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Marketing Environment

Analysis

A firms macro
Environment
Technological
The technological environment includes factors and trends related to
innovations that affect the development of new products or the marketing
process.
These technological trends can provide opportunities for new product
development, affect how marketing activities are performed, or both.

Socio-Cultural
The social environment includes all factors and trends related to groups of
people, including their number, characteristics, behavior, and growth
projections.

Politico-Legal
In todays world economy, international political events greatly affect
marketing activities. For example the impact of the war on terrorism on the
travel and security industries.

Economic Demographic
The economic environment includes factors and trends related to income
levels and the production of goods and services.

Analytical Tools
Mapping Company Strengths /
Weakness with Environment
Characteristics
Porter's Five Forces
BCG Matrix
GE Matrix
Ansoff Matrix
SWOT Analysis

Michael Porter
An industrys profit
potential is largely
determined by the
intensity of competitive
rivalry within that
industry.

Porters Five Forces

Portfolio Analysis
Strategy at the time
(1970s) was focused on two
dimensions of the portfolio
grids
Industry Attractiveness
Competitive Position

Where was
Michael Porter
coming from?

School of Economics

at Harvard

Structural reasons
why

some industries were


profitable
* Firm concentration
* Established cost
advantages
* Product differentiation
* Economies of scale

Structural reasons
all represented barriers
to entry in certain
industries, thus allowing
those industries to be
more profitable than
others.

Porters Five Forces


* Threat of Entry
* Bargaining Power of
Suppliers
* Bargaining Power of
Buyers
* Development of Substitute
Products or Services

Barriers to Entry
large capital requirements or
the need to gain economies
of scale quickly.
strong customer loyalty or
strong brand preferences.
lack of adequate distribution
channels or access to raw
materials.

Power of Suppliers
high when
* A small number of dominant,
highly concentrated suppliers
exists.
* Few good substitute raw
materials or suppliers are
available.
* The cost of switching raw
materials or suppliers is high.

Power of Buyers
high when
* Customers are concentrated, large or
buy in volume .
* The products being purchased are
standard or undifferentiated making
it easy to switch to other suppliers.
* Customers purchases represent a
major portion of the sellers total
revenue.

Substitute products
competitive strength high
when
* The relative price of substitute
products declines .
* Consumers switching costs
decline.
* Competitors plan to increase
market penetration or

Rivalry among
competitors

intensity increases as

* The number of competitors


increases or they become
equal in size.
* Demand for the industrys
products declines or industry
growth slows.
* Fixed costs or barriers to
leaving the industry are high.

Summary
As rivalry among
competing firms
intensifies, industry
profits decline, in some
cases to the point
where an industry
becomes inherently

Ansoff Matrix
Growth Marketing Strategy
Most companies (ASDA, British Airways, IBM etc) want to grow
There are several alternative growth strategies proposed by Ansoff
Market Strategies on vertical axis
Market Penetration Strategy
Market Development Strategy

Product Strategies on horizontal axis


Product Development Strategy
Product Diversification Strategy

Ansoff Matrix
Current
Products

Current
Markets

New
Markets

New
Products

Growth Marketing Strategy

Market
Penetration
Strategy

Product
Development
Strategy

Market
Development
Strategy

Product
Diversification
Strategy

Ansoff Matrix
Market Penetration Strategy
Expanding sales from existing products in existing markets
Strategies: heavy promotions, PR, price discounts etc in Wrexham
Market Development Strategy
Entering new markets with existing products
Strategies: introductory offers, trial brochures, radio etc in Chester
Product Development Strategy
Launching new products in existing markets
Strategies: developing new products, additional features of existing products
Introductory promotion of new products etc in Wrexham
Product Diversification Strategy
Launching new products in new markets
Strategies: developing new products, additional features of existing products
Introductory promotion of new products etc in Chester

Boston Consultancy Group


Model
Relative Market Share
Company Market Share/Highest Market
Share (or 2nd Highest Market Share if the
Company is the leader)
Market Growth Rate

BCG Matrix

Market Growth Rate

Stars

Cash Cows

Question Marks

Dogs

Relative Market Share

General Electric Model


Market Attractiveness
Company Strength
Method
List the core attractiveness features with
weightage
Rank the environment on these features
Multiply the rank with the weightage to
get the coordinates for both Market
Attractiveness and Company Strengths
for the SBU

Market Attractiveness
Whightag
e

Rank(onascaleof1
to10)forMarket
A

Rank(onascaleof1
to10)forMarket
B

Coordinate
for
Market
A

Coordinate
for
Market
B

Growth

0.2

10

0.4

EntryBarriers

0.2

10

0.4

CompetitiveSkills

0.1

0.2

0.3

TechnologyOrientation

0.1

0.7

0.5

Size

0.2

10

0.2

Distance

0.15

10

0.6

1.5

LegalFramework

0.05

0.1

0.1

Total

5.8

5.2

SBU Strength
Whightag
e

Rank(onascaleof1
to10)forSBUA

Rank(onascaleof1
to10)forSBUB

Coordinate
for
SBUA

Coordinate
for
SBUB

FinancialStrengths

0.5

10

ManagerialSkills

0.3

10

0.6

TechnologyOrientation

0.1

0.2

0.3

BrandStregth

0.1

0.7

0.5

Total

8.9

2.4

GE Matrix

Invest

Invest

Analyze

Market Attractiveness

A
B
Invest

HOLD

MILK

Milk

Dives
t

Divest
SBU Strength

East Central Ohio Freight


Discussion Questions
What is the competitive Structure of the TL
and LTL Markets?
What factors impact the primary demand?
Provide an analysis of the strategic decision
using the GE Model
Conduct an analysis of the industry using
Porters Five forces model
Provide an analysis of the strategic decision
using Ansoffs Matrix.

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