1. Chapter 2
The Dynamic Marketing
Environment

2. Chapter Outline
 External Macroenvironment
 External Microenvironment
 Organization’s Internal Environment
 Planning as Part of Management
 Strategic Company Planning
 Strategic Marketing Planning
 The Annual Marketing Plan

3. External Macroenvironment
1.Demography: is the study of the human
population in terms of size, density,
location, age, gender, race, occupation, and
other variables.
2.Economic conditions: consist of factors
that affect consumers purchasing power and
spending patterns as as well as a firm’s
marketing system.

4. External Macroenvironment
3.Competition: marketers must monitor and
understand their competitor’s marketing activities
and gain a strategic advantage.
Three Major Sources of Competition:
1. Direct brand and store
competition
2. Substitute competition
3. General competition

5. External Macroenvironment
4.Social and Cultural Forces: some of these
forces which have influenced marketing are:
- erosion of stereotypes
- emphasis on service quality
- enhanced concern for the
physical environment
- desire for convenience
- impulse buying

6. External Macroenvironment
5.Political and Legal Forces: create laws,
regulations and legislation that affect
marketing.
Three purposes of regulations:
1.To protect companies from each other.
2.To protect consumers from unfair business
practices.
3. To protect the interests of society from
unrestrained activity.

7. External Macroenvironment
6.Technology: Technological breakthroughs
create, replace and radically change
industries, as well as stimulate markets not
related to the technology.
Marketers must carefully monitor
technological changes and invest in R&D to
spur innovation.

8. External Microenvironment
1.The Market: are people or organizations with wants
to satisfy, money to spend, and the willingness to
spend it.
2.Suppliers: provide goods and/or services and affect
the prices a marketer must charge as well as their
ability to satisfy their customers.
3.Marketing Intermediaries: are firms that aid in the
flow of products from the marketing company to its
markets.

9. Internal Environment
These forces are largely inside the company
and are directly controllable by
management. They require careful
relationship building by marketing
personnel to best contribute to the
development of winning marketing
programs.

10. Planning as Part of Management
1. The Marketing Management Process
a)Planning - involves setting goals, and selecting
strategies and tactics to reach those goals.
b)Implementation - involves organizing and staffing,
leading, guiding and directing. It also involves turning
marketing strategies and plans into marketing actions to
accomplish objectives.
c)Evaluation - involves comparing results with goals to
guide future plans, and if necessary, taking corrective
action to make sure objectives are reached.

11. 2. Basic Management Terminology
Mission Statement - is a statement of an organization’s
purpose, (what it wants to accomplish in the larger
environment.) It helps employees understand the
values of the firm and acts as a guide to instill ethical
organizational as well as marketing behavior.
Objectives - are desired outcomes which a company
commits to achieve a measurable outcome in a
specified period.
- They should be clear and specific, stated
in writing, ambitious but realistic, consistent with each
other, measurable whenever possible and for a
specified period.

12. 2. Basic Management Terminology
Strategies - suggest how a firm will achieve its goals.
Tactics - relate to how strategies will be implemented.
Policies - guide how a firm does business.

13. 3. Levels of Goals and Strategies
 An objective at one organizational
level may become a strategy for
management at a higher level.

14. 4. Scope of Planning Activities
a)Strategic Company Planning is the process of
developing and maintaining a strategic fit between
the organization’s goals and capabilities and its
changing marketing opportunities.
b) Strategic Marketing Planning is guided by the
organizations mission and goals
c)Annual Marketing Planning is a short term
marketing plan that describes the current
marketing situation, the strategy for the year, and
the action program, budgets and controls.

15. Four Steps in Strategic Company Planning
1.Defining the organizational mission.
2. Analyzing the situation.
3. Setting organizational objectives.
4. Selecting strategies to achieve the
organizational objectives.

16. Product/Market Expansion Strategies
1.Market Penetration - is a strategy for company
growth by increasing sales of current products to
current market segments without changing the
product in any way.
2.Market Development - is a strategy for company
growth by identifying and developing new market
segments for current products.
3.Diversification - is a strategy for company growth
by starting up or acquiring businesses outside the
company’s current products markets.

17. Strategic Marketing Planning
1. Conduct a Situation Analysis
(SWOT Analysis):
Strengths - are competitive
advantages or distinct competencies that give the
firm an advantage in meeting the needs of its
target market.
Weaknesses - are limitations the
company might face in marketing strategy
development or implementation.

18. SWOT Analysis:
Opportunities - are favorable
conditions in the environment that could
produce rewards for the organization if
acted upon properly.
Threats - are conditions or
barriers that may prevent the firm from
reaching its objectives.

19. 2. Develop Marketing Objectives
 marketing objectives must be
linked to the company wide goals.

20. 3. Select Target Markets and Estimate
Demand
Segments – are part of markets
Target Market – a group of customers to
whom a seller aims its marketing efforts
 Can focus on one or more market
segments!!

21. 4. Determine Positioning and Differential
Advantage
Positioning: refers to a product’s image in
relation to directly competitive products, as
well as other products marketed by the same
company.
Differential Advantage: refers to any feature
of an organization or brand perceived by
customers to be desirable and different from
those of the competition.

22. 5. Design a Marketing Mix
The marketing mix includes:
1. Product
2. Price
3. Place (distribution)
4. Communication
5. Customer Service

23. The Annual Marketing Plan
 is the master plan for a product, a product
line, a brand or a market.
 it
represents a “road-map” to guide
marketing activity over the coming year.

24. Planning Models
Strategic Business Units (SBU)
 To make planning more effective, a large, diverse
organization may divide itself into smaller planning
units called Strategic Business Units
 The unit should:
– Be a separately identifiable business
– Have a distinct mission
– Have separate competitors
– Have a separate group of executives charged with
profit responsibility
– Have its own strategic plan

25. The Boston Consulting
Group Matrix
 Using this model, a strategic business unit (SBU) can be classified
according to two factors: its market share relative to competitors,
and the growth rate of the industry in which the SBU operates.
 The resulting 2 x 2 grid has 4 quadrants that represent distinct
categories of SBUs or major products.
 Each category is assigned a name that reflects its market share,
industry growth rate, cash needs, and appropriate strategies.
 A company should seek a balanced portfolio of SBUs with a mix
of stars, cash cows, and questions marks, but hopefully no dogs.

26. Product-Market
Growth Matrix
 growth requires examination of both products and markets;
what needs changing?
 Should you stay and fight? Or should you forge an alliance
to meet the challenge?
– market penetration: sell more of present
products/services to present markets
– market development: sell present products to new
markets or segments
– product development: new products/services for
existing markets
– diversification: new products to new markets
diversification