Part 1: Marketing strategy and

management
Chapter 3: Identifying marketing
opportunities
Step 1: Analyse the current market
environment
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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
Know about the different types of international and
domestic marketing opportunities to pursue
Understand how to screen and evaluate marketing
strategy opportunities
Know the logic behind planning grids or matrices

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Forces that shape the marketing

Environment
Direct marketing environment

Customers
The company
Competitors

External market environment

Economic
Technological
Political and legal
Cultural and social

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Company objectives
Mission statement

Sets out the organisations basic purpose for being

Three generic objectives

Engage in activities that perform a socially and

economically useful function
Develop an organisation to carry out the functions
of the business and implement its strategies
Earn sufficient profit to survive

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Figure 3.1 A hierarchy of objectives

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Examples of
company resources
Financial strength (BHP Billiton)
Production capability and flexibility (Fisher

and Paykel)
Marketing strengths

Patents (Sarich)
Channel relationships (Nestle, Westpac)
Distribution dominance (Coca-Cola)
Skilled sales force; low-cost Internet Web site
Technical capability (Du Pont)
Loyal customer base (Kraft)

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The competitive environment

Pure competition
Oligopoly
Monopoly
Monopolistic competition

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Figure 3.2 The five competitive forces

Threats
of new
entrants

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Competitive advantage
The company has a marketing mix that the

target market sees as better than a

competitor's mix
The company is required to

understand current competitors' offerings

anticipate competitors' likely plans
monitor effects of changes in competition

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Figure 3.3 A framework for competitor analysis

disposable nappies in Japan

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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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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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Examples of changes in the

political and legal environments
Ban on liquor or cigarette sponsorship
Control of advertising by the Trade Practices

Commission (Australia) or Commerce

Commission (NZ)
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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Figure 3.4 Main features of the Trade Practices Act

(Australia) and the Commerce Act and Fair Trading
Act (New Zealand)

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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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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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Figure 3.5 Four basic types of opportunities

Present

New

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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

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Types of opportunities (continued)

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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Figure 3.6 An example of product-market

screening criteria for a small retail and wholesale
distributor ($5 million annual sales)

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Figure 3.7 Expected sales and cost curves of two

strategies over five-year planning periods

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Figure 3.8 Continuum of environmental sensitivity

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Figure 3.9 General Electrics strategic planning

grid

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Figure 3.10 The Boston Consulting Group (BCG)

matrix

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What we will be doing in the next

chapter
In Chapter 4 we will discuss how information

can be obtained to facilitate the planning

and implementation of successful marketing
strategies

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