Marketing Plan & Environmental Analysis

April 4, 2000

Environmental Analysis

• In order to not be overwhelmed by the effort that is needed to conduct environmental analysis, it is best to collect data as you go along.

Important to Remember• Analysis itself is not enough

– Leads to better planning & decision making, but must be wisely interpreted by management

– Encourages both analysis and synthesis to get an understanding of the big picture.

• Data is not the same as information– To much information is overwhelming– It must be interpreted– Garbage in, garbage out

Important to Remember

• The benefits of data must outweigh the costs.– Data must be used to ultimately improve

service to the customer this includes: better planning and better decision making

– Analysis without action is worthless

Components of Environmental Analysis

• The external environment– competition– economics– politics, legal/regulatory– technological– sociocultural

External Environment

• Constantly monitor the competition

• Three categories of competition– Brand Competition– Product Competition– Generic Competition– Total Budget Competition

Definitions of Competition• Brand = products similar in features & benefits

to the same customers at similar prices

• Product = compete in same product class with different features, benefits, and prices

• Generic = market very different products that solve the same problem or satisfy the same basic need

• Total budget = compete for limited financial resources of the same customers

Competitive Analysis

• Identify all current and potential brand, product, generic, and total budget competitors

• Assess key competitors by ascertaining its size, growth profitability, objectives, strategies, and target markets

• Asses each competitor’s strengths & weaknesses, include major competencies

Competitive Analysis

• Focus on each competitor’s marketing capabilities: product, price, distribution, & promotion

• Estimate likely strategies under different environmental situations & reactions to marketing efforts

The Economy

• Analyze and anticipate the economic conditions of the nation, region, state, and local area in which you operate.

• Consider inflation, employment rates, taxes, tariffs and trade restrictions

• Consider how your customers feel about the economy and how this effects their spending patterns

Politics

• Must consider how government views your company and your industry

• Your competition will!

Legal & Regulatory Factors

• Know the laws and decisions that effect your company

• New court interpretations can indicate future trends

• International companies should be aware of trade agreements

Technology

• Technology effects how customers live their lives and how employees perform their jobs.

• Therefore, marketers have new ways of fulfilling customer needs

• Frontstage = cell phones & CD Rom

• Backstage = Improved inventory control and distribution

Cultural

• Lifestyle Trends– Time spent watching tv has declined

• Demographic trends– polarization of income, growing older

• Changes in cultural values– less tolerance of smoking

Customer Environment

• Know thy customer– Who are your existing and future customers– Prevailing and current needs of customers– Basic features of the firm’s and competitor’s

products that are perceived as meeting the needs of the customer

– Anticipate changes in the needs of the customer

Customer Environment

• Who are our customers

• What do our customers do with our products

• Where do our customers purchase our products

• When do our customers purchase product

• Why do customers select our products

• Why do non-customers select other products

• How do they select our products

Customer Environment

• What must be done to convert non-buyers to buyers?

• What must be done to convert one-time buyers to repeat customers.

• At what cost is it to convert these non-buyers.

Internal Environment

• Review marketing goals, objective and performance

• Review current and anticipated organizational resources

• Review of current and anticipated structural issues

SWOT

• Simple

• Flexible

• Allows you to synthesize data

• Encourages collaboration

SWOT

• To be successful:– stay focused - separate different product lines

and examine them independently then recombine for strategic business unit analysis

– Search extensively for competitor– Collaborate with other functional areas– Examine Issues from the Customer Perspective

SWOT

• Separate internal from external issues

• “Would this issue exist if the company did not exist?”

Strategic Planning & SWOT

• Match strengths with opportunities

• Convert weaknesses into strengths

• Convert threats into opportunties

Prioritize

• M*I=R

• Assign magnitude (small, med., large)

• Assign importance

Competitive Advantage

• Match strengths with opportunities

• Currently most firms have competitive advantage in the following areas:– operational excellence– product leadership– customer intimacy