
  may well be wrong in predicting what they want,
  particularly when new technology is concerned.
• The conviction that ones firm can always react
  fast enough to change.

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Economic Environment

• Globalization
• Regional economic integration
• NAFTA
• European Union
• MERCOSUR
• Exchange rates
• Currency flows

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Political and Legal Environment

• Laws and regulations
• Intellectual property
• Contract law
• Lobbying
• Special Interest Groups
• Stakeholders

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Natural Environment

• Shortage of raw materials
• Increased energy costs
• Anti-pollution pressures
• Changing role of governments

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Environmental Analysis

• Track information on political, social, and
  economic affairs on changes in attitudes, and
  changes in the market.
• Example
• Content analysis

Method 1 Environmental Scanning
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Environmental Analysis

• Aggregate judgment of a number of experts who
  cannot come together physically.

Method 2 Delphi Studies
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Environmental Analysis

• Group of employees identifies the forces of
  change within an industry.

Method 3 Scenario Building
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Competition Industry

• Industry
• Group of organizations that offer products that
  are near substitutes for each other.
• Important factors
• Size of the market
• Number of organizations

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Competitive Structure

• Issues affecting structure of competition
• Economies of scale
• Government influence
• Competitive history of firms
• Distribution channels
• Production capacity configuration

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Forces Driving Competition
Potential entrants
Threat of new entrants
Bargaining power of suppliers
Industry competitors Rivalry among existing
firms
Buyers
Suppliers
Bargaining power of buyers
Threat of substitute products
Substitutes
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Competitive Structure

• Three types of competitive response
• Nonresponse (or slow response)
• Fast response
• Focused response

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Competitive Strategies
Cost Leadership
Product Differentiation
Focus
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If you dont have a competitive advantage, dont
compete.

• Jack Welch, GE

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Attack Strategies
Bypass attack
Flank attack
Guerilla warfare
Attacker
Defender (Market Leader)
Frontal attack
Encirclement attack