Scanning the Environments

Internal Evaluation
Measuring Strengths and Weaknesses
Product Scope & Depth Current Strategy Past Performance

Strengths
Core competencies Distinctive competencies Competitive advantages

Weaknesses
Constraints Competitive disadvantages Pursuing a strategy not supported by organizational design and culture

Evaluating Current Strategy

Underlying reasons for firms success (or failure) Current scope of firms activities Pattern of past and existing resource deployment Critical factors affecting strategy Trend and direction of likely changes in critical factors Performance criteria, emphasis, and priorities

Evaluation of Product/Market
What customers do we serve? What is our market scope? How is each market/product served?

What Customers Do We Serve?

Market segments Demographic profile of each segment Reasons customers buy Anticipated changes in customers perspectives

What is Our Market Scope?

Geographic reach: Global Regional National Local

How Is Each Market Served?

Resource base Channel relationships Pricing strategies Promotional strategies

Measuring Past Performance

Identify trends of:
ROI, price, revenue streams, profit etc. Market Share Total market Customer equity

Performance Measures
Growth rate Profitability Cash flow Customer retention/loss rate

Performance Standards
Company performance Competitor performance Management expectations Customer expectations

Areas of Strength: Sources of CA

Excellent product design Leader in product innovation Efficient customer service Effective sales promotion Merchandising efficiency Customer loyalty Dominant market share Successful branding/advertising

Strength-Opportunity Analysis
Matching strengths or competencies to opportunities Analyze impact of environment Opportunities develop in environment

Marketing Weaknesses
Inadequate resource emphasis on product/market development No clear sense of vision/goal direction Too many levels of reporting/not enough empowerment to line managers

Scanning the Marketing Environment

Overview:

Why Study of Environment is Important? Opportunities or Threats come from it.

Strategic fit is critical for success and environmental scanning helps company keep in touch Marketing more then any other functional department has the responsibility to carry this out
Marketing Departments role is that of a boundary spanner

Opportunities
Unmet needs are opportunities
Opportunities can be found by identifying trends

Trend is a direction or sequence of events with momentum and direction

Fads, Trends, Style, Taste and Fashion?

What is the difference between fashion, style, trend, fad and taste?
Anyone can have his/her own style in manner of living, speaking, or dressing. Celebrities come to mind famous for their distinct style A style becomes a trend when it is accepted and adopted by a substantial number of people As the trend peaks, it is said to have assumed the position of a mega-trend or fashion

Taste
Taste refers to the prevailing opinion of what is attractive and appropriate for a given occasion or person We speak of people having good or bad taste Good taste is considered not only artistically pleasant but also what is appropriate for a certain occasion or situation Fad is a short-lived fashion that suddenly becomes popular and quickly disappears Generally, it affects a specific group in the population It is non-utilitarian and impulsive in nature

Is It a Trend or a Fad?
A trend is a direction or sequence of events that have some momentum and durability.
Many Market Offerings are Created by identifying trends.

The Marketing Manager needs to determine: 1. Does the new product fit with basic lifestyle changes? 2. What are the benefits? 3. Can it be personalized? 4. Would it be a trend or a fad? 5. Who will adopt the change? 6. Who would resist to what extent?

Forces in the Environment

Macro vs Micro Internal vs External Controllable vs Uncontrollable

Factors in the External Environment

Marketing Mix
Ever-Changing Marketplace Social & Cultural

Demographics

Natural

Economic Conditions

Competition Product Place Promotion Price

Target Market
Technology

Political & Legal Factors

Environmental Scanning

External Environmental Factors (Macro)

Political & Legal
Political & Fiscal Policy, Interest Groups, Consumerism, Deregulation, Legislation, Most Important due to accelerated rate of change. Unlimited opportunity for innovators. Raw material shortage, increased energy cost, pollution, depleting natural resources

Technology

Natural

External Environmental Factors (Macro)

Demographic Economic Conditions Statistical Study of human population: Gender, regions, cities,ethnic etc Interest rates, inflation, income distribution, business cycle
Closest Competitors are those with similar marketing mix and are called strategic group
Most difficult to change Ultimate determinant of trends Tolerant & Indulgent cultures High / Low Context cultures

Competition

Social & Cultural

Lessons to learn
Adjust yourself to the external environment Use your strengths to avail opportunities (SO) and to counter threats (ST) Overcome weaknesses and turn them into strengths

Where do you want to sail: Red or Blue Ocean

Avoid the Dinosaur Dilemma

RED vs BLUE OCEAN

RED OCEAN Compete in existing markets Beat the competition Explore existing demand Strengthen the existing value proposition Seek competitive advantage in differentiation or low cost BLUE OCEAN Look for/develop uncontested markets Make competitors irrelevant Explore latent demand Create a new value proposition Seek competitive advantage in differentiation with low cost